Contract
Xxxxxxx Xxxxxxx Xxxxxxxxx xx Xxxxx, mayor de edad, de nacionalidad española, con domicilio a estos efectos en Campus Palmas Altas, calle Energía Solar número 1, código postal 00000 Xxxxxxx, y con N.I.F. 05241137-N, actuando en nombre y representación de Xxxxxxx,
S.A. (la “Sociedad”), sociedad española, con domicilio social y fiscal en Sevilla, en Campus Palmas Altas, calle Energía Solar número 1, inscrita en el Registro Mercantil xx Xxxxxxx, hoja 2.921, folio 107, tomo 47 de Sociedades y con C.I.F. número A-41002288, debidamente apoderado al efecto,
CERTIFICA
Que el contenido del folleto informativo de admisión a negociación de las acciones y de los warrants emitidos en ejecución de los acuerdos aprobados por la Junta General Extraordinaria de Accionistas de la Sociedad celebrada el 22 de noviembre de 2016 (el “Folleto”), registrado con fecha 30 xx xxxxx de 2017 por la Comisión Nacional xxx Xxxxxxx de Valores (la “CNMV”), coincide exactamente con el ejemplar del mismo que ha sido remitido a la CNMV en formato electrónico.
Asimismo, por la presente se autoriza a la CNMV para que el Folleto sea puesto a disposición del público a través de su página web.
Y, para que así conste y surta los efectos oportunos, firma el presente en Madrid, a 30 xx xxxxx de 2017.
Abengoa, S.A.
Xxxxxxx Xxxxxxx Xxxxxxxxx xx Xxxxx
PROSPECTUS
ABENGOA, S.A.
(A sociedad anónima incorporated under the laws of Spain)
Admission to listing of 1,577,943,825 new class A shares and 16,316,369,510 new class B shares of Abengoa, S.A.
and
83,049,675 Class A Warrants and 858,756,290 Class B Warrants issued by Xxxxxxx, S.A.
This document relates to:
(i) The admission to listing on the Madrid and Barcelona Stock Exchanges of 1,577,943,825 new class A shares with a par value of €0.02 each (the "New Class A Shares") and of 16,316,369,510 new class B shares with a par value of €0.0002 each (the "New Class B Shares", and together with the New Class A Shares, the "New Shares") of Abengoa, S.A. (the "Company"), a sociedad anónima incorporated under the laws of Spain, of the same class and series and carrying the same rights as the class A shares and the class B shares currently in circulation (collectively, the "Shares"). The New Shares were issued pursuant to five share capital increases (the "Share Capital Increases" or collectively referred to as the "Share Capital Increase") carried out with the purpose of capitalizing debt and fees held by certain former creditors and new financing entities that have participated in the recent financial and corporate restructuring of the Company and the group of companies of which the Company is the controlling entity, within the meaning established by Spanish law (together with the Company, "Abengoa" or the "Group"). The New Shares were issued to those creditors who contributed their credits for their capitalization outside of the United States of America in compliance with Regulation S ("Regulation S") under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The New Shares were also issued to creditors in the United States of America pursuant to an exemption under Section 1145 of the U.S. Bankruptcy Code from the registration requirements under Section 5 of the Securities Act. The New Shares have not been and will not be registered under the Securities Act. See "The Share Capital Increase" for a detailed description of the Share Capital Increase.
(ii) And the admission to listing on the Madrid and Barcelona Stock Exchanges of 83,049,675 class A share warrants (the "Class A Warrants") and 858,756,290 class B share warrants (the "Class B Warrants"and, together with the Class A Warrants, the "Abengoa Warrants" and, together with the New Shares, the "Securities"), to be traded on the Automated Quotation System Block Market of the Madrid and Barcelona Stock Exchanges (the "AQS"), in the "Warrants, Certificates and Other Products" segment (segmento de "Warrants, Certificados y Otros Productos"), attaching the right to respectively subscribe for the same number of new class A shares and new class B shares. The Abengoa Warrants to be allotted for no consideration to those who held the status of shareholders of the Company at 23:59 hours CET on the date immediately preceding the date of execution of the Share Capital Increase (i.e., March 27, 2017), according to the book-entry records maintained by Xxxxxxxxx and its member entities. The Abengoa Warrants have not been and will not be registered under the Securities Act. See "Description of the Abengoa Warrants" for a detailed description of the Abengoa Warrants.
The existing Shares of the Company are listed on the Madrid and Barcelona Stock Exchanges and traded through the AQS under the symbols "ABG/AC A" and "ABG/AC B", respectively.
We expect the Securities to be admitted to listing on the Madrid and Barcelona Stock Exchanges for trading through the AQS on or about the date hereof ("Admission"), with trading on the Securities commencing effectively on March 31, 2017.
The New Class A Shares represent 1,900% of the Company's issued and paid up share capital represented by the existing class A shares and the New Class B Shares represent 1,900% of the Company's issued and paid up share capital represented by the existing class B shares, in both cases before giving effect to the Share Capital Increase.
In addition, the New Class A Shares and the New Class B Shares that may be issued in exercise of the Abengoa Warrants would represent, if and when exercised, 5% of the Company's issued and paid up share capital immediately after giving effect to the Share Capital Increase.
The Shares and the Warrants are in book-entry form and clear and settle through the facilities of Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U. and its participating entities ("Iberclear").
This document (the "Prospectus") constitutes a prospectus for the purposes of Directive 2003/71/EC of the European Parliament and of the Council of the European Union (as amended, including by Directive 2010/73/EU, the "Prospectus Directive") and has been prepared in accordance with, and including the information required by Xxxxxxx X, III, XII and XXII of Regulation (EC) No. 809/2004, (as amended, including by Commission Delegated Regulation (EU) No 486/2012 of 30 March 2012, the "Prospectus Regulation" and, together with the Prospectus Directive, the "Prospectus Rules") (see equivalence chart included in the B-pages to this Prospectus). This Prospectus has been approved as a Prospectus by the Spanish National Securities Market Commission (Comisión Nacional xxx Xxxxxxx de Valores) ("CNMV") in its capacity as competent authority under the restated text of the Securities Market Act approved by Royal Legislative Decree 4/2015, of 23 October (texto refundido de la Xxx xxx Xxxxxxx de Valores aprobado por el Real Decreto Legislativo 4/2015, de 23 de octubre) (the "Spanish Securities Market Act") and relevant implementing measures in Spain.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction or to any person to whom it would be unlawful to make such an offer.
The Company considers that the issuance of the New Shares under the Share Capital Increases for them to be subscribed and disbursed by the Company's creditors through the offsetting of the credits held by them against the Company does not fall in the definition of public offering of securities as this term is defined in Article 35 of the Securities Market Act since it stems from and is carried out in execution of the commitments assumed by the creditors and any all parties under the agreement for the financial restructuring of the Company entered into on September 24, 2016 by the Company, a group of investors and a group of its creditors comprised of xxxxx and holders of bonds issued by entities belonging to the Group and could not, therefore, be configured as an offer to subscribe for the New Shares that could be freely accepted or rejected by those creditors who signed or subsequently adhered to the restructuring agreement, as required by Article 35 of the Securities Market Act.
March 30, 2017
TABLE OF CONTENTS
Page
SUMMARY 1
RISK FACTORS 30
PRESENTATION OF FINANCIAL AND OTHER INFORMATION 59
INDUSTRY AND MARKET DATA 68
EXCHANGE RATES 69
IMPORTANT INFORMATION 70
FORWARD-LOOKING STATEMENTS 72
AVAILABLE INFORMATION 73
BUSINESS 74
USE OF PROCEEDS 132
DIVIDENDS AND DIVIDEND POLICY 133
CAPITALIZATION AND INDEBTEDNESS 134
SELECTED CONSOLIDATED FINANCIAL INFORMATION 137
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 142
MANAGEMENT AND BOARD OF DIRECTORS 194
PRINCIPAL SHAREHOLDERS 212
RELATED PARTY TRANSACTIONS 214
DESCRIPTION OF CAPITAL STOCK 216
TAXATION 237
MARKET INFORMATION 249
THE SHARE CAPITAL INCREASE 255
DESCRIPTION OF THE ABENGOA WARRANTS 261
U.S. SECURITIES LAWS MATTERS 268
LEGAL MATTERS 270
INDEPENDENT AUDITORS 271
GENERAL INFORMATION 272
DOCUMENTS ON DISPLAY 280
ENFORCEMENT OF CIVIL LIABILITIES 282
CERTAIN TERMS AND CONVENTIONS 283
SPANISH TRANSLATION OF THE SUMMARY ..........................................................................................A-1 EQUIVALENCE CHART.................................................................................................................................. B-1
SUMMARY
Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in Sections A–E (A.1– E.7).
This summary contains all the Elements required to be included in a summary for this type of security and company. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.
Even though an Element may be required to be inserted in the summary because of the type of security and company, it is possible that no relevant information can be given regarding the Element. In this case, a short description of the Element is included in the summary with the mention of "not applicable".
Section A — Introduction and warnings | ||
Element | Disclosure requirement | |
A.1 | Warning | This summary should be read as an introduction to the Prospectus. Any decision to invest in the new Class A Shares (the "New Class A Shares") and of new Class B Shares (the "New Class B Shares", and together with the New Class A Shares, the "New Shares"), and in the Class A Warrants and the Class B Warrants (collectively referred throughout this Prospectus as "Abengoa Warrants" and, together with the New Shares, the "Securities"), issued by Xxxxxxx, S.A. (the "Company" or "Abengoa") should be based on a consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the European Economic Area ("EEA") member states, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in the Shares. |
A.2 | Information on financial intermediaries | Not applicable. Abengoa is not engaging any financial intermediaries for any resale of securities or final placement of securities requiring a prospectus after the publication of this Prospectus. |
Section B — Company | ||
Element | Disclosure requirement | |
B.1 | Legal and commercial name | The legal name of the Company is "Abengoa, S.A." and the global brand name of the Company and of the companies belonging to the group of companies of which Abengoa is the controlling entity, within the meaning established by Spanish law (together, the "Group") is "Abengoa". |
B.2 | Domicile/legal form/legislatio n/country of incorporation | The Company is a public limited liability company (sociedad anónima) under the laws of the Kingdom of Spain. The Company's registered office is located at Campus Palmas Altas, X/ Xxxxxxx Xxxxx 0, 00000, Xxxxxxx, Xxxxx. |
B.3 | Current operations / principal activities and markets | We organize our business into the following two activities: Engineering and Construction and Concession Type Infrastructure, which in turn comprise five operating segments (until December 31, 2016 we organized our business in three activities: Engineering and Construction, Concession-Type Infrastructure and Industrial Production): |
• Engineering and Construction: relates to our traditional engineering activities in the energy and environmental sectors, with more than 70 years of experience in the market as well as the development of solar technology. Our Engineering and Construction activity is now comprised of a single operating segment: Engineering and Construction. | ||
This activity is comprised of one operating segment: | ||
o Engineering and Construction—Specialized in carrying out complex turnkey projects for thermo-solar plants, solar gas hybrid plants, conventional generation |
Section B — Company | ||
Element | Disclosure requirement | |
plants, biofuels plants and water infrastructures, as well as large scale desalination plants and transmission lines, among others. • Concession-Type Infrastructure: groups together our proprietary concession assets that generate revenues governed by long-term sales agreements, such as take or pay contracts, tariff contracts or power purchase agreements. This activity includes the operation of electric (solar, generation or wind) energy generation plants and transmission lines. These assets generate low demand risk and we focus on operating them as efficiently as possible. This activity is currently composed of four operating segments: o Solar—Operation and maintenance of solar energy plants, mainly using solar thermal technology; o Water—Operation and maintenance of facilities aimed at generating, transporting, treating and managing potable water, including desalination and water treatment and purification plants; o Transmission—Operation and maintenance of high voltage transmission power line infrastructures; and o Co-generation and other—Operation and maintenance of conventional electricity plants. Discontinuation of Industrial Production Abengoa produces biofuels, which used to be reported as a separate segment (Industrial Production activity or “Biofuels" or "Bioenergy”) until December 31, 2016. Following the financial restructuring announced in August of 2016 and the changes in corporate strategy envisioned in the viability plan, Xxxxxxx has decided to focus primarily on Engineering and Construction and move away from the Industrial Production sector. Our Biofuels assets have been included in the disposal plan presented in the proposed restructuring presentation. As a consequence of the open sale processes given the discontinuance of Biofuels on the viability plan of Abengoa approved by the Board of Directors on August 3, 2016 and due to the significance of the Industrial Production activity developed by Xxxxxxx, its income statement and Cash flow statement have been reclassified to profit from discontinued operations in the Consolidated income statement and in the Consolidated statement of cash flow for the year ended December 31, 2016 and 2015 in accordance with the IFRS 5 “Non- Current Assets Held for Sale and Discontinued Operations”. Discontinuation of Brazilian transmission lines As a consequence of the open sale processes and due to the significance of the Brazilian Transmission lines activity developed by Abengoa, its income statement and Cash flow statement have been reclassified to profit from discontinued operations in the Consolidated income statement and in the consolidated statement of cash flow at December 31, 2016 and 2015 in accordance with the IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations”. | ||
B.4 | Significant recent trends affecting Abengoa and the industries in which it operates | The Company is not aware of any exceptional recent trend influencing the industries in which the Group operates, without prejudice to the risk factors listed in Element D.1 of this summary. Apart from the trends affecting the industries in which Abengoa operates, since November 0000, Xxxxxxx has gone through a financial restructuring process in order to strengthen its capital structure (the "Restructuring Process"). A vital part of the Restructuring Process included changing its corporate strategies and refocusing its efforts on certain core businesses while divesting in other non-essential businesses. On August 3, 2015, we announced our intent to complete a capital raise of €650 million, an additional package of asset disposals and the implementation of a business model with lower |
Section B — Company | ||
Element | Disclosure requirement | |
capex requirements aimed at improving the liquidity position of Abengoa and reducing its dependence on leverage. Following a few months of negotiations with xxxxx and potential partners, including Gonvarri Corporación Financiera, and a failure to reach an agreement, we announced the filing of the communication under Article 5 bis of the Spanish Insolvency Law on November 25, 2015. Article 5 bis of the Spanish Insolvency Law allows the filing of a notice to the Court informing of the start of negotiations with creditors to reach a refinancing agreement. While those negotiations take place, the filing of the communication under Article 5 bis of the Spanish Insolvency Law provides for interruption of any court enforcement against assets that prove to be necessary for the continuity of the debtor’s economic activities; any enforcement against other assets, except for those originating from public law claims, may also be interrupted where at least 51% of the creditors holding financial claims against the debtor have expressly supported the start of the negotiations. On December 15, 2015 the Mercantile Court of Seville Nº 2 published the decree by virtue of which it agreed to admit the filing of the communication set forth under Article 5 bis of the Insolvency Law, therefore granting Abengoa certain rights and protections. On August 16, 2016 we announced that we had reached an agreement with our financial creditors and presented an Updated Viability Plan for the financial restructuring. As part of the financial restructuring terms presented on August 16, 2016, we obtained commitments from several xxxxx and investors to underwrite the new financing needed to implement the Restructuring (as defined below) and restart the business, following which the Restructuring Agreement (as defined below) was signed on September 24, 2016. On October 28, 2016, an application for the judicial approval (homologación judicial) of the Restructuring Agreement was filed with the Mercantile Court of Seville, which was granted by the Mercantile Court of Seville no. 2 on November 8, 2016. The Restructuring Agreement had previously obtained the support of 86% of the financial creditors to which it was addressed, surpassing the majority support required by law (75%). Among other effects, the judicial approval extended the Standard Restructuring Terms (as defined below) stipulated in the Restructuring Agreement to those financial creditors that did not adhere or voted against the Restructuring Agreement. Notwithstanding this extension, creditors who did not accede to the Restructuring Agreement in the first instance were granted the option to accede to the Restructuring Agreement during the Supplemental Accession Period, which commenced on January 18, 2017 and finished on January 24, 2017, in order to allow them to opt for the Alternative Restructuring Terms (as defied below) avoiding the application of the Standard Restructuring Terms (as defined below). After the end of the Supplemental Accession Period, the support of financial creditors to the Restructuring Agreement increased up to 93.97% of the financial creditors to which it was address. As part of the new corporate strategy, all efforts will be focused on conventional and renewable energy generation, large transmission systems, and water transport and generation. Abengoa is focused on sectors and products with a large growth potential in which we are internationally renowned, resulting in a new project portfolio and commercial opportunities that Abengoa expects will provide visible earnings for its business. Several changes are being made within the organization as part of the updated viability plan. It was necessary to design a smaller organization, adapted to the new reality which encompasses operations in the same sectors and businesses but at a smaller scale, in line with the reviewed strategy and the availability of resources. The priority of the new structure will be turnkey (EPC) projects. Given that cash flow generation is paramount in this new phase, this type of project will be Abengoa's main focus. The new business strategy includes the implementation of tools and systems designed to carry out a thorough risk analysis, placing special emphasis on financial ones. It is also aimed to restore credibility with customers, suppliers, partners and financial institutions, proposing a business model that is less intensive in cash needs. | ||
B.5 | Group structure | The Company is the parent company of a group formed by 679 directly and indirectly controlled subsidiaries, with a current presence in 50 countries. Abengoa’s registered office and principal establishment is in Campus Palmas Altas, X/ Xxxxxxx Xxxxx, 0, 00000, Xxxxxxx, Xxxxx. For further information on the real estate owned by the Group, see Notes 9 and 10 to our Consolidated financial statements which are incorporated by reference into this Prospectus. The following diagram shows a simplified summary of Group’s structure and the Company’s |
Section B — Company | ||||||
Element | Disclosure requirement | |||||
position therein. . Abengoa, S.A. Engineering & Concession Type Industrial Construction Infrastructures Production* | ||||||
Engineering & Construction | Solar | Biofuels | ||||
Transmission | ||||||
Water Infrastructure Co-Generation & Other * Industrial Production has been discontinued as of December 31, 2016. The following diagram shows a simplified summary of Group’s corporate structure post- restructuring. The chart does not include all of our subsidiaries. |
Section B — Company | |||
Element | Disclosure requirement | ||
B.6 | In so far as is known to the issuer, the name of any person who, directly or indirectly, has an interest in the issuer's capital or voting rights which is notifiable under the issuer's national law, together with the amount of each such person's interest. | As of the date of this Prospectus, the Company's share capital is €36,654,895.16, consisting of 1,660,993,500 Class A Shares of €0.02 par value each, and of 17,175,125,800 Class B Shares of €0.0002 par value each. The following tables set forth certain information with respect to the ownership of the Company's Shares following the execution of the Share Capital Increase: Principal Shareholders following the Share Capital Increase Number of Number of Class A shares Percentage of Class B shares Percentage of beneficially Class A beneficially Class B Combined Name held shares issued held shares issued voting power Banco Santander, S.A.(∗) ........ 159,952,808 9.63% 1,653,953,996 9.63% 9.63% Crédit Agricole CIB............... 145,699,057 8.77% 1,506,360,491 8.77% 8.77% Caixabank, S.A. ..................... 82,278,775 4.95% 850,783,839 4.95% 4.95% Bankia, S.A............................ 77,116,450 4.64% 797,404,166 4.64% 4.64% Banco Popular Español, 76,014,382 4.58% 786,008,381 4.58% 4.58% S.A......................................... X.X. Xxxx.............................. 60,120,231 3.62% 621,658,211 3.62% 3.62% Arvo Investment Holdings 58,623,921 3.53% 606,185,833 3.53% 3.53% S.à r.l. .................................... Banco xx Xxxxxxxx, S.A.......... 52,748,835 3.18% 545,436,862 3.18% 3.18% Treasury shares ...................... 5,662,480 0.34% – – 0.34% | |
Total...................................... 718,216,939 43.24% 7,367,791,779 42.90% 43.24% | |||
(∗) 50,115,215 class A shares and 518,204,466 class B shares are held through "Santander Factoring y Confirming, |
Section B — Company | |||
Element | Disclosure requirement | ||
Whether the issuer's major shareholders have different voting rights if any. | S.A. EFC"; and 1,745,034 class A shares and 18,044,105 class B shares are held through "Banco Santander Brasil, S.A.". Control of the Company None of the shareholders mentioned above may directly or indirectly exercise control over the Company. Arrangements for Change in Control of the Company We are not aware of any arrangements the operation of which may result in a change of control as a result of the Share Capital Increase. | ||
To the extent known to the issuer, state whether the issuer is directly or indirectly owned or controlled and by whom and describe the nature of such control. | |||
B.7 | Summary historical financial information | Selected Consolidated income statement data The following table sets out the Group's selected Consolidated income statement for the years ended 31 December 2016, 2015 and 2014: Year ended Year ended December 31, December 31, | |
2016 2015(1) 2015 | 2014 | ||
(audited) (unaudited) (audited) (audited) (€ in millions, except share and per share amounts) Consolidated Income Statement Data Revenue 1,510.0 3,646.8 5,755.5 7,150.6 Changes in inventories of finished (10.4) 8.3 (9.4) 1.1 goods and work in progress Other operating income 65.8 124.3 196.4 188.3 Raw materials and consumables used (978.5) (2,049.0) (3,554.9) (4,083. 1) Employee benefit expense (440.3) (713.3) (839.5) (871.9) Depreciation, amortization and (1,900.7) (372.8) (814.3) (474.9) impairment charges Other operating expenses (387.8) (673.7) (1,032.7) (976.9) | |||
Operating profit (2,141.9) (29.4) Finance income 15.7 56.7 Finance expense (679.6) (653.6) Net exchange differences 9.1 (11.2) Other financial income/(expense) net (507.0) (89.5)
Finance expense, net (1,161.8) (697.6) Share of (loss)/profit of associates (587.4) (8.3) Profit/(loss) before income tax n (3,891.1) (735.3) Income tax benefit/(expense) (371.6) (88.4)
Profit for the year from continued (4,262.7) (823.7) operations Profit/(loss) for the year from (3,352.3) (519.0) discontinued operations, net of tax
Profit for the year (7,615.0) (1,342.7)
Profit attributable to non-controlling (13.1) 0.1 interest from continued operations Profit attributable to non-controlling (0.9) 129.1 interest from discontinued operations Profit for the year attributable to the (7,629.0) (1,213.5) parent company | (298.9) 933.2 | ||
67.0 62.1 | |||
(772.2) (745.4) | |||
(4.2) 5.0 | |||
(159.2) (176.5) | |||
(868.6) (854.8) | |||
(8.0) 7.0 | |||
(1,175.5) 85.4 | |||
(22.9) 58.7 | |||
(1,198.4) 144.1 | |||
| |||
(144.3) (22.2) | |||
(1,342.7) 121.9 | |||
3.0 3.6 | |||
126.2 (0.2) | |||
| |||
(1,213.5) 125.3 | |||
Section B — Company | ||
Element | Disclosure requirement | |
1. On December 31, 2016, the Company has reclassified the income statements and the Cash flow statements of the Biofuels and Brazilian transmission lines owner companies to “Profit (loss) from discontinued operations, net of tax” in our income statements and under separate line items in our Consolidated cash flow statements, due to their significant activities develop within Abengoa. As a consequence the income statements and the Cash flow statements for the period ended December 31, 2015 have been restated. The main effects derived from the most significant magnitudes of the income statement are next: Revenues: Revenue decreased by 58.6% for the year ended December 31, 2016, compared to the previous year. The decrease in consolidated revenues is mainly due to current situation of the Company given the strong limitations of financial resources in which the Company is subjected during the last months, which has affected significantly to the evolution of the business after the general deceleration of the business. In addition, there is a decrease in revenues as a consequence of the negative impact that the finalization of several projects in 2015 has caused and the sale to Atlantica Yield of concessional-type plants and the loss of control of Rioglass at the end of 2015. Operating profit: Operating profit has decreased by 7,192.7 % for the year ended December 31, 2016, compared to the previous year. This decrease is mainly attributable to the already mentioned situation of the Group in last paragraph, which has supposed the general deceleration in business in every activity. Additionally, losses have increased mainly due to the impairment expenses registered in certain assets (intangible and fixed assets) pertaining to the Engineering and Construction segment (€163.0 million) due to their doubtful recovery given the problems arisen during the period to keep developing the activity in an appropriate manner, as well as, the impairment losses recognized when registering at fair value the assets related to solar plants in Chile (€455.6 million) and the generating plants in Mexico (€946.8 million). All the mentioned has been partially offset by lower amortization expenses due to the impact of the sale to Atlántica Yield of certain owner companies of concessional-type plants in 2015. Share of profit (loss) of associates carried under the equity method Results from share in associates companies decreased by 6,977.1% for the year ended December 31, 2016, compared to the previous year. This decrease is mainly attributable to the impairment recognized on the investment of the associates Rioglass Solar, Ashalim and APW-1 (€244 million). Profit/(Loss) from discontinued operations, net of tax Loss from from discontinued operations, net of tax increased by 545.9% for the year ended December 31, 2016, compared to the previous year. This decrease is mainly attributable to the integration of results of the transmission lines in Brazil and the operative segment of Bioenergy after its consideration as discontinued operation including an impairment given its recognition as fair value. Additionally, there is a decrease caused by the use of the equity method with Atlantica Yield and its affiliates at 2015 closing once loss its control and leaving the global integration method (classified until that date as discontinued operation). Profit for the year attributable to the parent company The decrease is mainly explained by the discontinued results of Bioenergy and Brazilian transmission lines (including the impairment loss on its assets), and the impairment of tax credits carried out in the uncertainty created by the current situation of the company regarding its possible recovery. Selected Consolidated balance sheet data The following table sets out the Group's selected Consolidated balance sheet for the years ended 31 December 2016, 2015 and 2014: Year ended December 31, 2016 2015 2014 (audited) (audited) (audited) |
Section B — Company | ||
Element | Disclosure requirement | |
(€ in millions) Consolidated Statement of Financial Position Data Non-current assets: Intangible assets 76.1 1,446.0 1,568.4 Property, plant and equipment 177.4 1,154.1 1,287.3 Fixed assets in projects 397.7 3,359.7 6,188.4 Investments in associates carried under the equity 823.2 1,197.7 311.3 method Financial investments 64.9 1,113.7 686.5 Deferred tax Assets 615.2 1,584.8 1,503.6
Total non-current assets 2,154.5 9,855.9 11,545.5
Current assets: Inventories 99.9 311.3 294.8 Clients and other receivables 1,327.4 2,004.4 2,156.9 Financial investments 149.9 518.8 1,048.6 Cash and cash equivalents 277.8 680.9 1,810.8 Assets held for sale (discontinued operations) 5,904.5 3,255.9 8,390.0
Total current assets 7,759.5 6,771.3 13,701.1
Total assets 9,914.0 16,627.2 25,246.6 Total equity (6,780.0) 452.9 2,646.2 Non-current liabilities Long-term project debt 12.6 503.5 4,158.9 Long-term corporate financing 267.0 371.5 3,748.7 Other liabilities 298.4 656.3 851.5
Total non-current liabilities 578.0 1,531.3 8,759.1
Current liabilities: Short-term project debt 2,002.9 2,566.6 799.2 Short-term corporate financing 7,398.1 6,196.5 1,576.7 Other liabilities 2,828.5 4,688.5 5,984.9 Liabilities held for sale (discontinued operations) 3,886.5 1,191.4 5,480.5
Total current liabilities 16,116.0 14,643.0 13,841.3
Total Liabilities 9,914.0 16,627.2 25,246.6
Selected Consolidated statement of cash flow data The following table sets out the Group's selected Consolidated statements of cash flows for the years ended 31 December 2016, 2015 and 2014: Year ended December 31, Year ended December 31,
2016 2015 (0) 0000 0000
(audited) (unaudited) (audited) (audited) (€ in millions) Consolidated Cash Flow Statement Data Profit for the period from (4,262.7) (823.7) (1,198.4) 144.1 continuing operations |
Section B — Company | ||
Element | Disclosure requirement | |
Non-monetary adjustments Depreciation, amortization and 1,900.7 372.8 814.3 474.9 impairment charges Finance (income)/expenses 719.0 472.9 611.0 648.3 Fair value gains on derivative financial 1.6 37.1 43.1 35.1 instruments Shares of (profits)/losses from 587.4 8.4 8.1 (7.0) associates Income tax 371.6 88.4 22.9 (58.6) Changes in consolidation and other 429.0 (324.8) (326.2) (54.1) non-monetary items Profit for the year from continuing operations adjusted by non (253.4) (168.9) (25.2) 1,182.7 monetary items Inventories 66.9 (29.5) (29.5) 67.1 Clients and other receivables 263.4 (59.5) (59.5) (654.7) Trade payables and other current (751.3) (666.5) (666.5) 246.3 liabilities Financial investments and other 344.4 257.1 257.1 (158.1) current assets/liabilities Elimination of flows from 11.2 (370.7) (142.1) (24.2) discontinued operations Variations in working capital and (65.4) (869.1) (640.5) (523.6) discontinued operations Income tax paid/collected (1.6) (20.8) (20.8) 8.6 Interest paid (83.2) (829.3) (829.3) (806.2) Interest received 18.0 39.5 39.5 33.9 Elimination of flows from 58.1 376.3 279.7 123.2 discontinued operations Received/(paid) for interest and (8.7) (434.3) (530.9) (640.5) income tax Total net cash flow generated by (327.5) (1,472.3) (1,196.6) 18.6 (used in) operating activities
Acquisition of subsidiaries - (28.6) (28.6) (303.7) Investment in property, plant & (60.5) (103.7) (103.7) (142.3) equipment Investment in intangible assets (180.3) (2,077.7) (2,077.7) (2,437.3) Other non-current assets/liabilities - (76.3) (76.3) (34.8) Elimination of flows from 68.3 751.6 102.1 284.0 discontinued operations Investments (172.5) (1,534.7) (2,184.2) (2,634.1)
Acquisition of subsidiaries 490.6 210.4 210.4 11.7 Disposals related to the sale of assets - 367.7 367.7 - to Abengoa Yield Investment in property, plant & 2.6 3.7 3.7 14.1 equipment Investment in intangible assets 11.7 - - 10.6 Other non-current assets/liabilities 53.6 - - 98.0 Elimination of flows from (380.7) - - - discontinued operations Disposals 177.8 581.8 581.8 134.4
Total net cash flows used in 5.3 (952.9) (1,602.4) (2,499.7) investment activities Proceeds from loans and borrowings 487.7 4,010.1 4,010.1 5,038.9 Repayment of loans and borrowings (496.2) (2,455.8) (2,455.8) (4,108.5) Dividends paid to company´s - (90.2) (90.2) (39.1) shareholders Initial Public Offering of subsidiaries - 331.9 331.9 611.0 Funds received from minority interest - 301.9 301.9 - of Abengoa Yield for sale of assets Other finance activities - 46.3 46.3 338.8 Elimination of flows from 223.6 (158.2) (158.0) (250.5) discontinued operations Total net cash flows generated by 215.1 1,986.0 1,986.2 1,590.6 finance activities Net increase/(decrease) in cash and (107.1) (439.2) (812.8) (890.5) |
Section B — Company | ||
Element | Disclosure requirement | |
cash equivalents
