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Tuesday, July 5, 2022

SEPI meets with Abengoa at the limit to avoid bankruptcy

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After years of soap opera, Abengoa is nearing its end. Some of the company’s employees will meet with SEPI and the Ministry of Industry today to discuss how to protect the Andalusian infrastructure group on which 5,000 jobs depend. In the coming days, the government will provide the information on the rescue requested by the company in the amount of 249 million, on which the refinancing of the group and the entry of a new owner, the California fund Terramar, depend. All of this on the same day that the last bull of creditors who can request competition for the entire once-great engineering conglomerate expires.

Time is short for Abengoa. In 10 days is the deadline for SEPI to have the company bailout fund to alleviate the consequences of Covid-19, to which the Andalusian company has requested 249 million. Public support – as well as that of financial institutions with the granting of 300 million in guarantees with public support and the refinancing of the debt by creditors – is a sine qua non for California fund Terramar to inject the 200 million it has promised the company to get going again. This fund, which is carrying out its first operation in Spain, has pledged a loan of 140 million and another 60 million for a capital increase, which will give it 70% of the company.

Some sources consulted agree that SEPI is preparing to reject this bailout. He will argue that he does not have the approval of Grant Thorton, his adviser, to carry out this operation and given the European criteria for using the bailout fund the company is unlikely to receive any public money.

SEPI may propose solutions to Abengoa. Some sources even indicate that the public body is putting an alternative solution on the table, possibly involving the integration of the Andalusian company into its perimeter. An alternative in this context could be direct acquisition Equity capital, with or without a partner. Or explore other options that require participation in a future creditors’ contest. These could both be imperatives for the productive units of society. Or refer to Article 373 of the Securities Companies Act. It allows the government to intervene before liquidating a company deemed critical to the economy or social interest if requested by one-fifth of its shareholders or employees.

At the moment, the company is touching its fingertips on bankruptcy that may lead the company to liquidation. The parent company, Abengoa SA, has been in insolvency proceedings since February 2021. This month of July, the judge ruled to move on to the settlement phase, giving the companies and creditors until July 1 to reach a settlement that will save them. Everything indicates that the judge-appointed liquidator will file a complaint against EY against the settlement, which would see the company go into liquidation in about two months.

But attempts by creditors and the company in recent months have not focused on bailing out the parent company, but on its subsidiary Abenewco, which pools all of its operating assets. This has had a bull from its creditors for more than two months to avoid bankruptcy and expires today. Since this agreement has not been extended again, creditors are expected to file for bankruptcy proceedings starting this morning. A competition that will be frozen until the end of the bankruptcy moratorium on June 30th.

SEPI has only two options left to resolve the situation. The public body’s advisory board will meet today and Friday to release the latest bailouts. These must be approved by the Council of Ministers on June 28th. Or officially released before that date. In Abengoa, today’s workers’ summit with SEPI and the Ministry of Industry will be accompanied by a meeting at the gates of the organization, which depends on the Andalusian Minister of Finance, María Jesús Montero.

Cesce plays 150 million guarantees

  • Public coffers. Abengoa’s bankruptcy will be the largest by a company in Spain. And it will also be a problem for public coffers. The company has 150 million guarantees backed by Cesce. If the company goes bankrupt, this would mean that the public body would have to support these guarantees. The company expects to pay around €100 million in taxes and levies due to public administrations at the time of the restructuring.
  • dial key. The meeting of the SEPI and Abengoa trade unions arrives in the full electoral hangover of the Andalusian elections, in which the PP has swept to gain an absolute majority. The PSOE accused the Moreno Bonilla Board of torpedoing the rescue of Abengoa because it refused to contribute 50 million to the operation. This led to the parent company, controlled by the group of recalcitrant shareholders, entering bankruptcy proceedings in February last year.

Source elpais.com

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