Abengoa Expects at Least 75% of Creditors to Approve Plan

MADRID—Renewable-energy and engineering company Abengoa SA said Tuesday it expects at least 75% of creditors to approve its restructuring plan by Sept. 30, a key hurdle for the company as it aims to stave off what would be Spain's largest-ever corporate bankruptcy.

Abengoa said in a regulatory filing that it "expects to implement the final restructuring agreement" by Sept. 30.

Still, the Seville, Spain-based company cautioned that it doesn't have definitive figures yet on what percentage of creditors will accept the deal. Abengoa said it continues "working towards gaining sufficient creditor support." Spanish bankruptcy law requires three-quarters of creditors to ratify a restructuring plan.

Executives said that once the restructuring plan is put in place, they expect Abengoa to generate positive cash flow as of the end of 2017. Asset sales will also help to streamline the company, they added.

The details that Abengoa provided on Tuesday follow the company's announcement last week that a group of investors including Centerbridge Partners LP, Elliott Management Corp. and Oaktree Capital Management LP had agreed to inject â,¬1.17 billion ($1.31 billion) into the debt-laden company. In exchange, the investors will receive up to a 50% stake in Abengoa's equity.

Abengoa also said it would also receive €307 million in financial guarantees

The renewable-energy company has been negotiating with creditors since November to avoid becoming Spain's largest bankruptcy. Abengoa has been among the top builders of power lines transporting energy across Latin America and a top engineering and construction business, manufacturing massive renewable-energy power plants around the world.

But the company's expansion during Spain's boom years was fueled by too much debt and misguided exuberance about future profitability.The company has amassed around €9 billion in debt. On Tuesday, Abengoa had a market value of €246 million.

Last week, Abengoa offered existing creditors two options to avert the company's insolvency. One option: Creditors accept a 97% loss on their financial debt, and the remaining 3% of outstanding debt would receive no annual interest payments. Alternatively, Abengoa said existing creditors could swap 70% of their debt holdings into equity and receive a 40% stake in the restructured company in return.

Investors and creditor banks, such as Spanish lenders Banco Santander SA and Banco Popular Españ ol SA, are set to own between 90% and 95% of Abengoa after the restructuring, depending on whether Abengoa meets certain targets.

"While we believe the deal has been structured to encourage creditors to participate in the debt-for-equity swap, the relative economics and attractiveness depend heavily on each creditor's assessment of the enterprise value of Abengoa," analysts with Moody's Investors Service said in an Aug. 12 report.

For years, Abengoa built power transmission lines, biofuel plants and desalination infrastructure for clients. During Spain's boom years, though, the company began to construct such projects for itself, fueled by cheaper bank loans and a desire to expand. The company took on piles of debt in anticipation of a growth rate that never materialized.

In Madrid trading Tuesday, Abengoa's shares rose 4.6% to 66 euro cents.

Write to Jeannette Neumann at [e-mail]

(END) Dow Jones Newswires

August 16, 2016 14:55 ET (18:55 GMT)

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