Cash, cash equivalents and bank 680.9 1,810.8 1,810.8 2,951.7 overdrafts at beginning of the year Translation differences cash or cash 5.2 (61.1) (58.2) 31.3 equivalent Elimination of cash and cash equivalents classified as assets held for 25.9 (37.6) (37.6) (21.8) sale during the year Elimination of cash and cash equivalents classificated as (327.1) (592.0) (221.3) (259.9) discontinued operations during the year Cash and cash equivalents at the end 277.8 680.9 680.9 1,810.8 of the year 1. On December 31, 2016, the Company has reclassified the income statements and the Cash flow statements of the Biofuels and Brazilian transmission lines owner companies to “Profit (loss) from discontinued operations, net of tax” in our income statements and under separate line items in our Consolidated cash flow statements, due to their significant activities develop within Abengoa. As a consequence the income statements and the Cash flow statements for the period ended December 31, 2015 have been restated. Selected Consolidated statements of changes in equity The following table sets out the Group's selected Consolidated statements of changes in equity for the year ended December 31, 2016 and 2015: Parent Accumulated Non- Share company currency Retained Total controlling Total capital and other translation earnings interest equity reserves differences Balance at December 31, 91.8 959.5 (582.8) 852.3 1,320.8 572.2 1,893.0 2013 (audited) Total comprehensive - (129.1) 53.5 125.3 49.7 8.3 58.0 income (loss) Transactions (0.1) 152.9 - (194.0) (41.2) - (41.2) with owners Scope variations, acquisitions and - 61.5 - 54.5 116.0 620.4 736.4 other movements Balance at December 31, 91.7 1,044.8 (529.3) 838.1 1,445.3 1,200.9 2,646.2 2014 (audited) Total comprehensive - 210.1 (501.1) (1,213.5) (1,504.5) (315.6) (1,820.1) income (loss) Transactions (89.9) 445.1 - (199.6) 155.6 - 155.6 with owners Scope variations, acquisitions and - 4.6 - (38.7) (34.1) (494.7) (528.8) other movements Balance at December 31, 1.8 1,704.6 (1,030.4) (613.7) 62.3 390.6 452.9 2015 (audited) Total comprehensive - 37.8 185.0 (7,629.1) (7,406.3) 150.0 (7,256.3) income (loss) Transactions - (1,062.1) - 1,062.8 0.7 - 0.7 with owners Scope variations, acquisitions and - - - 8.2 8.2 14.5 22.7 other movements Balance at December 31, 1.8 680.3 (845.4) (7,171.8) (7,335.1) 555.1 (6,780.0) 2016 (audited) |
Section B — Company | ||
Element | Disclosure requirement | |
Business and GeographicActivity Data For the year ended For the year ended December 31, December 31,
2016 2015(1) 2015 2014
audited unaudited audited audited (€ in millions) Engineering and 1,367.3 3,381.8 3,330.2 4,514.5 Construction Engineering and 1,367.3 3,381.8 3,330.2 4,514.5 Construction Concession Type 142.7 264.9 406.8 499.4 Infrastructure Solar 37.1 166.5 166.5 335.2 Water 58.9 53.0 53.0 40.8 Transmission 1.4 1.6 143.5 91.3 Co-generation and other 45.3 43.8 43.8 32.0
Industrial Production - - 2,018.5 2,136.7 Biofuels - - 2,018.5 2,136.7
Revenue (total) 1,510.0 3,646.7 5,755.5 7,150.6
1. On December 31, 2016, the Company has reclassified the income statements and the Cash flow statements of the Biofuels and Brazilian transmission lines owner companies to “Profit (loss) from discontinued operations, net of tax” in our income statements and under separate line items in our Consolidated cash flow statements, due to their significant activities develop within Abengoa. As a consequence the income statements and the Cash flow statements for the period ended December 31, 2015 have been restated. Year ended Year ended December 31, December 31, 2016 2015 (0) 0000 0000
(audited) (unaudited) (audited) (audited) (€ in millions) Consolidated Revenue by Geography Spain 212.8 436.4 806.7 889.1 North America 359.1 722.5 1,520.8 2,253.6 Europe (excluding Spain) 160.4 24.5 643.0 892.9 South America (excluding Brazil) 238.5 1,296.8 1,296.8 1,301.8 Brazil 98.8 521.8 843.1 874.7 Other regions 440.4 644.8 645.1 938.5
Total revenue 1,510.0 3,646.8 5,755.5 7,150.6
1. On December 31, 2016, the Company has reclassified the income statements and the Cash flow statements of the Biofuels and Brazilian transmission lines owner companies to “Profit (loss) from discontinued operations, net of tax” in our income statements and under separate line items in our Consolidated cash flow statements, due to their significant activities develop within Abengoa. As a consequence the income statements and the Cash flow statements for the period ended December 31, 2015 have been restated. | ||
B.9 | Profit forecast or estimate | The Company has chosen not to include a profit forecast or estimate in this Prospectus. |
B.10 | Qualifications | The Audited Consolidated Financial Statements of Abengoa as of and for each of the years |
Section B — Company | ||
Element | Disclosure requirement | |
in the audit report on historical information | ended December 31, 2016, 2015 and 2014 and the Audited Stand-Alone Financial Statements of the Company as of and for the years ended December 31, 2016, 2015 and 2014 have been audited by Deloitte, S.L. The auditor's reports on the Audited Consolidated Financial Statements and the Audited Stand-Alone Financial Statements as of and for the years ended December 31, 2016, 2015 and 2014 express an unqualified opinion. | |
However, the auditor's reports on the Audited Consolidated Financial Statements and the Audited Stand-Alone Financial Statements as of and for the years ended December 31, 2016 and 2015, contain an emphasis of matter paragraph regarding the restructuring process of the Company and its Group. Those emphasis of matter paragraphs are reproduced below: | ||
2015 Audited Consolidated Financial Statements: | ||
"Emphasis of Matter | ||
Without qualifying our audit opinion, we draw attention to the information included in Notes 2 and 4 to the accompanying consolidated financial statements, which describe the events that occurred in the second half of 2015 which led the Parent's directors to submit the notification provided for in Article 5 bis of Spanish Insolvency Law 22/2003 at Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 25 November 2015 and to request similar proceedings for certain subsidiaries both in Spain and in other countries. On 16 March 2016, the Parent presented its business plan and financial restructuring proposal which were previously agreed upon with a significant number of its financial creditors based on the aforementioned plan and which included, inter alia, the adherence of the financial creditors to a seven-month standstill agreement and which, following obtainment of the majorities required by current legislation, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 6 April 2016. The aforementioned agreement provides for the negotiation of the restructuring of the Group's debt and capital in order to ensure the viability of its operations. Therefore, the directors prepared the accompanying consolidated financial statements considering the entity's ability to continue as a going concern. | ||
The above-mentioned events and their impact on the financial and economic position of the Group, as reflected in the accompanying consolidated financial statements for 2015, indicate the existence of a significant uncertainty as to the Group’s ability to continue to operate as a going concern. Consequently, the recovery of the assets, the settlement of the liabilities and the fulfilment of the guarantee and collateral commitments for the amounts indicated in the accompanying consolidated financial statements will depend on the success of such financial and corporate restructuring measures as might be approved, on the performance of the Group companies' operations and on the possible future decisions that the Group's managers may make on disposals of assets or business lines." | ||
2015 Audited Stand-Alone Financial Statements: | ||
"Emphasis of Matter | ||
Without qualifying our audit opinion, we draw attention to the information included in Notes 2 and 5 to the accompanying financial statements, which describe the events that occurred in the second half of 2015 which led the Company's directors to submit the notification provided for in Article 5 bis of Spanish Insolvency Law 22/2003 at Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 25 November 2015 and to request similar proceedings for certain subsidiaries both in Spain and in other countries. On 16 March 2016, the Company presented its business plan and financial restructuring proposal were previously agreed upon with a significant number of its financial creditors based on the aforementioned plan and which included, inter alia, the adherence of the financial creditors to a seven-month standstill agreement and which, following obtainment of the majorities required by current legislation, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 6 April 2016. The aforementioned agreement provides for the negotiation of the restructuring of the debt and capital of Abengoa S.A. and Subsidiaries ("the Group") in order to ensure the viability of their operations. Therefore, the directors prepared the accompanying financial statements considering the entity's ability to continue as a going concern. | ||
The above-mentioned events and their impact on the financial and economic position of the Company, as reflected in the accompanying financial statements for 2015, indicate the existence of a significant uncertainty as to the Company’s ability to continue to operate as a going concern. Consequently, the recovery of the assets, the settlement of the liabilities and |
Section B — Company | ||
Element | Disclosure requirement | |
the fulfilment of the guarantee and collateral commitments for the amounts indicated in the accompanying financial statements will depend on the success of such financial and corporate restructuring measures as might be approved, on the performance of the operations and on the possible future decisions that the Company's managers may make on disposals of assets or business lines of the Group." 2016 Audit Consolidated Financial Statements: "Emphasis of Matters Without qualifying our audit opinion, we draw attention to the disclosures included by the Parent’s directors in Notes 2 and 4 to the accompanying consolidated financial statements, which describe the evolution of operations and the events that led the Parent's directors to approve the signing of a financial restructuring agreement (“Abengoa Restructuring Agreement”) with various xxxxx and new investors on 24 September 2016, the approval of which, once the majorities required by current legislation had been obtained, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 8 November 2016. This financial restructuring agreement was subject to the fulfilment of certain conditions precedent. On 14 February 2017, the Parent reported, through a relevant event communication, that, in view of the situation in Mexico and in order to expedite the fulfilment of the conditions precedent of the Abengoa Restructuring Agreement and to begin to implement the revised viability plan approved on 3 August 2016, it had prepared, together with its main creditors and investors, a proposal to adapt the mechanism for the payment of the new financing envisaged in the financial restructuring agreement. This proposal requires certain amendments to the Abengoa Restructuring Agreement and the consent of the majority of the participating creditors, which had been obtained at the date of this report. The aforementioned agreements envisage, among other matters, the restructuring of the Group's debt and of the Parent's share capital, with certain financial creditors and new investors becoming shareholders, and, also, the reorganisation of the Group companies and the Group's businesses in accordance with the revised viability plan. Under this plan, at 31 December 2016 certain business lines and construction projects that are regarded in the revised viability plan as being non-core for the continuity of the Group with the new financing structure agreed upon, or which the directors consider to be unfeasible in the medium term in view of the current situation of the companies or the assets, were classified as either non current assets held for sale or discontinued operations. From August 2015 the inability to access sufficient financing had paralysed the majority of the Group’s operations and made it impossible for it to meet its deadline obligations in existing concessions and projects, whilst preventing it from undertaking significant new projects, all of which affected the performance of the business during the year. As a result of all the foregoing, certain foreign companies have undergone court insolvency proceedings that have resulted in company or asset liquidation processes that are out of the Group’s control. The Parent’s directors have disclosed in the consolidated financial statements the impacts of the liquidation and discontinuation of the companies not included in the Group’s revised viability plan and liquidity plan, which will be substantially offset by the future effects of the restructuring of the debt and the corresponding debt reduction. Also, the loss for 2016 includes the impact of the impairment losses which, in accordance with International Financial Reporting Standards (IFRSs), must be recognised at 31 December 2016. As a result, both the Group and the Parent had an equity deficit at that date and, therefore, the Parent was in a situation of mandatory dissolution. The directors consider that the restructuring agreed upon will make it possible to restore the equity and financial position of the Parent. The aforementioned circumstances are indicative of the existence of a significant uncertainty regarding the ability of the Group to continue operating as a going concern. As a result, the viability of the Group, and the recovery of its assets, the settlement of its liabilities and the fulfilment of its guarantee commitments for the amounts reflected in the accompanying consolidated financial statements will depend on the effective application of the measures envisaged in the restructuring agreement, the revised viability plan and the liquidity plan, as well as on the evolution of the Group companies’ operations and such future decisions as the |
Section B — Company | ||
Element | Disclosure requirement | |
managers of the Group might make regarding its equity." 2016 Audited Stand-Alone Financial Statements: "Emphasis of Matter Without qualifying our audit opinion, we draw attention to the disclosures included by the directors in Notes 2 and 5 to the accompanying consolidated financial statements, which describe the evolution of operations and the events that led the Company's directors to approve the signing of a financial restructuring agreement (“Abengoa Restructuring Agreement”) with various xxxxx and new investors on 24 September 2016, the approval of which, once the majorities required by current legislation had been obtained, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 8 November 2016. This financial restructuring agreement was subject to the fulfilment of certain conditions precedent. On 14 February 2017, the Company reported, through a relevant event communication, that, in view of the situation in Mexico and in order to expedite the fulfilment of the conditions precedent of the Abengoa Restructuring Agreement and to begin to implement the revised viability plan approved on 3 August 2016, it had prepared, together with its main creditors and investors, a proposal to adapt the mechanism for the payment of the new financing envisaged in the financial restructuring agreement. This proposal requires certain amendments to the Abengoa Restructuring Agreement and the consent of the majority of the participating creditors, which had been obtained at the date of this report. The aforementioned agreements envisage, among other matters, the restructuring of the debt of Xxxxxxx, S.A. and Subsidiaries ("the Group") and of the Company's share capital, with certain financial creditors and new investors becoming shareholders, and, also, the reorganisation of the Group companies and the Group's businesses in accordance with the revised viability plan. Under this plan, at 31 December 2016 certain business lines and construction projects that are regarded in the revised viability plan as being non-core for the continuity of the Group with the new financing structure agreed upon, or which the directors consider to be unfeasible in the medium term in view of the current situation of the companies or the assets, were classified as either non current assets held for sale or discontinued operations. From August 2015 the inability to access sufficient financing had paralysed the majority of the Group’s operations and made it impossible for it to meet its deadline obligations in existing concessions and projects, whilst preventing it from undertaking significant new projects, all of which affected the performance of the business during the year. As a result of all the foregoing, certain foreign companies have undergone court insolvency proceedings that have resulted in company or asset liquidation processes that are out of the Group’s control. The Parent’s directors have disclosed in the financial statements the impacts of the liquidation and discontinuation of the companies not included in the Group’s revised viability plan and liquidity plan, which will be substantially offset by the future effects of the restructuring of the debt and the corresponding debt reduction. Also, the loss for 2016 includes the impact of the impairment losses which, in accordance with the regulatory financial reporting framework applicable to the Company, must be recognised at 31 December 2016. As a result, both the Group and the Parent had an equity deficit at that date and, therefore, the Parent was in a situation of mandatory dissolution. The directors consider that the restructuring agreed upon will make it possible to restore the equity and financial position of the Parent. The aforementioned circumstances are indicative of the existence of a significant uncertainty regarding the ability of the Company to continue operating as a going concern. As a result, the viability of the Company, and the recovery of its assets, the settlement of its liabilities and the fulfilment of its guarantee commitments for the amounts reflected in the accompanying financial statements will depend on the effective application of the measures envisaged in the restructuring agreement, the revised viability plan and the liquidity plan, as well as on the evolution of the Group companies’ operations and such future decisions as the managers of the Company might make regarding its equity." |
Section B — Company | ||
Element | Disclosure requirement | |
B.11 | If the issuer's | The Company believes that, taking into account the bank facilities available, its existing cash |
working | resources and the result of the Share Capital Increase (as defined in C.1 below) and | |
capital is not | contribution of New Money, Abengoa can meet its working capital post-restructuring | |
sufficient for | requirements for a period of twelve months. However, if Abengoa's capital requirements | |
the issuer's | exceed its projections, Abengoa may be required to seek additional financing, which may not | |
present | be available on commercially reasonable terms, if at all. | |
requirements | ||
an explanation | ||
should be | ||
included |
Section C — Securities | ||
Element | Disclosure requirement | |
C.1 | Description of class of the securities | The securities for which admission to trading on the Madrid and Barcelona Stock Exchanges is sought by way of this Prospectus are: • 1,577,943,825 new class A shares with a par value of €0.02 each (the "New Class A Shares") and 16,316,369,510 new class B shares with a par value of €0.0002 each (the "New Class B Shares", and together with the New Class A Shares, the "New Shares") of Abengoa, of the same class and series and carrying the same rights as the class A shares and the class B shares currently in circulation, respectively (collectively, the "Shares"). The New Shares were issued pursuant to five Share Capital Increases carried out in order to capitalize debt and fees held by certain former creditors and new financing entities that have participated in the recent restructuring of Abengoa (collectively referred as the "Share Capital Increase"). The New Class A Shares and the New Class B Shares issued in the Share Capital Increase have been allocated by the Spanish National Agency for the Codification of Securities (Agencia Nacional de Codificación de Valores), an entity dependent upon the CNMV, with the following temporary ISIN codes until Admission, following which they will bear ISIN codes ES0105200416 for the class A shares and ES0105200002 for the class B shares, as to the rest of the Company's issued and outstanding Shares: New Money Tranche 1 Capital Increase (as defined in section E.2 below): New Class A Shares: ES0105200390 New Class B Shares: ES0105200408 New Money Tranche 2 Capital Increase (as defined in section E.2 below): New Class A Shares: ES0105200424 New Class B Shares: ES0105200432 New Money Tranche 3 Capital Increase (as defined in section E.2 below): New Class A Shares: ES0105200440 New Class B Shares: ES0105200457 New Bonding Facilities Capital Increase (as defined in section E.2 below): New Class A Shares: ES0105200465 New Class B Shares: ES0105200473 Existing Debt Capital Increase (as defined in section E.2 below): New Class A Shares: ES0105200481 New Class B Shares: ES0105200499 • 83,049,675 Class A Warrants and 858,756,290 Class B Warrants (collectively referred throughout this Prospectus as "Abengoa Warrants" and, together with the New Shares, the "Securities"), to be traded on the AQS, in the "Warrants, Certificates and Other Products" segment (segmento de "Warrants, Certificados y Otros Productos"), attaching the right to respectively subscribe for the same number of new class A shares and new |
Section C — Securities | ||
Element | Disclosure requirement | |
class B shares. The Spanish National Agency for the Codification of Securities (Agencia Nacional de Codificación de Valores Mobiliarios), has assigned the following ISIN codes to the Class A Warrants and the Class B Warrants: ES0605200007 for the Class A Warrants and ES0605200015 for the Class B Warrants. The Abengoa Warrants will be traded through the AQS Block Market solely and, therefore, no market member will be designated as specialist responsible for promoting market liquidity in respect of the Abengoa Warrants. | ||
C.2 | Currency of the Securities issued | The Securities are denominated in Euros. |
Section C — Securities | ||
Element | Disclosure requirement | |
C.3 | Number of issued and fully paid Shares | Immediately prior to the execution of the Share Capital Increase, the Company's share capital was of €1,832,744.76, consisting of 83,049,675 Class A Shares of €0.02 par value each, and of 858,756,290 Class B Shares of €0.0002 par value each. |
C.4 | Rights attaching to the Securities | • The New Shares: The New Shares will grant their owners the same rights set forth in the Company's bylaws (estatutos sociales) and in the consolidated text of the Spanish Companies Act, approved by Royal Legislative Decree 1/2010, of July 2 (texto refundido de la Ley de Sociedades de Capital, aprobado por el Real Decreto Legislativo 1/2010, de 2 de julio) (the "Spanish Companies Act"), for the Shares currently outstanding, as follows: Class A shares: Voting rights Each Class A share carries one hundred (100) voting rights. Pre-emptive rights and rights to free assignment of new shares Right to convert Class A shares into Class B shares Other rights Class B shares: Voting rights Each Class B share, with a par value of two ten-thousandths euro (€0.0002), carries the right to one vote. Pre-emptive rights and rights to free assignment of new shares Other rights Separate voting in the event of modifications of the bylaws or resolutions and other transactions that may negatively affect Class B shares Redemption Rights of Class B shares • The Abengoa Warrants: Grant the Shareholders of Record the right to subscribe for a number of new class A and new class B shares collectively representing a 5% of the total number of class A shares and class B shares into which the share capital of Abengoa is divided following the Share Capital Increase. |
C.5 | Description of restrictions on free transferability of the Securities | • There are no restrictions on the free transferability of the Shares in the Company's bylaws (estatutos sociales), as it is required by the regulations in force on matters regarding the listing shares on regulated markets. Once admitted to trading on the Madrid and Barcelona Stock Exchanges, the New Shares issued pursuant to the Share Capital Increase will be traded and transferable through the AQS. • Likewise, once admitted to trading on the Madrid and Barcelona Stock Exchanges, the Abengoa Warrants issued pursuant to the Share Capital Increase will be traded and freely transferable through the AQS. |
C.6 | Applications for admission to trading on regulated markets | On March 16, 2017, the Company's Board of Directors, by virtue of the powers delegated in its favour by the Extraordinary General Shareholders' Meeting held on November 22, 2016, resolved to apply for the admission to trading of both the New Shares and the Abengoa Warrants on the Madrid and Barcelona Stock Exchanges through the Automated Quotation System (in the case of the Abengoa Warrants, in the "Warrants, Certificates and Other Products" segment −segmento de "Warrants, Certificados y Otros Productos"− and to take all steps required for both the New Shares and the Abengoa Warrants to be included in the book-entry records of Iberclear and its member entities. |
Section C — Securities | ||
Element | Disclosure requirement | |
The admission of both the New Shares and the Abengoa Warrants does not require any authorization other than the approval and registration of this Prospectus by the CNMV, the securities being recorded in Iberclear and the possitive verification of admission to listing by the Stock Exchanges of Madrid and Barcelona, according to the provisions of the Spanish Securities Markets Act and developing regulation. | ||
C.7 | Dividend policy | The terms and conditions included in the financial agreements entered into as part of the Restructuring Agreement include a prohibition on the distribution of dividends until all of the new money financing and old money financing is repaid in full. Therefore, we expect that no dividend payments will be made until, at least, 2023, date in which the last Old Money financing is expected to be repaid. The prohibition on dividends also affects "Abengoa Abenewco 1, S.A.U." ("AbeNewco 1") and "Xxxxxxx Xxxxxxxx 2, S.A.U." ("AbeNewco 2"), the holding companies recently incorporated by Abengoa in the context of the Group's corporate restructuring (see chart B.5 above). Whilst distribution of dividends within the companies of AbeNewco 1's consolidation perimeter are generally permitted, distributions of dividends in favour of the Company, AbeNewco 2 and any shareholders thereof are prohibited, except for distributions required to attend scheduled debt service payments and, up to a certain cap, distributions required to attend the Company's general corporate expenses. |
C.8 | Ranking and any limitations to the rights attaching to the Abengoa Warrants | As previously stated in Element C.4 above, the Abengoa Warrants grant the Shareholders of Record the right to subscribe for a number of new class A and new class B shares collectively representing a 5% of the total number of class A shares and class B shares into which the share capital of Abengoa is divided following the Share Capital Increase. No ranking is applicable to the Warrants. Please see Elements C.16 and C.19 for further information on the exercise prices and periods. |
C.11 | Aplication for the admission to trading of the Abengoa Warrants | See Element C.1 above. |
C.15 | Effects of the value of the underlying Shares on the value of the Abengoa Warrants | The market price of the Company's Shares underlying to the Abengoa Warrants may significantly affect the market price of the Abengoa Warrants. The market price of the Company's Shares could be subject to significant fluctuations due to different factors make impossible to predict how the Company's Shares will trade in the future, such as future sales of Company's Shares and/or equity related securities in the public market, additional issuances of Company's Shares or convertible securities, which may dilute shareholders’ interest in the Company, changes in the Company's dividend policy, the Company's performance or the interest of securities dealers in making a market in the Abengoa Warrants. A decline in the market price of the Company's Shares could lead to a decline in the market price of the Abengoa Warrants. The price of the Company's Shares could also be affected by possible sales of Company's Shares by investors who view the Abengoa Warrants as a more attractive means of equity participation in the Company and by hedging activity involving the Company's Shares. The hedging of the Company's Shares could, in turn, affect the market price of the Abengoa Warrants. |
C.16 | Exercise date of the Abengoa Warrants | The Abengoa Warrants may be exercised by their holders, totally or partially, if, following the expiration of the time period comprised by the 96 months following the date on which all the necessary actions to implement the restructuring of the Group's financial debt and recapitalization set out in the Restructuring Agreement were taken (i.e., the date of completion of the Reestructuring, which will be such date on which the Securities for which admission is sought by way of this Prospectus commence trading on the Madrid and Barcelona Stock Exchanges, which is expected for March 31, 2017) the amounts owed both under of the new financing provided to Abengoa under the Restructuring Agreement and the pre-existing financial debt (as restructured) have been fully satisfied, including the financial costs involved. If such condition is met, the Abengoa Warrants could be executed at any time within the maximum term of the three months. The fulfillment of such exercise condition will be communicated by the Company to the market through the publication of a relevant event notice (comunicación de hecho relevante). According to the foregoing, the rights attaching to the Abengoa Warrants will be cancelled if, following the expiration of a 96-month period, the amounts owed both under of the new |
Section C — Securities | ||
Element | Disclosure requirement | |
financing provided to Abengoa under the Restructuring Agreement and the pre-existing financial debt (as restructured), including the financial costs involved were not paid in full. They will also be cancelled if, at the end of the 96-month period, the amounts owed both under of the new financing provided to Abengoa under the Restructuring Agreement and the pre-existing financial debt (as restructured) were fully satisfied, including the financial costs involved but holders of the Abengoa Warrants do not exercise their rights in the three month period referred to above. | ||
C.17 | Settlement procedure of the Abengoa Warrants | Not applicable. The Abengoa Warrants are not derivative securities. |
C.18 | Return on the Abengoa Warrants | Not applicable. The Abengoa Warrants are not derivative securities. No payments will be made on the Abengoa Warrants. The Abengoa Warrants do not grant their holders any further rights other than those described in Elements C.4 and C.8 above and, in particular, they shall not grant the right to receive any amounts equivalent to the per-share dividend, distribution of reserves or other similar distributions corresponding to the underlying Company's Shares. |
C.19 | Exercise price of the Abengoa Warrants | The total consideration of the Warrants Share Capital Increase whereby the Class A Warrant Shares and the Class B Warrant Shares are to be issued, if appropriate, to meet the exercise requests of the rights attaching, respectively, to the Class A Warrants and the Class B Warrants, shall be paid up by the holders thereof through the disbursement in cash of the exercise price of the Class A Warrants and/or the Class B Warrants, as applicable, which shall be equivalent to the respective par values of €0.02 and €0.0002 of each of the Class A Warrant Shares and the Class B Warrant Shares. The exercise price shall only be adjusted in the event that the Company was to split the par value of the class A and/or the class B shares, group the shares or carry out any other transactions with an equivalent effect in the par value per share, without affecting the amount of the Company's share capital. In those cases, the Company shall adjust the respective exercise prices of the Abengoa Warrants accordingly to adapt them to the new par value of the underlying Abengoa shares. Therefore, other events or corporate transactions that affect the value of the Abengoa shares and thus, the Abengoa Warrants (such as share capital increases with pre-emptive rights or any sort of distributions to existing shareholders) may occur that do not result in an adjustment to the exercise prices or the number of underlying shares. Likewise, the share capital reductions effected to meet the requests for conversion of class A shares into class B shares submitted by the shareholders in the exercise of their right of voluntary conversion of class A shares into class B shares will not have any effect on the exercise price of the Abengoa Warrants. In addition, in the event that, within the period comprised between the date of issuance of the Abengoa Warrants and the date, following the expiration of the time period comprised by the 96 months following the date on which all the necessary actions to implement the restructuring of the Group's financial debt and recapitalization set out in the Restructuring Agreement were taken and provided that, once such period has elapsed, on which the amounts owed both under of the new financing provided to Abengoa under the Restructuring Agreement and the pre-existing financial debt (as restructured) have been fully satisfied, including the financial costs involved, the General Shareholders' Meeting of the Company were to approve the collapse the Company's class A and class B shares into a single new class of ordinary shares, the type and number of the underlying shares would be adjusted in order to ensure that the shares to be subscribed for in exercise of the rights attaching to the Abengoa Warrants are ordinary shares of the Company and that, collectively considered, the number of the underlying shares continues to represent 5% of the total number of shares into which the Company's share capital is divided as a result of the execution of the Capital Increases. The exercise price of the Abengoa Warrants would likewise be adjusted to the par value of the underlying Abengoa ordinary shares. |
C.20 | Type of the underlying and where the information | Not applicable. |
Section C — Securities | ||
Element | Disclosure requirement | |
on the underlying can be found |
Section D — Risks | ||
Element | Disclosure requirement | |
D.1 | Key information on the key risks that are specific to the Issuer or its industry | IMPORTANT NOTICES The Company wishes to highlight to the market and to any future shareholders of the Company the following matters: We have incurred significant losses in 2015 and 2016 resulting in negative net equity for Abengoa and uncertainty regarding the ability of Abengoa to continue operating as going concern |
We incurred losses in 2015 and 2016. In 2016, Xxxxxxx'x consolidated losses amounted to €7,629 million (€1,213 million in 2015), mostly due to the negative impact from: (i) the impairment of certain assets (Bioenergy plants, transmission lines in Brazil, generation assets in Mexico and Chile, tax credits) for a total amount of €6,036 million; (ii) the effect of the general decrease in activity which has caused, amongst others, provision of constructions costs for a total of €245 million; and (iii) higher financial expenses amounting to €521 million, mainly derived from the materialization and provision of certain guarantees and default interests. | ||
