Abengoa’s Plea For $1.85 Billion Attracts Investors A Little, Analysts Doubt Over Cash Requisites
By Staff Writer
Feb 18, 2016 07:14 AM EST
Regions
A picture taken on November 27, 2015 shows solar power towers at Abengoa solar plant in Sanlucar La Mayor. Shares in Spain's Abengoa went into free fall November 26, 2015 after it emerged the renewable energy giant is close to bankruptcy following years of unsustainable expansion. Just days before the start of the global COP21 climate conference in Paris, the company announced that a deal with Spanish engineering group Gestamp -- which had been due to inject much-needed cash into the firm -- had fallen through, leaving the renewables giant with a mountain of debt and the threat of becoming Spain's biggest-ever corporate failure. (Photo : CRISTINA QUICLER/AFP/Getty Images)
Abengoa SA requires €1.66 billion ($1.85 billion) during the next two years to survive as a company with less financial risk. The Spanish renewable energy developer may become the country's biggest ever bankrupt for its failure in debt restructuring with creditor banks and bondholders by March 28.
The clean energy producer requires fresh cash of €826 million in 2016 and €304 million in 2017. Furthermore, an additional €525 million is required this year for technical guarantees to initiate receiving new orders quickly, reports Bloomberg citing a regulatory filing to Comisión Nacional del Mercado de Valores (CNMV) by the company on late Tuesday.
The Spanish power developer requires these funds after raising €473 million from selling assets during the next two years. The company is trying to escape from collapse through restructuring debts and raising cash. Abengoa claims that the operative business worth seven times than its liquidation value, reports Financial Times.
Negotiating talks have witnessed little advancement since Abengoa delayed the presentation of a new viability plan to re-focus on core engineering and construction business. However, lenders have expressed doubts over the group's liquidity requisites, reports Reuters. The outline of the business plan offers a little comfort to the investors in respect of providing fresh capital. Avoiding insolvency involving numerous creditors and suppliers in a complex situation, is a challenging job, opines Felix Fischer, a credit analyst at Singapore based independent researcher, Lucror Analytics. The plan has been drafted by consultancy firm Alvarez & Marsal without due diligence on Abengoa's financial condition. Rather it has focused on the group level without considering its multiple legal entities. Meanwhile a Spanish judge has ordered Felipe Benjumea, former chairman and main shareholder of Albengoa, to surrender his passport. He has also been instructed to report twice a month since the court doubts, he may attempt to flee. Spain's High Court has been investigating allegations of mismanagement against Benjumea. The debt burdened company's woes have started in 2013 with the Spanish energy reform. The reform has slashed subsidies for renewable energy producers. The company is reported to embattle with a gross debt of €8.9 billion as of September. Abengoa shares have gained 7% value with a range of €0.04 to €0.65 on Wednesday while early trading in Madrid.
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