Abengoa submits a refinancing plan (Part II)

On Thursday, February 24, Abengoa laid out to its financing creditors (banks, bond holders and insurance companies) a financing proposal which includes write offs, convertible credits, warranties and bullet debt, to obtain Euro 8 billion in return of the transmission to them of 95% of the company, all that to avoid the insolvency filing (deadline on March 27). Particularly, the plan proposes a write of 70% of corporate debt, currently near Euro 9.5 billion. Such amount ... On Thursday, February 24, Abengoa laid out to its financing creditors (banks, bond holders and insurance companies) a financing proposal which includes write offs, convertible credits, warranties and bullet debt, to obtain Euro 8 billion in return of the transmission to them of 95% of the company, all that to avoid the insolvency filing (deadline on March 27). Particularly, the plan proposes a write of 70% of corporate debt, currently near Euro 9.5 billion. Such amount of debt is currently distributed amongst bond holders (Euro 4 billion) and bank-insurance companies (Euro 5.5 billion). If such write of is accepted by those financing creditors, the company would give them up to 20% of Abengoa shares. For the rest of the 30% of corporate debt, the company requests to such creditors a refinancing with bullet credit structure for a 6 year time. This bullet structure means that the main part of the credit would be payable at the end of the refinancing contract and the interests on a monthly basis from the beginning. Moreover, if the creditors give to the company, by one side, new money (around Euro 1 billion) to face treasury and structural necessities, and by other side Euro 800-1 billion in warranties, Abengoa would offer them an additional 65% of the company shares. Such new credits would also have bullet structure. Finally, to give flexibility and obtain the acceptance by the creditors, Abengoa plans to give an extra 10% of the company shares to those of them, who having covered its part on the plan, would assume the rejected part of others, like a compensation. All that means that the 95% of the new Abengoa would be owned by creditors and only a 5% would be property of the former Benjumea family. By other side, the suppliers’ situation regarding the part of write of scheme is not currently clear (it is between 50 to 60%), nevertheless, they will have to collaborate in a lower proportion than the financing entities if the plan wants to be accepted. The situation is really critical for the company because the deadline in March is close and it is not foreseeable a unanimous agreement with the creditors, what means that it is necessary to validate the plan, the favorable vote of, at least, the 75% of such creditors. If that agreement is not finally achieved and no urgent financing enters in the company, it will be forced to submit before the court an insolvency declaration request, and predictably, the company will go to its liquidation.