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Crisis talks at Spain's Abengoa as firm teeters on brink of bankruptcy

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A general view of the Abengoa solar plant in Sanlucar la Mayor. Photo: AFP
09:23 CET+01:00
Bank creditors are tipped to meet on Monday to discuss the next steps in a restructuring process as the renewable energy giant looked set to become Spain's biggest ever bankruptcy.

Various bank creditors will meet KPMG on Monday to discuss restructuring the company's debt just days after the CEO resigned.

Santiago Seage resigned on Friday after it emerged the Spanish renewable energy giant was close to bankruptcy, as concerns rise over the fate of a firm that employs close to 29,000 people.

The company announced Wednesday that a deal with Spanish engineering group Gestamp -- which had been due to inject much-needed cash into the firm -- had fallen through, leaving it with a mountain of debt and the threat of becoming Spain's biggest-ever corporate failure.

On Friday, it said it had accepted "the resignation of Santiago Seage", adding all operational powers would now be in the hands of board chairman Jose Dominguez Abascal.

Gestamp subsidiary Gonvarri had planned to buy up 28 percent of Abengoa for some 350 million euros ($370 million), which would have made it the renewable energy firm's biggest shareholder.

But the deal fell through, and a court in the southern city of Seville -- where the company is headquartered -- said Friday it had launched bankruptcy proceedings, which offers Abengoa protection from creditors for up to four months until it finds a solution.

Unions and politicians are increasingly concerned about the fate of the 70-year-old firm, which employs 28,700 people around the world, including 7,000 in Spain.

Alberto Garzon, Spain's far-left candidate to December general elections, called on the government to rescue the company while UGT, one of Spain's main unions, urged the authorities to find a solution.

"What we cannot allow -- neither Abengoa workers, nor Spanish society, nor the industrial sector of our country -- is to let this company disappear," UGT head Candido Mendez told Cadena Ser radio.

Economy Minister Luis de Guindos told reporters it was important for the world player in solar and wind power, biofuels and water management to find "an industrial partner", but he appeared to reject any bailout of the group.

"Any action by the government will be constructive, but we also have to take into account that there are limits in European regulations with regards to state aid," he said.

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De Guindos said that from "a business point of view, (the company) is viable.".

"Now what is most important is to find out exactly what the accounting and debt situation of the company is."

Shares in Abengoa have been suspended from Spain's main Ibex-35 index after they went into freefall.

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