Nov 26 2015
Abengoa seeks insolvency protection
November 25, 2015
In New York, NASDAQ shares in Abengoa SA plunged 49% in Wednesday trading after the embattled renewable energy developer said it would seek bankruptcy protection as it seeks to reorganize nearly $9.4 billion in debt. The protective filing was announced after an expected infusion of nearly $300 million from Spanish steelmaker Gonvarri did not materialize, wrote the Digest today.
“Less than three weeks ago, it was announced that Spanish industrial group Gonvarri, which is part of Corporacion Gestamp, has agreed to become Abengoa’s main stockholder. The terms of a framework agreement called for Gonvarri Corporacion Financiera to take part in a capital hike that was approved on October 10, investing EUR 250 million as a first step. Later, the company was to pour a further EUR 100 million.”
Abengoa in an SEC filing stated:
“In relation to the Material Fact (Hecho relevante) of November 6, 2015 (No. 230768) concerning the framework agreement entered into with Gonvarri Corporación Financiera (“Gonvarri”), the Company announces that it has received notice from Gonvarri that the framework agreement is terminated considering that the conditions to which that agreement was subject have not been satisfied.
“The Company will continue negotiations with its creditors with the objective of reaching an agreement that ensures the Company’s financial viability, under the protection of article 5 bis of the Spanish Insolvency Law (Ley Concursal) , which the Company intends to apply for as soon as possible.”
On Wednesday Abengoa said the framework agreement had been terminated as the conditions had not been satisfied. Among these conditions was the successful signing of financial support from banks amounting to EUR 1.5 billion for Abengoa, Spanish newspaper Expansion said
The company did not elaborate on the problems in meeting Gonvarri’s conditions. At the time of the announcement of the proposed investment, which would have made Gonvarri the largest shareholder in Abengoa, the companies said that “the Investment Agreement is subject to certain conditions such as the standby underwriting of the share capital increase by the underwriters announced on September 24th, 2015 continuing to be in force and the signing of a substantial package of financial support in favour of the Company by a group of financial institutions.”
The company developed the 25 million gallons cellulosic ethanol facility in Hugoton, Kansas, and is a major operator of ethanol and biodiesel production assets in the US and Europe.
a. Traditional fermentation of cereal grains and sugar cane for the commercial production of bioethanol
b. Traditional transesterification for the production of biodiesel from cereal and vegetable oils.
c. Commercial scale cellulosic fuel production.
The company, which also builds concentrating solar power (CSP) parks and bioenergy plants, among other projects, reported revenues of EUR 4.87 billion for the first nine months of 2015.
Overall, the company has €7256 in sales, 24,000 employees and €1.365 in EBITDA. The company says: ”We specialize in carrying out complex turn-key projects for solar-thermal plants, solar-gas hybrid plants, conventional generation plants, biofuels plants and water infrastructures, as well as large-scale desalination plants and transmission lines, among others.”