Towers of Abengoa solar plant at ‘Solucar’ solar park are pictured in Sanlucar la Mayor, near the Andalusian capital of Seville, southern Spain. Spanish and international banks’ total exposure to Abengoa stands at around €20.2bn ($21.40bn), including financing for projects, a source says.

Reuters
Madrid

Spain’s Abengoa started insolvency proceedings yesterday after a potential investor said it would not inject fresh capital into the energy firm, sending its share price tumbling by 60%. Under Spanish law, companies can enter into pre-insolvency proceedings, giving them up to four months to reach an agreement with creditors to avoid a full-blown insolvency process and a potential bankruptcy.
Failure by Abengoa to reach such a deal could lead to Spain’s largest bankruptcy on record.
Spanish and international banks’ total exposure to Abengoa stands at around €20.2bn ($21.40bn), including financing for projects, a source familiar with the matter said at the end of September. Shares in the engineering and renewables company plummeted by 69% when trading resumed following a more than three-hour suspension. They were down 58% at €0.38 at 1136 GMT.
Bonds lost most of their value.
Abengoa had earlier confirmed that Gonvarri, a unit of privately-held industrial group Gestamp, had backed away from a plan to inject around €350mn into the firm.
“The company will begin the negotiating process with its creditors with the aim to reach an accord to guarantee the financial viability under the Article 5 of the Bankruptcy act, which the company intends to request as soon as possible,” Abengoa said in a statement.
Abengoa has been trying to find new investors since the end of July, when it announced a €650mn rights issue of new shares to cut gross debt of some €8.9bn.
Gonvarri’s interest was conditional on banks underwriting a rights issue agreed in September and it had asked the banks to inject €1.5bn in to the company, sources told Reuters late on Tuesday.
Earlier this month, Abengoa’s auditor Deloitte said the group faced significant risks and its future depended heavily on a proposed investment deal with Gonvarri.