Abengoa declares bankruptcy and makes it difficult for minority shareholders to enter

Abengoa declares bankruptcy and makes it difficult for minority shareholders to enter

We are facing the second largest contest in Spain, with a debt close to 6,000 million euros.

Abengoa headquarters in Seville

The Board of directors from Abengoa has decided this Monday to take advantage of the bankruptcy proceedings hours after the creditor bank canceled the process of restructuring your debt.

We are facing the second largest contest in Spain, with a debt close to 6,000 million euros (at the end of 2019 it stood at 5,989.7 million), only behind that of Martinsa Fadesa, which totaled more than 7,100 million euros. The company employs 14,000 workers, 2,500 in Spain.

“The decision has been made to request the declaration of voluntary insolvency of Abengoa, S.A. When the factual assumptions provided for in bankruptcy legislation concur and considering that this measure is the most appropriate to safeguard the interests of the Company and all creditors. The request has been presented today in the competent court of Seville”, the company has indicated.

“The Board of directorsbeing aware of the complex situation and of the increasingly greater difficulties in reaching a solution that satisfies all the interest groups whose positions have, until now, been in conflict, remains committed to seeking alternatives to avoid the inviability of the subsidiary companies that carry out the activity of the group and, thereby, preserve employment and try to minimize the loss of value, an objective for which all those who have an interest in the Company and its group are requested to provide maximum collaboration in order to try to avoid definitive damages” , they have indicated.

Despite this, the members of the current council have continued in their positions, waiting for the Justice to appoint a bankruptcy administrator to order payments, restructure the company and sell assets if necessary.

The decision has been taken to avoid the bankruptcy of the company that will face serious liquidity problems after confirming that the bailout negotiated since August cannot be carried out.

The company announced this Monday that it has not been able to obtain the 20 million euros that the Andalusian Government nor a new extension to continue trying to get them, the key to closing the refinancing agreed by the company with its creditors.

This has generated that the creditor banks annul the process of restructuring its debt and pushed the company into a critical situation, with a new bankruptcy and bankruptcy on the table.

Clement Fernandez

This decision has been taken a week before the Shareholders Meeting in which the ‘rebels’ or minority of Abengoa they had the necessary votes to change the Board of directors and assume the management of the company.

This group of shareholders led by Clement Fernandez He has indicated to this newspaper that they will continue with their project, although they recognize that it will not be easy in the new context.

The declaration of bankruptcy does not block the appointment of a new Board of directors, but the future CEO must submit to the decisions of the bankruptcy administrator, at least for the duration of the process.

Another problem that it will generate for a new management team is the access to company financing. A company in bankruptcy cannot apply for ICO credits, but it can do so to the rescue fund of the SEPI and other types of financing.

In any case, the rescue and refinancing plan that was paralyzed this Monday it had an important component of ICO credits, an aid that the minority shareholders intended to take up again once they had assumed the management of the company.

“The company informs that the financial creditors have not granted the consents requested by the Company to once again extend the term for the closing and execution of the restructuring agreement (the “Restructuring Agreement”)”, explained the company based in Andalusia this morning.

Talks

“From the aforementioned date and until last February 19, the period for closing the operation has been extended, as the necessary consents for this purpose have been obtained at each possible expiration, the Company having worked, at all times and in parallel, on the search for possible alternatives to the non-contribution of 20 million euros for the Board of Andalusia”.

“However, not having obtained a new consent for the extension of the term, the Restructuring Agreement has been automatically resolved so that the financing operation announced on the day can no longer be executed”.

On August 6, 2020, the company announced a pre-agreement that represented the third rescue of Abengoa since it entered pre-bankruptcy in 2015. The creditors and the Public Administrations promised to inject more than 500 million between guarantees and liquidity. The Andalusian Government committed 20 million, but finally did not inject capital.

Shareholders Meeting

During the last weeks, the Group has been negotiating with various gangs to obtain these 20 million, essential to close the rescue. Even after negotiating with five funds, Abengoa obtained a commitment from one of them to inject 35 million euros.

However, the ICO would be blocking the rescue because it prefers to wait to sign the rescue until the meeting promoted by several minority shareholders is held, scheduled for March 4. In this situation, Abengoa it did not obtain a new term to continue postponing the approval of the bailout already agreed with the creditor banks.

Minorities who have opposed the bailout want to expel the current president of Abengoa, Juan Pablo Lopez-Bravo, and the other director Margarida Smith with the aim of putting another rescue plan on the table. A plan that would be hindered by the declaration of bankruptcy.

Ellsworth Weber