Abengoa’s Desperate Situation Or How To Remove The Wreckage Of A Company

Abengoa anticipates tripling its billing in 10 years

Abengoa would have demanded the Solvency Support Fund for Strategic Companies from the Spanish government, a tool designed to help companies affected by the pandemic, with 10 billion euros of financing. So Abengoa would have asked state-owned holding SEPI for the rescue of its company Abenewco 1, to which it transferred the most valuable assets and activities of its broken parent company . The group would try to preserve these assets and to keep a subsidiary operating where almost 13,000 employees are still working.

This news confirms the announcement reported a week ago by the company that it was working on an alternative solution. It said it had initiated negotiations with public institutions and private entities in order to close the new financial operation that would guarantee the stability and future of the holding. That is why Abengoa decided to extend until March 31 the deadline to reach a debt restructuring agreement with suppliers after obtaining the majority support of the suppliers adhered to it (only 0.17% of the suppliers voted against). Previously, the Minister of Industry, Trade and Tourism, Reyes Maroto, had already said the government was “working” on the rescue of Abengoa.

Separately, elEconomista.es reported that Abengoa had approved a three-phase plan prior to requesting the bailout for its company Abenewco 1. At this point, Abenewco 1 would receive 35 million euros in the form of a loan and would have an advance on a new guarantee line for an initial amount of 40 million euros. In addition, it also comprises a new restructuring contract and the financing commitments in cash and guarantees given by the ICO and CESCE.

In the second phase, Abenewco 1 would implement a new restructuring agreement in line with the one signed and published in August 2020, applying certain changes and amendments to the debt tools currently in force. It would in any case involve capitalisations and write-downs as well as appropriate amendments to include the investment transaction by TerraMar. This is a fund based in Los Angeles and specialised in investing in companies dealing with bankruptcy or other complex situations. It has offered Abengoa 150 million euros in the form of a loan and 50 million euros in the form of an equity contribution to Abenewco 1.

In the third phase, Abengoa would request SEPI’s rescue. In this case, if the company aspires to be given SEPI’s rescue, it will have to demonstrate that it was not in crisis before the pandemic, but that the crisis has been triggered as a result of it.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.