Abengoa given lifeline by creditors

Renewable energy giant Abengoa has struck a €1.17bn restructuring deal with its creditors, ensuring the survival of the debt-laden Spanish renewables group after a year of financial instability that pushed it to the brink of bankruptcy.

Spain-based Abengoa - an engineering business which borrowed heavily over the past ten years to fund an aggressive expansion into clean energy - has been negotiating since November with lenders to try and cut its debt of over €9bn.

It has yet to draw a line completely under a tumultuous 12 months, heralded by unsuccessful attempts to carry out a rights issue last August that eventually led it into pre-insolvency talks.

According to media reports, Abengoa said in a statement that negotiations with a group of investors and creditors, including banks, had led to "a deal on the terms and conditions for the restructuring of its financial debts and its recapitalisation."

The agreement, however, needs to be ratified by 75% of creditors by the end of October in order to avoid bankruptcy, under Spanish law. The company did not specify if it had reached that threshold, adding that it would hold a telephone conference with investors on Aug. 16. A banking source familiar with the talks said the company hoped to reach that threshold by the first week of September.

A spokeswoman for the company declined to comment, according to Reuters.

Once the restructuring is finalised, control of Abengoa will be transferred from its founding family, with about 90% of the ownership going to banks and bondholders.

Its new owners - a mix of banks such as Santander and funds specialised in distressed debt, like Elliott Management and KKR Credit - will also have to keep the company on a stable footing as it shrinks and refocuses on core businesses such as construction.

It has already been gradually shedding assets in recent months, including a fibre networks subsidiary which it sold to Sweden's Ericsson for an undisclosed amount.

"It's a positive step, and hopefully it means the business can continue," CreditSights analyst Andrew Moulder said of the restructuring deal.