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December 4, 2015Abengoa declines over debt issues
The Spanish power giant Abengoa faces imminent bankruptcy proceedings, after another Spanish company failed to inject equity into the debt laden Abengoa. Note unlike SunEdison, Abengoa’s demise has been slow and painful with the company’s debt load increasing and its revenues not keeping up with the increasing interest payments. GeStamp was supposed to buy an equity stake in the company, infusing crucial cash into Abengoa’s balance sheet. Abengoa is one the largest RE companies in the world with interest in biofuels, solar thermal, solar PV as well as conventional power plants throughout the world. It has more than 24000 employees with power plants located in India as well. However, this Spanish company now seems to be in the death throes with more than $20 billion in overall debt. With massive risk aversion towards energy debt with the oil and gas price crash, it looks unlikely that the company can recover. However, there are still 4 months that the company can come up with a deal with creditors.
Like SunEdison, Abengoa had listed a RE yieldco Abengoa yieldco in USA earlier. Like the rest of this investment class Abengoa Yield also saw its stock price cratering, creating a further accounting loss of more than $200 million for its parent. This also hurt the company. The company’s stock price saw a fall of more than 50% after GeStamp said that it would not infuse money into the company. The company’s bond which were already trading at a significant discount saw a further hit.
Like SunEdison, Abengoa is both a major developer and contractor of solar power plants in the world. The company was the leading international contractor in transmission and distribution for the eighth consecutive year and the top international contractor for solar energy for the fourth consecutive year in 2014.
The USA government will also see some significant losses as it was a guarantor of Abengoa’s Palen solar thermal project that got built 5 years ago, when USA gave $25 billion in loan guarantees to numerous renewable energy projects throughout USA.