The group representing the small creditors and bondholders affected by Abengoa’s situation has recommended they do not sign up for the Spanish company’s financial restructuring plan. In the opinion of the representatives of this organisation – La Plataforma de Perjudicados por Abengoa – the best solution is to go ahead with bankruptcy proceedings.
“In light of the plan’s contents, it needs to be considered whether filing for bankruptcy would be the best solution for creditors. Particularly for minority shareholders and bondholders. We think it would be,” the platform said in a statement.
Its reason for preferring the bankruptcy filing is that if the Spanish engineering and renewable energy firm’s restructuring doesn’t meet requirements, this could lead to a complaint, landing the company back in the same situation it wants to avoid. The circumstances would be the same, but with the peculiarity that the bank loans not covered by real guarantees would have a priviliged position once the restructuring plan was approved.
This would prejudice small creditors when they tried to recover their money, the platform says. It also thinks that the approval of the restructuring plan will be a big obstacle for Abengoa when it wants to obtain new financing in the future, at least in market conditions.
The platform describes signing up for the restructuring agreement as “not beneficial” for the minority bondholders or the minority shareholders due to “the lack of transparency of Abengoa” and its “acolytes.” They have put up “every kind of obstacle to prevent the creditors from having their say” in this process.
They also reject the plan in light of the “excessive privileges bestowed on certain financial entities (lenders, guarantors, bonholders),” with whom they have agreed “certain economic conditions, particularly in the case of new loans, which are completely removed from normal market conditions and are, in fact, totally unfair.”
In addition, the plaform considers there is “unfair and discriminatory treatment of creditors, not only of financial ones but also of others.” It also highlights “the impossibility of proving, due to a lack of information, if the plan can be fulfilled. And whether it will ensure that the capitalisation of 70% of the loans, as well as the recovery of the remainder, doesn’t turn into another fiasco.”
In the light of the need for more privilged creditors and for control on the part of the courts of the management and the divestments, the plaform insists that “it seems the bankruptcy filing would be more in the minority bondholders’ interest than the restructuring plan.” But it says that signing up for the plan would be “very much in the interest of, and very lucrative for, the majority bondholders who are prepared to provide new funding” and, in particular, for the investment funds.