August 11, 2016 / 7:55 AM / 2 years ago

UPDATE 2-Spain's Abengoa secures provisional debt deal in bid to ward off bankruptcy

* Abengoa agrees restructuring outline with main creditors

* Deal would see banks, bondholders take control

* Unclear how many overall creditors have signed up

* Company to hold conference call on Aug. 16 (Writes through, updates shares, adds quote)

By Axel Bugge

MADRID, Aug 10 (Reuters) - Indebted renewable energy firm Abengoa said on Thursday it had reached a restructuring deal with its main creditors that will hand them control of the company, as it tries to avoid becoming Spain’s biggest ever bankruptcy.

Seville-based Abengoa - an engineering business which borrowed heavily over the past 10 years to fund an aggressive expansion into clean energy - has been negotiating since November with lenders to try and cut its debt of over 9 billion euros ($10 bln).

It has yet to draw a line completely under a tumultuous 12 months, heralded by unsuccessful attempts to carry out a rights issue last August that eventually led it into pre-insolvency talks.

Abengoa said in a statement on Thursday that negotiations with a group of investors and creditors, including banks, had led to “a deal on the terms and conditions for the restructuring of its financial debts and its recapitalisation.”

The agreement, however, needs to be ratified by 75 percent of creditors by the end of October in order to avoid bankruptcy, under Spanish law. The company did not specify if it had reached that threshold, adding that it would hold a telephone conference with investors on Aug. 16. A banking source familiar with the talks said the company hoped to reach that threshold by the first week of September.

A spokeswoman for the company declined to comment.

Once the restructuring is finalised, control of Abengoa will be transferred from its founding family, with about 90 percent of the ownership going to banks and bondholders.

Its new owners - a mix of banks such as Santander and funds specialised in distressed debt, like Elliott Management and KKR Credit - will also have to keep the company on a stable footing as it shrinks and refocuses on core businesses such as construction.

It has already been gradually shedding assets in recent months, including a fibre networks subsidiary which it sold to Sweden’s Ericsson for an undisclosed amount.

“It’s a positive step, and hopefully it means the business can continue,” CreditSights analyst Andrew Moulder said of the restructuring deal.

“The engineering and construction side of Abengoa is a reasonably good business to be in, and if the financing is done on a sustainable basis the main obstacle is getting everybody to sign up and getting the requisite approvals in time.”


Abengoa shares jumped 9.9 percent at the market open on news that a deal had been reached, but were down 4.5 percent by 1230 GMT as investors took profits after recent gains in anticipation of an agreement.

The deal will provide the company with much-needed cash, after its finances have been so stretched over recent months that it has failed to pay some wages on time.

It will now get a total of 1.17 billion euros in cash - including some already granted to tide it over in recent months - and a further 307 million euros in financial guarantees.

Abengoa said it had offered creditors two options under the restructuring deal. The company would convert 70 percent of outstanding debts into equity, and refinance the remaining debts over six years, in return for 40 percent ownership of the restructured company. The family would also relinquish another 50 percent in the company to new investors.

Alternatively, 97 percent of the company’s financial debt would be written off and the remaining 3 percent would mature in 10 years without interest payments.

Creditors hope to present the court with the finalised restructuring by the first week of September, the banking source familiar with the talks said, adding that Abengoa also had to call a shareholder meeting to ratify the deal.

The company plunged into a 340-million-euro loss in the first quarter. It has not yet published second quarter results, but can still do so by the end of September. ($1 = 0.8970 euros) (Additional reporting by Sarah White and Jose Elias Rodriguez; Editing by Susan Fenton)

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