The SEPI informed Abengoa yesterday that it officially rejects its rescue. This leads the company to the largest bankruptcy in the history of Spain, with 6,000 million debt and 5,000 jobs. The company’s council will meet tomorrow to request the pre-contest for its subsidiaries. And try to shield your most valuable assets before creditors request voluntary bankruptcy.
The Council of Ministers on Monday was the last in which it could authorize the SEPI rescue of Spanish companies with the fund to alleviate the consequences of Covid-19. The Government did so with six companies, but excluded Abengoa from the list. This supposed unofficially a refusal to rescue Andalusian engineering. An unofficial refusal that became official yesterday.
SEPI already decided to provisionally reject the bailout last week. The public body prepared a forceful report in which, with the studies carried out by PKF and Grant Thornton, it rejected the operation as it did not see the return of public money guaranteed. According to the SEPI report, to which this newspaper has had access, the main objection of the public entity was about the more than 900 million, of which 760 million were not included in the company’s viability plan. It also questioned 2,000 million in fiscal contingencies. And SEPI, moreover, did not consider it proven that the company’s financial problems were due to the effects of Covid-19.
However, SEPI gave the company five days to present allegations, which were sent last Thursday. After several days studying them, on Monday he had a clear decision to definitively reject the rescue. And yesterday he officially communicated it to the company.
The injection of public money was the sine qua non condition for executing the entire rescue plan for the group that the creditors had designed. It was a condition for Terramar’s participation in the operation, which had promised to contribute 200 million in exchange for 70% of the capital. The other condition was the support of the bank with 300 million in guarantees backed by the State.
The company’s intention now is to buy time. They have three days until the bankruptcy moratorium is lifted on July 1 and the last bull of the creditors ends to extend the maturity of the debt. The idea is in these few days to identify the subsidiaries with the most value to request the pre-bankruptcy of creditors on them. This will give him a period of four months to try to attract an investor or find a solution with the creditors, without them urging a mandatory contest on the same Friday. Abengoa’s board will meet tomorrow and is expected to make this decision.
Convention in the matrix
At the same time, the bankruptcy of the parent company, Abengoa SA, advances, which before July 1 must present an agreement to the judge to avoid its liquidation. The sources consulted conclude by pointing out that, a priori, the bankruptcy of the parent company and the subsidiaries -which, in turn, depend on Abenewco, the company created by the banks with the majority of the group’s productive assets- they run in parallel.
The president of Abengoa SA and head of the group of minority shareholders of the company, Clemente Fernández, has asked the judge to have more time to reach an agreement. The idea at first was to request about two or three weeks, so that the deadline for creditors to adhere does not coincide with the month of August. It is even considering requesting an extension for two months.
Fernández is now working to obtain an offer from a new investor, who supports the agreement to be presented to the judge. The idea is that, through this pact, he proposes a rescue operation for this group.
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