Spanish energy company Abengoa SA (NASDAQ:ABGB) has obtained the support of about 75% of its lenders to reorganize its large debt and ask for additional time from the judiciary for negotiations targeted at preventing bankruptcy as per a document. The organization having a EUR9.4 billion ($10.5 billion) debt amount is in pre-solvency talks and would be Spain’s biggest ever bankruptcy if it doesn’t reach a compromise with lenders as well as bondholders.
Abengoa has a deadline of March 28 to get the support of minimum 60% of them and persuade a Seville court to grant the company an extra seven months to obtain the 75% creditor acceptance plan for a debt reorganizing plan.
In an email sent to senior staff, one of Abengoa’s most senior executives informed that the company has got the support of 75% of financial creditors when it required 60% to obtain a standstill deal. He added that tomorrow at 0900(0700 GMT) the agreement will be given to the judiciary in Seville.
People familiar with the negotiations had informed Reuters earlier in this week that over 60% of creditors were expected to support a debt reorganizing agreement reached by Abengoa and its major banks and bondholders on March 9. Abengoa would also receive EUR137 million to pay salaries as well as providers. As per the deal, certain lenders would lend up to EUR1.8 billion to the organization over a five year period, granting them the right to 55% of the reorganized company.
At the same time, about 70% of existing debt would be exchanged for equity, granting those other creditors the right to 35% of the organization. Creditors who lent an extra EUR800 million in monetary guarantees to build projects would be entitled to 5% of the reorganized company.
Recently Abengoa was sidelined in the Vista Ridge water project. As a giant in clean energy technologies, establishing large-scale projects globally Spain based Abengoa should have been associated with reliability and expertise. Vista Ridge is a big project by all measures. Abengoa was an organization large enough to execute the project. The former was supposed to strengthen the water project. However it became an entity potentially disastrous to the water project.