6 de agosto de 2015 / 12:19 / en 2 años

Abengoa "not aware" of cashflow cut when it sold treasury shares

* Spanish firm did not expect slashed guidance two weeks ahead

* Financing for Brazilian projects a long-running issue

By Robert Smith

LONDON, Aug 6 (IFR) - Abengoa said that its management did not know it was about to slash guidance outlining a significant drop in its cashflow when it sold stock in mid-July.

On July 16 the troubled energy firm raised 97.6m from selling its treasury’s stock of Class B shares for 2.8 each, leading to questions about why the company needed hard cash.

At the time Abengoa said it decided to monetise the treasury stock as it no longer needed to support hedging requirements on its convertible bonds.

But last Friday, July 31 - just two weeks later - Abengoa halved its 2015 free cashflow guidance from 1.4bn down to 600m-800m, spooking the bond market. The company then announced a 650m cash call on Monday August 3.

On Tuesday its shares were quoted as low as 1.044, some 60% lower than when the treasury stock was sold.

Abengoa maintains that it did not see the shock cashflow revision coming when it sold the shares.

“At that moment, the management was not aware that the FY15 free cashflow guidance would be revised downwards,” said a spokesperson told IFR.

The Abengoa spokesperson stressed that the “business is doing well” and that its higher-than-expected capex needs are due to “one-off impact from projects in Brazil”. This refers to its transmission lines projects in Brazil, which Abengoa told investors on July 31 now have “increased equity requirements”.

One bond investor said that Abengoa’s management are “admitting they have zero visibility on their cashflows”.


CEO Santiago Seage said on Friday’s investor call that Abengoa now expects 50% leverage on Brazilian projects, meaning there will be an equal split of debt and equity.

This is likely to be at least partly a result of a decision announced in January by state-owned Brazilian development bank BNDES to limit leverage on deals it is involved in. BNDES said that its bank debt could only finance up to 50% of its upcoming power transmission projects.

Also, in March, a crucial joint venture signed with EIG Global Energy Partners - an energy investment fund - placed specific limitations on the US private equity firm’s involvement in Brazilian projects.

CEO Santiago Seage said on Friday’s conference call that, under the agreement with EIG, a higher percentage of equity for Brazilian projects will come from Abengoa.

Abengoa has 240m of cash from the EIG deal still locked in an escrow account, which it previously told investors would be released by now. It now does not expect to release all of the money until next year.

“Expectations shared regarding EIG perhaps were a bit too aggressive, regarding how quickly our financing partner can move in some of the projects,” said Seage.

Abengoa’s Brazilian projects have required extra capital in the past. In a July 6 letter providing further information on its annual results to Spanish market regulator CNMV, Abengoa revealed that “certain Brazilian subsidiaries” had to carry out capital increases last year.

Seage said he now expects a 1.5bn investment bill in Brazil for the rest of 2015 and 2016.

Abengoa’s various corporate bonds are trading at deeply distressed levels, including the euro tranche of the Abengoa Greenfield bond - which helped fund Brazilian projects - which is bid at 57 to yield nearly 23%.

It was this Green bond that triggered a sharp repricing lower of Abengoa’s securities when the company reclassified it as non-recourse in its accounts last November, despite it benefiting from a corporate guarantee. (Reporting by Robert Smith. Editing by Alex Chambers and Matthew Davies.)

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