During 2016, the activity of Abengoa has been strongly conditioned by the restrictions on liquidity, which caused a general slowdown in business development. Within this context, Xxxxxxx has recorded revenues of €1,510 million and a negative EBITDA of €241 million in 2016. These figures exclude the impact from the Bioenergy activity and the concessional Brazilian transmission lines, which have been classified as discontinued operations in line with the viability plan, and with combined impact on revenues of €1,137 million in 2016 (€2,109 million in 2015). | ||
Due to the foregoing, as of December 31, 2016, the Company had €6,357 million of individual negative net equity (patrimonio neto individual negativo). | ||
The aforementioned circumstances were considered by Deloitte, S.L., as auditor of the Company and its Group, with the occasion of the issue of the auditor's reports on the Audited Consolidated Financial Statements and the Audited Stand-Alone Financial Statements as of and for the years ended December 31, 2016 and 2015, which –although expressing an unqualified opinion–, included an emphasis of matter paragraph on the existence of a significant uncertainty regarding the ability of Abengoa to continue operating as a going concern. | ||
The implementation of the measures stipulated in the viability plan has led to the recognition of certain losses during 2016. It is expected that these losses will be compensated once the positive impacts from the debt write-offs and Share Capital Increases contemplated in the Restructuring Agreement (as defined below) are registered, allowing Abengoa to restore its financial stability and to obtain the liquidity needed to begin the operations contemplated in the viability plan and continue with the its activity in a competitive and sustainable manner going forward. | ||
In addition to the financial restructuring, Xxxxxxx presented in August 2016 a viability plan that would allow for reduction of corporate debt, improvement of liquidity position and stabilization of operations. This viability plan envisaged the completion of the Restructuring Process by December 2016 with the company resuming business activity in early 2017. The delay in the completion of the Restructuring Process and the start of Abengoa’s business activity could prevent Abengoa to fully benefit from the positive effects of the financial restructuring. | ||
The successful implementation of the viability plan is subject to a variety of factors outside of the scope of control of the Company |
Section D — Risks | ||
Element | Disclosure requirement | |
The successful implementation of the viability plan will depend on Xxxxxxx'x ability to reverse the activity slowdown suffered over the past year, the future operating results,the ability of Abengoa's business to generate cash flows recursively and the completion of the asset disposal plan This will be conditioned, to a great extent, and among many other factors, by the economic, financial, market and competitive situation, and asset sales could be subject to market appetite, approvals from partners, financing entities or government authorities, which are all outside of the scope of control of Abengoa. Even after the restructuring of its financial debt (see “Capitalisation and Indebtedness”), Xxxxxxx keeps a financial indebtedness of an approximate amount of €5,829 million, out of which €3,450 are consolidated corporate and project financial debt and €2,379 is classified under liabilities held for sale. At the current high levels of debt, if market or business operating conditions do not recover or further deteriorate, Xxxxxxx'x business may be unable to generate enough cash flows in order to deal with its current debt maturities. Furthermore, Xxxxxxx'x inability to complete the sales during 2017 of the assets that are identified as assets available for sale, although such sale is considered to be highly probable by Xxxxxxx, would prevent Abengoa from continuing to classify any asset and related liability that has not been sold as available for sale and would entail the reclassification of the asset and related liability, including the debt, in the Consolidated financial statements, which would have the effect of increasing the levels of corporate financing and project financing. As of the date of this Prospectus, Abengoa has completed sales of assets included in the viability plan published on August 16, 2016 for €200 million. Some asset disposal initiatives have been put on hold or conditioned to the completion of the restructuring process; so, it is reasonable to expect those processes to accelerate once the restructuring process is completed. Also, on March 16, 0000, Xxxxxxx announced the sale of the European bioenergy assets to Trilantic Europe; however, as of the date of this Prospectus the sale has not been completed as it is subject to certain conditions precedent; therefore, proceeds from this sale are not accounted for in the €200 million mentioned above Finally, Abengoa can opportunistically dispose of other assets or businesses not included in the disposal plan that can add on to the plan or mitigate the risk of not completing it in the period initially expected. For example, in December 0000 Xxxxxxx reached an agreement with Ericsson for the transfer of its telecommunications business, Abentel. The five-year viability plan presented to the market in August 2016 envisaged the completion of the restructuring by December 2016, with Xxxxxxx resuming business activity in early 2017. The delay in the completion of the restructuring process and the restart of Abengoa's business activity might have an impact on the operating cash flow and investment estimates in the viability plan. However, as of the date of this Prospectus, Xxxxxxx does not have an updated viability plan. Certain of the Abengoa's most valuable assets have been contributed to a series of holding companies, whose shares serve as collateral of the new financing arrangements subscribed in the context of the Restructuring Agreement In consideration of creditors for voluntarily acceding to the Restructuring Agreement and opting for Alternative Restructuring Terms therein, the Company assumed before those creditors, amongst others, the obligation to implement a corporate restructuring of the Group with the purpose of contributing certain of the Abengoa’s most valuable assets (including Abengoa’s stake in Atlantica Yield, the cogeneration plan in Mexico Abent 3T and certain EPC subsidiaries) as collateral of the new financing agreements entered into by Abengoa and the new money financing providers. If Abengoa breaches any of the debt servicing obligations or breaches any related financial or operational limitation under any of those financing agreements, the creditors could declare the total value of the debt immediately due and payable and could foreclose on any asset pledged as collateral, which may result in the Company losing control over, or being deprived of, the underlying assets. Certain circumstances occurring following the date of this Prospectus may give rise to the financial restructuring events of default The completion of the Restructuring (including the accounting of the Restructuring in the |
Section D — Risks | ||
Element | Disclosure requirement | |
Company's records) will not take place until the date when all the coditions foreseen in the Restructuring Agreement to that effect have been completely fulfilled, including the admission to listing and effective trading on the Madrid and Barcelona Stock Exchanges of the Securities for which admission is sought by way of this Prospectus. All such conditions have been fulfilled as of the date of this Prospectus, except for the admission to listing of the Securities, which, as previously stated throughout this Prospectus, the Company expects to take place on March 31, 2017, with trading on the Securities commencing effectively on March 31, 2017. If the effective trading on the Securities does not take place on or before the long-stop date for the completion of the Restructuring, which is March 31, 2017, completion of the Restructuring will not take place. Likewise, if, in the context of the legal proceedings relating to the challenge of the judicial approval of the Restructuring Agreement that are currently taking place in Spain, the challenges upheld were to imply that Existing Creditors holding Affected Debt (as defined in "Business—4.- The restructuring process" below) for an aggregate amount higher than €20 million were not affected by the Restructuring Agreement, an event of default under the new financing instruments will occur. If Abengoa breaches any of the debt servicing obligations or breaches any related financial or operational limitation under any of those new financing instruments, the creditors could declare the total value of the debt immediately due and payable and could foreclose on any asset pledged as collateral, which may result in the Company losing control over, or being deprived of, the underlying assets. The Abengoa Warrants will be traded through the AQS Block Market solely and are expected to have very limited liquidity The Abengoa Warrants will be traded through the AQS Block Market solely and, therefore, no market member will be designated as specialist responsible for promoting market liquidity in respect of the Abengoa Warrants. As a consequence, it is expected that they will have very limited liquidity and thus it will be difficult for investors to be able to transfer the Abengoa Warrants when needed. The transactions in the AQS Block Market are strictly bilateral and require investors to find a counterparty that is willing to acquire such instruments. The minimum amount of each transaction is 50,000€ which could be a large amount depending on the value of each Xxxxxxx Xxxxxxx. Xxxxxxx has made its best efforts to appoint a market member to act as specialist for the Abengoa Warrants, but due to the difficulties in the valuation of these instruments, so far it has not been possible to do so. However, Abengoa will continue to make its best efforts to find such a specialist and, should it be the case, the Abengoa Warrants would then be listed in the principal market of the Stock Exchanges and through the AQS of the Stock Exchange Interconnection System. For a futher description of these matters, see the risk factors below: I.- SPECIFIC RISKS RELATED TO ABENGOA RISKS RELATED TO ABENGOA'S FINANCIAL SITUATION – We have incurred significant losses in 2015 and 2016 resulting in negative net equity for Abengoa and uncertainty regarding the ability of Abengoa to continue operating as going concern – The successful implementation of the viability plan is subject to a variety of factors outside of the scope of control of the Company – Certain of the Abengoa's most valuable assets have been contributed to a series of holding companies, whose shares serve as collateral of the new financing arrangements subscribed in the context of the Restructuring Agreement – Certain circumstances occurring following the date of this Prospectus may give rise to the financial restructuring events of default – The Abengoa Warrants will be traded through the AQS Block Market solely and are expected to have very limited liquidity – – The Restructuring is a complex transaction that will have a significant impact on the Group's reported financial situation; the impact on reported results may differ from that assessed by Group management – Risks relating to the indebtedness of Abengoa after the restructuring of its debt |
Section D — Risks | ||
Element | Disclosure requirement | |
– Risks arising from Abengoa’s strategy of operating with negative working capital – Risks arising from the Company's dividend policy – Risks relating to possible judicial actions filed in the context of the Restructuring – Abengoa operates with high levels of debt and could take on additional borrowing – Risks derived from the need to make significant levels of investment in fixed assets (CAPEX) – RISKS RELATED TO ABENGOA'S BUSINESS Risks related to the Engineering and Construction activity – Risks arising from delays or cost overruns in the Engineering and Construction activity due to the technical difficulty of projects and the long term nature of their implementation – The nature of the Engineering and Construction business exposes Abengoa to potential liability claims – Backlog risk: Cancellation of pending projects in Engineering and Construction – The results of the Engineering and Construction (“E&C”) activity depend to some extent on the growth of Abengoa’s Concession-type Infrastructures Risks related to the Concession-Type Infrastructure activity – Risks associated with concession-type infrastructure projects that operate under regulated tariffs or very long term concession agreements – Risks derived from the existence of termination and/or renewal clauses of the concession agreements managed by Abengoa Other risks related to Abengoa’s business – Risks derived from Abengoa's significant dependence on its relationships with certain major customers – Internationalization and country risk – Risks derived from turnover in the senior management team and among key employees or from an inability to hire highly qualified personnel – Construction projects related to the Engineering and Construction activity and the facilities of the Concession-type Infrastructures and biofuels operations are hazardous workplaces – Risks related to the bioenergy activities II.- OTHER RISKS RISKS RELATED TO THE INDUSTRY IN WHICH ABENGOA OPERATES – Risks derived from associations with third parties when executing certain projects – The delivery of products and the provision of services to clients, and compliance with the obligations assumed with these clients, can all be affected by problems related to third-parties and suppliers – Risks relating to changes in technology, prices, industry standards, and other factors – Insurance policies taken out by Abengoa may be insufficient to cover the risks arising from projects REGULATORY RISKS – A substantial portion of our consolidated revenues is generated by our operations in the United States of America – Risks derived from reductions in government budgets, subsidies and adverse changes in the law that could affect Xxxxxxx’x business and development of its current and future projects – Risk derived from a reliance on favorable regulation of the renewable energy business and bioethanol production – Risks derived from compliance with strict environmental regulations MARKET RISK – Risks relating to the exposure to foreign exchange rate |
Section D — Risks | ||
Element | Disclosure requirement | |
– Risks relating to the exposure to variations in interest rate CREDIT RISKS – Risks related to clients and other receivables – Risks related to financial investments ACCOUNTING RISKS – The analysis of whether the IFRIC 12 ruling applies to certain contracts and activities, and determination of the appropriate accounting treatment in the event that it is applicable, involves various complex factors and is influenced by diverse legal and accounting interpretations – The recovery of deferred tax assets depends on obtaining profits in the future, which in turn depends on uncertain estimates MACROECONOMIC RISKS – Risks arising from the difficult conditions in the global economy and in global capital markets and their impact on reducing the demand for goods and services and difficulties in achieving the funding levels necessary for the development of existing and future projects and debt refinancing REPUTATIONAL RISKS – Adverse publicity may have negative effect on the brand names owned or used in the Group – Risks derived from a shift in public opinion about Xxxxxxx'x activities RISKS DERIVED FROM LAWSUITS AND OTHER LEGAL PROCEEDINGS |
Section D — Risks | ||
Element | Disclosure requirement | |
D.3 | Key information on the key risks that are specific to the Securities | III.- SPECIFIC RISKS RELATING TO THE SECURITIES RISKS RELATED TO THE SHARES – Future sales of the Class A shares, Class B shares and/or equity related securities in the public market could adversely affect the trading price of the Class A shares and Class B shares and our ability to raise funds in new stock offerings – Abengoa may at some point in the future issue additional shares or convertible securities, which may dilute shareholders’ interest in our Company – Risks arising from Company's dividend policy. We do not intend to pay dividends in the short/medium term on our shares and, as a result, an investor's only opportunity to achieve a return on its investment could be if the price of our shares appreciates – It may be difficult for shareholders outside Spain to serve process on, or enforce foreign judgments against, the Company or the directors, for example, shareholders may face difficulties in protecting their interests because of differences in shareholders' rights and fiduciary responsibilities between Spanish laws and the laws of other jurisdictions, including most U.S. states – Shareholders in certain jurisdictions other than Spain or other EU countries, including the United States, may not be able to exercise their pre-emptive rights to acquire further shares or participate in buy-backs – An investor whose currency is not the euro is exposed to exchange rate fluctuations – Certain potential U.S. federal income tax consequences to the Company’s U.S. Subsidiaries RISKS RELATED TO THE ABENGOA WARRANTS – The Abengoa Warrants are a risky investment and may expire worthless – There is no existing market for the Warrants, and we cannot be certain that an active market will be developed – The market price of the Abengoa Warrants will be affected by the market price of the Company's Shares, which may be volatile – Subsequent holders of the Abengoa Warrants will have no rights as shareholders until they acquire Company's Shares upon exercise of the rights attaching to the Abengoa Warrants – The exercises prices of the Class A Warrants and the Class B Warrants and the number of underlying class A and class B shares will not be adjusted for all dilutive events |
D.6 | Warning on the risk of losing the value of the Abengoa Warrants or part of it | If the underlying Company's Shares price falls and remains below the exercise price of the Abengoa Warrants (which is the face value of the underlying Company's Shares), the Abengoa Warrants may not have any value and may expire without being exercised. There can be no assurance that the market price of the Company's Shares will exceed the exercise price or the price required for the holder of the Abengoa Warrants to achieve a positive return at any point during the Abengoa Warrants exercise period. |
Section E — The Share Capital Increase and the issue of the Abengoa Warrants | ||
Element | Disclosure requirement | |
E.1 | Total net | The Share Capital Increase (which amounted in total to 34,822,150.402 euros) was executed |
proceeds of | to capitalize existing debt and to honor the commitments under the refinancing. | |
the Share | ||
Capital | Additionally in case that all the Abengoa Warrants are exercised, the Company will obtain | |
Increase and | total net proceeds of 1,832,744.758 euros. | |
the issue of the | ||
Abengoa | The tables below set forth, merely for illustrative purposes, the estimated expenses | |
Warrants and | (excluding VAT) involved in the listing of the New Shares and the Abengoa Warrants: | |
estimated | ||
expenses | Listing of the New Shares Expenses € | |
Iberclear fees 30,000 | ||
Fees of the Madrid and Barcelona Stock Exchanges ............................................................... 8,000 | ||
CNMV fees 40,000 | ||
Legal and miscellaneous expenses (*) 954,183 | ||
Total 1,032,183 |
Section E — The Share Capital Increase and the issue of the Abengoa Warrants | ||
Element | Disclosure requirement | |
(*) Including notary, Commercial Registry, agent bank and accounting and audit expenses. This line | ||
item comprises as well the legal and miscellaneous expenses of the listing of the Abengoa Warrants. | ||
Listing of the Abengoa Warrants | ||
Expenses € | ||
Iberclear fees .......................................................................................................................... 500 | ||
Fees of the Madrid and Barcelona Stock Exchanges .............................................................. 100 | ||
CNMV fees ............................................................................................................................ 6,000 | ||
Legal and miscellaneous expenses (*)...................................................................................... – | ||
Total (*) ................................................................................................................................... 6,600 | ||
(*) The legal and miscellaneous expenses of the listing of the Abengoa Warrants are already comprised | ||
in the legal and miscellaneous expenses involved in the listing of the New Shares. | ||
Xxxxxxx will not charge any expense to the subscribers of the New Shares or of the Abengoa | ||
Warrants. This must be understood to be independent of the expenses or fees to be paid to | ||
maintain or manage the corresponding securities accounts of the shareholders or of the | ||
warrant-holders. | ||
The Company expects to pay these expenses with the proceeds arising out of the New Money | ||
Financing that will be granted to the Group in the context of the Restructuring. | ||
E.2 | Reasons for the Share Capital Increase and the issue of the Abengoa Warrants and use of proceeds | Reasons for the Share Capital Increase and the issue of the Abengoa Warrants The Share Capital Increase and the issue of the Abengoa Warrants were approved by the Company's Extraordinary General Shareholders' Meeting held on November 22, 2016. Subsequently, the Board of Directors, in the meeting held on 16 March 2017, determined the terms and conditions under which both the Share Capital Increase and the Abengoa Warrants would have to be executed and delegated powers in favour of its Chairman, any of the Directors, the Secretary to the Board of Directors or the Vicesecretary to the Board of Directors to execute the Share Capital Increase and issue the Abengoa Warrants in those terms. On 28 March 2017 the Chairman executed the Share Capital Increase and issued the Abengoa Warrants in discharge of the obligations assumed by the Company in the context of the agreement for the restructuring of the financial indebtedness and recapitalization of the Group entered into on September 24, 2016 by the Company, a group of investors and a group of its creditors comprised of xxxxx and holders of bonds issued by entities belonging to the Group (the "Restructuring Agreement"). |
The main terms of the Restructuring Agreement were the following: | ||
(i) The amount of new money lent to the Group totals 1,169.6 million euros. This financing ranks senior with respect to the preexisting debt and is divided into different tranches: | ||
(a) Tranche 1: Amounting to 945.1 million euros, with a maximum maturity of 47 months and secured by certain assets that include the Abent 3T project in Mexico and the shares of Atlantica Yield. Creditors have subscribed for a number of New Class A shares and New Class B Shares representing 30% of Abengoa’s share capital following the appropriate share capital increase (the "New Money Tranche 1 Capital Increase"). | ||
(b) Tranche 2: Amounting to 194.5 million euros (increased to 249.3 million euros due to the inclusion of the amounts corresponding to the refinancing of payment in kind interest (PIK) interests under Tranche 1B; as of the date of this prospectus, this incremental amount has not been drawndown), with a maximum maturity of 48 months and secured by certain assets in the engineering business. Creditors have subscribed for a number of New Class A shares and New Class B Shares representing 15% of Abengoa’s share capital following the appropriate share capital increase (the "New Money Tranche 2 Capital Increase"). | ||
(c) Tranche 3: Contingent credit facility of up to 30 million euros, with a maximum maturity of 48 months and with the sole purpose of providing guaranteed funding in case of an eventual shortfall ensuring the completion of the Abent 3T project. Creditors have subscribed for a number of New Class A shares and New Class B Shares representing 5% of Abengoa’s share capital following the appropriate share capital increase (the "New Money Tranche 3 Capital Increase"). | ||
Without prejudice to the validity of the foregoing amounts, the new money lent to |
Section E — The Share Capital Increase and the issue of the Abengoa Warrants | ||
Element | Disclosure requirement | |
the Group has been funded in the following currencies: New Money Tranche 1A in USD (894.3MUSD), New Money Tranche 1B in € (106M€), New Money Tranche 2 in € (194.5M€ increased to 249.3 million euros due to the inclusion of the amounts corresponding to the refinancing of payment in kind interest (PIK) interests under Tranche 1B; as of the date of this prospectus, this incremental amount has not been drawndown) and New Money Tranche 3 in USD (31.9MUSD). (ii) New bonding facilities amounting to 307 million euros (increased to 322.6M€ due to the renovation of pre-existing bonds (avales)). The financing entities have subscribed for a number of New Class A shares and New Class B Shares representing 5% of Abengoa’s share capital following the appropriate share capital increase (the "New Bonding Facilities Capital Increase"). (iii) The restructuring proposal for the preexisting debt involved, in general, a 97% write-off of its nominal value or quita, while keeping the remaining 3% with a ten-year maturity, with no annual coupon or option for capitalization (“Standard Restructuring Terms”). Exceptionally, the write-off or quita applicable to the nominal value of the credits owed to certain creditors was below such 97%, as it was estimated that the liquidation value of certain of the Group companies was greater than 3%. (iv) Creditors who adhered to the agreement had the option to choose either the conditions laid out in section (iii), or alternative conditions which consisted of the following (“Alternative Restructuring Terms”): (a) Capitalisation or write-off (at their election) of 70% of preexisting debt in exchange for New Class A shares and New Class B Shares representing 40% of Abengoa’s share capital following the appropriate share capital increase (the "Existing Debt Capital Increase"). (b) The remaining 30% of the nominal value of the preexisting debt has been refinanced in new debt instruments, replacing the preexisting ones, which rank as senior or junior depending on whether or not creditors participate in the new money facilities. Such instruments have maturities of 66 and 72 months respectively, with the possibility of an extension of up to 24 months, accruing annual interest of 1.50% (0.25% cash payment and 1.25% Pay If You Can). The junior instrument could be subject to additional reductions (provided that total reduction does not exceed 80% of the nominal value prior to the capitalization) if the aggregate amount of preexisting debt exceeds 2,700 million euros due to the calling of uncalled bonds and/or execution of corporate guarantees (i.e. crystallization of contingent claims). (v) Those who held the status of shareholders of the Company prior to the execution of the Share Capital Increase currently hold 5% of the share capital. Eventually, through the exercise of the Abengoa Warrants, they could increase such stake in a percentage of an additional 5%, if, within 96 months, the Group has paid in full all outstanding amounts under the new financing provided in the framework of the restructuring and under the existing indebtedness (as this indebtedness may have been restructured), including its financial costs. On October 28, 2016, after the finalization of the initial accession period to the Restructuring Agreement, certain financial creditors filed with the Mercantile Courts of Seville an application for the judicial approval (homologación judicial) of the Restructuring Agreement which obtained the support of 86.00% of the financial creditors to which it was addressed, being therefore over the legally required majority (75%). On November 8, 2016, the Mercantile Court No. 2 of Seville granted the homologación judicial of the Restructuring Agreement, extending the Standard Restructuring Terms to the financial creditors who had not signed the Restructuring Agreement or had expressed their disagreement to it. Notwithstanding this extension, creditors who did not accede to the Restructuring Agreement in the first instance were granted the option to accede to the Restructuring Agreement during a supplemental accession period (the "Supplemental Accession Period"), which commenced on January 18, 2017 and finished on January 24, 2017, in order to allow them to |
Section E — The Share Capital Increase and the issue of the Abengoa Warrants | ||
Element | Disclosure requirement | |
opt for the Alternative Restructuring Terms, thus avoiding the application of the Standard Restructuring Terms. After the end of the Supplemental Accession Period, the support of financial creditors to the Restructuring Agreement increased up to 93.97% of the financial creditors to which it was addressed. Use of proceeds Although neither the Share Capital Increase nor the issue of the Abengoa Warrants have provided the Company with an effective flow of funds, the execution of both the Share Capital Increase (and the subsequent capitalization in its framework of 5.804million euros of financial debt by certain creditors, which represents the amount of the share capital increase corresponding to the pre-existing debt - the Existing Debt Capital Increase as defined throughout the Prospectus) and the issue of the Abengoa Warrants were conditions precedent for the effectiveness of the Restructuring Agreement and for Abengoa to obtain the new financing deriving from the set of financing and refinancing agreements entered into by the Company and certain financial entities in execution of the Restructuring Agreement. Therefore, through the Share Capital Increase, Xxxxxxx seeks to accomplish the commitments reached with its financial creditors, which would allow the execution of the financing and refinancing agreements. In addition, the Share Capital Increase has enabled Abengoa to significantly reduce its current indebtedness level and its financial costs and will allow the continuity of the Group as a going concern, particularly, through the Existing Debt Capital Increase by virtue of which those creditors who held credits already existing prior to the date of signing of the Restructuring Agreement against the Company and other Group companies and who acceded to the Restructuring Agreement and elected for the Alternative Restructuring Terms, have offset 70% of the credits they respectively held vis-à-vis the Company. | ||
E.3 | Terms and conditions of the offering | Not applicable. The Prospectus does not relate to an offering of securities. |
E.4 | Material interests in the Share Capital Increase and / or the issue of the Xxxxxxx Xxxxxxxx | Xxxxxxx is not aware of the existence of any material relationship or interest between the Company and DLA Xxxxx UK LLP, or DLA Xxxxx Spain, S.L.U., or Deloitte, S.L., except for the strictly professional relationship deriving from their respective advises. "Banco Santander, S.A.", has been appointed by the Company as the agent bank for the Share Capital Increase ("Banco Santander"). Banco Santander is a financial institution engaged in the provision of investment banking, commercial banking and financial advisory services and in the ordinary course of business has engaged in investment banking and/or commercial banking transactions with the Company and its affiliates. In addition, Banco Santander may hold investments and trade debt and equity securities in the Company and its affiliates for its own account and for the account its customers. Banco Santander does not consider these arrangements to be material in the context of the Share Capital Increase or the issue of the Abengoa Warrants. As of the date of this Prospectus, Banco Santander holds a global position with the Company and its affiliates of €186 million. In addition, as of the date of this Prospectus, Banco Santander directly and undirectly, through "Santander Factoring y Confirming, S.A. EFC" and "Banco Santander Brasil, S.A.", holds 159,952,808 class A shares and 1,653,953,996 class B shares, representing in aggregate 9.63% of the voting rights in the Company following the execution of the Share Capital Increase. |
E.5 | Entities offering the New Shares or the Abengoa Warrants and lock-up arrangements | Not applicable. The Prospectus does not relate to an offering of securities and there are no lock-up agreements related to the Share Capital Increase nor to the Abengoa Warrants. |
E.6 | Dilution | Shareholders before the Share Capital Increase were not entitled to subscribe for the New Shares in the context of the Share Capital Increase and, thus, they have experienced a dilution of their holdings in our share capital of 95% from the date on which the Share |
Section E — The Share Capital Increase and the issue of the Abengoa Warrants | ||
Element | Disclosure requirement | |
Capital Increase was executed. A total of 17,894,313,335 New Shares have been issued pursuant to the Share Capital Increase whilst the Class A Shares and Class B Shares existing before the execution of the Share Capital Increase represent 5.00% of each of the total Class A Shares and Class B Shares issued as of the date of this Prospectus. The table below sets forth the increase in the number of our Class A shares and Class B shares as a result of the Share Capital Increase: Prior to After the Share Capital Increase The Share Capital Increase the Share Capital Increase Number of Class A shares...................... 83,049,675 8.82% 1,577,943,825 8.82% 1,660,993,500 8.82% Number of Class B shares...................... 858,756,290 91.18% 16,316,369,510 91.18% 17,175,125,800 91.18% Total .......................... 941,805,965 100% 17,894,313,335 100% 18,836,119,300 100% | ||
E.7 | Expenses charged to investors | Xxxxxxx will not charge any expense to the subscribers of the Securities. This must be understood to be independent of the expenses or fees to be paid to maintain or manage the corresponding securities accounts of the shareholders. |
RISK FACTORS
You should carefully consider the following risk factors and the other information contained in this Prospectus before making an investment decision. The risks described below are not the only ones that Abengoa faces. Additional risks not presently known to Abengoa or that Xxxxxxx currently believes to be immaterial may also materially adversely affect Abengoa's business, financial condition, results of operations and prospects. The trading price of the New Shares could decline due to any of these risks and, as a result, you may lose part or all of your investment. This document also contains forward-looking statements that are based on estimates and assumptions about future events and, as such, are subject to risks and uncertainties. Actual results could differ materially from those anticipated in such forward-looking statements, whether as a result of the risks described below and elsewhere in this Prospectus or otherwise.
