Abengoa’s endless rescue continues with almost all fronts open. The board of the operating parent and target of the rescue, Abenewco 1, gave the starting signal on Wednesday, after informing the CNMV that it had requested the consent of the financial creditors to the Terramar offer. The most complicated and crucial issue is that the banks –Santander, CaixaBank, Crédit Agricole, Bankinter and BBVA– provide the 300 million in guarantees requested by the US fund. The sources consulted indicate that they are willing to provide guarantees for half.
Most of the owners of the subsidiary’s current debt, which totals $ 466 million, has already given their green light. The conversations are especially advanced with the owners of the section called New Money 2, with 163.7 million that expired on March 31. These creditors have been extending the expiration date until December 15.
The situation is logical. Terramar’s plan is to use the 60 million euros that it promises to inject to return part of Abenewco 1’s liabilities. The key, once again, is in the new guarantees. The main participants in Terramar’s roadmap are the banks, which must put up 300 million in guarantees. This was agreed in the agreement, which never materialized, on August 6, 2020, when Gonzalo Urquijo was the president of Abengoa.
But this agreement was reached without the deterioration of the balance sheet and without executed guarantees, as is now the case with around 5% of the guarantees, which reach 800 million euros.
Abengoa’s largest guarantor is Banco Santander. In the rest of the debt, which will be repaid or renewed in similar terms to the one that Terramar will inject (for 140 million euros), the largest positions correspond to the KKR, Blue Mountain funds, which assume the greatest risk in the operation, and also Alden and Melqart. In the original plan of the summer of last year, the amount of the guarantees was more modest, starting at 126 million, with the possibility of expanding to 300 million. The sources consulted indicate that the formula that will be proposed by the bank is that they are gradually given.
The role of the State, if the Terramar offer goes ahead, which already has an official expiration date – December 31st – will be twofold. The intervention of the rescue fund is essential with 249 million in loans that must be granted under similar conditions to those of the California-based fund, with an interest rate below 5%, below 10%, or higher, which they usually require lenders of last resort to distressed businesses.
Of course, the SEPI will require the same position in terms of the order of priority – position on the list of creditors when collecting in the event of liquidation of the company – as the Californian fund that Joshua Phillips pilots as managing partner.
The Abenewco 1 board vote was absolutely divided. The president of the parent company, Abengoa SA, Clemente Fernández, explains to this newspaper that half of the directors voted “against with very solid arguments that justify the unsuitability that appear in the minutes.”
The Abengoa unions, which have met with both the Abenewco 1 board and the insolvency administrator, EY, demand in a letter dated November 19 that they “support and approve any of the binding offers that have been been presented ”.
The matter still has to be discussed in the board of directors of the parent company, controlled by the shareholders’ union and chaired by Clemente Fernández. This, former president of Amper, indicates that “the parent company will support all offers that arise and are considered suitable for the future of the group and do not compromise the financial investment of the Government of Spain.”
- Participation. Terramar’s offer does not include any type of compensation for Abengoa shareholders, which ceased trading on the Stock Market in July 2020 on orders from the CNMV, although the modification of the offer specifies that “Offers the possibility to shareholders of Abengoa SA to participate with the investor [Terramar] in debt and equity instruments in Abenewco 1 ”.
- Problems. Clemente Fernández, president of the parent company, assures that “the approach is not suitable to put money from minorities who would act as mere bankers of the fund with rigid long-term exit conditions.” At the shareholders’ meeting on November 16, Fernández clarified that a second rescue offer is in the process of gestation.