Abengoa Faces Cash Squeeze After Losing Creditor Court Case

Abengoa SA, which last year faced becoming Spain’s largest insolvency, may suffer new financial pressures after losing a court case brought by disgruntled creditors.

The renewable-energy company said in a statement it owes 72 million euros ($85 million) to creditors as a result of the ruling, according to a statement on Wednesday. Analysts at Stifel Nicolaus had earlier estimated a payout of about 170 million euros. Seville, Spain-based Abengoa postponed an earnings call on Tuesday, saying it plans to ask the court for clarifications about the ruling, which came a day earlier.

“We do not think that the company currently has the funds to repay creditors immediately,” Stifel Nicolaus analysts Arndt Muthreich and Nicolas Bourguignon wrote in a note. Abengoa probably can’t appeal the ruling, and it may have to seek court protection if a deal isn’t reached with the creditors, the analysts said.

The Seville court case was led by insurers and export credit agencies that suffered 97 percent losses after rejecting Abengoa’s 9 billion-euro debt-restructuring package last year.

Their minority opposition failed to derail the deal, which left participating creditors owning 95 percent of the company.

“The nominal value of the excluded debt which has been claimed by the challengers amounts to approximately 72 million euros,” Abengoa said in its statement Wednesday. A Brazilian unit said this week that it had filed for bankruptcy.

“We continue to have doubts about the viability of the restructured Abengoa,” Felix Fischer, an analyst at Lucror Analytics, wrote in a note on Wednesday. “The latest court ruling adds to the group’s troubles.”

The court-case payout could eventually rise to as much as 750 million euros, the Stifel Nicolaus analysts wrote. Abengoa had 660 million euros of cash and short-term investments as of March, according to data compiled by Bloomberg.

Abengoa’s almost 500 million euros of reinstated March 2023 junior notes are quoted at about 6 cents on the euro, down from 9 cents on Friday, Bloomberg data show.

The company filed for preliminary creditor protection in 2015 after failing to raise capital and struggling under debt built up through years of overseas expansion.

Following the restructuring, a group including Elliott Management Corp., Centerbridge Partners and Varde Partners became the company’s largest shareholders. The investors provided 1.17 billion euros of new capital.

Bloomberg News
September 27, 2017, 20:40:15 GMT
Reporting by Luca Casiraghi and Katie Linsell, with assistance by Kenneth Pringle; Editing by Abigail Moses and Neil Denslow