Abengoa Bonds, Shares Tumble as Capital Plan Fails to Reassure
2015-08-03 09:51:05.624 GMT
By Rodrigo Orihuela and Katie Linsell
(Bloomberg) -- Abengoa SA’s bonds and shares plunged as the Spanish renewable-energy company’s plan to stem declining cash flow by selling assets and raising capital failed to reassure investors.
Abengoa said on Monday it’s planning a 650 million-euro ($713 million) capital increase and to boost asset disposals to 500 million euros, according to a regulatory filing The Seville- based company told investors on Friday that corporate free cash- flow for 2015 will be as much as 800 million euros lower than it previously forecast and that asset sales would be 400 million euros.
The liquidity disclosure is the latest scare to investors concerned that Abengoa has insufficient cash to meet its obligations as consolidated net debt exceeds 6.5 billion euros. Abengoa is struggling to regain confidence after its reclassification of some debt in November threw its accounting methods into doubt.
“There were liquidity concerns before and this downward revision of corporate free cash flow guidance is disappointing,” said Felix Fischer, a credit analyst at Lucror Analytics Pte Ltd. in Singapore. “The capital increase more or less just covers the shortfall. There are serious liquidity concerns for this company and bondholders believe this measure isn’t sufficient.”
Bonds Plunge
The company’s 375 million euros of 7 percent notes maturing in April 2020 fell to the lowest since they issued, pushing the yield up to 16.6 percent, according to data compiled by Bloomberg. Its 265 million euros of 5.5 percent notes maturing in October 2019 fell 7.5 cents on the euro to 68 cents, the lowest since they were issued in September through its unit Abengoa Greenfield SA, according to data compiled by Bloomberg.
Abengoa’s class B shares fell more than 30 percent, the biggest intraday decline since November. They were at 1.56 euros, down 24 percent, at 11:42 a.m. in Madrid.
Abengoa will use proceeds from the planned share sale to reduce debt by 300 million euros, the company said Monday. Existing shareholders will have preferential rights to buy the new shares and Abengoa’s main shareholder, Inversion Corporativa IC SA, will participate in the sale with new funds.
“The equity increase gives the impression that the company urgently needs cash,” said Fischer. “They’ve not done enough to win back investors’ trust.”
Abengoa held a conference call with investors for almost three hours on Friday after reporting earnings. It said it will generate between 600 million euros and 800 million euros of cash this year, down from about 1.4 billion euros, according to a company presentation.