On Tuesday 9, Abengoa submitted to the Financial Creditors’ Committee, composed by Santander, CaixaBank, Bankia, Popular, Sabadell, HSBC and Credit Agricole and to the bond holders’ representative (the Committee”) a refinancing proposal (the “Proposal”) to avoid Abengoa’s insolvency filing (deadline on March 27). This Proposal has been made orally by Abengoa’s management, without submitting any written proposal to the Committee.
Such Proposal is addressed to the financi...
On Tuesday 9, Abengoa submitted to the Financial Creditors’ Committee, composed by Santander, CaixaBank, Bankia, Popular, Sabadell, HSBC and Credit Agricole and to the bond holders’ representative (the Committee”) a refinancing proposal (the “Proposal”) to avoid Abengoa’s insolvency filing (deadline on March 27). This Proposal has been made orally by Abengoa’s management, without submitting any written proposal to the Committee.
Such Proposal is addressed to the financial creditors (the “Financial Creditors”) defined by the Spanish Insolvency Law as any individual or legal entity having provided financing to the company, whether it is, or not, a financial institution.
The Proposal requests to the Financial Creditors to provide to Abengoa between Euro 650 and 700 million financing to implement the industrial plan (the “Plan” incorporated into the Proposal in order to permit the company to continue its activity. Such amount is lower than the initially proposed of Euro 800 million to 1 billion. The proposal also includes a debt restructuring of 6 billion, equivalent approximately to the 60% of the actual financial debt by means of a write off and a debt to equity swap for an undetermined amount of debt. The banks seem to be very reluctant to the debt write of and only consider as acceptable the debt to equity swap for the unsustainable debt.
The proposal also includes a disinvestment plan for an estimated amount of Euro 1.5 billion of non-strategic assets, among which is included the biotechnological division as well as the sale of several real-state assets like the historical headquarters in Sevilla.
Nevertheless, this disinvestment proposal faces serious risks in case of insolvency, as they could be submitted to claw back actions from the insolvency administrator and, thus, it seems only to be feasible either or when an agreement has been met with the Financial Creditors to avoid insolvency or after the insolvency has been filed. If no disinvestment is finally made, Abengoa will need to obtain a back-up credit line, liquidity lines and loans to invest in the several projects they pretend to carry on.
Moreover, the urgent liquidity of Euro 165 million the company needs from the bond holders, to let the running and make possible the payment of February and March salaries, will be discussed next Thursday 11.
If the Plan is finally rejected and/or the urgent liquidity from the bond holders is not reached, the company will be forced to file for insolvency.
If you need any further information about the Spanish pre-insolvency system, you can find it clicking here and also here. For further clarifications, please do not hesitate to contact us.
Agustín Bou
Head of the Restructuring and Insolvency Department
abou@jausaslegal.com