IMPORTANT NOTICES
The Company wishes to highlight to the market and to any future shareholders of the Company the following matters:
We have incurred significant losses in 2015 and 2016 resulting in negative net equity for Abengoa and uncertainty regarding the ability of Abengoa to continue operating as going concern
We incurred losses in 2015 and 2016. In 2016, Xxxxxxx'x consolidated losses amounted to €7,629 million (€1,213 million in 2015), mostly due to the negative impact from: (i) the impairment of certain assets (Bioenergy plants, transmission lines in Brazil, generation assets in Mexico and Chile, tax credits) for a total amount of €6,036 million; (ii) the effect of the general decrease in activity which has caused, amongst others, provision of constructions costs for a total of €245 million; and (iii) higher financial expenses amounting to
€521 million, mainly derived from the materialization and provision of certain guarantees and default interests.
During 2016, the activity of Abengoa has been strongly conditioned by the restrictions on liquidity, which caused a general slowdown in business development. Within this context, Abengoa has recorded revenues of
€1,510 million and a negative EBITDA of €241 million in 2016. These figures exclude the impact from the Bioenergy activity and the concessional Brazilian transmission lines, which have been classified as discontinued operations in line with the viability plan, and with combined impact on revenues of €1,137 million in 2016 (€2,109 million in 2015).
Due to the foregoing, as of December 31, 2016, the Company had €6,357 million of individual negative net equity (patrimonio neto individual negativo).
The aforementioned circumstances were considered by Deloitte, S.L., as auditor of the Company and its Group, with the occasion of the issue of the auditor's reports on the Audited Consolidated Financial Statements and the Audited Stand-Alone Financial Statements as of and for the years ended December 31, 2016 and 2015, which
–although expressing an unqualified opinion–, included an emphasis of matter paragraph on the existence of a significant uncertainty regarding the ability of Abengoa to continue operating as a going concern.
The implementation of the measures stipulated in the viability plan has led to the recognition of certain losses during 2016. It is expected that these losses will be compensated once the positive impacts from the debt write- offs and Share Capital Increases contemplated in the Restructuring Agreement (as defined below) are registered, allowing Abengoa to restore its financial stability and to obtain the liquidity needed to begin the operations contemplated in the viability plan and continue with the its activity in a competitive and sustainable manner going forward.
In addition to the financial restructuring, Xxxxxxx presented in August 2016 a viability plan that would allow for reduction of corporate debt, improvement of liquidity position and stabilization of operations. This viability plan envisaged the completion of the Restructuring Process by December 2016 with the company resuming business activity in early 2017. The delay in the completion of the Restructuring Process and the start of Abengoa’s business activity could prevent Abengoa to fully benefit from the positive effects of the financial restructuring.
The successful implementation of the viability plan is subject to a variety of factors outside of the scope of control of the Company
The successful implementation of the viability plan will depend on Xxxxxxx'x ability to reverse the activity slowdown suffered over the past year, the future operating results,the ability of Abengoa's business to generate cash flows recursively and the completion of the asset disposal plan This will be conditioned, to a great extent, and among many other factors, by the economic, financial, market and competitive situation, and asset sales could be subject to market appetite, approvals from partners, financing entities or government authorities, which are all outside of the scope of control of Abengoa. Even after the restructuring of its financial debt (see “Capitalisation and Indebtedness”), Xxxxxxx keeps a financial indebtedness of an approximate amount of
€5,829 million, out of which €3,450 are consolidated corporate and project financial debt and €2,379 is classified under liabilities held for sale. At the current high levels of debt, if market or business operating conditions do not recover or further deteriorate, Xxxxxxx'x business may be unable to generate enough cash flows in order to deal with its current debt maturities.
Furthermore, Xxxxxxx'x inability to complete the sales during 2017 of the assets that are identified as assets available for sale, although such sale is considered to be highly probable by Xxxxxxx, would prevent Abengoa from continuing to classify any asset and related liability that has not been sold as available for sale and would entail the reclassification of the asset and related liability, including the debt, in the Consolidated financial statements, which would have the effect of increasing the levels of corporate financing and project financing.
As of the date of this Prospectus, Abengoa has completed sales of assets included in the viability plan published on August 16, 2016 for €200 million. Some asset disposal initiatives have been put on hold or conditioned to the completion of the restructuring process; so, it is reasonable to expect those processes to accelerate once the restructuring process is completed. Also, on March 16, 0000, Xxxxxxx announced the sale of the European bioenergy assets to Trilantic Europe; however, as of the date of this Prospectus the sale has not been completed as it is subject to certain conditions precedent; therefore, proceeds from this sale are not accounted for in the
€200 million mentioned above Finally, Abengoa can opportunistically dispose of other assets or businesses not included in the disposal plan that can add on to the plan or mitigate the risk of not completing it in the period initially expected. For example, in December 0000 Xxxxxxx reached an agreement with Ericsson for the transfer of its telecommunications business, Abentel.
The five-year viability plan presented to the market in August 2016 envisaged the completion of the restructuring by December 2016, with Xxxxxxx resuming business activity in early 2017. The delay in the completion of the restructuring process and the restart of Abengoa's business activity might have an impact on the operating cash flow and investment estimates in the viability plan. However, as of the date of this Prospectus, Xxxxxxx does not have an updated viability plan.
Certain of the Abengoa's most valuable assets have been contributed to a series of holding companies, whose shares serve as collateral of the new financing arrangements subscribed in the context of the Restructuring Agreement
In consideration of creditors for voluntarily acceding to the Restructuring Agreement and opting for Alternative Restructuring Terms therein, the Company assumed before those creditors, amongst others, the obligation to implement a corporate restructuring of the Group with the purpose of contributing certain of the Abengoa’s most valuable assets (including Abengoa’s stake in Atlantica Yield, the cogeneration plan in Mexico Abent 3T and certain EPC subsidiaries) as collateral of the new financing agreements entered into by Abengoa and the new money financing providers.
If Abengoa breaches any of the debt servicing obligations or breaches any related financial or operational limitation under any of those financing agreements, the creditors could declare the total value of the debt immediately due and payable and could foreclose on any asset pledged as collateral, which may result in the Company losing control over, or being deprived of, the underlying assets.
Certain circumstances occurring following the date of this Prospectus may give rise to the financial restructuring events of default
The completion of the Restructuring (including the accounting of the Restructuring in the Company's records)
will not take place until the date when all the coditions foreseen in the Restructuring Agreement to that effect have been completely fulfilled, including the admission to listing and effective trading on the Madrid and Barcelona Stock Exchanges of the Securities for which admission is sought by way of this Prospectus. All such conditions have been fulfilled as of the date of this Prospectus, except for the admission to listing of the Securities, which, as previously stated throughout this Prospectus, the Company expects to take place on March 31, 2017, with trading on the Securities commencing effectively on March 31, 2017. If the effective trading on the Securities does not take place on or before the long-stop date for the completion of the Restructuring, which is March 31, 2017, completion of the Restructuring will not take place.
Likewise, if, in the context of the legal proceedings relating to the challenge of the judicial approval of the Restructuring Agreement that are currently taking place in Spain, the challenges upheld were to imply that Existing Creditors holding Affected Debt (as defined in "Business—4.- The restructuring process" below) for an aggregate amount higher than €20 million were not affected by the Restructuring Agreement, an event of default under the new financing instruments will occur.
If Abengoa breaches any of the debt servicing obligations or breaches any related financial or operational limitation under any of those new financing instruments, the creditors could declare the total value of the debt immediately due and payable and could foreclose on any asset pledged as collateral, which may result in the Company losing control over, or being deprived of, the underlying assets.
The Abengoa Warrants will be traded through the AQS Block Market solely and are expected to have very limited liquidity
The Abengoa Warrants will be traded through the AQS Block Market solely and, therefore, no market member will be designated as specialist responsible for promoting market liquidity in respect of the Abengoa Warrants. As a consequence, it is expected that they will have very limited liquidity and thus it will be difficult for investors to be able to transfer the Abengoa Warrants when needed. The transactions in the AQS Block Market are strictly bilateral and require investors to find a counterparty that is willing to acquire such instruments. The minimum amount of each transaction is 50,000€ which could be a large amount depending on the value of each Xxxxxxx Xxxxxxx. Xxxxxxx has made its best efforts to appoint a market member to act as specialist for the Abengoa Warrants, but due to the difficulties in the valuation of these instruments, so far it has not been possible to do so. However, Abengoa will continue to make its best efforts to find such a specialist and, should it be the case, the Abengoa Warrants would then be listed in the principal market of the Stock Exchanges and through the AQS of the Stock Exchange Interconnection System.
I.- SPECIFIC RISKS RELATED TO ABENGOA
RISKS RELATED TO XXXXXXX'X FINANCIAL SITUATION
We have incurred significant losses in 2015 and 2016 resulting in negative net equity for Abengoa and uncertainty regarding the ability of Abengoa to continue operating as going concern
We incurred losses in 2015 and 2016. In 2016, Xxxxxxx'x consolidated losses amounted to €7,629 million (€1,213 million in 2015), mostly due to the negative impact from: (i) the impairment of certain assets (Bioenergy plants, transmission lines in Brazil, generation assets in Mexico and Chile, tax credits) for a total amount of €6,036 million; (ii) the effect of the general decrease in activity which has caused, amongst others, provision of constructions costs for a total of €245 million; and (iii) higher financial expenses amounting to
€521 million, mainly derived from the materialization and provision of certain guarantees and default interests.
During 2016, the activity of Abengoa has been strongly conditioned by the restrictions on liquidity, which caused a general slowdown in business development. Within this context, Abengoa has recorded revenues of
€1,510 million and a negative EBITDA of €241 million in 2016. These figures exclude the impact from the Bioenergy activity and the concessional Brazilian transmission lines, which have been classified as discontinued operations in line with the viability plan, and with combined impact on revenues of €1,137 million in 2016 (€2,109 million in 2015).
Due to the foregoing, as of December 31, 2016, the Company had -€6,357 million of individual negative net equity (patrimonio neto individual negativo) and it had incurred in losses for an amount of €7,054 million. Furthermore the consolidated net equity amounted to -€6,780 million, and the losses that the Group had incurred
were of €7,629 million.
According to Spanish law if a company's net equity is reduced as a result of losses to less than half of the share capital, that company shall be under a cause of dissolution unless its share capital is increased or decreased with the sufficient amount and as long it is not appropriate to request its insolvency. For this purpose, and pursuant to Article 36 of the Commercial Code, adjustments for changes of value arising from outstanding cash flow hedging transactions charged to the profit and loss account shall not be considered as equity.
Applying the above mentioned rules and settings, computable net equity (patrimonio neto computable) of the Company on December 31, 2016 was -€6,330.6 million, in other words, -€6,331.5 million below the threshold of compulsory settlement established in Spanish law (in the case of the Company, €0.9 million, equivalent to half of its share capital at that date). Therefore, on the above mentioned date, the Company was involved in the case of the above mentioned dissolution scenario.
The aforementioned circumstances were considered by Deloitte, S.L., as auditor of the Company and its Group, with the occasion of the issue of the auditor's reports on the Audited Consolidated Financial Statements and the Audited Stand-Alone Financial Statements as of and for the years ended December 31, 2016 and 2015, which – although expressing an unqualified opinion–, included an emphasis of matter paragraph on the existence of a significant uncertainty regarding the ability of Abengoa to continue operating as a going concern and stating that, as a result, the viability of the Group, the recovery of its assets, the settlement of its liabilities and the fulfilment of its guarantee commitments for the amounts reflected in those financial statements will be dependent on the effective application of the measures envisaged in the Restructuring Agreement, the viability plan and the liquidity plan, as well as on the evolution of the Group companies’ operations and such future decisions as the managers of the Group might make regarding its equity.
The above notwithstanding, it is management’s best estimate that the losses at the Company’s level have been compensated after registering the positive impacts from the debt write-offs and capital increase contemplated in the Restructuring Agreement, allowing the Company to restore its financial stability so the Company is no longer under a cause of dissolution.
In any case, the terms of the restructuring of the financial indebtedness agreed between Abengoa and its financial lenders and other creditors, which are described in detail in section "Business—4.- The restructuring process", allowed for the restructuring and strengthening of Abengoa and its recapitalization through the Share Capital Increase which is the purpose of this Prospectus.
As a result of the implementation of the aforementioned financial restructuring, as at the date of this Prospectus, Xxxxxxx'x management estimates a positive impact in the consolidated profit and loss and the consolidated equity of Abengoa of between €6,000 and €6,500 million. Despite this positive impact, consolidated net equity is expected to continue to be negative (see “Capitalisation and Indebtedness”).
In addition to the financial restructuring, Xxxxxxx presented in August 2016 a viability plan that would allow for reduction of corporate debt, improvement of liquidity position and stabilization of operations. This viability plan envisaged the completion of the Restructuring Process by December 2016 with the company resuming business activity in early 2017. The delay in the completion of the Restructuring Process and the start of Abengoa’s business activity could prevent Abengoa to fully benefit from the positive effects of the financial restructuring.
The successful implementation of the viability plan is subject to a variety of factors outside of the scope of control of the Company
The terms and conditions of the restructuring of the debt of Abengoa are based on the viability plan presented to the market in August 2016 with the objective to normalize its operational situation and attend the schedule of the debt service, allowing the maintenance of its positive liquidity (tesorería). This viability plan makes certain assumptions regarding, for instance, sales prices and volumes, margins, cost savings, normalization of the conditions of the working capital and in particular the implementation of an asset disposal plan according to which Xxxxxxx expects to raise €421 million by the end of the 2017 financial year.
The successful implementation of the viability plan will depend on Xxxxxxx'x ability to reverse the activity slowdown suffered during the past year, the future operating results,the ability of Abengoa's business to generate cash flows recursively and the completion of the asset disposal plan.. Abengoa’s operations are subject,
amongst many other factors, to the economic, financial, market and competitive situation, and asset sales could be subject to market appetite, approvals from parters, financing entities or government authorities, which are all outside of the scope of control of Abengoa. Even after the restructuring of its financial debt (see “Capitalisation and Indebtedness”), Xxxxxxx keeps a financial indebtedness of an approximate amount of €5,829million, out of which €3,450 are consolidated corporate and project financial debt and €2,379is classified under liabilities held for sale. At the current high levels of debt, if market or business operating conditions do not recover or further deteriorate, Abengoa may face difficulties to generate the expected cash flows and, consequently, to attend its debt service (servicio de deuda).
Likewise, Xxxxxxx’x future cash flows may not be enough to attend its expenses, investment commitments and/or obligations of debt service, and it may be obliged to obtain additional funds or to reduce costs, through any of the following methods:
(i) Increase, as far as possible, the loaned amounts under the amended credits and loans in the context of its finance restructuring;
(ii) Fall into an additional financial indebtedness authorized under the terms of the restructuring agreements;
(iii) Restructure or refinance again its financial indebtedness before its maturity date under its own terms;
(iv) Delay or decrease the investments in order to maintain its operations and react to the market conditions and the increasing competence;
(v) Reduce the number of its employees or the cost of each one; and/or
(vi) Delay the execution of its strategic plans.
Furthermore, Xxxxxxx'x inability to complete the sales during 2017 of the assets that are identified as assets available for sale, although such sale is considered to be highly probable by Xxxxxxx, would prevent Abengoa from continuing to classify any asset and related liability that has not been sold as available for sale and would entail the reclassification of the asset and related liability, including the debt, in the Consolidated financial statements, which would have the effect of increasing the levels of corporate financing and project financing.
As of the date of this Prospectus, Abengoa has completed sales of assets included in the viability plan published on August 16, 2016 for €200 million. Some asset disposal initiatives have been put on hold or conditioned to the completion of the restructuring process; so, it is reasonable to expect those processes to accelerate once the restructuring process is completed. Also, on March 16, 0000, Xxxxxxx announced the sale of the European bioenergy assets to Trilantic Europe; however, as of the date of this Prospectus the sale has not been completed as it is subject to certain conditions precedent; therefore, proceeds from this sale are not accounted for in the
€200 million mentioned above Finally, Abengoa can opportunistically dispose of other assets or businesses not included in the disposal plan that can add on to the plan or mitigate the risk of not completing it in the period initially expected. For example, in December 0000 Xxxxxxx reached an agreement with Ericsson for the transfer of its telecommunications business, Abentel.
The five-year viability plan presented to the market in August 2016 envisaged the completion of the restructuring by December 2016, with Xxxxxxx resuming business activity in early 2017. The delay in the completion of the restructuring process and the restart of Abengoa's business activity might have an impact on the operating cash flow and investment estimates in the viability plan. However, as of the date of this Prospectus, Xxxxxxx does not have an updated viability plan.
Certain of the Abengoa's most valuable assets have been contributed to a series of holding companies, whose shares serve as collateral of the new financing arrangements subscribed in the context of the Restructuring Agreement
In consideration of creditors for voluntarily acceding to the Restructuring Agreement and opting for Alternative Restructuring Terms therein, the Company assumed before those creditors, amongst others, the obligation to implement a corporate restructuring of the Group with the purpose of contributing certain of the Abengoa’s most valuable assets (including Abengoa’s stake in Atlantica Yield, the cogeneration plan in Mexico Abent 3T and certain EPC subsidiaries) as collateral of the new financing agreements entered into by Abengoa and the new money financing providers.
Therefore, if Abengoa breaches any of the debt servicing obligations or breaches any related financial or operational limitation under any of those financing agreements, the creditors could declare the total value of the debt immediately due and payable and could foreclose on any asset pledged as collateral, which may result in the Company losing control over, or being deprived of, the underlying assets. Furthermore, some of the financing agreements contain cross default clauses, meaning that breach of one specific financing agreement will automatically count as a breach of other financing agreements, accentuating the effect of an individual breach. Consequently, a breach relating to debt could entail a substantial loss for Xxxxxxx and could have a significant adverse effect on the ability of Abengoa and its subsidiaries to meet their respective obligations regarding said debt and eventually lead the Company into a cause of dissolution or insolvency.
Certain circumstances occurring following the date of this Prospectus may give rise to the financial restructuring events of default
The completion of the Restructuring (including the accounting of the Restructuring in the Company's records) will not take place until the date when all the coditions foreseen in the Restructuring Agreement to that effect have been completely fulfilled, including the admission to listing and effective trading on the Madrid and Barcelona Stock Exchanges of the Securities for which admission is sought by way of this Prospectus. All such conditions have been fulfilled as of the date of this Prospectus, except for the admission to listing of the Securities, which, as previously stated throughout this Prospectus, the Company expects to take place on March 31, 2017, with trading on the Securities commencing effectively on March 31, 2017. If the effective trading on the Securities does not take place on or before the long-stop date for the completion of the Restructuring, which is March 31, 2017, completion of the Restructuring will not take place.
Likewise, if, in the context of the legal proceedings relating to the challenge of the judicial approval of the Restructuring Agreement that are currently taking place in Spain, the challenges upheld were to imply that Existing Creditors holding Affected Debt (as defined in "Business—4.- The restructuring process" below) for an aggregate amount higher than €20 million were not affected by the Restructuring Agreement, an event of default under the new financing instruments will occur.
If Abengoa breaches any of the debt servicing obligations or breaches any related financial or operational limitation under any of those new financing instruments, the creditors could declare the total value of the debt immediately due and payable and could foreclose on any asset pledged as collateral, which may result in the Company losing control over, or being deprived of, the underlying assets.
The Abengoa Warrants will be traded through the AQS Block Market solely and are expected to have very limited liquidity
The Abengoa Warrants will be traded through the AQS Block Market solely and, therefore, no market member will be designated as specialist responsible for promoting market liquidity in respect of the Abengoa Warrants. As a consequence, it is expected that they will have very limited liquidity and thus it will be difficult for investors to be able to transfer the Abengoa Warrants when needed. The transactions in the AQS Block Market are strictly bilateral and require investors to find a counterparty that is willing to acquire such instruments. The minimum amount of each transaction is 50,000€ which could be a large amount depending on the value of each Xxxxxxx Xxxxxxx. Xxxxxxx has made its best efforts to appoint a market member to act as specialist for the Abengoa Warrants, but due to the difficulties in the valuation of these instruments, so far it has not been possible to do so. However, Abengoa will continue to make its best efforts to find such a specialist and, should it be the case, the Abengoa Warrants would then be listed in the principal market of the Stock Exchanges and through the AQS of the Stock Exchange Interconnection System.
The Restructuring is a complex transaction that will have a significant impact on the Group's reported financial situation; the impact on reported results may differ from that assessed by Group management
The issue of the New Shares and the issue of the Abengoa Warrants for which admission to trading is sought by way of this Prospectus were approved by the Company's Extraordinary General Shareholders' Meeting held on November 22, 2016 and tby the Board of Directors held on 16 March 2017 and subsequently executed by its Chairman on March 28, 2017, in discharge of the obligations assumed by the Company in the context of the process for the restructuring of the financial indebtedness and recapitalization of the Group, conducted throughout 2016 and early 2017 (the "Restructuring") and formalized through the agreement entered into on September 24, 2016 by the Company, a group of investors and a group of its creditors comprised of xxxxx and holders of bonds issued by entities belonging to the Group (the "Restructuring Agreement").
The Restructuring is a complex transaction which, as a consequence of its implementation resulted in changes to the corporate and debt structures of the Group (see "Business—4.- The restructuring process").
Although the management of the Group has made assessments of the consequences of the Restructuring, factors unknown to Group management may have an impact on the assessments made. Therefore, the consequences of the Restructuring on the Group's financial position and results reported in the Consolidated financial statements following the date of completion of the Restructuring may be different from those assessed by Group's management.
Risks relating to the indebtedness of Abengoa after the restructuring of its debt
(a) High volume of financial indebtedness of Abengoa
Abengoa has traditionally required an important level of investment to ensure the development of its projects and the growth of its business, through the engineering, procurement and construction projects, solar plants, and other projects. In order to finance these investments Abengoa has resorted, amongst other financing sources, to syndicated facilities, guaranteed loans and others bank credits, having increased the financial indebtedness of the Group in the last years, to reach the amount of €12,257 million on December 31, 2016 of which €9,681 million are consolidated corporate and project financial debt and €2,576 are classified under liabilities held for sale).
Moreover, and even after the restructuring of the financial debt (see “Capitalisation and Indebtedness”), Xxxxxxx keeps a financial indebtedness of an approximate amount of €5,829 million, out of which €3,450 million is consolidated corporate and project financial debt and €2,379 million is classified under liabilities held for sale. At this high level of debt, there is a risk that, if market or business operating conditions do not recover or further deteriorate or the restructuring of the financial debt of Xxxxxxx does not finally take place in the agreed terms, the business of Abengoa may be unable to generate enough cash flows in order to deal with its current debt maturities.
In any case, the ability of Abengoa to repay or refinance its debt, deal with the requirements of working capital and attend their investment commitments, or take advantage of business opportunities that may arise in the future, will depend on future operating results and the ability of their business to generate cash flows recursively. This will be conditioned, to some extent, and among many other factors, by the economic, financial, market and competitive situation, some of which are outside of the scope of control of Abengoa. The high indebtedness of Abengoa could have additional consequences in its business and financial situation, such as:
• that Abengoa may be obliged to devote a significant portion of its cash flows to operations regarding repayment debt, avoiding, therefore, that such flows can be used for other purposes;
• to increase the vulnerability of the Group to adverse economic conditions and/or specific conditions of the sectors where Abengoa operates, limiting its flexibility to react to changes in the business or the industry in which it operates;
• the ability of Abengoa to make strategic acquisitions or undertake other corporate operations may be limited;
• that Xxxxxxx is in a situation of competitive disadvantage against competitors who have greater funds
availability, a lower level of debt or less strict covenants with its financial lenders; or
• that Abengoa deals with a limitation on its ability to borrow additional funds or deal with an increase of the cost of these funds (which eventually also could affect the ability of the Group to refinance its debt in the future).
(b) Xxxxxx and covenants imposed by the refinancing under the Restructuring Agreement
On December 31, 0000 Xxxxxxx did not attend the ratios referred to in different facilities, loans and notes to which he was part of, either as borrower or as guarantor. However, the agreements entered in the context of the financial restructuring described in "Business—4.- The restructuring process", imposed the obligation that Abengoa shall keep or improve, according to the case, certain financial ratios.
Additionally, the above mentioned agreements entered into in the context of the financial restructuring included certain clauses and covenants that limit the ability of Abengoa to participate in certain types of operations or perform certain situations as, for example, to incur on additional indebtedness, to pay dividends or to make certain investments.
Please see sections "Business—4.- The restructuring process" and "Management’s discussion and analysis of financial condition and results of operations—12.- Financing Arrangements" for further information on the covenants under the new financing instruments envisaged in the restructuring agreements.
In the event of a breach of any of the covenants under the new financing instruments, an event of default under the relevant financing instrument may be declared and, consequently, the principal and all accrued and unpaid interest under the relevant financing instrument could be declared due and payable. In addition, if an event of default was declared, securities guaranteeing the obligations under the relevant financing instrument, if any, may also be enforceable.
The capacity of Abengoa to deal with these terms or covenants, including the ratios, may be affected by factors and circumstances out of its control. As a result, Xxxxxxx cannot ensure that it may be forced in the future to request again exemptions or waivers to the ratios or covenants provided for in the agreements entered in the context of financial restructuring, neither that will be granted at the expected terms.
Risks arising from Xxxxxxx’x strategy of operating with negative working capital
Abengoa has historically operated with significant negative working capital balances, relying on the following tools to generate cash flows from working capital: (i) use non-recourse factoring for many of our receivables, pursuant to which we are able to advance payment of amounts owed to us under such receivables in return for a fee; and (ii) payment to suppliers at 180 days via “confirming”. This strategy was heavily dependent on the continuous growth of our engineering and construction business, so any slowdown of the business could result in cash outflows to meet working capital requirements. As of December 31, 0000 Xxxxxxx had utilized confirming lines for an amount of €693 million, out of which, €357 million are classified under liabilities held for sale, and utilized factoring lines for approximately €430 million, with virtually no additional available amounts.
Going forward it is Xxxxxxx’x intention to continue relying on the same negative working capital strategy, but with some significant changes. As a result of the financial restructuring, Xxxxxxx’x operating activity will be reduced compared to previous years and so will the working capital needs; and, in addition, payment terms to suppliers will be reduced to 60 days. In order to implement this strategy Abengoa is required to be able to obtain new factoring and confirming lines from financial entities which are items of additional debt specifically permitted under the terms of the new financing.
Despite these changes, Xxxxxxx’x engineering and construction activity might not grow, non-recourse factoring and confirming lines might not be available or Abengoa might not be able to negotiate payment terms with suppliers as expected, resulting in cash outflows in order to meet working capital requirements.
Risks arising from the Company's dividend policy
The terms and conditions included in the financial agreements include a prohibition on the distribution of dividends until all of the new money financing and old money financing is repaid in full. Therefore, we expect
that no dividend payments will be made until, at least, 2023, date in which the last old money financing is expected to be repaid.
The prohibition on dividends also affects "Abengoa Abenewco 1, S.A.U." ("AbeNewco 1") and "Xxxxxxx Xxxxxxxx 2, S.A.U." ("AbeNewco 2"), the holding companies recently incorporated by Abengoa in the context of the Group's corporate restructuring. Whilst distribution of dividends within the companies of AbeNewco 1's consolidation perimeter are generally permitted, distributions of dividends in favour of the Company, AbeNewco 2 and any shareholders thereof are prohibited, except for distributions required to attend scheduled debt service payments and, up to a certain cap, distributions required to attend the Company's general corporate expenses.
