Abengoa set for €250m as Gonvarri agrees to become main shareholder

Indebted Spanish renewables group Abengoa is in line for an investment of €250m ($269m) from compatriot steel group Gonvarri.

Solar-thermal specialist Abengoa has signed a framework deal that will see Gonvarri invest the sum and become its largest shareholder with a 28% stake following a capital raising, which will also see it make a further investment beyond the €250m announced yesterday.

Spain’s Gonvarri is no stranger to the renewables sector. It is part of the Corporación Gestamp industrial conglomerate that also owns Gestamp Renewables, which has global wind and solar development interests.

Abengoa and its shares have been under pressure since late last year as a result of a range of factors including its debt pile and cash flow situation.

The Spanish group's shares were 15% higher in mid-morning trading in Madrid following news of the Gonvarri deal.

Abengoa unveiled plans for a €650m share issue in September, as part of a package of measures that also included a €1.2bn asset disposal programme.

Announcing the Gonvarri agreement, Abengoa said the investment is conditional on “the signing of a substantial package of financial support in favour of the company by a group of financial institutions”, without giving further details.