Abengoa Reaches Creditor Agreement in Bid to Fend Off Insolvency

2016-08-11 09:15:44.985 GMT

By Macarena Munoz and Katie Linsell

(Bloomberg) -- Abengoa SA won agreement from major creditors for a rescue plan, potentially averting Spain’s largest corporate insolvency.

Investors including Elliott Management Corp., Centerbridge Partners LP and Varde Partners LP will provide 1.17 billion euros ($1.3 billion) of new loans in exchange for a 50 percent stake, according to a regulatory filing on Thursday. The renewable-energy producer’s existing shareholders, including a company part-owned by the founding Benjumea family, will be left with about 5 percent.

Abengoa has until Oct. 28 to garner support from 75 percent of creditors for the deal, which follows an initial agreement in March. The Seville-based company filed for preliminary court protection in November following a failed attempt to raise capital as it buckled under about 9.4 billion euros of debt built up through years of overseas expansion.

“While it is positive that the company has finalized the agreement, we have our doubts over its business model and whether the new capital structure is sustainable,” said Felix Fischer, a credit analyst at research provider Lucror Analytics in Singapore. “Bondholders or lenders not participating in the new financing will have to take a substantial haircut.”

Under the plan, existing creditors can swap 70 percent of debt into a 40 percent stake in Abengoa, the statement said. The remaining 30 percent will be refinanced through new debt instruments. Alternatively, they can accept a 97 percent loss, the statement said.

The company will also get 307 million euros in new guarantees from investors in return for a 5 percent stake.

Abengoa’s bonds were little changed, with 375 million euros of 7 percent notes due April 2020 quoted at 6.6 cents on the euro, according to data compiled by Bloomberg. The company’s Class B shares were little changed in Madrid trading at 0.24 euros.