Accounting tricks come home to roost.
Over a month ago, it seemed that Abengoa, the global renewables giant headquartered in Spain, that once thought it had mastered the dark arts of financialization only to crumble under the weight of its own debt, appeared to be on the path to recovery. Or at least rebirth.
A Spanish judge had agreed to give the firm seven more months’ breathing space through a debt standstill. More importantly, 75% of the company’s lenders, including banks and bondholders, had provisionally agreed to the company’s restructuring plan, which includes a debt-for-equity swap and 70% write-downs on its over €9 billion debt.
The plan also includes opening up between €1.5-1.8 billion of credit lines for Abengoa, as well as €800 million in guarantees. Much of this would be provided by current bondholders and lenders, though some of the slack is expected to be picked up by private equity firms like KKR, Blackstone, Cerberus, Apollo, Centerbridge, Children’s Investment fund (TCI) and Oaktree.
Abengoa desperately needs the money to keep paying wages and invoices as well as fund what’s left of its day-to-day operations. The company also faces litigation proceedings worth €650 million. If the debt renegotiation falls through, Abengoa will go down in history as Spain’s biggest ever corporate failure…
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