Abengoa reconciles with its creditors to avoid bankruptcy – El Periodico de Mexico

Jeannette Neumann, The Wall Street

would have been the largest corporate bankruptcy in Spain

MADRID-The firm Spanish engineering and renewable energy Abengoa SA He said it had reached a restructuring agreement with its creditors to avoid what would have been the largest corporate bankruptcy Spain. After the announcement, shares of the company rose nearly 4%, but in the afternoon and recorded a fall of more than 2% in Madrid.

A group of investors, among which are Centerbridge Partners LP Elliott Management Corp. and Oaktree Capital Management LP, agreed to inject 1.170 billion euros (US $ 1,310 million) in the indebted company, Abengoa said in a document submitted to regulators on Thursday. Abengoa will also receive 307 million euros in financial guarantees, the statement said.

In exchange, investors and creditor banks, such as Banco Santander S.A. and Banco Popular Spanish S.A. , Will control between 90% and 95% of Abengoa, depending on whether the company complies or not with certain objectives.

The company did not say if 75% of the creditors had accepted the restructuring agreement, as required the Spanish bankruptcy law. Abengoa said it plans to hold a conference call with investors and analysts on August 16 at noon, New York time, to give more details.

The company based in Seville had been negotiating with creditors from November to avoid bankruptcy, which would have been the country’s largest bankruptcy. Abengoa had years of expansion fueled by debt during the heyday of Spain.

The company has been one of the main builders of power transmission lines in Latin America and a leading engineering firm that has raised enormous renewable energy power plants from Kansas to the UK.

last year, however, investors became concerned about the amount of cash that Abengoa had to manage their heavy debts. Although the debt burden of the company was nothing new for investors and analysts who had been monitoring the company for years, movements last year led some to conclude that Abengoa had less cash in their coffers than they thought.

Investors and analysts determined that the current financial difficulties of Abengoa to change strategy were due during the housing boom in Spain, which started gaining momentum around 2004. Spanish banks then relaxed requirements financing for businesses, which helped trigger an infectious entrepreneurial optimism that encouraged some Spanish companies to intensify their expansion abroad.

Since its creation, Abengoa has built for third electrical transmission lines, plants biofuels and infrastructure for water desalination, but during the boom years of Spain began to do for herself, fueled by cheaper bank loans and a desire for expansion.

the company took a huge debt foreseeing a growth rate that never materialized.

JMRS