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18 March 2016 By Fiona Maharg-Bravo

The debt-laden engineering and renewable energy firm has put together a restructuring plan that will provide it with fresh cash and swap existing debt into equity. Not all creditors are on board yet. But it could be enough to prevent Spain’s biggest ever bankruptcy.

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Abengoa on March 16 said it had agreed a draft rescue plan that would see the company avoid a full-blown insolvency. The Spanish engineering group said it had backing from 40 percent of creditors, but expected to have the support of creditors representing 60 percent of its debt by a legal deadline on March 28. It needs 60 percent backing from creditors in order to obtain a standstill agreement, giving it breathing space. Abengoa needs to achieve a 75 percent threshold to implement the restructuring plan.

As part of the agreement, Abengoa would swap around 70 percent of its existing debt for equity equivalent to 35 percent of the company. Creditors who advanced an additional 800 million euros in financial guarantees to develop projects would get 5 percent of the restructured company.

Existing shareholders, including the majority-shareholding Benjumea family, would see their shareholding diluted to 5 percent. The stake could rise to 10 percent if the new financing is repaid. New creditors have agreed to provide Abengoa with up to 1.8 billion euros in fresh money to help fund new and existing projects in return for 55 percent of the company. New debt investors include Elliott Management, Oak Hill Advisors and KKR.

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