Abengoa Wins Reprieve in Debt Talks to Avert Insolvency

  • Gains support of 75.04% of lenders for standstill agreement
  • Abengoa aims for standstill conditions to apply to all lenders

Abengoa SA won support from creditors to allow more time to approve a 9.4 billion-euro ($10.5 billion) debt restructuring and avoid insolvency.

More than 75 percent of the company’s lenders agreed to continue talks for as much as seven months, Seville-based Abengoa said in a regulatory filing Monday. The support from creditors is higher than the 60 percent required to extend the acceptance period and puts the engineering-services company on track to approve its final restructuring plan, Abengoa said in a separate e-mailed statement.

Terms of a restructuring were agreed with its main bank creditors and bondholders earlier this month, which would leave existing shareholders including the founding Benjumea family with 5 percent of the firm.

Abengoa had until Monday to reach an agreement or start insolvency proceedings after seeking preliminary creditor protection in November. The support from creditors, who agreed not to demand repayment for the extended period, means Abengoa may avoid becoming Spain’s largest corporate failure.

Abengoa’s B shares have jumped 28 percent in Madrid this year through March 24, the last day they traded before Spanish holidays. They are still down 73 percent since Nov. 24, the day before the company said it was seeking preliminary creditor protection.

“This key step in the restructuring process of Abengoa will permit the company to complete the financial viability plan that has already been accepted by lenders in order to stabilize business,” the company said. “Abengoa is working hard to meet the objectives set out in the re-sizing of the company.”

International Investors

The proposal accepted last week would see lenders get a 55 percent stake in return for giving the company as much as 1.8 billion euros in loans. The company has lined up international investors including Elliott Management Corp., KKR & Co. LP and Oak Hill Advisors LP to anchor the new money facility, Abengoa said on March 16.

Other creditors will get 35 percent of the company in a debt-for-equity swap. Abengoa will also seek investors to provide 800 million euros in new guarantees in return for a 5 percent stake.

A unit of the company signed a credit facility with another group of investors last week to satisfy Abengoa’s general needs.

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