Spanish energy and engineering firm Abengoa steps up its race to avoid insolvency by asking creditors for seven months' breathing space to execute a restructuring plan. Hayley Platt reports.
It started business making electricity meters in Seville 70 years ago. Now Abengoa is a giant in renewable energy and solar technology, employing 24,000 people worldwide. It even received an endorsement from President Obama as it expanded in America. But its success has become its downfall. Growing too fast, it's now saddled with more than 9 billion euros of debt. It's calling on creditors to stop the clock for seven months while it tries to formulate a restructuring plan. SOUNDBITE (English) CMC MARKETS, MARKET ANALYST, JASPER LAWLER, SAYING: "The company has not been able to generate the profits to sustain those levels of debt and that's what we're running into at the moment. There's no real suggestion, especially given the low energy prices at the moment which makes alternative energy a lot less attractive." Insolvency talks with creditors began last November. Abengoa has until March 28 before the pre-insolvency period ends. The company hopes to get a standstill agreement in place before then. SOUNDBITE (English) CMC MARKETS, MARKET ANALYST, JASPER LAWLER, SAYING: "There's just a real chance of default and that makes the future of the company very questionable because investors will be impacted by that and it will make them less encouraged to fuel the future growth of the company." For its restructuring package, Abengoa needs to win the support of creditors holding 75 percent of its debt. So far it says it has support of banks and bondholders representing around 40 percent. It could yet seek a further extension from Seville's court. If that fails Abengoa could still end up becoming Spain's largest corporate bankruptcy in its history.