Risks relating to possible judicial actions filed in the context of the Restructuring
Spain
The judicial approval of the Restructuring Agreement and, in particular, the extension of its effects to dissenting creditors was challenged by some of those dissenting creditors. Specifically, on January 11, 2017, the Mercantile Court of Seville no. 2 admitted for consideration the challenges from nine separate creditor groups against the Restructuring Agreement's homologación.
Challengers generally considered that the treatment imposed to them implied a disproportionate sacrifice and, therefore, they alleged that the effects of the Restructuring Agreement should not be applied to them.
Although the Company relies on defending and obtaining a favorable judgment against those challenges, as of the date of this Prospectus the judge has not made a definitive ruling regarding these challenges. If the judge was to resolve in favour of the challengers, the effects of the Restructuring Agreement would not be applied to their credits, which would remain subject to their respective terms and conditions as they currently stand. However, since the percentage of the support to the Restructuring Agreement would not fall below the required 75% even if all the challenges were to be upheld by the judge, the homologación of the Restructuring Agreement would not be at risk. Notwithstanding the foregoing, if the challenges upheld were to imply that Existing Creditors holding Affected Debt (as defined in "Business—4.- The restructuring process" below) for an aggregate amount higher than €20 million were not affected by the Restructuring Agreement, an event of default under the New Financing instruments will occur.
Brazil
On January 29, 2016, Xxxxxxx'x Brazilian subsidiaries "Abengoa Concessões Brasil Holding, S.A.", "Abengoa Construção Brasil, Ltda." and "Abengoa Xxxxxxxxxx Brasil Holding, S.A." filed requests for creditors protection (recuperação judicial), which were admitted by the Brazilian court of competent jurisdiction on February 22, 2016. This protective measure was undertaken on the grounds of the economic and financial crisis (crise econômico-financeira) incurred by Xxxxxxx, which is contemplated in Brazilian Law 11,101/05. The recuperação judicial consists of a specific proceeding provided for by the Brazilian legislation which allows corporations to restructure their debt in an orderly manner and continue as a going concern once the financial difficulties are overcome. General Assembly with creditors is foreseen to be celebrated in late May 2017.
In parallel to the process described above, in July 2016 the Brazilian electricity market regulator (Agência Nacional de Energia Elétrica – “ANEEL”) informed the Abengoa companies owners of the transmission lines under construction (ATEs) of the initiation of administrative procedures for breach of the relevant concession contracts. One of the possible consequences could be the expiration of the concession contracts granted for those transmission lines currently under construction (valued at €142 million as of Abengoa’s latest financial statements of December 31, 2016). As of the date of this document ANEEL has not yet made a final declaration on the matter; however, Xxxxxxx expects to reach a friendly settlement with no significant impact on Abengoa.
Abengoa seeks for the best solution and negotiation of its debts (including the ones arising from the ATE’s debts) under the judicial reorganization on behalf of the creditors. The proposed settlement includes a plan to restructure the companies under recuperação judicial and divestment of certain assets in order to improve the recovery rate of Abengoa Brasil’s creditors. The success of the negotiations will depend on the approval from the creditors but also the regulatory agents, in the sense that an agreement with creditors shall imply a solution for the ATEs. Failure to reach an agreement regarding the recuperação judicial would likely imply the liquidation of the three Brazilian subsidiaries, whose main assets are the electricity transmission lines in
operation and under construction, valued at €1,615 million as of Abengoa’s latest financial statements of December 31, 2016).
Mexico
On July 25, 2016, "Banco Base S.A., Institución de Banca Múltiple" ("Banco Base"), in its condition as creditor of Abengoa's Mexican subsidiary "Abengoa México, S.A. de C.V." ("Abengoa México"), filed a judicial petition for the declaration of the commercial insolvency (concurso mercantil) of Abengoa México. Said procedure was filed before the Sixth Court in Civil Affairs of Mexico City, which, despite two separate reports from the expert appointed by the Court (visitador) to the contrary, by judgement dated December 16, 2016, ruled on the declaration of Abengoa México´s commercial insolvency. Despite the declaration, the control of Abengoa México remains with the current management.
Abengoa México, the visitador and, despite the fact that the Court resolved in its favor, Banco Base as well, filed an appeal against said judgment. Currently, the process is at conciliatory state with a legal duration of 185 calendar days, term that can be extended by the court, after which, as per Mexican applicable law, the reorganization agreement that is to be reached by the debtor and the majority of its recognized creditors must be executed and filed before the Court. To this respect, on March 17, 0000 Xxxxxxx Mexico entered into a lock-up agreement with the majority of the holders of Mexican bonds (Certificados Bursátiles Estructurados or “CEBURES”) as well as with certain of its suppliers and local and international xxxxx. The lock-up agreement contemplates the approval of the proposed reorganization agreement and obtained the support of more than 60% of the creditors (well above the 50% required by Mexican law). Those creditors that entered into this lock-up agreement are contractually bound to support the reorganization agreement tentatively expected to be filed with the Court in within the timeframe comprised by Xxxx and July 2017.
Based on the aforementioned lock-up agreement with creditors, Xxxxxxx expects that the conciliatory state will result in the signing of such reorganization agreement; however, in case that no agreement is reached amongst Abengoa México and its creditors as per applicable Mexican Law the company will be considered bankrupt. Abengoa Mexico accounts for €19 million in revenues, approximately 7% of Abengoa’s revenue in Mexico and is registered for approximately €171 million in Abengoa’s latest financial statements of December 31, 2016.
United States of America
On December 15, 2016 a United States Bankruptcy Judge in Delaware, issued a confirmation order of the plan filed by Xxxxxxx’x main subsidiaries in the engineering and construction and solar businesses (the Original Debtors, the Additional Debtors and the Maple Debtors as defined in "4.4.- Chapter 15 and Chapter 11 Proceedings in the United States—The EPC and Solar Debtors’ Cases") in the Bankruptcy procedure started by the company late March 2016. This confirmation order shows the support by the creditors of Xxxxxxx'x aforementioned businesses in the United States. The Plan contemplates the liquidation of some of the subsidiaries and the reorganization of others to allow their activity in the engineering and construction and solar businesses and sets forth certain conditions precedent that Xxxxxxx estimates to completely fulfill by the Restructuring Completion Date (as defined in the Restructuring Agreement).
Additionally, regarding the Missouri bankruptcy procedure filed by some of Xxxxxxx’x bioenergy subsidiaries (the ABI/ABIL Debtor Group and the Bioenergy Debtor Group as defined in "4.4.- Chapter 15 and Chapter 11 Proceedings in the United States—The Bioenergy Debtors’ Cases"), on January 25, 2017, these subsidiaries filed the joint liquidation plan which is expected to be approved in a hearing by April 2017. The liquidation plan contemplates an agreed and orderly liquidation of all the aforementioned subsidiaries, the sale of Abengoa’s bioethanol plants in the United States announced in August 2016 was part of this process. The implementation of the proposed plan would imply recoveries of approximately 31% for the Bioenergy Debtor Group and 100% for the ABI/ABIL Debtor Group. Failure to approve the proposed plan would most likely imply the liquidation of the subsidiaries under a Chapter 7 Proceeding where percentages of recovery for creditors are currently unknown.
Xxxxxxx does not expect to have any negative impact in addition to what has already been reflected in the annual accounts for the year ending December 31, 2016.
As of the date of this Prospectus, the Spanish, Brazilian, Mexican and United States proceedings described above are the main relevant ongoing judicial actions filed in the context of the Restructuring. Any judicial
resolution failed against Xxxxxxx'x interests in the contexts of those proceedings may adversely affect the Group's business, results of operations and financial condition.
Abengoa operates with high levels of debt and could take on additional borrowing
Abengoa's operations have been capital intensive and Abengoa therefore has operated with a high level of indebtedness. The consolidated gross financial debt as of December 31, 2016 was €12,257 out of which €9,681 million are consolidated corporate and project financial debt and €2,576 are classified under liabilities held for sale.
Even after the financial restructuring (see Capitalisation and Indebtedness), Xxxxxxx’x financial indebtedness amounts to €5,829 million, out of which €3,450 are consolidated financial debt and €2,379 is classified under liabilities held for sale. With respect to the consolidated financial debt, €3,204 million correspond to corporate financing and €246 million to project debt.
Project debt is generally understood to be financing that does not have recourse to the parent company or controlling shareholder or another Abengoa company, but whose repayment is instead guaranteed by the flows and assets of the projects financed under this method, as well as by the shares of the project companies.
Of the €246 million to project debt, approximately €32 million correspond to bridge loans, in which Abengoa and/or its subsidiaries (distinct from the project subsidiaries) guarantee debt for the purpose of acting as sponsors during the period prior to the period in which the project companies guarantee the financing of the project in the long term (typically periods of under 2-3 years). In the case of failure to comply with these obligations, the creditors would have recourse against Abengoa and any other subsidiary that might have guaranteed these bonds. If it has not been possible to assign the bridge financing to projects under construction, this financing will be classified in the consolidated statement of financial position as corporate financing, depending on the nature of the loan.
Xxxxxxx'x high level of debt could, amongst others, have the following consequences:
• Impede the successful refinancing of future maturities;
• Impede compliance with obligations relating to pending debt;
• Make future borrowing more expensive;
• Increase vulnerability to general adverse economic and industrial conditions;
• Inability to fulfill short-term payment obligations;
• The need to dedicate a substantial volume of operational cash flows to payments relating to the debt, thus reducing the availability of the cash flows to finance the working capital, investment in fixed assets (capex), R&D&i investment, and other business aims;
• Restrict the ability to make dividend payments and that the subsidiaries make dividend payments to Abengoa in view of the payment limitations and restrictions set out in the financing agreements;
• Limit flexibility in planning or in reaction to changes in the business and markets in which Abengoa operates;
• Put Abengoa at a competitive disadvantage compared to competitors with lower levels of debt;
• Limit the ability to borrow additional funds; and
• Compromise the viability of Abengoa.
If the operational cash flows and other resources are insufficient to repay the obligations when they mature or to finance liquidity requirements, Abengoa might be obliged to carry out one or more of the following actions:
• Delay or reduce investment in fixed assets (capex);
• Forego business opportunities, including acquisitions; or
• Again, restructure or refinance all, or part, of the debt when it matures or before then.
If Abengoa breaches any of the debt servicing obligations or breaches any related financial or operational limitation, the creditors could declare the total value of the debt immediately due and payable and could foreclose on any asset pledged as collateral. Furthermore, some of the financing agreements contain cross default clauses, meaning that breach of one specific financing agreement will automatically count as a breach of other financing agreements. Some of the financing agreements also contain cross default clauses relating to financing agreements of other sponsors that are not related with Abengoa. These cross default clauses could accentuate the effect of an individual breach. Consequently, a breach relating to debt could entail a substantial loss for Xxxxxxx and could have a significant adverse effect on the ability of Abengoa and its subsidiaries to meet their respective obligations regarding said debt.
Despite the significant current leverage, the terms of the agreements relating to debt allow Abengoa and its subsidiaries, joint ventures, and associates to incur certain extra debt in the future including new confirming and non-recourse financing lines. Furthermore, the terms of the debt do not limit the value of the project financing that can be incurred. If Abengoa incurs additional debt, the current risks might intensify.
Finally, under the terms of the debt issuances, the Company is obliged to offer the repurchase of the bonds if there is a change in control of the Company.
In the case of a change of control, Xxxxxxx might be unable to obtain sufficient funds to be able to repay all of the outstanding debt under the finance agreements or to repurchase the bonds.
Risks derived from the need to make significant levels of investment in fixed assets (CAPEX)
In order to carry out its operations Abengoa requires a certain level of investment in fixed assets (capex), principally in the area of Concession-Type Infrastructure activity, as well as Engineering and Construction, investment that is expected to increase significantly over the next few years. This level has traditionally been high but the Company expects to switch to a lower intensive capex model. In accordance with the updated viability plan presented on August 16, 2016 and its new corporate strategy, Xxxxxxx has decided to minimize cash contribution into existing projects, taking the decision to sell or hibernate the most cash-consuming projects. Xxxxxxx also intends not to contribute cash in new concessional (Integrated Product) projects until the first quarter for 2018. From 2018 through 0000, Xxxxxxx has plans to limit its equity investment in future projects at a total of €535 million. This limit includes the assumption of limiting the equity participation to 33% of the total equity needs of the individual projects, and a total leverage of 70%. For a detailed description of Abengoa's capital expenditures, see "Management’s discussion and analysis of financial condition and results of operations−15.- Capital Expenditures".
Return on investment, especially made in concessions, will occur in the medium to long term and there is a risk that some of Abengoa's projects will not deliver a return on investment because of operational problems attributable to Abengoa or for reasons external to it. In this regard, as has happened in the past (e.g. projects in Brazil, Chile, and Mexico), it is possible that Abengoa's investments in fixed assets (capex) will be greater than initially envisaged.
Furthermore, there is the risk that new financial conditions will be imposed, as the Brazilian government did in the first half of 2015 by reducing the permitted leverage in relation to power transmission line projects in that country and increasing the value of the capital that must be invested.
The investment needs imply a reliance on access to capital markets and bank financing both to finance new projects and to meet the general corporate finance requirements. The problems accessing financing, motivated amongst other reasons by the existing high level of debt, might increase the cost of obtaining financing, or it might even not be possible to obtain it, with a subsequent reduction in the internal rate of profit of the projects that partially depend on Abengoa's degree of leverage.
If these difficulties in accessing financing persist, it might not be feasible to close on the financing, something that might require additional investment by Abengoa or might result in not accomplishing the projects.
The cost of this financing, and ultimately its very availability, might mean that Abengoa cannot invest in these projects and must sell them, with the subsequent loss of the development costs incurred and the expected future profitability.
RISKS RELATED TO ABENGOA'S BUSINESS
Risks related to the Engineering and Construction activity
In 2016, the Engineering and Construction activity accounted for 90.5% of the consolidated total revenue of the Group.
Risks arising from delays or cost overruns in the Engineering and Construction activity due to the technical difficulty of projects and the long term nature of their implementation
In the Engineering and Construction activity, it is important to note that –with few exceptions– all of the agreements that Abengoa has entered into are ‘turnkey’ construction agreements (also known as "EPC agreements"). Under the terms of these agreements the client receives a completed facility in exchange for a fixed price. These projects are subject to very long construction periods of between one and three years. This type of agreement involves a certain amount of risk that the costs will be higher than those expected and the profitability of the project will be diminished since the price offered prior to beginning the project is based on cost estimates that can change over the course of the construction period, which can make certain projects unprofitable or even cause significant losses. Delays can result in cost overruns, deadlines being missed or penalty payments to the client, depending on what has been negotiated. Furthermore, in most EPC contracts Abengoa is responsible for every aspect of the project, from the engineering through to the construction, including the commissioning of the project.
In addition to the general responsibilities for each project, Xxxxxxx must also assume the technical risk and the associated guarantee commitments.
Likewise, Xxxxxxx must ensure that at all times it respects the minimum levels of subcontracting permitted by regulations applicable in the construction sector and registers with the Register of Accredited Companies (a register which aims to prove that companies operating in the construction sector meet the requirements of capacity and quality in the prevention of occupational hazard), as well as monitoring that the subcontractors are duly registered. Otherwise, Xxxxxxx could be jointly and severally liable for wages and social security. These circumstances should be taken into account especially in "turnkey" contracts.
The nature of the Engineering and Construction business exposes Abengoa to potential liability claims
The Engineering and Construction business carries out operations in which flaws in the design, construction or systems can involve substantial damages to third parties. Moreover, the nature of the Engineering and Construction business means that customers, subcontractors and suppliers occasionally file claims against Abengoa to recover the costs they have incurred in excess of their provisions, or for those for which they do not consider themselves to be contractually liable. Xxxxxxx has been and will be in the future a respondent in legal proceedings in which the parties claim damages and compensation in connection with Abengoa projects or other matters. These claims and lawsuits arise in the normal activity of Abengoa. In those cases in which it is concluded that Abengoa is liable, Abengoa may not be covered by its insurance or, should it be covered, the amount of these liabilities could exceed the limits of Abengoa's policies. As of December 31, 0000 Xxxxxxx’s provisions for potential liability claims amounted to €30 million.
Backlog risk: Cancellation of pending projects in Engineering and Construction
It is important to note that the term "backlog" usually refers to projects, operations and services for which we have signed contracts and in respect of which we have received non-binding commitments from customers or other operations within the Group, where the related revenues are not eliminated upon consolidation. Commitments may be in the form of written contracts for specific projects, purchase orders, or indications of the amount of time and materials we need to make available for customers’ anticipated projects. Some of the projects are conditional upon other factors, usually the process of obtaining third party financing. Similarly, all
the projects in the backlog are exposed to unexpected adjustments and cancellations, as well as early termination, variations or non-payment, since the projects may remain in the portfolio for an extended period of time. The Engineering and Construction contracts that Xxxxxxx signs in the framework of the development of its projects are often executed over a period that may exceed two years to complete construction. This circumstance increases the chances that any of such contracts could be terminated early, while respecting the corresponding notice periods. These cancellation processes are legally or contractually regulated, with compensation procedures having been established. However, if any breach or default exists on the part of Abengoa, it may not be entitled to receive the compensation stemming from the early termination.
Xxxxxxx’x backlog as of December 31, 2016 stood at €2.700 million; however, it cannot be guaranteed that the expected revenues from the "backlog" will materialize or, even if they do materialize, that they will lead to a profit. Due to the possible termination of projects, suspensions and changes in the schedule and scope of the project, it is not possible to predict with certainty when the backlog may be updated or whether it should be updated. Nor can Abengoa guarantee that additional cancellations will not occur and, even if a project progresses as planned, it is possible that the customer may become insolvent and not pay the amounts due to Abengoa. Material delays, cancellations and payment defaults could significantly affect Abengoa's business, financial position and the results of its operations.
The term "backlog" may not reflect the definition used by other companies with similar activities to those of Abengoa. Therefore, the determination of the backlog may not be comparable to other companies using a different definition.
The results of the Engineering and Construction (“E&C”) activity depend to some extent on the growth of Abengoa’s Concession-type Infrastructures
The Engineering and Construction business is Xxxxxxx'x most important activity in terms of revenues. In the past, a significant part of this business has depended on the construction of new assets for the Concession-type Infrastructures activity, especially power plants, transmission lines and water infrastructures. Abengoa expects that this dependence will be reduced pursuant to its plan to focus its Engineering and Construction business towards "turnkey" and concessionary projects that require limited capital investment or no investment by Abengoa. As part of this plan, for example, Xxxxxxx plans to postpone the development of new concessional projects until 2018.
If Abengoa is unsuccessful in winning new contracts in its Concession-type Infrastructures activity, the revenues and profitability of the Engineering and Construction activity might suffer.
Risks related to the Concession-Type Infrastructure activity
In 2016, the Concession-Type Infrastructure activity accounted for 9.5% of the consolidated total revenue of the Group.
Risks associated with concession-type infrastructure projects that operate under regulated tariffs or very long term concession agreements
Revenues obtained from concession-type infrastructure projects are highly dependent on regulated tariffs or, if applicable, long term price agreements over a period of between 25 and 30 years, depending on the asset. Abengoa has very little flexibility with regards to amending these tariffs or prices (being subject to increases indexed to the CPI and to possible requests for the economic rebalancing of the concession) when faced with adverse operating situations, such as fluctuations in commodity prices, exchange rates, and labor and subcontractor costs, during the construction and operating phases of these projects. Higher than expected operating costs, especially after many years in operation, in most cases cannot be passed on to the rate or price and would therefore diminish the operating margin and, consequently, the profitability of the project would be reduced. These projects are normally calculated with tariffs or prices that are higher than the operating and maintenance cost.
Similarly, government agencies (in some jurisdictions) or customers (where applicable) are entitled to sanction poor provision of the services under the operational activity, with a lowering of the rate structure or by postponing its update. In the area of renewable energies in particular, there is a risk that the government could reduce or eliminate the rates currently in force at any time during the life of the concession.
Risks derived from the existence of termination and/or renewal clauses of the concession agreements managed by Abengoa
Projects involving the operation of concessions are governed by the provisions of public contracts, where the competent government agency has certain prerogatives, such as monitoring the effective enforcement of contracts through the requirement for submission of technical, administrative or financial reporting, or the unilateral modification (subject to certain limits) of the established commitments. In any case, these contracts are subject to revocation or termination or non-renewal clauses which may be applicable in cases of inadequate compliance with the commitments (on investment, compliance with efficiency and safety standards, etc.) established in those contracts.
Other risks related to Abengoa’s business
Risks derived from Abengoa's significant dependence on its relationships with certain major customers
Xxxxxxx'x business depends to a significant degree on long-standing relationships with certain key customers.
In particular, during 2016, the top 10 customers of our Engineering and Construction activity represented approximately 41% of our consolidated revenue. As of December 31, 2016 the top 3 customers were Comisión Federal de Electricidad in Mexico, Xina CSP South Africa Ltd (Abengoa holds 40% and the remaining 60% is held by Industrial Development Corporation, KaXu Community Trust and the Southafrican Public Investment Corporation), and Central Texas Regional Water Supply Corporation. Together these top 3 customers represented approximately 18% of our consolidated revenue. Abengoa's largest single customer of the Engineering and Construction activity accounted for 7% of Abengoa's consolidated revenue in that year.
In addition, during 2016, the top 3 customers of our Concession-Type Infrastructure activity were Sonatrach SPA, Ghana Water Company Ltd, and Energía VM S.A. Together these top 3 customers represented approximately 6% of our consolidated revenue, of which the top customer represented 4% of our consolidates revenue.
Xxxxxxx'x business depends to a low degree on long-standing relationships with certain key customers. In particular, as of December 31, 2016, Abengoa's largest single customer, which belongs to the Engineering and Construction activity, accounted for 7% of Abengoa's total consolidated revenue and its ten, five and three largest customers collectively accounted for 43%, 26% and 18%, respectively, of its total consolidated revenue in that year.
If one or more of Abengoa's key customers were to breach or terminate their contracts with Abengoa, enter into agreements with Abengoa's competitors and/or otherwise become unable or unwilling to perform their obligations under existing contracts with Abengoa, such an event would be likely to have a material adverse effect on Abengoa's business, results of operations and financial condition.
Internationalization and country risk
Abengoa has projects on 4 continents, some of them in emerging countries, including locations as diverse as Africa, China, India, Middle East, North and South America (including Brazil), and it is expected to expand operations to new locations in the future.
The following table sets forth the breakdown by country of the consolidated total revenue of the Group as at December 31, 2016 and as at December 31, 2015 respectively:
For the years ended December 31,
2016 2015
(audited) (unaudited)
Consolidated Revenue by Geography | (€ in millions) | % of revenue | (€ in millions) | % of revenue | |||
Spain | 212.8 | 14.1 | 000.0 | 00.0 | |||
Xxxxx Xxxxxxx (Xxxxxx Xxxxxx and Canada) | 89.3 | 5.9 | 97.6 | 2.7 | |||
Mexico | 269.8 | 17.9 | 624.9 | 17.1 | |||
Europe (excluding Spain) (1) | 160.4 | 10.6 | 24.5 | 0.7 | |||
South America (excluding Brazil) (2) | 238.5 | 15.8 | 1,296.8 | 35.6 | |||
Brazil | 98.8 | 6.5 | 521.8 | 14.3 | |||
South Africa | 123.8 | 8.2 | 249.3 | 6.8 | |||
Other regions(3) | 316.6 | 21.0 | 191.1 | 10.8 | |||
Total revenue | 1,510.0 | 100.0 | 3,646.8 | 100.0 |
(1) Includes mainly the United Kingdom and France.
(2) Includes mainly Peru, Argentina and Uruguay.
(3) Includes mainly Algeria, Morocco, Saudi Arabia and Israel.
Abengoa's various operations and investments may be affected by different types of risk related to the economic, political and social conditions of the various countries in which Abengoa operates, particularly in countries with a higher degree of instability in the various factors cited and often referred to jointly as "country risk", which include:
• the effects of inflation and/or the possible devaluation of local currencies;
• possible restrictions on capital movements;
• regulation and possible unanticipated changes that could have adverse retroactive effects for Abengoa;
• the exchange/interest rate;
• the possibility that governments could expropriate or nationalize assets or increase their involvement in the economy and management of companies, as well as not granting or revoking previously granted licenses;
• the possible imposition of new and higher taxes or tariffs;
• the possibility of economic crises, political instability or civil disturbances.
For example, some of the contracts of Abengoa in Peru and Mexico are payable in local currency at the exchange rate on the payment date. In the event of a rapid devaluation or the establishment of exchange controls, Abengoa might not be able to convert to the local currency the amount agreed in dollars, which could affect the liquidity position of Abengoa.
In addition, in recent years, we have experienced episodes of political and social instability, with regime changes and armed conflicts in certain countries in the Middle East and Africa, including Egypt, Iraq, Syria, Libya and Tunisia. These events have increased the political instability and economic uncertainty in some of the countries in the Middle East and Africa where Abengoa operates.
With the exception of Mexico that accounted for approximately 18% of Abengoa’s revenues in 2016. activities in emerging countries are not concentrated in any specific country, the occurrence of one or more of these risks in a country or region in which Abengoa operates could have a significantly adverse effect on Abengoa's business, financial position and the results of its operations.
Abengoa's policy is to hedge the country risk through country risk insurance policies (covering cases such as political violence, expropriation, nationalization, confiscation, regulatory risk, failure to pay amounts related to the investment, dividends, amortization of credits, contractual breaches by the authorities of the host country regarding the insured investment and revolution or war) and the transfer of risk to financial institutions through the corresponding financing agreements or other mechanisms. However, it is not possible to guarantee that these mechanisms will ensure full coverage of possible contingencies or the full recovery of damages in all cases.
Risks derived from turnover in the senior management team and among key employees or from an inability to hire highly qualified personnel
Xxxxxxx'x future success heavily relies on the participation of the entire senior management team and key employees, who have valuable experience in every business area. Xxxxxxx'x capacity to retain and motivate senior executives and key employees and to attract highly skilled employees will significantly affect Xxxxxxx'x ability to develop the business successfully and expand operations in the future. Xxxxxxx'x restructuring process has caused the leave of some skilled employees of Abengoa. If Xxxxxxx loses one or more of its senior executives or valuable local managers with significant experience in the markets in which it operates, Abengoa could find it difficult to appoint replacements.
Construction projects related to the Engineering and Construction activity and the facilities of the Concession-type Infrastructures and biofuels operations are hazardous workplaces
Employees and other personnel that work on Abengoa's construction projects for the Engineering and Construction activity and at the facilities of the Concession-Type Infrastructures and biofuels operations are usually surrounded by large scale mechanical equipment, moving vehicles, manufacturing processes or hazardous materials, which are subject to wide-ranging regulations when they are used. Projects may involve the use of hazardous or highly regulated materials that, if not handled correctly or spilt, could expose Xxxxxxx to claims that result in all types of civil, criminal and administrative liabilities (fines or Social Security benefits surcharges).
Despite the fact that Abengoa has functional groups that are exclusively responsible for monitoring the implementation of the necessary health and safety measures, as well as working procedures that are compatible with protecting the environment, throughout the organization (including at construction and maintenance sites), any failure to comply with these regulations could result in liability for Abengoa. In the event of non- compliance Abengoa could be found liable.
Historical safety levels are a critical part of Xxxxxxx'x reputation. Many of its clients expressly require Abengoa to comply with specific safety criteria in order to be able to submit bids, and many contracts include automatic termination clauses or withdrawal of all or part of the contractual fees or profits in the event that Xxxxxxx fails to comply with certain criteria. Consequently, Xxxxxxx'x inability to maintain adequate safety standards could result in lower profitability or the loss of clients or projects.
As at the date of this Prospectus, no agreements have been terminated, no penalties have been imposed and no material decreases in earnings have occurred due to failures to comply with safety-related obligations.
Risks related to the bioenergy activities
The profitability of the biofuels sector within Abengoa's bioenergy business is affected by the prices of the commodities, including Abengoa's capacity to manage the price differentials (spreads) between the raw materials that must be acquired (maize, sugarcane, natural gas, etc.) and the product obtained that is sold (bioethanol, sugar, distilled grain and solubles, etc.). These prices are subject to a high degree of volatility and uncertainty and are decided by various market factors that are outside Abengoa's control that are typical of commodities. As a consequence of the volatility of the prices of these commodities, the operating results of the biofuels sector might fluctuate considerably.
In order to mitigate the risk of commodity market price fluctuations, the Group has historically used futures and options listed on organized markets, as well as OTC (over-the-counter) contracts with financial institutions.
At December 31, 2016, there were no commodity price derivatives, so would have been no change in other reserves as a result of changes in prices. A breakdown of the commodity derivative instruments as of December 31, 2016 and 2015 is included in Note 14 to the Consolidated financial statements.
