The firm can play the biggest creditors’ contest in the history of Spain
The Abengoa group has informed the CNMV on Wednesday that it will immediately request the pre-contest of creditors , given the breach of the agreement it had reached with Gestamp , for which the Basque group had to sign an increase of 350 million euros in the company. The firm, with a financial debt of 6,300 million euros, and debts with suppliers of more than 2,000 million can thus lead the largest creditors’ contest in the history of Spain , surpassing the one presented by the real estate company Martinsa Fadesa in 2008, with a liability of more than 7,000 million euros.
Gestamp finally decided to break the pre-agreement that had subscribed to enter the capital of Andalusian engineering due to the refusal of financial institutions to extend their lines of credit, a decision they have cataloged as “definitive” . The CEO of Gestamp, Francisco Riberas, argues for the fact that it took “time” and “consensus” to develop a long-term plan, something that was not supported by the bank. “We have tried to be part of a solution to a very complex problem,” Riberas added in a statement made on Wednesday.
At first, Gestamp had announced that its subsidiary, Gonvarri , would subscribe an extension of the Sevillian engineering to control 28% of the capital, but conditioned its investment to obtain the support of the creditor bank, to which it requested credits for 1,300 million euros to attend to the group’s short-term maturities: a bond issue of 375 million matures before the end of the year. The bank, however, refused to assume such a high injection of new funds and has requested that the orderly liquidation of the group begin.
The CNMV has suspended the share price for much of the morning after receiving the relevant event, in which Abengoa states that “it will continue the negotiation process with its creditor entities in order to reach an agreement that guarantees the financial viability of the the same under Article 5 bis of the Bankruptcy Law, which is the intention of the company to request as soon as possible “.
Crash and exclusion of the Ibex 35
The shares of the company (Abengoa B) have plummeted by up to 70% after being re-quoted after 11 o’clock in the morning and the regulator has had many difficulties in matching the sale and purchase transactions. After one o’clock in the afternoon the fall softened to 40%, while towards the end of the session it climbed again and lost more than 50% of the value, specifically 53.85%. In addition, the technical advisory committee of the IBEX Indices, “taking into account the special circumstances that occur in Abengoa’s value”, has decided to exclude class “B” shares of the value -which are liquid- of the IBEX 35 from next Friday 27 .
A tower in the Solúcar solar plant, in Sanlúcar la Mayor, in Andalusia (Reuters)
Constant bad results
The engineering and energy company has seen its losses accelerate in recent months: until September it has lost 194 million euros, and the auditor itself, Deloitte , made public a note questioning the continuity of the company.
The failure of the entry of Gestamp has been accelerated by the poor results presented by Abengoa until September: the firm announced a historical loss of 194 million euros, and, what is more serious, a free cash flow of 597 million . In the first nine months of the year its turnover fell by 3.8% to 4,873 million euros, while its operating profit (ebit) stood at 529 million, after falling by 12.3%. Its financial expenses amounted to 540 million and were higher than the resources generated by the company.
This situation led the risk rating agency Moody’s to warn last week that the company had “insufficient availability of liquidity” and lowered its rating to junk bond. The company’s own auditor, Deloitte, questioned in the presentation of accounts the continuity of the company.
Abengoa is a multinational company with 24,748 employees worldwide, 6,689 of them in Spain, and the majority in Andalusia, where it has its headquarters. The firm specialized in generating electricity with solar installations, growing with a strong debt, but its business model collapsed in 2010 when the government decided to end renewable premiums to control the “tariff deficit”. The company raised the entry of investors who signed a capital increase of 650 million to refloat the company, but the withdrawal of Gestamp, which was to lead it, calls into question that can get the commitment of new investors.
Reactions to the contest
The president of the CNMV , Elvira Rodríguez, said Wednesday that she expects Abengoa to find “some kind of solution” that will allow her to move forward. “I like to think positive. We hope that you can find some kind of solution that allows the company to move forward, “he said.
For his part, the Minister of Industry , José Manuel Soria , has said that the announcement of pre-contest creditors “is not good news” and that he hopes that those who intended to inject liquidity can reach an agreement with the bank for “salvation “Of the company.
Hopefully you can find a solution that allows the company to move forward ”
Elvira Rodríguez President of the CNMV
Soria has highlighted the importance of Abengoa for the Spanish economy, in general, and for the renewable energy sector, in particular. Asked if the dimension of the pre-contest could lead the government to undertake some action, Soria has asked “not to advance events” and has insisted on waiting for there to be some agreement with the bank so that this company can be saved.
On the other hand, the Minister of Employment and Social Security , Fátima Bañez , has called for dialogue and negotiation to seek a “good solution” to “continue to maintain employment and create wealth and opportunities.”
Bañez has transmitted a message of tranquility and has been confident that “among all of us, we continue to have a large Spanish multinational that continues to create wealth and continue to maintain employment.” However, the minister wanted to emphasize that the Government “is concerned about all workers.”
Confidence has also been present in the words of Juan Rosell , president of the CEOE , who has said that he has information, which he has not wanted to specify, that allows him to ensure that Abengoa’s situation will be resolved .
Concern in Andalusia
The Minister of Employment, Enterprise and Commerce of the Junta de Andalucía , José Sánchez Maldonado, has described as “very bad news for the economy” that Abengoa is going to request a pre-contest of creditors. However, he has trusted that, “finally, have a favorable result.”
Thus, Sánchez Maldonado has acknowledged that there is “a great concern in the economic, political and social environments of Andalusia in particular and Spain in general for the final outcome of this company.” “We are concerned because it is one of the largest Spanish companies, a large multinational, with almost 30,000 jobs in the world and more than 6,000 in Spain,” said the Andalusian head of Employment, Business and Commerce.
Solar platform of Solúcar de Abengoa, in Sanlúcar la Mayor (Seville) (Archive)
Sánchez Maldonado said that from the Board are “very attentive and providing all the help” they can “within our capabilities and competencies,” so “we hope that the process of capital increase has a happy result.”
In this line, the mayor of Seville , the socialist Juan Espadas , has shown that Abengoa’s theme “is very concerned about the city” and asks “to give it utmost importance”.
“I give the utmost importance to this matter and I will be permanently attentive with the direction of the company, which we are going to support so that it comes to a good port before any type of negotiation so that it can continue forward and get out of this hole that it goes through. these moments, “he stresses.
In this context, the Sevillian mayor makes clear that the fact that the headquarters of this Andalusian multinational company stays in Seville must be “unquestionable”, since the capital must be “a fundamental value in any future strategy of this company”.