Abengoa Woes Drive Brazil Government to Hunt for Investors

  • Threat of Abengoa insolvency spurs at least seven meetings
  • Abengoa is biggest private company working on Brazil's grid

The Brazilian government met with at least seven power companies since Jan. 5 to discuss the situation at Abengoa SA, the Spanish company teetering on the verge of insolvency, which operates transmission lines in the South American nation.

Agnes Aragao da Costa, a director at the Brazilian energy ministry, met on Jan. 11 with a representative of Elecnor SA to discuss “potential interest in Abengoa projects," according to agendas published on the ministry’s website. That same day, Executive Secretary Luiz Barata, the second-highest ranked ministry official, met with Elecnor and Carlos Facondini, head of transmission at Grupo Engevix, according to his schedule. The document didn’t disclose reasons for Barata’s meetings.

Abengoa is the largest non-state owned transmission line operator in Brazil, with operations running from the Amazons to Sao Paulo, according to its website. It has 10 lines in operation and nine under development, according to the website.

Government officials have said that they expect a “market solution" for Abengoa’s woes. Brazil’s state-owned development bank, Bndes, is one of Abengoa’s top creditors. The government is talking to Abengoa and other companies to ensure that both Abengoa’s existing power plants and those under development are safeguarded as the Seville-based company works with its creditors to avoid falling into bankruptcy. The company is seeking to sell about 1.5 billion euros of assets to raise funds and satisfy the creditors.

Over the past 10 days, Aragao da Costa also met with State Grid Corp. of China, Enel Green Power SpA, Cymimasa, Taesa SA, Brookfield and Siemens AG to discuss Abengoa’s projects, according to the ministry agenda. Officials at both the ministry and Abengoa declined to comment.

Enel’s meeting was a routine, and the company is not “interested in acquiring these assets," the utility said in an e-mailed response to questions. Brookfield declined to respond when contacted by email, while officials for Elecnor, Taesa, Engevix and Cymimasa couldn’t immediately comment. The remaining companies didn’t immediately respond to e-mailed requests for comments.

Abengoa is currently working with advisers and banks on a new business plan, with which it will aim to cut  revenue by about 30 percent from the 7.15 billion euros it had reached in 2014, a person familiar with the plan, who asked not to be named because the information isn’t public, said Thursday.

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