Abengoa seeks creditor protection as investor Gonvarri walks away

Shares in solar-thermal specialist Abengoa plunged by almost half today, as the Spanish company said it will seek protection from its creditors after a potential €250m ($264m) investor walked away.

Abengoa told investors that compatriot steel group Gonvarri will not now inject the money in return for a 28% stake, after the latter deemed conditions attached to the deal had not been met.

The potential Gonvarri investment was seen as a lifeline for Abengoa, whose finances have been under pressure all year amid concerns over its debt levels and cash flow.

Announcing the termination Abengoa said it will now “continue negotiations with its creditors with the objective of reaching an agreement that ensures the company’s financial viability, under the protection of…Spanish Insolvency Law”.

Abengoa’s shares were 46% lower in Madrid in mid-afternoon trading, and are just a quarter of their value this time a year ago.

Abengoa made a €194m loss in the first nine months of 2015 and saw the departure of long-serving chairman Felip Benjumea, amid revival plans that relied heavily on cost cutting and the sale of projects to Abengoa Yield, the yieldco set up by the Spanish group in mid-2014.

Among the projects Abengoa is advancing worldwide is the 500MW Palen Solar development in California.

The company is also building the Atacama Solar 1 CSP/PV hybrid project in Chile, and is an early candidate to build pilot CSP plants in Brazil.