MADRID (Reuters) - The Spanish government is considering granting guarantees and credit lines to renewable energy and engineering firm Abengoa (ABG.MC) in a bid to keep the company afloat, a source with knowledge of the negotiations said.
Spanish state agency ICO will guarantee up to 70% of the 180 million euros that bank creditors including Bankia (BKIA.MC) and Santander (SAN.MC) are considering lending to the company, the source said.
ICO may also directly lend Abengoa 50 million euros, while an extra 20 million loan is being negotiated with the regional government of Andalusia. Abengoa declined to comment.
In mid-July, troubled Abengoa postponed until July 27 a final decision on a debt restructuring deal with creditors.
It warned that a lack of liquidity and guarantees was “severely” affecting its business, making its viability “very difficult” if the transaction is not closed in the short term.
A more than 50% jump in its share price to 0.161 euros on July 14 led Spain’s financial regulator CNMV to suspend trading, awaiting the outcome of Abengoa’s negotiations with lenders.
A banking source involved in the talks confirmed that ICO was discussing guaranteeing part of bank’s credit lines but did not say how much would be backed up by the state.
Bankia, Santander, the Economy Ministry and the Andalusian government all declined to comment.
The debt restructuring deal is focused on 250 million euros in short-term funding needs and 3.2 billion euros that Abengoa has owed to creditors and providers since 2016, another source familiar with the matter said.
In 2016, Abengoa avoided becoming Spain’s largest ever corporate bankruptcy after striking a deal to refinance 9 billion euros of debt, handing creditors control of the company.
By end-2019, Abengoa’s total debt was 5.95 billion euros, of which around 1.2 billion is debt considered up for sale and around 560 million belongs to project finance, according to company data.
That left corporate debt at 4.2 billion euros, it showed.
Reporting by Jesús Aguado; Additional reporting by Emma Pinedo; Editing by Ingrid Melander and Jan Harvey