Abengoa to Meet With Banks in Next Stage of Talks on Funding

  • Abengoa comments on meeting, debt analysis in statement
  • Abengoa says KPMG to present report to banks this week

Abengoa SA is scheduled to meet with its main creditor banks this week as it seeks to line up the funds it may need to avoid insolvency.

The Spanish producer of renewable energy is working on creating a “map” of its debt situation, as previously agreed with banks and auditing firm KPMG, Abengoa said Monday in an e-mailed statement. A working group representing the Seville-based company, its main creditor banks and KPMG will meet on Wednesday and the audit firm will pass its report to the lenders in the early part of this week, Abengoa said.

Talks with banks started after Abengoa, which has 8.9 billion euros ($9.6 billion) of gross debt, filed for preliminary creditor protection on Nov. 25. While the company has as long as four months to reach an agreement with creditors under Spanish bankruptcy law, failure to obtain funding could force it into insolvency proceedings before then.

“The situation is fluid, with the company urgently needing to raise short-term funds, which banks are apparently unwilling to provide,” Felix Fischer, a credit analyst at independent research provider Lucror Analytics in Singapore, wrote in a note to clients on Monday before Abengoa’s statement. “Recovery prospects are slim and the risk of insolvency remains high.”

Emergency Credit

Abengoa asked banks last week for as much as 150 million euros to pay employees’ wages and suppliers through the end of the year, according to three people familiar with the matter. The company also requested 100 million euros a month from January to keep operating, said the people. The group of lenders meeting with Abengoa includes Banco Santander SA and HSBC Holdings Plc.

Banks refused emergency credit to Abengoa, Spanish news website El Confidencial reported Monday. A company spokeswoman declined to comment on the report.

Abengoa reported negative corporate free cash flow of 597 million euros in the first nine months of the year and said it had 346 million euros of cash immediately available in September, down from 831 million euros in June.

Its 550 million euros of bonds maturing in February 2018 fell to be quoted at less than 15 cents on the euro from 48 cents a month ago, according to data compiled by Bloomberg.

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