(Corrects first paragraph to say it would be the biggest ever bankruptcy, not the first)
MADRID, March 16 (Reuters) - Struggling energy and engineering firm Abengoa will probably have to ask a court for more time to get lenders to back its debt restructuring, as its race to avoid becoming Spain’s biggest ever bankruptcy goes down to the wire.
The company said on Wednesday it expected to have the support of creditors representing 60 percent of its financial debt by a legal deadline on March 28.
However, under Spanish law it needs the green light from 75 percent of creditors for its plan to slash debt and get fresh cash to go through, meaning it will most likely have to ask the court overseeing its talks with lenders to extend the deadline.
It already has the backing of creditors owning 40 percent of its debt. A source said it was likely to ask the court for more time.
“(On March 27) the auditor will have to certify the plan has the backing from 60 percent of debtholders in order to ask the judge in Seville, on the 28th, for more time,” the source with knowledge of the negotiations said.
Abengoa, a Seville-based clean energy firm with operations that stretch from Brazil to the United States, has been in pre-insolvency negotiations with bondholders and banks for the past four months as it tries to get on a stable footing.
Investors had become increasingly spooked by Abengoa’s opaque structure and its massive debt pile, built up during a rapid expansion into solar energy plants and other projects.
Its lenders face writedowns in the restructuring but are now trying to mitigate the losses a full-blown insolvency could impose. The company has about 24,000 employees worldwide.
Abengoa’s corporate debt - excluding project financing and debts to suppliers - was 9.4 billion euros ($10.5 bln) at the end of 2015. It will fall to 4.9 billion euros after the restructuring, the company said on Wednesday.
It did not detail how much of an extension it needed to reach the 75 percent threshold with lenders.
“It’s the intention of our company to immediately continue the negotiations with the rest of the creditors to get an agreement before the end of the month,” Executive Chairman Antonio Fornieles told a conference call.
Abengoa also said it expected to receive between 135 million euros and 140 million euros in emergency cash as soon as this Wednesday from some of the investors participating in its restructuring.
The final deal involves more liquidity lines as well as a debt-for-equity swap with lenders who will end up owning most of the company’s shares, almost squeezing out the founding Benjumea family.
Its biggest bank lenders include Santander, Bankia and HSBC. Abengoa said funds such as Varde Partners, Elliott Management, KKR Credit and Oak Hill Advisors - which specialise in distressed debt investments - were among creditors that would provide it with fresh funding.
$1 = 0.9042 euros Additional reporting by Sarah White and Jesus Aguado; Editing by Angus Berwick and Susan Fenton
Our Standards: The Thomson Reuters Trust Principles.