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Saturday, June 25, 2022

Abengoa exhausts the rescue deadlines and prolongs his ordeal

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The 2,000 workers of Abengoa in Seville gathered this Wednesday at the gates of their various headquarters in the province to demand a solution that would guarantee the company’s profitability and, above all, the 5,000 jobs throughout Spain. At the same time, in Madrid, four of his colleagues – representatives of the subsidiaries’ works councils and two other members of the UGT – woke up inside the State Industrial Participation Company (SEPI), where they had spent the night at He protests for his lack of a clear statement on the rescue of the company, which is currently dependent on the public body approving a €249 million aid which it rejected on Tuesday. “This is a symbolic measure with which we want to push for a final solution,” explains Laura Rodríguez, spokeswoman for the workers.

Abengoa is used to leaning over the edge and finding someone to save him before he falls over the edge. So far, despite the struggles between shareholders and creditors, it has always managed to stay afloat. However, the €6,000m Sevillian conglomerate faces a race against time this week to convince the government that its umpteenth bailout is feasible. To do this, he must resolve the legal doubts sent to him by SEPI last night in order to authorize the aid that will save the group’s six subsidiaries.

Time is running out. The company hoped SEPI, depending on the Treasury Department, would give the green light for the aid on Wednesday, a condition indispensable requirement that the California fund Terramar injected 200 million euros into Abenewco 1, the subsidiary that concentrates most of the company’s assets, thus guaranteeing its rescue. This offer expires on June 30, a period that SEPI also has to support, as that is when the Freibar in Brussels for state aid closes. The main creditors of this company had also extended the moratorium on debt settlement until this Friday.

However, SEPI limited itself to providing Abengoa with the two reports it had commissioned on the company’s profitability. If Grant Thornton’s document doubts about the business model and the financial viability of the company, the PKF consultant warned of the contract lawsuits pending at Abenewco 1. If not won, those lawsuits will cost about $700 million, which could result in $249 million in loan repayment, the firm said. SEPI has given Abengoa five days to make allegations, a margin the company will not make use of to avoid missing remaining deadlines it is yet to face. Before Thursday, close sources indicate, the company’s management will deliver its report.

“We were surprised by the request because the situation of the lawsuits was known, they could have asked at any time,” the same sources say. However, the response sent to SEPI indicates that most of these pending lawsuits are against Abenewco 1 and that in any case the public aid would be received by the six group companies: Energía, Solar, Abener, Abengoa Operation and Maintenance and Inabensa. “In addition, the company has a positive track record because they usually handle these matters well and have prior agreements,” they point out. “If, as it appears, the problem is just technical and doesn’t affect the business model, then there shouldn’t be a problem.”

If the final decision is made, SEPI should approve the bailout this Friday the 24th for approval in the Council of Ministers on June 28th. But before that, on June 24, the latest extension of the moratorium on the lender funds of this subsidiary to avoid filing for bankruptcy ends. “There is an alignment between the investor and financial creditors and if SEPI does not approve the bailout, the scenario would become very complicated from July 1,” the Abengoa sources explain.

July 1st is another date marked in red on the company calendar. Not only does this day end the government-approved bankruptcy moratorium due to the pandemic in March 2020, for which insolvent companies were exempted from filing for bankruptcy, but it is also the last day that the company’s parent company, Abengoa SA, filed for bankruptcy has been immersed in creditor competition since February 2020 to present its agreement and avoid liquidation.

A ‘Plan B’ to specify

This creditor agreement is one of the tricks used by the parent company’s president, Clemente Fernández, as the basis for an alleged claim Plan B to save the company if the government finally does not authorize the rescue of the 249 million. “This fund only bails out American bondholders, repays the debt, but boosts the company’s business,” explains Fernández. The Chairman of Abengoa, SA, who has always opposed Terramar’s investment activity, advocates that the government, which is already Abengoa’s largest private shareholder with 3.1%, increase its stake and take over the company. “He has already done it with Indra, of whom he has 30%,” he points out.

Fernández proposes that the company enter a pre-bankruptcy situation from July 1, a restructuring of the company, the creation of an intermediate structure that protects the subsidiaries, and that the agreed parent company assume part of the debt and make new arrangements with the rest of the Creditor. “There is a solution. Abengoa bills 1,000 million a year, paid the payroll even though there were no guarantees or funding,” explains Fernández, who insists there are better solutions than relying on an American fund. “If they save us, the capital should be 100% Spanish,” he adds.

“The paper supports everything, but in order for the bankruptcy agreement to go through, everything related to the subsidiaries must be viable and that situation does not exist at this time,” point out sources close to EY, the firm in charge of the bankruptcy administration the skepticism towards Fernández’s proposal. “If there was a plan B, we still don’t know about it, and what is certain is an agreement between the investor and creditors,” these sources insist.

This agreement would support the third bailout, which mainly depends on SEPI receiving the 249 million. Terramar Capital’s bid is based on this uncertain pillar, which would inject 140 million to pay creditors for the overdue debts and add another 60 million in capital to acquire 70% of Abenewco 1. The financial companies and the Cesce (Spanish Export Credit Insurance Company) They would provide 300 million in guarantees, while creditors and suppliers have agreed to forgive or capitalize nearly 3,000 million.

Workers are wary of Fernández’s plans, with whom, unlike Juan Pablo López-Bravo, President of Abenewco 1, there is little dialogue. “We are tired of hearing options that only make us lose our jobs, this man it plays with the livelihood of many families,” Rodríguez, the workers’ spokesman, said this morning.

While she and her five colleagues are still in the SEPI building in Seville, on the fourth floor of the Palmas Altas headquarters in Seville, 500 workers are waiting for Fernández to visit them to explain his work Plan Bthat they learned about through the media. The ordeal that Abengoa has endured in recent years has also become an ordeal of uncertainty for its greatest asset, its employees.

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Source elpais.com

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