The bioenergy activities were classified as discontinued operations as of December 31, 2016. On March 16, 0000 Xxxxxxx announced the sale of our European biofuel plants, including plants in Spain and France, to Trilantic Europe, completion is subject to certain condition precedent. Once the sale is completed, Abengoa will only own the existing bioethanol plants in Brazil.
II.- OTHER RISKS
RISKS RELATED TO THE INDUSTRY IN WHICH ABENGOA OPERATES
Risks derived from associations with third parties when executing certain projects
Abengoa undertakes large projects (both in terms of the resources allocated and the income derived therefrom), which are becoming increasingly more technically complex and are characterized by the award of the entire project to a single contractor. Given the complexity of the projects (usually designed ad hoc) they require the involvement of third parties specializing in the processes necessary to carry out certain activities related to such projects.
In this regard, it should be noted that Xxxxxxx has made investments in certain projects with third parties where such third parties provide technical expertise to the project. In certain cases, such collaborations are developed through uniones temporales de empresas or "UTEs" (a type of temporary joint venture under Spanish law) or joint ventures over which Abengoa has only partial control or joint control.
As of December 31, 2016, the revenues of the UTEs with non-Group partners included in the consolidated financial statements were €70.7 million.
Projects developed through UTE or joint venture agreements are subject to the risk that Xxxxxxx’x partner may block decisions that may be crucial to the success of the project or investment in the project, and it runs the risk that these third parties may in some way implement strategies that are contrary to Xxxxxxx'x economic interests, resulting in a lower return. Furthermore, the success of these partnerships depends on the satisfactory compliance by partners with their obligations. If third parties cannot satisfactorily meet their obligations due to financial or other difficulties, the said partnership may fail to perform or comply with its obligations towards a customer. In these circumstances, Xxxxxxx could be required to make additional investments or provide additional services to ensure the provision of services, or take responsibility for breaches vis-à-vis the customer, or assume additional financial or operational obligations that could eventually lead to lower profits or losses.
The delivery of products and the provision of services to clients, and compliance with the obligations assumed with these clients, can all be affected by problems related to third-parties and suppliers
Some Abengoa contracts require services, equipment or software that are outsourced to third parties, as well as material that is obtained from third party suppliers. The delivery of products or services that do not meet the contractual requirements or the late delivery of products and services may involve a breach in the contracts entered into with customers. Insofar as Abengoa is not able to transfer all the risk or obtain compensation from such third parties, Xxxxxxx will be exposed to customer claims as a result of problems caused by such third party.
The main products used by the Engineering and Construction activity include structural steel, metal plate, concrete, cable and various electrical and mechanical components such as turbines and boilers. Our top 3 suppliers worldwide are General Electric, Siemens, and ABB, and they represent a very significant share of the total supplier cost as they are providers of power plant turbines, which are a key component of both our conventional and renewable generation projects; however we do not have specific figures to cuantify their relevance as suppliers.
Abengoa's reliance on its suppliers to secure industrial materials, parts, components and subsystems used in its activity may expose Abengoa to volatility in the prices and availability of these materials. A disruption in deliveries from Abengoa's suppliers, supplier capacity constraints, supplier production disruptions, closing or bankruptcy of Abengoa's suppliers, price increases or decreased availability of raw materials or commodities could have a material adverse effect on Abengoa's ability to meet its customer commitments or result in an increase in Abengoa's operating costs if Abengoa is not able to transfer the increased costs on to the customer.
Risks relating to changes in technology, prices, industry standards, and other factors
The markets in which Abengoa's activities operate change quickly owing to technological innovations and to changes in the prices, industry standards, client requirements, and the economic environment. New technology or changes in the industry and in clients' requirements might mean that existing products and services become obsolete, excessively expensive, or not easily marketable. Consequently, Abengoa must improve the efficiency and reliability of existing technologies and pursue the development of new technologies to remain at the forefront of industry standards and the requirements of clients. As at December 31, 2016 R&D&i expenses
amounted to €10 million (€345 million and €598 million as at December 31, 2015 and 2014, respectively) an amount significantly lower than previous years as a consequence of the financial restructuring process.
Some of Abengoa's competitors might have substantially greater financial resources than Abengoa. If Abengoa is unable to introduce and integrate new technologies into its products and services in a timely and cost effective manner or does not obtain the necessary financing to carry out appropriate R&D&i activities, Xxxxxxx'x competitive position and growth prospects might deteriorate, resulting in an adverse material impact on Abengoa's business, financial situation, and operating results.
Insurance policies taken out by Abengoa may be insufficient to cover the risks arising from projects and the cost of insurance premiums may rise
Abengoa's projects are exposed to various types of risk that require appropriate coverage in order to mitigate their potential effects. Despite Xxxxxxx'x attempts to obtain the correct coverage for the main risks associated with each project, it is impossible to guarantee that it is sufficient for every type of potential loss.
Xxxxxxx'x projects are insured with policies that comply with sector standards in relation to various types of risk, such as risks caused by nature; incidents during assembly, construction or transport; and loss of earnings associated with such events. All of the insurance policies taken out by Xxxxxxx comply with the requirements demanded by the institutions that finance Xxxxxxx’x projects and the coverage is verified by independent experts for each project.
The amount of the insurance premiums paid by Xxxxxxx during each of 2015 and 2016 amounted to €58 million and €34 million, respectively.
Furthermore the insurance policies taken out are reviewed by the insurance companies. If insurance premiums increase in the future and cannot be passed on to the client, these additional costs could have a negative impact for Abengoa.
REGULATORY RISKS
A substantial portion of our consolidated revenues is generated by our operations in the United States of America
Despite our broad international presence and the reduction in contribution to consolidated revenues, the United States of America continues to be one of the countries of reference for Abengoa’s business. With 5% of consolidated revenues in 2016 and 3% in 2015, we continue to be exposed to fluctuations in the US economy and other circumstances affecting our US subsidiaries.
The former Administration of the United States of America, led by President Xxxxx, adopted strong policies of actively supporting the businesses developed by Xxxxxxx in the United States of America, particularly with respect to the renewable energies activity in the form of direct support for investment.
If the current Xxxxx Administration decides to decrease or abandon their support for the development of renewable energies, due, for example, to other funding priorities, political considerations or a desire to promote other energy sources, the renewable energies activity that Abengoa may plan to develop in the United States of America in the future could be less profitable or no longer economically feasible or could even result in Abengoa being unable to complete projects currently underway.
As a result of the above, the risks affecting our operations in the United States of America can, therefore, have an impact on our consolidated business, financial condition and results of operations.
Risks derived from reductions in government budgets, subsidies and adverse changes in the law that could affect Abengoa’s business and development of its current and future projects
The reduction in public spending on infrastructure has an impact on Abengoa's results, since a large part of the projects developed by Abengoa are promoted by public bodies, which provide Abengoa with a volume of income that is difficult to match with private investment, especially in the current economic environment as they are very capital-intensive projects that require a large initial investment and whose economic returns begin to be profitable in the very long term.
It should be mentioned that while Xxxxxxx'x business focuses increasingly outside of Spain and has gradually spread to other countries, a significant part of that activity is still concentrated in Spain. During 2016, sales revenues generated in Spain amounted to €212.8 million, accounting for 14% of the consolidated total revenue of the Group (€436.4 million and 12% as of December 31, 2105). In recent years, Spain has experienced an economic situation that has resulted in a decline in the tax revenues collected by the various government agencies, as well as increased public deficit and x xxxxx increase in the cost of sovereign debt.
Risk derived from a reliance on favorable regulation of the renewable energy business and bioethanol production
Renewable energy is rapidly maturing but its cost of generating electricity is still significantly higher than conventional energy production (nuclear, coal, gas, hydroelectric). Governments have established support mechanisms to make renewable generation projects economically viable, in the form of subsidized tariffs (mainly in Spain and South Africa), supplemented in specific cases with direct support for investment (mainly in the USA). In 2016, the solar operating segment amounted to €37.1 million e, accounting for 2% of the consolidated total revenue of the Group (€166.5 million and 5% as at December 31, 2015).
The subsidized tariffs vary depending on the technology (wind, photovoltaic −“PV”−, STE, biomass) since they are at different stages of maturity and the regulator wants to promote the development of each type by giving developers sufficient economic incentive in the form of a reasonable return on their investment. Without this support, any renewable energy project would currently be unfeasible, although as the technology matures, the need for this support will diminish or even completely disappear over the long term.
Subsidy schemes for renewable energy generation have been the subject of legal proceedings in the past in various jurisdictions (including claims that such schemes constitute state aid that is forbidden in the European Union).
If all or part of the subsidy schemes and incentives for renewable energy generation in any jurisdiction in which Abengoa operates are determined to be illegal and, therefore, are eliminated or reduced, Abengoa might not be able to compete effectively with other forms of renewable and conventional energy and could even be unable to complete some projects that are currently underway.
Risks derived from compliance with strict environmental regulations
Xxxxxxx'x business is subject to significant environmental regulations which, among others, requires Abengoa to carry out environmental impact studies in future projects or project changes, obtain regulatory licenses, permits and other authorizations, and meet the requirements of such licenses, permits and authorizations.
A breach of these regulations may lead to significant liability, including fines, damages, fees and expenses and the closure of facilities
MARKET RISK
Market risk arises when Group activities are exposed fundamentally to financial risk derived from changes in foreign exchange rates and interest rates.
To hedge such exposure, Abengoa uses currency forward contracts, options and interest rate swaps as well as future contracts for commodities. The Group does not generally use derivatives for speculative purposes.
Risks relating to the exposure to foreign exchange rate
The international activity of the Group generates exposure to foreign exchange rate risk. Foreign exchange rate risk arises when future commercial transactions and assets and liabilities recognized are not denominated in the functional currency of the Group company that undertakes the transaction or records the asset or liability. The main exchange rate exposure for the Group relates to the US Dollar against the Euro.
To control foreign exchange risk, the Group purchases forward exchange contracts which are designated as fair- value or cash-flow xxxxxx, as appropriate. Folowing the financial restructuring Xxxxxxx will continue purchasing forward exchange contracts once normal commnercial operations are recovered.
In the event that the exchange rate of the US Dollar had risen by 10% against the euro as of December 31, 2016, with the rest of the variables remaining constant, the effect in the Consolidated income statement would have been a loss of € 24,707 thousand (loss of €27,185 thousand in 2015) mainly due to the US Dollar net asset position of the Group in companies with euro functional currency and an increase of €25 thousand in 2016 (decrease of €1,649 thousand in 2015) in other reserves as a result of the cash flow hedging effects on highly probable future transactions.
Risks relating to the exposure to variations in interest rate
Interest rate risk arises mainly from financial liabilities at variable interest rates. Abengoa actively manages its risks exposure to variations in interest rates associated with its variable interest debt.
Historically, the main interest rate exposure for the Group relates to the variable interest rate with reference to the Euribor; however, as a consequence of the financial restructuring risks related to variable interest rates have been reduced as the majority of Abengoa’s financial debt relates to the new issuances as a result of the financial restructuring, which are all at fixed interest rates.
CREDIT RISKS
Risks related to clients and other receivables
Most receivables relate to clients operating in a range of industries and countries with contracts that require ongoing payments as the project advances; the service is rendered or upon delivery of the product. It is a common practice for Abengoa to reserve the right to cancel the work in the event of a material breach, especially non-payment.
In general, and to mitigate the credit risk, prior to any commercial contract or business agreement, Abengoa generally holds a firm commitment from a leading financial institution to purchase the receivables through a non-recourse factoring arrangement. Under these agreements, Abengoa pays the bank for assuming the credit risk and also pays interest for the discounted amounts. The Company always assumes the responsibility that the receivables are valid.
Abengoa derecognizes the factored receivables from the Consolidated Statement of Financial Position when all the conditions of IAS 39 for de-recognition of assets are met. In other words, an analysis is made to determine whether all risks and rewards of the financial assets have been transferred, comparing the company’s exposure, before and after the transfer, to the variability in the amounts and the calendar of net cash flows from the transferred asset. Once Xxxxxxx’x exposure to this variability has been eliminated or substantially reduced, the financial asset is transferred.
In general, Xxxxxxx considers that the most significant risk related to Clients and other receivables is the risk of non-collection, since: (a) trade receivables may be quantitatively significant during the progress of work performed for a project or service rendered; (b) it is not under Xxxxxxx’x control. However, the risk of delays in payment typically relates to technical problems, i.e., associated with the technical risk of the service provided and, therefore, within Abengoa’s control.
If Xxxxxxx concludes that the risk associated to the contract has been transferred to the financial institution, the receivable is derecognized in the Consolidated Statement of Financial Position at the time it is transferred, in accordance with IAS 39.20.
As of December 31, 0000 Xxxxxxx had utilized factoring lines for approximately €430 million, with virtually no additional available amounts.. In order to be able to reduce clients’ credit risk Abengoa will be required to be able to obtain new non-recourse factoring lines from financial entities going forward.
Risks related to financial investments
To control credit risk in financial investments, the Group has established corporate criteria which require that counterparties are always highly rated financial entities and government debt, as well as establishing investing limits with periodic reviews.
ACCOUNTING RISKS
The analysis of whether the IFRIC 12 ruling applies to certain contracts and activities, and determination of the appropriate accounting treatment in the event that it is applicable, involves various complex factors and is influenced by diverse legal and accounting interpretations
Abengoa records certain assets of the concession-type infrastructure business as service concession contracts in accordance with IFRIC 12. The infrastructure that Abengoa records as service concessions according to IFRIC 12 are primarily related to the power transmission lines business, desalination plants and solar thermal power generation plants outside and inside Spain.
The analysis regarding whether or not IFRIC 12 applies to certain contracts and activities includes several complex factors and is significantly affected by legal interpretations of certain contractual arrangements or other terms and conditions with public sector bodies. In particular, the application of IFRIC 12 requires that the party that awards the concession should determine what services the operator using the infrastructure must provide, to whom and at what price, and that it also control any residual interest in the infrastructure at the end of the concession period. When the operator of the infrastructure is also responsible for engineering, procurement and construction of the asset, IFRIC 12 requires separate accounting for revenues and margins associated with the construction activities, which are not eliminated on consolidation even between companies within the same consolidated group, as well as for the consequent operation and maintenance of the infrastructure. In these cases, investment in the infrastructure used in the concession agreement may not be classified as property, plant and equipment of the operator, but rather should be classified as an intangible asset or financial assets, depending on the nature of the receivables established in the contract.
Therefore, the application of IFRIC 12 requires significant judgment in relation to, among other factors, (i) the identification of certain infrastructures and contracts within the scope of application of IFRIC 12; (ii) an understanding of the nature of the payments in order to determine the classification of the infrastructure as a financial asset or as an intangible asset; and (iii) the time scale and the recognition of revenues from the construction and concessionary business.
Changes in one or more of the factors described above could significantly affect the conclusions of Abengoa on the application of IFRIC 12 and, therefore, the results of its operations and financial position. Consequently, if it is determined that such assets do not fall within the scope of IFRIC 12, the associated revenues and margins obtained by Abengoa during the construction phase of the affected assets might not be recognized in accordance with IFRIC 12 and eliminated on consolidation, leading to a decrease in revenues and profits in the Consolidated financial statements of the period, and a reclassification of intangible assets to property, plant and equipment in the consolidated balance sheet. Therefore, if it is determined that these assets no longer fall within the scope of application of IFRIC 12, this would affect the comparability of the operating results of Abengoa and its financial position in the periods in which such determination was made.
The recovery of deferred tax assets depends on obtaining profits in the future, which in turn depends on uncertain estimates
Abengoa assesses the recovery of deferred tax assets on the basis of future taxable profit estimates. These estimates stem from the projections included in the 5-year and 10-year strategic plan prepared by Xxxxxxx and drafted yearly to ensure the accuracy of the assumptions used in their preparation. Based on current estimates, Xxxxxxx expects to generate sufficient taxable income to recover the tax credits. Nevertheless, income may be affected by adverse circumstances that arise during the ordinary course of its business, as well as due to non- recurring extraordinary circumstances. A modification to estimates and assumptions by management may result in the non-recognition of the recoverability of deferred tax assets in the balance sheet of the Company, if indeed
it is considered unlikely that no taxable profits against which to offset the deductible temporary differences will be recorded, which will result in the recognition of the tax expense in the Consolidated income statement, although there would be no impact on cash flows.
Abengoa held deferred tax assets for a total amount of €615 million as of December 31, 2016. The Company, based on the assessment made, expects to recover the deferred tax assets through the projected taxable profit, taking into account in the said assessment the possible reversions of deferred tax liabilities, as well as any limitation established by the tax regulations in force in each tax jurisdiction.
MACROECONOMIC RISKS
Risks arising from the difficult conditions in the global economy and in global capital markets and their impact on reducing the demand for goods and services and difficulties in achieving the funding levels necessary for the development of existing and future projects and debt refinancing
The evolution of Abengoa's business has been traditionally affected not only by factors intrinsic to Abengoa but also by external factors such as economic cycles and their impact on the regions and areas where Abengoa operates. Typically, in situations of economic growth, the demand for the services offered by Abengoa increases and, conversely, in situations of economic instability or recession, demand suffers.
There is an uncertain macroeconomic backdrop in the main regions, both emerging and developed economies, in which Abengoa conducts a significant part of its operations.
Mexico is currently the largest country contributor to consolidated revenues accounting for 18% of consolidated revenues in 2016 (17% in 2015). The Mexican economy has been resilient over the past few years of global economic uncertainty with domestic demand driving the economy; however, the arrival of president Xxxxx to the government of the United States of America has increased uncertainty about their future policies in relation to Mexico. Any fluctuations in the Mexican economy specially related to the energy market could have a significant impact on Abengoa’s performance.
In the Latin American region, Brazil has traditionally been a key area for growth but now the country is slowly emerging from a severe recession combined with political uncertainty, low business confidence and high inflation leading to tight fiscal and monetary policies. Public expenditures, including those related to the kind of projects Abengoa develops, are expected to continue limited in the medium term.
In the United States, president Xxxxx’x Administration has indicated its intention to eliminate or decrease support for renewable energy and increase protectionism, creating uncertainty for foreign companies in general and those specialized in renewable energies, such as Abengoa.
In South Africa, economic growth is projected to rebound in 2017 and strengthen further in 2018; however, the macroeconomic situation is still difficult as growth is weak and inflation is above the central bank’s target and fiscal policy is under pressure from the risk of a ratings downgrade. The South African energy system has historically suffered from severe capacity shortages causing frequent blackouts in the country. The local government has incentivized the participation of private capital in the development of additional electricity generartion capacity through the Integrated Resource Plan 2010 – 2030, and specifically the development of renewable generation through auctions under the Renewable Energy Independent Power Producers Procurement Programme. Over this period, Xxxxxxx was awarded with 3 CSP plants. The South African government is currently updating an Intregrated Resource Plan 2020 – 2050 in order to set the targets for ther energy mix structure in which renewable energy, and in particular wind and solar, continue to be a key driver. Abengoa’s activity in South Africa has been predominantly related to renewable generation, specifically solar generation, and based in our past experience in the country, we expect to be able to materialize some new project opportunities in the future. However, if the economic growth continues to be weak and fiscal budgets contrained, projections for new generation opportunities might not materialize as expected.
Finally, in Europe there has been growing uncertainty regarding the role of the European Union after Brexit and increasing anti-European sentiment in other countries such as France. These circumstances could threaten recent recovery in economic growth that remains fragile, and adversely affect the state or regional budgets or the demand for environmental services. These and other factors could, therefore, entail that Abengoa’s customers will reduce their spending budgets for Abengoa's products and services. In addition, , Abengoa is a Spanish company and any turmoil in the country related for example to economic growth, corruption or the secession
movement in Catalonia, could also have a negative impact on profitability and public perception of the company internationally.
Geopolitical tensions, uncertainties in the international scene, terrorist actions, the growth of populist and nationalist political parties opposed to globalization in certain Latin American countries, the United States or even Europeans such as the United Kingdom and France, among others, undermine investor confidence and could significantly affect the economic situation in countries where Xxxxxxx operates, either because of budgetary constraints on sensitive items for the Group's operations, changes in regulation in sensitive sectors (e.g., the banking sector) or increased reliance on local suppliers to the detriment of multinationals such as Abengoa. Any of these circumstances, as well as any other that may affect the world economy could have a significant impact on the Group's business. Also, any continued uncertainty and volatility in global capital and credit markets could limit access to this route of funding for the capital required to operate and develop the business, including access to project finance which Abengoa uses to finance many of its projects.
REPUTATIONAL RISKS
Adverse publicity may have negative effect on the brand names owned or used in the Group
Adverse publicity relating to the restructuring or the financial condition of the Group or of other participants in the market(s) in which it operates may have a material adverse effect on the Group's customer and supplier relationships (including with financial and insurance institutions) and/or market perception of its business. Existing suppliers may choose not to do business with the Group, may demand quicker payment terms and/or may not extend normal trade credit. The Group may find it difficult to obtain new or alternative suppliers.
Ongoing negative publicity may have a long-term negative effect on the brand names owned or used in the Group.
Risks derived from a shift in public opinion about Xxxxxxx'x activities
There are certain individuals, associations or groups that may oppose the projects carried out by Xxxxxxx, such as the installation of renewable energy plants, due to reasons such as the misuse of water resources, landscape degradation, land use, and damage to the environment.
Although carrying out these infrastructure, engineering and building projects generally requires an environmental impact study and a public consultation process prior to granting the corresponding administrative authorizations, Abengoa cannot guarantee that a specific project will be accepted by the local population. Moreover, in those areas in which facilities are located next to residential areas, opposition from local residents could lead to the adoption of restrictive rules or measures regarding the facilities.
If part of the population or a particular competing company decides to oppose the construction of a project or takes legal action, this could make it difficult to obtain the corresponding administrative authorizations. In addition, legal action may request the adoption of precautionary measures that force construction to stop, which could cause problems for commissioning the project within the planned time frame causing the non-compliance with Xxxxxxx'x business objectives.
RISKS DERIVED FROM LAWSUITS AND OTHER LEGAL PROCEEDINGS
Abengoa is subject to the risk of claims and lawsuits and disciplinary sanctions in the regulatory environment during the ordinary course of its business. The results of the legal and regulatory proceedings are not predictable with certainty. Xxxxxxx is a party to several lawsuits, proceedings, actions and investigations, including in relation to possible anti-competitive practices.
In particular, Xxxxxxx has been sued in certain disputes brought before the United States District Court for the Southern District of New York and the Commercial Court in Seville, on behalf of certain investors of Abengoa, alleging infringement of the securities regulations in the United States and Spain. In addition Abengoa faces a risk of claims and litigation around the restructuring process due to its implementation in several jurisdictions.
The corresponding provisions that Abengoa has or could be required to record in its accounts could prove insufficient. The total provisions due to legal proceedings outstanding as at the date of this Prospectus amount to €34.2 million, out of which, €30 million are related to the engineering and construction business.
In the event that Abengoa were required to pay penalties, fines or damages to a third-party as a result of these legal proceedings, and such penalties, fines or damages were not be covered by the provisions in the accounts, they could, individually or in the aggregate, have a material adverse effect on Dominion’s business, financial condition and results of operations. For a detailed description of Abengoa's current legal proceedings, see "Business—17.- Legal Proceedings".
III.- SPECIFIC RISKS RELATING TO THE SECURITIES RISKS RELATED TO THE SHARES
Future sales of the Class A shares, Class B shares and/or equity related securities in the public market could adversely affect the trading price of the Class A shares and Class B shares and our ability to raise funds in new stock offerings
Future sales of substantial amounts of the Class A shares, Class B shares and/or equity related securities in the public market, or the perception that such sales could occur, could adversely affect prevailing trading prices of our Class A shares or Class B shares, and could impair our ability to raise capital through future offerings of equity or equity related securities. No prediction can be made as to the effect, if any, that future sales of the Class A shares and/or Class B shares or the availability of the Class A shares, Class B shares and/or equity related securities for future sale will have on the trading price of our Class A or Class B shares. In this regard, it should be noted that, upon exercise of the Abengoa Warrants, 941,805,965 New Shares will be issued, which may be detrimental to the trading price of either one or both the Class A and Class B shares.
The price of the Class A shares and Class B shares could be depressed by investors’ anticipation of the potential sale in the market of substantial additional amounts of Class B shares. Disposals of the Class A shares and/or Class B shares would increase their supply in the market and could depress their price.
Abengoa may at some point in the future issue additional shares or convertible securities, which may dilute shareholders’ interest in our Company
Xxxxxxx may decide to carry out additional issuances of shares or issue convertible securities in the future. If a share capital increase is effected, the Company's shareholders could be diluted if they do not exercise their preferential subscription rights or if such share capital increase excludes preferential subscription rights for existing shareholders in accordance with Spanish law. The Company has in place a delegation granted by our General Shareholders’ Meeting on March 29, 2015 to its board of directors to issue up to a value of half of the share capital that was in the existence on such date with or without preferential subscription rights. In addition, the General Shareholders’ Meeting held on March 29, 2015 approved delegating powers to the board of directors to issue any fixed or variable income securities, or similar debt instruments, that are convertible into our shares, or that are exchangeable for our shares, amounting to a maximum of €5 billion and with the ability to exclude preferential subscription rights. This delegated authority to issue new shares or convertible securities may be exercised in one or multiple transactions during a maximum period of five years from such date, although, as previously stated throughout this section, the financial agreements entered into by the Company in the context of its financial restructuring impose limitations on the Company's ability to assume additional debt, either through the market, by way of the issuance of debt instruments or otherwise.
As a result, the shareholding of our existing shareholders may be diluted in the event that shares or securities convertible into our shares are issued in the future.
Risks arising from Company's dividend policy. We do not intend to pay dividends in the short/medium term on our shares and, as a result, an investor's only opportunity to achieve a return on its investment could be if the price of our shares appreciates
The terms and conditions included in the financial agreements include a prohibition on the distribution of dividends until all of the New Money financing and Old Money financing is repaid in full. Therefore, we expect that no dividend payments will be made until, at least, 2023, date in which the last Old Money financing is expected to be repaid.
The prohibition on dividends also affects AbeNewco 1 and AbeNewco 2, the holding companies recently incorporated by Abengoa in the context of the Group's corporate restructuring. Whilst distribution of dividends within the companies of AbeNewco 1's consolidation perimeter are generally permitted, distributions of
dividends in favour of the Company, AbeNewco 2 and any shareholders thereof are prohibited, except for distributions required to attend scheduled debt service payments and, up to a certain cap, distributions required to attend the Company's general corporate expenses.
Following that restriction, any determination to pay dividends or buy back Class A shares and Class B shares in the future must be proposed by our Board of Directors and then approved by our shareholders. The actual payment of future dividends and the amounts thereof, will depend on a number of factors, including (but not limited to) the amount of our distributable profits and reserves and our investment plans, earnings, level of profitability, cash flow generation, credit ratings, applicable restrictions on the payment of dividends under applicable laws, compliance with covenants in our debt instruments (further details of which are set out in "Dividends and dividend policy"), the level of dividends paid or shares repurchased by other comparable listed companies doing business in Spain and such other factors as the Board of Directors may deem relevant from time to time. As at the date of this Prospectus, we do not foresee paying dividends for the 2016‒2023 period. Additionally, our ability to pay dividends or buy back shares in the future may be limited and/or our distribution policy may change. If dividends are not paid in the future, capital appreciation, if any, of the shares would be investors' sole source of gains.
It may be difficult for shareholders outside Spain to serve process on, or enforce foreign judgments against, the Company or the directors, for example, shareholders may face difficulties in protecting their interests because of differences in shareholders' rights and fiduciary responsibilities between Spanish laws and the laws of other jurisdictions, including most U.S. states
The Company is incorporated under the laws of Spain. The rights of the shareholders are governed by Spanish law and by the bylaws. These rights may differ from the rights of shareholders in non-Spanish corporations. All of the Company's current directors are resident in Spain and a relevant portion of our assets is currently located in Spain. As a result, it may be difficult for shareholders outside Spain to serve process on, or enforce foreign judgments against the Company or the directors.
Our corporate governance regime is principally determined by Spanish corporate law, the bylaws and the Company's internal rules governing the meetings of the Board of Directors and the shareholders as further described in "Management and Board of Directors". Shareholders' rights and the fiduciary responsibilities of directors, officers and controlling shareholders are different under Spanish law when compared with the statutes and judicial precedents of other jurisdictions, including most states in the United States. As a result, shareholders may have more difficulty in protecting their interests with regard to any acts or any failure to act by the Company's directors, officers or shareholders than would shareholders of a corporation incorporated in another jurisdiction or a state in the United States.
