Spain's Abengoa seeks 7-month debt standstill to restructure

MADRID, March 18 (Reuters) - Spanish energy and engineering firm Abengoa SA said late on Thursday it will ask its creditors for seven months’ breathing space through a debt standstill to execute a restructuring plan if it manages to avoid bankruptcy.

Standstills are commonly used in restructurings to give companies time to manoeuvre without pressure from lenders who might want to ask for pre-payments.

Seville-based Abengoa, struggling to cope with a 9.4 billion euros ($10.62 billion) corporate debt pile, entered pre-insolvency talks with creditors last November after a potential investor backed away, affording it some protection from creditors. But the pre-insolvency period expires on March 28.

The company, which has some 24,000 employees worldwide, aims to get the standstill in place by then, it said in a statement, for which it needs the backing of creditors representing 60 percent of its financial debt.

Separately, it also needs a green light for a full range of planned restructuring measures - including a debt-for-equity swap and writedowns on its borrowings - from lenders that are owed 75 percent of its debt by March 28. Without that, Abengoa could still end up becoming Spain’s biggest-ever bankruptcy.

Earlier this week, Abengoa said its restructuring package had the support of banks and bondholders representing 40 percent of its financial debt at the last count.

If the debt standstill is secured, it could yet try to seek more time from a Seville court to reach the 75 percent creditor acceptance threshold for the restructuring plan, leaving its fate in the hands of the judge.

$1 = 0.8848 euros Reporting by Angus Berwick and Tomás Cobos; Editing by Sarah White and Kenneth Maxwell