The Abengoa soap opera has been going on since 2015. Now with the operating subsidiary, Abenewco 1, at the center of the rescue, after the parent company, Abengoa SA, entered bankruptcy in February. The insolvency administrator, EY, negotiates in parallel the rescue of the business, that the parent company exits the bankruptcy and that it can be listed again –for which it needs to retain a stake in Abenewco 1–, and that the creditors provide the group with new guarantees before the the eventual rescue is signed, in which EPI is decisive.
The great mission is to save the company that brings together the business, with the Terramar offer, which offers 200 million euros, 60 of them in the form of capital and the remaining 140 million as loans. But, at the same time, the bankruptcy administrator of Abengoa SA seeks to reach an agreement with the creditors of the parent company to revoke the bankruptcy and even that it can be listed again. For this it is necessary that part of the money from the rescue of the subsidiary goes up to the parent company and also that a part of Abenewco 1 remains.
The goal, initially, was for the parent company in competition to achieve an injection of Liquidity of about 25 million euros, as published by CincoDías on July 3. But that amount may grow at the cost of the stake in Abenewco 1. The creditors will, predictably, prefer to reduce their debts rather than have a stake in the operating subsidiary.
Even so, the objective is for Abengoa to maintain a position of around 3% in Abenewco 1, so that it can be listed again, after the CNMV suspended it from trading in July last year. The model would be similar to that of Pescanova, whose only asset is a 0.34% stake in Nueva Pescanova, the operating company. Abengoa SA’s market value will depend on the percentage it retains; In the original August 2020 plan, which was never executed, it kept 2.7% of Abenewco 1.
Grant Thornton and PKF, judges whether the group can access the SEPI
Eligibility. Abengoa requested the intervention of SEPI through the Strategic Companies Solvency Fund for an amount of 249 million last March. But this rescue vehicle, dependent on the Ministry of Finance, must check that the company in question meets the conditions to access it. One of the requirements is that the company was not in crisis before December 2019. And, although Abengoa had already signed two bailouts, one in 2017 and the other precisely in 2019, the financial sources consulted indicate that it will meet the requirements to access the helps. In any case, the consultants Grant Thornton and PKF Attest are the ones that are preparing the mandatory report to determine if Abengoa is eligible for these grants.
Strategic. That Abengoa is a strategic company for the productive fabric is unquestionable. It has a staff of more than 12,000 people, 2,000 in Spain.
Hard Felguera. The precedent of the Asturian engineering company, to which the SEPI has granted a rescue of 120 million euros, is an argument in favor of the rescue of Abengoa.
The AbengoaShares shareholders’ union, with more than 21% of the capital, opposed this plan against all odds and continues to affirm that an eventual rescue by Terramar will be a failure. Sources close to the group indicate that it is trying to put together an alternative rescue that gives greater weight to small shareholders. The problem is that the bankruptcy administrator has set a limit for the presentation of offers: the end of this September.
Abengoa SA’s liabilities at the end of 2019 amounted to 1,007 million, of which 354 were debts with group companies. The mission of liquidity is to amortize part of this liability and impose deductions for the rest. Among the proposals, attempts and linked to the rescue of Abenewco 1, the highest percentage of write-off reaches 95%, with the conversion of that amount into a bond that is obligatorily convertible in four years.
The insolvency administrator has also found other levers to raise money for Abengoa SA that would add to the liquidity that would come from the eventual rescue: “Income from income from real estate assets, from financial dividends, divestments in artistic and real estate assets and returns of assets” , says Abengoa in a document sent to the CNMV.
The group asks for 40 million in guarantees now to stay alive
The engineering group has been walking a tightrope since 2015, but the problems of the absence of a rescue since its need was announced in May of last year, have eroded its cash and its contracting capacity. Thus, the bankruptcy administrator requests that, before any rescue, the means be put in place so that the company can continue operating, as published by CincoDías on September 1. And the most pressing need to not lose business are guarantees. The requests to the creditors amount to 40 million euros in these guarantees, according to the financial sources consulted. Among the creditors are Spanish banks, such as Santander and CaixaBank, and there is also Crédit Agricole. It is with them that the granting of these guarantees is negotiated, according to the sources consulted. The problem is that in the end there is no rescue. An intermediate point is that they wait at least for an opinion to verify that Abengoa can access state aid. This would be a turning point for salvage. In his interim report on the situation of the group, the insolvency administrator also warns of “treasury tensions that impose the need to immediately obtain financing and guarantee instruments to ensure the continuity of operations.” The need for liquidity, despite the difficulties of recent times, is not as pressing, however, as obtaining new guarantees to avoid the loss of business in the short term. The calendar that Terramar is considering contemplates that SEPI will give its blessing to the rescue in November. .