Abengoa enters insolvency proceedings as Gonvarri deal fails

Abengoa SA (BME:ABG) has initiated insolvency proceedings after Gonvarri Steel Industries decided not to make the planned up to EUR-350-million (USD 372m) investment in the Spanish engineering and renewables firm.

“The Company will continue negotiations with its creditors with the objective of reaching an agreement that ensures the Company’s financial viability, under the protection of article 5 bis of the Spanish Insolvency Law (Ley Concursal), which the Company intends to apply for as soon as possible,” Abengoa said on Wednesday. It has four months to avoid bankruptcy, which would be the biggest in Spanish history.

GONVARRI INVESTMENT

Less than three weeks ago, it was announced that Spanish industrial group Gonvarri, which is part of Corporacion Gestamp, has agreed to become Abengoa’s main stockholder. The terms of a framework agreement called for Gonvarri Corporacion Financiera to take part in a capital hike that was approved on October 10, investing EUR 250 million as a first step. Later, the company was to pour a further EUR 100 million.

On Wednesday Abengoa said the framework agreement had been terminated as the conditions had not been satisfied. Among these conditions was the successful signing of financial support from banks amounting to EUR 1.5 billion for Abengoa, Spanish newspaper Expansion said yesterday.

The company, which builds concentrating solar power (CSP) parks and bioenergy plants, among other projects, reported revenues of EUR 4.87 billion for the first nine months of 2015.

(EUR 1 = USD 1.063)

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