Shareholders in certain jurisdictions other than Spain or other EU countries, including the United States, may not be able to exercise their pre-emptive rights to acquire further shares or participate in buy-backs
Under Spanish corporate law, holders of shares generally have the right to subscribe and pay for a sufficient number of shares to maintain their relative ownership percentages prior to the issuance of any new shares against monetary contributions or the issue of convertible securities, unless such right is excluded under special circumstances by a resolution passed at the general shareholders' or board of directors' meeting, in accordance with Royal Legislative Decree 1/2010 approving the restated text of the Spanish Companies Act (Real Decreto Legislativo 1/2010, de 2 de julio, por el que se aprueba el texto refundido de la Ley de Sociedades de Capital) (the "Spanish Companies Act"). Even if the right is not excluded and therefore exercisable, holders of the Class A Shares and Class B Shares in certain jurisdictions other than Spain may not be able to exercise pre- emptive subscription rights unless applicable securities law requirements are complied with or exemptions are available, although the option provided under the Prospectus Regulation to passport a prospectus into other member states of the EEA may facilitate the exercising of such rights by residents in the EEA. The Company may determine that it is not in its best interests to comply with these formalities and there can be no assurance that such exemptions will be available. Accordingly, the pre-emptive subscription rights of any such affected shareholders may lapse and their proportionate interests be reduced. In relation to the Share Capital Increase, no pre-emptive subscription rights were attributable to the then current shareholders of the Company. According to the Spanish Companies Act, no pre-emptive rights arise in the context of share capital increases disbursed against an offset of credits as the Share Capital Increase.
In particular, holders of Class A Shares and Class B Shares resident in the United States may not be able to exercise any future pre-emptive subscription rights in respect of the ordinary shares they hold unless a
registration statement under the Securities Act is effective or an exemption from the registration requirements under the Securities Act is available, nor may they be able to participate in any buy-back program. No assurance can be given that the Company would file or has declared any such registration statement as effective or that any exemption from such registration requirements would be available to allow the exercising of the pre-emptive subscription rights or the participation in buy-back programs of US holders, or that the Company would make use of an exemption, if available.
We intend to evaluate at the time of any pre-emptive rights offering or buy-back program the costs and potential liabilities associated with the granting of pre-emptive rights or extending the buy-back program to U.S. holders of Class A Shares and Class B Shares, as well as the benefits to our Company of enabling the exercise by such holders of pre-emptive rights for the Class A shares and Class B shares or participation in the buy-back, as the case may be. In doing so, we will also evaluate any other factors we may consider appropriate at the time. It is possible that we may opt not to extend pre-emptive rights or any buy-back offer to U.S. holders.
An investor whose currency is not the euro is exposed to exchange rate fluctuations
Our Class A Shares and Class B Shares are quoted only in euro and any future payments of dividends on our Class A Shares and Class B Shares will be denominated in euro. Any investment in shares by an investor whose principal currency is not the euro exposes the investor to foreign currency exchange risk. The U.S. dollar or other currency equivalent of any dividends paid on the shares or any distributions made on an investment made in the shares could be adversely affected by the volatility of the euro against other currencies.
Certain potential U.S. federal income tax consequences to the Company’s U.S. Subsidiaries
For U.S. federal income tax purposes, the restructuring of the Company may result in cancellation of indebtedness income to the Company's U.S. subsidiaries as well as a limitation on the ability of the Company's
U.S. subsidiaries to utilize net operating loss carryforwards in the future.
RISKS RELATED TO THE ABENGOA WARRANTS
The Abengoa Warrants are a risky investment and may expire worthless
If our Shares price falls and remains below the exercise price of the Warrants (which is the face value of the underlying shares), the Warrants may not have any value and may expire without being exercised. There can be no assurance that the market price of our Shares will exceed the exercise price or the price required for the holder of the Abengoa Warrants to achieve a positive return at any point during the Abengoa Warrants exercise period.
There is no existing market for the Warrants, and we cannot be certain that an active market will be developed
Prior to this issuance of the Abengoa Warrants, there has been no existing trading market for the Abengoa Warrants.
The liquidity of any market for the Abengoa Warrants will depend on a number of factors, including but not limited to:
• the number of Abengoa Warrants we issued;
• the number of holders of the Abengoa Warrants;
• the Company's performance;
• the market for similar securities;
• the interest of securities dealers in making a market in the Abengoa Warrants;
• the market price of the Company's Shares; and
• the markets' perception of the probability of the conditions for exercise of the Abengoa Warrants being met.
In addition, many of the risks that are described elsewhere in this section could materially and adversely affect the price of the Abengoa Warrants.
The market price of the Abengoa Warrants will be affected by the market price of the Company's Shares, which may be volatile
The market price of the Company's Shares will significantly affect the market price of the Abengoa Warrants. The market price of the Company's Shares could be subject to significant fluctuations due to factors described throughout this section and we cannot predict how the Company's Shares will trade in the future. A decline in the market price of the Company's Shares could lead to a decline in the market price of the Abengoa Warrants. The price of the Company's Shares could also be affected by possible sales of Company's Shares by investors who view the Abengoa Warrants as a more attractive means of equity participation in the Company and by hedging activity involving the Company's Shares. The hedging of the Company's Shares could, in turn, affect the market price of the Abengoa Warrants.
Subsequent holders of the Abengoa Warrants will have no rights as shareholders until they acquire Company's Shares upon exercise of the rights attaching to the Abengoa Warrants
Subsequent holders of the Abengoa Warrants will have no rights with respect to the Company's Shares, including rights to dividend payments, if any, rights to vote or rights to respond to tender offers until they acquire Company's Shares upon exercise of the rights attaching to the Abengoa Warrants. In addition, neither the exercise price nor the underlying securities of the Warrants will be adjusted in scenarios where existing shareholders of the Company may receive a consideration. See following risk factor “The exercise prices of the Class A Warrants and the Class B Warrants and the number of underlying class A and class B shares may not be adjusted for all dilutive events”.
The exercises prices of the Class A Warrants and the Class B Warrants and the number of underlying class A and class B shares will not be adjusted for all dilutive events
The exercise prices of the Class A Warrants and the Class B Warrants and the number of underlying class A and class B shares are subject to adjustment for certain events, including, but not limited to, the split of the par value of the class A shares and/or the class B shares, group the shares or carry out any other transactions with an equivalent effect in the par value per share, without affecting the amount of the Company's share capital, as described below under "Description of the Abengoa Warrants—Exercise price of the Abengoa Warrants. Adjustments". The exercise prices and the number of underlying shares will not be adjusted, however, for other events. Therefore, other events or corporate transactions that affect the value of the Abengoa shares and thus, the Abengoa Warrants (such as share capital increases with pre-emptive rights or any sort of distributions to existing shareholders) may occur that do not result in an adjustment to the exercise prices or the number of underlying shares. Likewise, the share capital reductions effected to meet the requests for conversion of class A shares into class B shares submitted by the shareholders in the exercise of their right of voluntary conversion of class A shares into class B shares will not have any effect on the exercise price of the Abengoa Warrants.
In addition, in the event that within the period comprised between the date of issuance of the Abengoa Warrants and the "Date for the Initial Exercise of the Abengoa Warrants" (as defined in "Description of the Abengoa Warrants—Exercise period of the Abengoa Warrants"), the General Shareholders' Meeting of the Company were to approve the collapse of the Company's class A and class B shares into a single new class of ordinary shares, the type and number of the underlying shares would be adjusted in order to ensure that the shares to be subscribed for in exercise of the rights attaching to the Abengoa Warrants are ordinary shares of the Company and that, collectively considered, the number of the underlying shares continues to represent 5% of the total number of shares into which the Company's share capital is currently divided as a result of the execution of the Share Capital Increase. The exercise price of the Abengoa Warrants would likewise be adjusted to the par value of the underlying Abengoa ordinary shares.
The resolutions by which, if appropriate, the execution of any of the transactions referred to in the preceding paragraph shall be approved, shall establish the corresponding adjustment mechanisms to compensate any subsequent dilution. In addition, the Abengoa Warrants may only be exercised by the holders thereof if, following the expiration of the time period comprised by the 96 months following the date on which all the necessary actions to implement the restructuring of the Group's financial debt and recapitalization set out in the
Restructuring Agreement were taken and provided that, once such period has elapsed, the amounts owed both under of the new financing to be provided to Abengoa under the Restructuring Agreement and the pre-existing financial debt (as restructured) have been fully satisfied, including the financial costs involved (hereafter the "Conditions for Exercise" and the "Date for the Initial Exercise of the Abengoa Warrants"). The Abengoa Warrants may be exercised by their holders, totally or partially, at any time within the maximum term of the three months immediately following the Date for the Initial Exercise of the Abengoa Warrants.
The Date for the Initial Exercise of the Abengoa Warrants will be communicated by the Company to the market in a timely manner through the publication of a relevant event notice (comunicación de hecho relevante) both on the Company's corporate website (xxx.xxxxxxx.xxx) and the CNMV's website (xxx.xxxx.xx).
According to the foregoing, the rights attaching to the Abengoa Warrants will be cancelled if, following the expiration of a 96-month period, the amounts owed both under of the new financing provided to Abengoa under the Restructuring Agreement and the pre-existing financial debt (as restructured), including the financial costs involved were not paid in full.
They will also be cancelled if, at the end of the 96-month period, the amounts owed both under of the new financing provided to Abengoa under the Restructuring Agreement and the pre-existing financial debt (as restructured) were fully satisfied, including the financial costs involved but holders of the Abengoa Warrants do not exercise their rights in the three month period referred to above.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
General
The Company prepares its financial statements in euro. The euro is the currency of the member states of the European Union, including Spain, which participated or participate at the relevant time in the Economic and Monetary Union.
Certain monetary amounts and other figures included in this Prospectus have been subject to rounding adjustments. Any discrepancies in any tables between the totals and the sums of the amounts listed are due to rounding.
Audited Consolidated Financial Statements
Xxxxxxx'x audited Consolidated financial statements as of and for each of the years ended December 31, 2016, 2015 and 2014 (together, the "Audited Consolidated financial statements") have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The Audited Consolidated financial statements have been audited by Deloitte, S.L., as stated in its unqualified reports, which, together with the Audited Consolidated financial statements in Spanish, are incorporated by reference herein and are available:
On the Company´s website (xxx.xxxxxxx.xxx):
• Year ended December 31, 2016: xxxx://xxx.xxxxxxx.xxx/xxx/xx/xxxxxxxx_x_xxxxxxxxxxxxx/xxxxxxxxxx/xxxxxxxx_xxxxxxx/0000/xxxx0/
• Year ended December 31, 2015: xxxx://xxx.xxxxxxx.xxx/xxx/xx/xxxxxxxx_x_xxxxxxxxxxxxx/xxxxxxxxxx/xxxxxxxx_xxxxxxx/0000/xxxx0/
• Year ended December 31, 2014: xxxx://xxx.xxxxxxx.xxx/xxx/xx/xxxxxxxx_x_xxxxxxxxxxxxx/xxxxxxxxxx/xxxxxxxx_xxxxxxx/0000/xxxx0/
And on the CNMV’s website (xxx.xxxx.xx): xxxxx://xxx.xxxx.xx/Xxxxxx/Xxxxxxxxx/XXX/XxxxxxxXXX.xxxx?xxx0&xxxxX00000000
However, the auditor's report on the Audited Consolidated Financial Statements of the Company for the years ended December 31, 2016 and 2015 contains an emphasis of matter paragraph regarding the restructuring process of the Company and its Group. These emphasis of matter paragraphs are reproduced below:
• Year ended December 31, 2016:
"Emphasis of Matter
Without qualifying our audit opinion, we draw attention to the disclosures included by the Parent’s directors in Notes 2 and 4 to the accompanying consolidated financial statements, which describe the evolution of operations and the events that led the Parent's directors to approve the signing of a financial restructuring agreement (“Abengoa Restructuring Agreement”) with various xxxxx and new investors on 24 September 2016, the approval of which, once the majorities required by current legislation had been obtained, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 8 November 2016. This financial restructuring agreement was subject to the fulfilment of certain conditions precedent.
On 14 February 2017, the Parent reported, through a relevant event communication, that, in view of the situation in Mexico and in order to expedite the fulfilment of the conditions precedent of the Abengoa Restructuring Agreement and to begin to implement the revised viability plan approved on 3 August 2016, it had prepared, together with its main creditors and investors, a proposal to adapt the mechanism for the payment of
the new financing envisaged in the financial restructuring agreement. This proposal requires certain amendments to the Abengoa Restructuring Agreement and the consent of the majority of the participating creditors, which had been obtained at the date of this report.
The aforementioned agreements envisage, among other matters, the restructuring of the Group's debt and of the Parent's share capital, with certain financial creditors and new investors becoming shareholders, and, also, the reorganisation of the Group companies and the Group's businesses in accordance with the revised viability plan.
Under this plan, at 31 December 2016 certain business lines and construction projects that are regarded in the revised viability plan as being non-core for the continuity of the Group with the new financing structure agreed upon, or which the directors consider to be unfeasible in the medium term in view of the current situation of the companies or the assets, were classified as either non current assets held for sale or discontinued operations.
From August 2015 the inability to access sufficient financing had paralysed the majority of the Group’s operations and made it impossible for it to meet its deadline obligations in existing concessions and projects, whilst preventing it from undertaking significant new projects, all of which affected the performance of the business during the year. As a result of all the foregoing, certain foreign companies have undergone court insolvency proceedings that have resulted in company or asset liquidation processes that are out of the Group’s control.
The Parent’s directors have disclosed in the consolidated financial statements the impacts of the liquidation and discontinuation of the companies not included in the Group’s revised viability plan and liquidity plan, which will be substantially offset by the future effects of the restructuring of the debt and the corresponding debt reduction. Also, the loss for 2016 includes the impact of the impairment losses which, in accordance with International Financial Reporting Standards (IFRSs), must be recognised at 31 December 2016. As a result, both the Group and the Parent had an equity deficit at that date and, therefore, the Parent was in a situation of mandatory dissolution. The directors consider that the restructuring agreed upon will make it possible to restore the equity and financial position of the Parent.
The aforementioned circumstances are indicative of the existence of a significant uncertainty regarding the ability of the Group to continue operating as a going concern. As a result, the viability of the Group, and the recovery of its assets, the settlement of its liabilities and the fulfilment of its guarantee commitments for the amounts reflected in the accompanying consolidated financial statements will depend on the effective application of the measures envisaged in the restructuring agreement, the revised viability plan and the liquidity plan, as well as on the evolution of the Group companies’ operations and such future decisions as the managers of the Group might make regarding its equity."
• Year ended December 31, 2015:
"Emphasis of Matter
Without qualifying our audit opinion, we draw attention to the information included in Notes 2 and 4 to the accompanying consolidated financial statements, which describe the events that occurred in the second half of 2015 which led the Parent's directors to submit the notification provided for in Article 5 bis of Spanish Insolvency Law 22/2003 at Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 25 November 2015 and to request similar proceedings for certain subsidiaries both in Spain and in other countries. On 16 March 2016, the Parent presented its business plan and financial restructuring proposal which were previously agreed upon with a significant number of its financial creditors based on the aforementioned plan and which included, inter alia, the adherence of the financial creditors to a seven-month standstill agreement and which, following obtainment of the majorities required by current legislation, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 6 April 2016. The aforementioned agreement provides for the negotiation of the restructuring of the Group's debt and capital in order to ensure the viability of its operations. Therefore, the directors prepared the accompanying consolidated financial statements considering the entity's ability to continue as a going concern.
The above-mentioned events and their impact on the financial and economic position of the Group, as reflected in the accompanying consolidated financial statements for 2015, indicate the existence of a significant uncertainty as to the Group’s ability to continue to operate as a going concern. Consequently, the recovery of the assets, the settlement of the liabilities and the fulfilment of the guarantee and collateral commitments for the amounts indicated in the accompanying consolidated financial statements will depend on the success of such
financial and corporate restructuring measures as might be approved, on the performance of the Group companies' operations and on the possible future decisions that the Group's managers may make on disposals of assets or business lines."
Audited Stand-Alone Financial Statements
Xxxxxxx'x Audited Stand-alone annual accounts as of and for each of the years ended December 31, 2016, 2015 and 2014, (together, the "Audited Stand-Alone financial statements") have been prepared in accordance with generally accepted accounting principles in Spain ("Spanish GAAP"). The Audited Stand-Alone Financial Statements have been audited by Deloitte, S.L., as stated in its unqualified reports, which together with the Audited Stand-Alone Financial Statements in Spanish are incorporated by reference herein and are available on the CNMV’s website (xxx.xxxx.xx), at:
xxxxx://xxx.xxxx.xx/Xxxxxx/Xxxxxxxxx/XXX/XxxxxxxXXX.xxxx?xxx0&xxxxX00000000
However, the auditor's report on the Audited Stand-Alone Financial Statements of the Company for the years ended December 31, 2016and 2015 contains an emphasis of matter paragraph regarding the restructuring process of the Company and its Group. These emphasis of matter paragraphs are reproduced below:
• Year ended December 31, 2016:
"Emphasis of Matter
Without qualifying our audit opinion, we draw attention to the disclosures included by the directors in Notes 2 and 5 to the accompanying consolidated financial statements, which describe the evolution of operations and the events that led the Company's directors to approve the signing of a financial restructuring agreement (“Abengoa Restructuring Agreement”) with various xxxxx and new investors on 24 September 2016, the approval of which, once the majorities required by current legislation had been obtained, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 8 November 2016. This financial restructuring agreement was subject to the fulfilment of certain conditions precedent.
On 14 February 2017, the Company reported, through a relevant event communication, that, in view of the situation in Mexico and in order to expedite the fulfilment of the conditions precedent of the Abengoa Restructuring Agreement and to begin to implement the revised viability plan approved on 3 August 2016, it had prepared, together with its main creditors and investors, a proposal to adapt the mechanism for the payment of the new financing envisaged in the financial restructuring agreement. This proposal requires certain amendments to the Abengoa Restructuring Agreement and the consent of the majority of the participating creditors, which had been obtained at the date of this report.
The aforementioned agreements envisage, among other matters, the restructuring of the debt of Xxxxxxx, S.A. and Subsidiaries ("the Group") and of the Company's share capital, with certain financial creditors and new investors becoming shareholders, and, also, the reorganisation of the Group companies and the Group's businesses in accordance with the revised viability plan.
Under this plan, at 31 December 2016 certain business lines and construction projects that are regarded in the revised viability plan as being non-core for the continuity of the Group with the new financing structure agreed upon, or which the directors consider to be unfeasible in the medium term in view of the current situation of the companies or the assets, were classified as either non current assets held for sale or discontinued operations.
From August 2015 the inability to access sufficient financing had paralysed the majority of the Group’s operations and made it impossible for it to meet its deadline obligations in existing concessions and projects, whilst preventing it from undertaking significant new projects, all of which affected the performance of the business during the year. As a result of all the foregoing, certain foreign companies have undergone court insolvency proceedings that have resulted in company or asset liquidation processes that are out of the Group’s control.
The Parent’s directors have disclosed in the financial statements the impacts of the liquidation and discontinuation of the companies not included in the Group’s revised viability plan and liquidity plan, which will be substantially offset by the future effects of the restructuring of the debt and the corresponding debt reduction. Also, the loss for 2016 includes the impact of the impairment losses which, in accordance with the
regulatory financial reporting framework applicable to the Company, must be recognised at 31 December 2016. As a result, both the Group and the Parent had an equity deficit at that date and, therefore, the Parent was in a situation of mandatory dissolution. The directors consider that the restructuring agreed upon will make it possible to restore the equity and financial position of the Parent.
The aforementioned circumstances are indicative of the existence of a significant uncertainty regarding the ability of the Company to continue operating as a going concern. As a result, the viability of the Company, and the recovery of its assets, the settlement of its liabilities and the fulfilment of its guarantee commitments for the amounts reflected in the accompanying financial statements will depend on the effective application of the measures envisaged in the restructuring agreement, the revised viability plan and the liquidity plan, as well as on the evolution of the Group companies’ operations and such future decisions as the managers of the Company might make regarding its equity."
• Year ended December 31, 2015:
"Emphasis of Matter
Without qualifying our audit opinion, we draw attention to the information included in Notes 2 and 5 to the accompanying financial statements, which describe the events that occurred in the second half of 2015 which led the Company's directors to submit the notification provided for in Article 5 bis of Spanish Insolvency Law 22/2003 at Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 25 November 2015 and to request similar proceedings for certain subsidiaries both in Spain and in other countries. On 16 March 2016, the Company presented its business plan and financial restructuring proposal were previously agreed upon with a significant number of its financial creditors based on the aforementioned plan and which included, inter alia, the adherence of the financial creditors to a seven-month standstill agreement and which, following obtainment of the majorities required by current legislation, was accepted by Xxxxxxx Xxxxxxxxxx Xxxxx xx. 0 on 6 April 2016. The aforementioned agreement provides for the negotiation of the restructuring of the debt and capital of Abengoa S.A. and Subsidiaries ("the Group") in order to ensure the viability of their operations. Therefore, the directors prepared the accompanying financial statements considering the entity's ability to continue as a going concern.
The above-mentioned events and their impact on the financial and economic position of the Company, as reflected in the accompanying financial statements for 2015, indicate the existence of a significant uncertainty as to the Company’s ability to continue to operate as a going concern. Consequently, the recovery of the assets, the settlement of the liabilities and the fulfilment of the guarantee and collateral commitments for the amounts indicated in the accompanying financial statements will depend on the success of such financial and corporate restructuring measures as might be approved, on the performance of the operations and on the possible future decisions that the Company's managers may make on disposals of assets or business lines of the Group."
Non-IFRS Financial Measures / Alternative Performance Measures
In addition to the financial information presented herein and prepared under IFRS, Xxxxxxx has included herein certain Alternative Performance Measures ("APMs") as defined in the guidelines issued by the European Securities and Markets Authority ("ESMA") on October 5, 2015 (apply since July 7, 2016) on alternative performance measures (the "ESMA Guidelines"), which have been extracted from the accounting records of Abengoa. Xxxxxxx has presented these APMs, which have not been reviewed or audited, because Xxxxxxx believes they may contribute to x xxxxxx understanding of Abengoa's results of operations by providing additional information on what Xxxxxxx considers to be some of the drivers of Abengoa's financial performance. The calculation criteria is consistent in all periods.
We believe that the presentation of the APMs included herein substantially complies with the ESMA Guidelines.
The most significant APM are the following:
• EBITDA:
Definition: earnings before interest, tax, depreciation and amortization.
Reconciliation: the Company presents the EBITDA calculation in Note 5 to the Consolidated annual financial statements for the years ended December 31, 2016, 2015 and 2014 in this Prospectus. See the section “Management´s Discussion and Analysis of Financial Condition and Results of Operations”.
Use: EBITDA is considered by the Company as a measure of performance of its activity given that provides an analysis of the operating results (excluding depreciation and amortization, which do not represent cash) as an approximation of the operating cash flows that reflects the cash generating before variations in working capital. Additionally, EBITDA is an indicator widely used by investors when valuing corporations, as well as by rating agencies and creditors to assess the indebtedness comparing EBITDA with net debt. The reconciliation of EBITDA is not made by segment because this information has been prepared based on internal management information that has not been published.
• EBITDA margin:
Definition: EBITDA / revenue.
Reconciliation: The calculations of the EBITDA margin of the Group for the years ended December 31, 2016, 2015 and 2014 are set forth in the following tables:
For the years ended For the years ended
December 31, December 31,
2016 2015 2015 2014
(audited) (unaudited) (audited) (audited)
(€ in millions) (€ in millions)
Revenue 1,510 3,647 5,755 7,151
EBITDA | (000) 000 | 000 0,408 |
XXXXXX Xxxxxx | -15.9% 9.4% | 8.9% 19.7% |
Use: operating margin is a measure of business profitability itself before the amortization, impairment, financial results and taxes impact. It measures the monetary units earned per units sold.
• Net corporate debt:
Definition: corporate financing – cash and cash equivalents (excluding project companies) – current financial investments (excluding project companies).
Reconciliation: the calculation of the net corporate debt of the group for the years ended December 31, 2016, 2015 and 2014 is set forth in the following tables:
For the years ended December 31,
2016 | 2015 | 2014 | ||||
(audited) (€ in millions) | (audited) (€ in millions) | (audited) (€ in millions) | ||||
Corporate Net Debt + Borrowings (current and non-current) | 2,843.0 | 2,328.0 | 1.316.0 | |||
+ Notes and bonds (current and non-current) | 3,550.0 | 3,301.0 | 3.853.0 | |||
+ Financial lease liabilities (current and non-current) | 21.1 | 36.5 | 35.0 | |||
- Financial investments | (150.0) | (519.0) | (1,048.6) | |||
- Cash and cash equivalents | (278.0) | (681.0) | (1,810.8) | |||
- Treasury shares + Financial investments and Cash and cash equivalents (project) | - | 14.9 | 8.0 | |||
Total | 5,986.1 | 4,480.4 | 2,352.6 |
Use: net corporate debt is a financial indicator which measures the indebtedness position of a company at corporate level. Additionally, it is an indicator widely used by investors when valuing the financial indebtedness of a company, as well as by rating agencies and creditors when valuing the level of indebtedness.
• Net Fixed Assets:
Definition: Intangible assets, Property plant and equipment and Fixed assets in projects net of depreciation and amortization.
Reconciliation: The calculation of the net fixed assets of the Group and by segment information for the years ended December 31, 2016, 2015 and 2014 are set forth in the following tables based on the amounts registered as Intangible assets, Property plant and equipment and Fixed assets in projects to the Consolidated annual financial statements for the years ended December 31, 2016, 2015 and 2014:
Engineering and construction
Concession-type infrastructure Industrial
production
Total As of December 31,
Item Eng. and const. Solar Water Trans. Cog. and
other
Biofuels
2016
Intangible assets | 73.8 | - | 1.7 | - | 0.5 | - | 76.0 |
Property plant and equipment | 177.2 | 0.2 | - | - | - | - | 177.4 |
Fixed assets in projects | - | 4.0 | 235.3 | 7.5 | 150.9 | - | 397.7 |
Total Net Fixed Assets | 251.0 | 4.2 | 237.0 | 7.5 | 151.4 | - | 651.1 |
Engineering and construction
Concession-type infrastructure Industrial
production
Total As of December 31,
Item Eng. and const. Solar Water Trans. Cog. and
other
Biofuels
2015
Intangible assets | 245.2 | 0.4 | 6.8 | - | 0.3 | 1,193.3 | 1,446.0 |
Property plant and equipment | 173.3 | 19.8 | - | - | - | 961 | 1,154.1 |
Fixed assets in projects | - | - | 244.7 | 2,178.1 | 161.2 | 775.6 | 3,359.6 |
Total Net Fixed Assets | 418.5 | 20.2 | 251.5 | 2,178.1 | 161.5 | 2,929.9 | 5,959.7 |
Engineering and construction
Concession-type infrastructure Industrial
production
Total as of December 31,
Item Eng. and const. Solar Water Trans. Cog. and other
Biofuels
2014
Intangible assets | 396.3 | 0.3 | - | 6.8 | 0.9 | 1,164.1 | 1,568.4 |
Property plant and equipment | 276 | 23.1 | - | 4.8 | - | 983.5 | 1,287.4 |
Fixed assets in projects | - | 2,111.6 | 2,273.1 | 484.3 | 321.1 | 998.2 | 6,188.3 |
Total Net Fixed Assets | 672.3 | 2,135.0 | 2,273.1 | 495.9 | 322.0 | 3,145.8 | 9,044.1 |
Use: Net Fixed Assets is a financial indicator which measures the investment in assets accumulated.
• Net Cash Flows from Operating Activities:
Definition: variations in cash arisen as the difference between collections and payments caused by trade transactions in the Group during the period.
Reconciliation: the Company presents the Net Cash Provided by Operating Activities calculation in the Cash Flow Statement in the Consolidated financial statements for the years ended December 31,2016, 2015 and 2014 and in this Prospectus, see the section “Selected Consolidated Financial Information”.
Use: net cash provided by operating activities is a financial indicator which measures the cash generation of business itself during the period.
• Net Cash Used in Investing Activities:
Definition: variations in cash arisen as the difference between collections and payments caused by disposals and investment transactions in the Group during the period.
Reconciliation: the Company presents the Net Cash Used in Investing Activities calculation in the Cash Flow Statement in the Consolidated financial statements for the years ended December 31, 2016, 2015, and 2014 and in this Prospectus, see the section “Selected Consolidated Financial Information”.
Use: net cash used in investing activities is a financial indicator which measures the investing effort of the Company in a period net of divestments in the Company during the period.
• Net Cash Generated from Financing Activities:
Definition: variations in cash arisen as the difference between collections and payments caused by financing transactions in the Group during the period.
Reconciliation: the Company presents the Net Cash Provided by Financing Activities calculation in the Cash Flow Statement in the Consolidated financial statements for the years ended December 31, 2016, 2015 and 2014 and in this Prospectus, see the section “Selected Consolidated Financial Information”.
Use: net cash provided by financing activities is a financial indicator which measures both the cash generated from new financing closed during the period and the use of cash in the same period to repay its financial creditors (financial entities, investors, partners and shareholders).
