Abengoa Said to Weigh Bigger Share Sale to Ease Debt Concern

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Abengoa SA is discussing options including a larger share sale than previously planned as the Spanish renewable-energy company struggles to convince investors it can avoid defaulting on its debt, according to people familiar with the matter.

Banks are advising Abengoa to raise about 800 million euros ($892 million) instead of the 650 million euros announced Aug. 3, said the people, who asked not to be identified because the deliberations are private. No decision has been made, they said.

Investors have been betting against the company since it announced the planned stock offering. Credit-default swaps insuring Abengoa’s debt signal a 88 percent probability of default within five years, up from 65 percent in January.

A larger capital increase “shouldn’t be seen as negative for the company, as long as the goal is to cut debt,” Nuria Alvarez, an analyst at Renta 4 Banco SA in Madrid, said by phone.

Other alternatives being discussed include finding an anchor investor from Europe or the Middle East to underpin the share sale, the people said.

No bank had advised to change the size of the offering, a company representative said in an e-mailed statement.

A bigger capital increase would require the controlling shareholder, Inversion Corporativa, to put in more cash if it wanted to avoid diluting its stake. Inversion Corporativa is owned by some 300 people, among them the Benjumea family. Felipe Benjumea is chairman of both Abengoa and Inversion Corporativa.

Asset Sales

Seville-based Abengoa also is seeking to dispose of 500 million euros of assets.

The company said last month that corporate free cash-flow for 2015 will be as much as 800 million euros lower than previously forecast. It also cut its 2015 guidance for revenue and earnings before interest, tax, depreciation and amortization as well as for net corporate leverage.

The company has consolidated net debt that exceeds 6.5 billion euros.

Abengoa’s Class B shares, which are more liquid than the Class A, rose 3.7 percent to 98.1 cents at 2:55 p.m. in Madrid. The Class Bs are down 46 percent this year, giving the company a market value of 981 million euros.

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