Abengoa's Main Shareholder Said Willing to Cut Stake to 5%

  • New offer boosts optimism energy firm will avoid bankruptcy
  • Company has until March 28 to reach deal with creditors

Abengoa SA’s majority shareholder sweetened its offer to creditors in talks aimed at avoiding bankruptcy, agreeing to further reduce its stake in the Spanish renewable-energy developer, according to three people familiar with the matter.

Inversion Corporativa IC SA, controlled by the family of Abengoa’s founder Javier Benjumea, told creditors it would cut its holding to 5 percent of the restructured company from 51 percent currently, said the people, asking not to be identified because the talks are private. It previously sought a 12.5 percent stake, with the option to increase that to 30 percent if the company’s viability plan succeeds, the people said.

Under Spanish law, the Seville-based company has until March 28 to reach a deal with creditors to restructure its 9.4 billion euros ($10.3 billion) of gross borrowings or file for insolvency. More than 90 percent of cases that file for insolvency in Spain are liquidated, according to rating company Axesor.

“It looks like the main shareholder tried to keep a meaningful stake in the company but that was unrealistic,” said Felix Fischer, a credit analyst at independent research provider Lucror Analytics in Singapore. “Debt holders are senior to equity holders. In theory the shareholder should be completely wiped out.”

Abengoa’s Class B shares jumped 16 percent to 17.2 euro cents at 2:51 p.m. in Madrid, the highest in more than three weeks, according to data compiled by Bloomberg. The stock has fallen 94 percent over the past year.

Abengoa would become the nation’s biggest corporate failure and its value would be seven times lower in liquidation than if it were restructured, the company’s viability plan shows. A press officer for Abengoa declined to comment on the restructuring talks.

This week, Abengoa replaced its chairman and ended a contract with Felipe Benjumea, the son of its founder. The changes were designed to make Abengoa more independent from Inversion Corporativa, the latest effort in a months-long reorganization that started in November, when it requested preliminary bankruptcy protection.

A Spanish National Court judge confiscated Felipe Benjumea’s passport last month and ordered him to appear in court twice a month as part of an investigation into his role at the company following complaints by investors.

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