Abengoa Seeks $1.85 Billion in Funds to Back Viability Plan
By Macarena Munoz Montijano
February 17, 2016
- Company needs cash and funds for technical guarantees
- Abengoa presents plan in fight to stave off insolvency
Abengoa SA, the Spanish renewable-energy developer fighting to avoid bankruptcy, said it needs 1.66 billion euros ($1.85 billion) over the next two years as it seeks creditor backing to keep operating as a smaller company with less financial risk.
Abengoa’s cash needs amount to 826 million euros in 2016 and 304 million euros in 2017, as well as an additional 525 million euros this year in technical guarantees to allow it to start taking in new orders quickly, the company said in a regulatory filing late Tuesday. The company will need these funds even after raising 473 million euros from selling assets in the next two years.
The Seville, Spain-based company, which has 8.9 billion euros of gross borrowings, is trying to convince creditors to allow it to remain in business after filing for preliminary creditor protection in November. Abengoa aims to pare back its geographical reach and shed assets to become a smaller and more disciplined company that can generate about 1 billion euros in cash from 2017 to 2020, the company said.
“In our view, the outline of the business plan does little to comfort investors in terms of providing fresh capital,” Felix Fischer, a credit analyst at independent research provider Lucror Analytics in Singapore, wrote in a note to clients. “We believe that avoiding insolvency is a challenging task, given the numerous creditors involved, including suppliers, and the hugely complex situation.”
The viability plan will allow Abengoa to focus on it’s engineering and construction business to give it an enterprise value of about 5.4 billion euros after the reorganization, the company said. The value of the “New Abengoa” in operation would be about 7 times its value if it were to be liquidated, the company said.
Abengoa B shares rose as much as 9.2 percent in Madrid trading.