• Earnings per share (EPS):
Definition: profit for the year attributable to the parent company / number of ordinary shares outstanding.
Reconciliation: the Company presents the EPS calculation in the Consolidated income statement for the years ended December 31, 2016, 2015 and 2014 in this Prospectus, see the section “Selected Consolidated Financial Information”.
Use: earning per share is a financial indicator which measures the portion of profit that corresponds to each share of the Company. It is an indicator widely used by investors when valuing the performance of a Company.
• Backlog:
Definition: value of construction contracts awarded and pending to execute.
As described in "Management’s discussion and analysis of our financial condition and results of operations
—2.- Factors Affecting Our Results of Operations—Regulation—Backlog and Concessions", our backlog is a significant indicator of the growth of our Engineering and Construction segment exclusively and, therefore, it would be useless as an indicator of the performance of any other of the Company's segments.
Use: backlog is a financial indicator which measures the capacity of future revenue generation of the Company.
• Payout ratio:
Definition: ratio calculated as the division of the total amount distributed as a dividend by the profit for the year attributed to the parent company. See “Dividends and dividend policy”.
Reconciliation: the Company presents the payout ratio calculation in the Section “Dividends and dividend policy” of this Prospectus for the years 2015 and 2014 (no dividends were distributed in 2016). The payout ratio is calculated based on the Profit for the year attributable to the parent company of the Consolidated Income Statements to the Consolidated annual financial statements for the years ended December 31, 2014 and 2013 and the amounts distributed as a dividend for the years 2015 and 2014, in Note 18.1 to the Consolidated annual financial statements for the years ended December 31, 2015 and 2014.
The Reconciliation of the payout ratio is as follows:
Payout ratio
(€ thousands)
2015 | 2014 | |
Amounts distributed as dividend | 94,894 | 91,637 |
Profit for the year attributed to the parent company | 125,292(1) | 101,445(2) |
Payout ratio | 75.7% | 90.3% |
(1) Profit from year 2014. | ||
(2) Profit from year 2013. |
Use: the payout ratio is used to determine whether Company's earnings are such that they can sustain its dividend payments.
We believe that the presentation of the APMs included herein comply with the ESMA Guidelines.
These measures are not defined under IFRS nor should be considered as an alternative to net income as an indicator of the Abengoa's performance nor as an alternative to operating cash flows as a measure of the Abengoa's liquidity and may be presented on a different basis than the financial information included in the Audited Consolidated financial statements. Accordingly, they may differ significantly from similarly titled information reported by other companies, and may not be comparable. Investors are cautioned not to place undue reliance on these non-IFRS financial accounting measures, which should be considered supplemental to, and not a substitute for, the financial information prepared in accordance with IFRS incorporated by reference herein and available on the Company´s website.
Segment reporting
We organize our business into the following two activities: Engineering and Construction and Concession Type Infrastructure, which in turn comprise five operating segments (until December 31, 2016 we organized our business in three activities: Engineering and Construction, Concession-Type Infrastructure and Industrial Production):
• Engineering and Construction: relates to our traditional engineering activities in the energy and environmental sectors, with more than 70 years of experience in the market as well as the development of solar technology. Prior to 2014, our Engineering and Construction activity was comprised of two operating segments: Engineering and Construction and Technology and Other. Beginning in 2014, we began including the Technology and Other segment within the Engineering and Construction segment, in accordance with IFRS 8, Operating Segments. As a result, our Engineering and Construction activity is now comprised of a single operating segment: Engineering and Construction.
This activity is comprised of one operating segment:
o Engineering and Construction—Specialized in carrying out complex turnkey projects for thermo-solar plants, solar gas hybrid plants, conventional generation plants, biofuels plants and water infrastructures, as well as large scale desalination plants and transmission lines, among others.
• Concession-Type Infrastructure: groups together our proprietary concession assets that generate revenues governed by long-term sales agreements, such as take or pay contracts, tariff contracts or power purchase agreements. This activity includes the operation of electric (solar, generation or wind) energy generation plants and transmission lines. These assets generate low demand risk and we focus on operating them as efficiently as possible.
This activity is currently composed of four operating segments:
o Solar—Operation and maintenance of solar energy plants, mainly using solar thermal technology;
o Water—Operation and maintenance of facilities aimed at generating, transporting, treating and managing potable water, including desalination and water treatment and purification plants;
o Transmission—Operation and maintenance of high voltage transmission power line infrastructures; and
o Co-generation and other—Operation and maintenance of conventional electricity plants.
Discontinuation of Industrial Production
Abengoa produces biofuels, which used to be reported as a separate segment (Industrial Production activity or “Bioenergy” or "Biofuels") until December 31, 2016. Following the financial restructuring announced in August of 2016 and the changes in corporate strategy envisioned in the viability plan, Xxxxxxx has decided to focus primarily on Engineering and Construction and move away from the Industrial Production sector. Our Biofuels assets have been included in the disposal plan presented in the proposed restructuring presentation.
As a consequence of the open sale processes given the discontinuance of Biofuels on the viability plan of Abengoa approved by the Board of Directors on August 3, 2016 and due to the significance of the Industrial Production activity developed by Xxxxxxx, its income statement and Cash flow statement have been reclassified to profit from discontinued operations in the Consolidated income statement and in the Consolidated statement of cash flow for the year ended December 31, 2016 and 2015 in accordance with the IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations”.
Abengoa reports its results in accordance with the following six geographic regions:
• Spain;
• Xxxxx Xxxxxxx (xxx Xxxxxx Xxxxxx, Xxxxxx and Mexico);
• Europe (excluding Spain);
• South America (mainly Uruguay, Peru, Argentina and Chile);
• Brazil; and
• Other (mainly South Africa, Morocco, Algeria, Israel, Saudi Arabia and Oman).
Rounding
Certain numerical figures included in this Prospectus, including financial data presented in millions or thousands and certain percentages, may have been subject to rounding adjustments. Accordingly, amounts shown as totals in columns or rows or tables in this Prospectus may not be an arithmetic aggregation of the related numbers. In addition, certain percentages presented in the tables in this Prospectus reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform to the percentages that would be derived if the relevant calculation were based upon the rounded numbers.
INDUSTRY AND MARKET DATA
Market and competitive position data in this Prospectus have been generally obtained from industry publications and from surveys, reports or studies conducted by third-party sources that the Company believes to be reliable. No assurance can be given on the accuracy and completeness of, and no independent verification has been made on, such information. However, responsibility is accepted for the correct reproduction of such information herein.
In many cases, estimates are given and statements are made in this Prospectus regarding the Company's industry and position in the industry based on the Company's experience and the Company's own investigation of market conditions, which are based on a number of assumptions. The Company cannot assure that any of these assumptions are accurate or correctly reflect the Company's position in the industry, and none of the Company's internal surveys, information or estimates has been verified by any independent sources. Unless otherwise specified in this Prospectus, the statements made in this Prospectus regarding the Company's industry and position in the industry must be deemed to be based on the Company's experience and own investigation of market conditions.
EXCHANGE RATES
Abengoa reports its financial results in its functional currency, the euro. However, Abengoa operates in 50 countries worldwide and many of Abengoa's subsidiaries transact business in currencies other than the euro. See "Risk Factors".
The following table sets forth, for the periods indicated, the period end, period average, high and low Bloomberg Composite Rates expressed in U.S. dollars per €1.00. The Bloomberg Composite Rate is a "best market" calculation, in which, at any point in time, the bid rate is equal to the highest bid rate of all contributing bank indications and the ask rate is set to the lowest ask rate offered by these xxxxx. The Bloomberg Composite Rate is a mid-value rate between the applied highest bid rate and the lowest ask rate.
The rates set forth below may differ from the actual rates used in the preparation of Abengoa's Audited Consolidated financial statements and other financial information appearing in or incorporated by reference to this Prospectus. The average rate for a year means the average of the Bloomberg Composite Rates on the last day of each month during a year. The average rate for a month, or for a partial month, means the average of the daily Bloomberg Composite Rate during that month, or partial month, as the case may be.
Noon Buying Rate
Exchange rates | High | Low | Average | Period End | |||
Year: | (U.S. dollars | per €1.00) | |||||
2012 .................................................................................... | 1.3448 | 1.2094 | 1.2859 | 1.3190 | |||
2013 .................................................................................... | 1.3808 | 1.2793 | 1.3281 | 1.3764 | |||
2014 .................................................................................... | 1.3952 | 1.2153 | 1.3286 | 1.2153 | |||
2015 .................................................................................... | 1.2104 | 1.0496 | 1.1098 | 1.0910 | |||
2016 .................................................................................... | 1.1581 | 1.0390 | 1.1069 | 1.0517 | |||
Month: | |||||||
October 2016 ...................................................................... | 1.1240 | 1.0879 | 1.1033 | 1.0955 | |||
November 2016 ................................................................. | 1.1141 | 1.0568 | 1.0808 | 1.0653 | |||
December 2016................................................................... | 1.0793 | 1.0390 | 1.0547 | 1.0517 | |||
January 2017 ...................................................................... | 1.0754 | 1.0397 | 1.0618 | 1.0701 | |||
February 2017..................................................................... | 1.0810 | 1.0506 | 1.0640 | 1.0596 | |||
March 2017 (through March 28, 2017)............................... | 1.0865 | 1.0528 | 1.0686 | 1.0859 |
These exchange rates are provided solely for the convenience of potential investors. The rates should not be construed as a representation that euro amounts could have been, or could be, converted into U.S. dollars at the rates set forth herein or at any other rate.
IMPORTANT INFORMATION
This Prospectus, including the financial information incorporated by reference herein, is in compliance with the Prospectus Rules, which comply with the provisions of the Prospectus Directive for the purpose of giving information with regard to the Company, the Group and the Securities. The Company and the undersigned, Mr. Xxxxxxx Xxxxxxx Xxxxxxxxx xx Xxxxx, in his capacity as Executive Chairman of the Company and acting under a special power of attorney granted by the Extraordinary General Shareholders' Meeting held on November 22, 2016 and the Board of Directors of the Company held on March 16, 2017, accepts the responsibility for the information contained in this Prospectus. Having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of his knowledge, in accordance with the facts and contains no omissions likely to affect its import.
This Prospectus has been approved by the CNMV. However, according to Article 24 of Spanish Royal Decree 1310/2005, of 4 November ("Real Decreto 1310/2005, de 4 de noviembre, por el que se desarrolla parcialmente la Ley 24/1988, de 28 de julio, xxx Xxxxxxx de Valores, en materia de admisión a negociación de valores en mercados secundarios oficiales, de ofertas públicas de venta o suscripción y del folleto exigible a tales efectos"
–"Royal Decree 1310/2005"–), the approval of the Prospectus by the CNMV does not imply a judgment on the quality of the issuer or the Securities.
The Company considers that the issuance of the New Shares under the Share Capital Increases for them to be subscribed and disbursed by the Company's creditors through the offsetting of the credits held by them against the Company does not fall in the definition of public offering of securities as this term is defined in Article 35 of the Securities Market Act since it stems from and is carried out in execution of the commitments assumed by the creditors and any all parties under the agreement for the financial restructuring of the Company entered into on September 24, 2016 by the Company, a group of investors and a group of its creditors comprised of xxxxx and holders of bonds issued by entities belonging to the Group and could not, therefore, be configured as an offer to subscribe for the New Shares that could be freely accepted or rejected by those creditors who signed or subsequently adhered to the restructuring agreement, as required by Article 35 of the Securities Market Act.
This Prospectus does not constitute an offer to the public generally to subscribe for or purchase or otherwise acquire the Securities. The information appearing in this Prospectus is accurate only as of its date. The Group's business, financial condition, results of operations, prospects and the information set forth in this Prospectus may have changed since the date of this Prospectus.
The contents of the website of the Company, or the website of any other member of the Group, do not form any part of this Prospectus.
This document does not constitute or form part of an offer to sell, or a solicitation of an offer to subscribe for or purchase, any Securities. The distribution of this Prospectus and any subsequent offer and sale of the Securities may be restricted by law in certain jurisdictions. Investors must inform themselves about, and observe any such restrictions. The Company is not making an offer to sell the Securities or a solicitation of an offer to buy any of the Securities to any person in any jurisdiction.
The Securities have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be sold within the United States, except to persons reasonably believed to be QIBs or outside the United States in offshore transactions in compliance with Regulation S. Investors are hereby notified that sellers of the Securities may be relying on the exemption from the registration requirements of Section 5 of the Securities Act provided by Rule 144A. Notwithstanding the foregoing, as permitted by Section 1145 of the U.S. Bankruptcy Code, the order of the U.S. Bankruptcy Court for the District of Delaware confirming the Chapter 11 Plan (as defined in "Business—4.- The restructuring process" below) provides that the issuance and distribution of the New Shares by us as contemplated by the Restructuring Agreement shall be exempt from the registration requirements of section 5 of the Securities Act and, further, that under Section 1145 of the Bankruptcy Code, such New Shares will be freely tradable by the recipients thereof, subject to the provisions of Section 1145(b)(1) of the U.S. Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act and compliance with any rules and regulations of the Securities and Exchange Commission, if any, applicable at the time of any future transfer of the New Shares.
NOTICE TO UNITED STATES INVESTORS
THE NEW SHARES HAVE NOT BEEN REGISTERED WITH, OR APPROVED OR DISAPPROVED BY, THE US SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER US REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT PASSED ON OR ENDORSED THE MERITS OF THE SHARE CAPITAL INCREASE OR THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements. These forward-looking statements include matters that are not historical facts, including the statements under the headings "Summary", "Risk Factors", "Business", "Management’s discussion and analysis of financial condition and results of operations" and elsewhere regarding future events or prospects. Statements containing the words "believe", "expect", "intend", "anticipate", "will", "positioned", "project", "risk", "plan", "may", "estimate" or, in each case, their negative and words of similar meaning are forward-looking statements.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual financial condition, results of operations and cash flows, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Prospectus. In addition, even if our financial condition, results of operations and cash flows, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this Prospectus, those results or developments may not be indicative of results or developments in subsequent periods.
The various factors described under "Risk Factors" could impact our ability to perform our obligations or to realize revenue in accordance with our expectations. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from those projected. Any forward-looking statements in this Prospectus reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. Additional risks that the Company may currently deem immaterial or that are not presently known could also cause the forward-looking events discussed in this Prospectus not to occur. Readers should not place undue reliance on any forward-looking statements.
These forward-looking statements speak only as of the date of this Prospectus. Subject to any continuing obligations under Spanish, U.S. federal and other applicable securities laws and regulations and by applicable stock exchange regulations, we undertake no obligation to publicly update or review any forward-looking statement contained in this Prospectus, whether as a result of new information, future developments or otherwise.
This Prospectus does not include profit forecasts or profit estimates as defined in section 13 of Annex I of the Prospectus Regulation.
AVAILABLE INFORMATION
The Company is currently neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act. For as long as this remains the case, the Company will furnish, upon written request, to any shareholder, any owner of any beneficial interest in any of the Shares or any prospective purchaser designated by such a shareholder or such an owner, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, if at the time of such request any of the Shares remain outstanding as "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act.
BUSINESS
1.- Overview
We are a renowned engineering and clean technology company with operations in more than 50 countries worldwide that provides innovative solutions for a diverse range of customers in the energy and environmental sectors. Over the course of our 70-year history, we have developed a unique and integrated business model that applies our accumulated engineering expertise to promoting sustainable development solutions, including delivering new methods for generating solar power, developing biofuels, producing potable water from seawater and efficiently transporting electricity. A cornerstone of our business model has been investment in proprietary technologies, particularly in areas with relatively high barriers to entry. We organize our business into the following two activities: Engineering and Construction and Concession-Type Infrastructure. Abengoa also produces biofuels, which used to be reported as a separate activity (Industrial Production) until December 31, 2016 and has been discontinued ever since (See "Presentation of financial and other information—Segment reporting").
Our revenue, Consolidated EBITDA and net fixed assets of the Group and by segment information as of and for the years ended December 31, 2016, 2015 and 2014 are set forth in the following tables:
For the years ended December 31, For the years ended December 31, 2016 2015(1) 2015 2014
audited unaudited audited audited
(€ in millions)
Engineering and Construction | 1,367.3 | 3,381.8 | 3,330.2 | 4,514.5 | |||
Engineering and Construction | 1,367.3 | 3,381.8 | 3,330.2 | 4,514.5 | |||
Concession Type Infrastructure | 142.7 | 265.0 | 406.8 | 499.4 | |||
Solar | 37.1 | 166.5 | 166.5 | 335.2 | |||
Water | 58.9 | 53.0 | 53.0 | 40.8 | |||
Transmission | 1.4 | 1.7 | 143.5 | 91.3 | |||
Co-generation and other | 45.3 | 43.8 | 43.8 | 32.0 | |||
Industrial Production | - | - | 2,018.5 | 2,136.7 | |||
Biofuels | - | - | 2,018.5 | 2,136.7 | |||
Revenue (total) | 1,510.0 | 3,646.8 | 5,755.5 | 7,150.6 |
1. On December 31, 2016, the Company has reclassified the income statements and the Cash flow statements of the Biofuels and Brazilian transmission lines owner companies to “Profit (loss) from discontinued operations, net of tax” in our income statements and under separate line items in our Consolidated cash flow statements, due to their significant activities develop within Abengoa. As a consequence the income statements and the Cash flow statements for the period ended December 31, 2015 have been restated.
For the years ended December 31, For the years ended December 31, 2016 2015(1) 2015 2014
audited unaudited audited audited
(€ in millions)
Engineering and Construction | (326.7) | 169.3 | 193.1 | 805.9 |
Engineering and Construction | (326.7) | 169.3 | 193.1 | 805.9 |
Concession-Type Infrastructures | 85.4 | 174.2 | 282.4 | 330.7 |
Solar | 21.5 | 115.0 | 115.0 | 235.9 |
Water | 40.7 | 42.3 | 42.2 | 26.6 |
Transmission | (0.2) | (1.0) | 107.3 | 64.3 |
Co-generation and other | 23.4 | 17.9 | 17.9 | 3.9 |
Industrial Production | - | - | 39.9 | 271.5 |
Biofuels | - | - | 39.9 | 271.5 |
Consolidated EBITDA (total) | (241.3) | 343.5 | 515.4 | 1,408.1 |
1. On December 31, 2016, the Company has reclassified the income statements and the Cash flow statements of the Biofuels and Brazilian transmission lines owner companies to “Profit (loss) from discontinued operations, net of tax” in our income statements and under separate line items in our Consolidated cash flow statements, due to their significant activities develop within Abengoa. As a consequence the income statements and the Cash flow statements for the period ended December 31, 2015 have been restated.
For the years ended December 31,
2016 | 2015 | 2014 | |||
(audited) | (audited) | (audited) | |||
(€ in millions) | |||||
Net Fixed Assets (total) | 651.1 | 5,959.7 | 9,044.1 | ||
Engineering and Construction | 251.0 | 418.5 | 672.3 | ||
Engineering and Construction | 251.0 | 418.5 | 672.3 | ||
Concession-Type Infrastructure | 400.1 | 2,611.3 | 5,226.0 | ||
Solar | 4.2 | 20.2 | 2,135.0 | ||
Water | 237 | 251.5 | 495.9 | ||
Transmission | 7.5 | 2,178.1 | 2,273.1 | ||
Co-generation and other | 151.4 | 161.5 | 322.0 | ||
Industrial Production | - | 2,929.9 | 3,145.8 | ||
Biofuels | - | 2,929.9 | 3,145.8 | ||
2.- History and Development of Abengoa |
We were incorporated under the laws of the Kingdom of Spain in Seville on January 4, 1941 as a limited liability company (sociedad de responsabilidad limitada), which was subsequently changed to a public limited company (sociedad anónima) on March 20, 1952. We were originally founded as Sociedad "Abengoa, S.L." in Seville by Xxxxxx Xxxxxxxx Xxxxxxxxxx and Xxxx Xxxxxx Xxxxxxx Xxxxxxxxx-Xxxxxxxxx and devoted to the manufacturing of mono phase meters for measurement of electric currents. However, soon after, we began offering engineering consultancy services, carrying out technical studies and completing construction works within the energy sector.
Today, we operate in more than 50 countries with offices and projects in more than 35 of them, with North America being the main region, accounting for 24% of total revenues as of December 31, 2016, and Spain accounting for 14% of total revenues in the same period. We are the parent company of the Group, which at the end of the twelve month period ended December 31, 2016, was made up of 630 companies, being the parent company itself, 523 subsidiaries, 82 associates and 24 joint ventures Additionally, the Group has a number of interests, of less than 20%, in other entities.
In October 2011, First Reserve Corporation, an investment fund of US nationality specializing in investments within the energy sector, purchased an equity interest in Abengoa. This was effected by the payment and full execution of the investment of €300 million in the equity of Abengoa, by means of the subscription of 17,142,858 class B new shares issued and 4,020,124 new warrants issued on class B shares in the terms and conditions established in the Investment Agreement reached on October 4, 2011.
On October 17, 2013, we carried out a capital increase of 250,000,000 Class B shares and, on October 29, 2013, we issued 37,500,000 additional Class B shares as a result of the exercise by the underwriters of the capital increase of their option to purchase additional shares to cover over allotments. The shares were offered at a price of €1.80 per share, for total gross proceeds, including shares sold pursuant to the option, of €517.5 million. The new Class B shares were listed on the Madrid and Barcelona Exchanges and, in the form of American Depositary Shares (with each American Depositary Share representing five Class B shares), on the NASDAQ Global Select Market. The shares were offered globally, including in the United States pursuant to a registration statement filed with the SEC until April 28, 2016, when we delisted the American Depositary Shares from the NASDAQ Stock Market and subsequently from the SEC.
On June 18, 2014, we completed an IPO of 28,577,500 ordinary shares of Atlantica Yield Plc (formerly, "Abengoa Yield Plc", –hereinafter, "Atlantica Yield" or "ABY"–) for total gross proceeds of $828.7 million. Atlantica Yield is a total return company that owns, manages, and acquires renewable energy, conventional power, electric transmission lines and water assets, focused on North America (the United States and Mexico), South America (Peru, Chile, Brazil and Uruguay) and EMEA (Spain, Algeria and South Africa), assets which were previously reported in different operating segments within the Concession-Type Infrastructures activity. Immediately following the Atlantica Yield IPO, we held 64% of the ordinary share capital of Atlantica Yield. On December 15, 2014, our board of directors approved a plan to reduce our shareholding in Atlantica Yield to below 50% during 2015, subject to market conditions. On January 22, 2015, we completed an initial disposal of 13% of Atlantica Yield, which brought our shareholding in Atlantica Yield to 51%. On July 14, 2015, we sold 2,000,000 shares of Atlantica Yield for $62 million, reducing our stake in Atlantica Yield to 49.05%. As of December 31, 2016 our ownership was reduced to 41.47% following the exchange of 7.6 million shares of
Xxxxxxxxx Xxxxx under the $279 million exchangeable notes that we issued on March 5, 2015. As of the date of this document, our ownership in Atlantica Yield remains at also 41.47% and cannot be reduced further because the full outstanding amount of exchangeable notes has been replaced by newly issued debt issuances as a result of the financial restructuring.
On August 3, 2015, we announced our intent to complete a capital raise of €650 million, an additional package of asset disposals and the implementation of a business model with lower capex requirements aimed at improving the liquidity position of Abengoa and reducing its dependence on leverage. Following a few months of negotiations with xxxxx and potential partners, including Gonvarri Corporación Financiera, and a failure to reach an agreement, we announced the filing of the communication under Article 5 bis of the Spanish Insolvency Law on November 25, 2015. Article 5 bis of the Spanish Insolvency Law allows the filing of a notice to the Court informing of the start of negotiations with creditors to reach a refinancing agreement. While those negotiations take place, the filing of the communication under Article 5 bis of the Spanish Insolvency Law provides for interruption of any court enforcement against assets that prove to be necessary for the continuity of the debtor’s economic activities; any enforcement against other assets, except for those originating from public law claims, may also be interrupted where at least 51% of the creditors holding financial claims against the debtor have expressly supported the start of the negotiations. On December 15, 2015 the Mercantile Court of Seville Nº 2 published the decree by virtue of which it agreed to admit the filing of the communication set forth under Article 5 bis of the Insolvency Law, therefore granting Abengoa certain rights and protections.
On March 28, 2016, we announced that we had signed a Standstill Agreement with the support of 75.04% of the financial creditors to which it was addressed, higher than the legally required majority of 60%, and that we had submitted the application for the judicial approval of said Standstill Agreement to the Mercantile Courts of Seville. The Court approved the Standstill Agreement shortly thereafter, in early April, extending the effect of the stay of the obligations referred to in the Standstill Agreement until 28 October 2016 (inclusive), to creditors of financial liabilities who had not signed the agreement or had otherwise expressed their disagreement with it. Also during the months of April, May, and June we announced the filing of Chapter 11 and Chapter 15 bankruptcy protection proceedings in the United States for several of its subsidiaries.
The judicial approval of the Standstill Agreement and particularly, the extension of its effects to dissenting creditors was challenged by some of those dissenting creditors. On October 24, 2016 the Mercantile Court of Seville no. 2 issued a ruling dismissing all challenges filed against the judicial approval of the Standstill except for three of them which were admitted on the basis of a disproportionate sacrifice and thus, the effects of the Standstill Agreement would not extend to those challenging entities. Nevertheless, these dissenting creditors have been applied the conditions foreseen in the Restructuring Agreement (as defined in section “4.- The Restructuring process” below) mentioned below, as a result of the judicial approval (homologación judicial) of said Restructuring Agreement granted on November 8, 2016.
On April 28, 2016, we delisted our American Depositary Shares from the NASDAQ Stock Market. These securities are now also deregistered from the SEC.
On August 16, 2016, we announced that we had reached an agreement with our financial creditors and presented an Updated Viability Plan for the financial restructuring. As part of the financial restructuring terms presented on such date, we obtained commitments from several xxxxx and investors to underwrite the new financing needed to implement the Restructuring (as defined below) and restart the business, following which the Restructuring Agreement (as defined below) was signed on September 24, 2016. On October 28, 2016, an application for the judicial approval (homologación judicial) of the Restructuring Agreement was filed with the Mercantile Court of Seville, which was granted by the Mercantile Court of Seville no. 2 on November 8, 2016. The Restructuring Agreement had previously obtained the support of 86% of the financial creditors to which it was addressed, surpassing the majority support required by law (75%). Among other effects, the judicial approval extended the Standard Restructuring Terms (as defined below) stipulated in the Restructuring Agreement to those financial creditors that did not adhere or voted against the Restructuring Agreement. Notwithstanding this extension, creditors who did not accede to the Restructuring Agreement in the first instance were granted the option to accede to the Restructuring Agreement during the Supplemental Accession Period, which commenced on January 18, 2017 and finished on January 24, 2017, in order to allow them to opt for the Alternative Restructuring Terms (as defied below) avoiding the application of the Standard Restructuring Terms (as defined below). After the end of the Supplemental Accession Period, the support of financial creditors to the Restructuring Agreement increased up to 93.97% of the financial creditors to which it was addressed.
The judicial approval of the Restructuring Agreement and, in particular, the extension of its effects to dissenting creditors was challenged by some of those dissenting creditors. Specifically, on January 11, 2017, the Mercantile Court of Seville no. 2 admitted for consideration the challenges from nine separate creditor groups against the Restructuring Agreement's homologación.
Challengers generally considered that the treatment imposed to them implies a disproportionate sacrifice and, therefore, they alleged that the effects of the Restructuring Agreement should not be applied to them.
The Company relies on defending and obtaining a favorable judgment against the challenges.
As of the date of this Prospectus the judge has not made a definitive ruling regarding these challenges. However, if the judge was to resolve in favour of the challengers, the effects of the Restructuring Agreement would not be applied to their credits, which would remain subject to their respective terms and conditions as they currently stand although, since the percentage of the support to the Restructuring Agreement would not fall below the required 75% if all the challenges were upheld, the judicial approval of the Restructuring Agreement would not be at risk. Additionally, if the challenges upheld implied that Existing Creditors holding Affected Debt (as defined below) for an aggregate amount higher than 20,000,000€ were not affected by the Restructuring Agreement (as defined below), an event of default under the new financing instruments will occur.
During the Extraordinary General Shareholders' Meeting held on November 22, 2016, all the proposed resolutions relating to the implementation of the Restructuring Agreement were approved, except for the resolution proposed under item 5 of the agenda regarding the collapse of the Company's class A and class B shares into a single new class of ordinary shares, which was not submitted to voting nor approved due to the lack of a quorum in respect of the class B shares separate voting. However, the approval of such resolution was not a pre-requisite for the implementation of the Restructuring Agreement.
On 14 February 2017, the Company informed that, in light of the situation in Mexico and in order to accelerate the completion of the Restructuring and begin implementing the Viability Plan as soon as possible, it had developed, together with some of its principal creditors and investors, a proposal for the adjustment of the drawdown mechanism of New Money Financing (the “Drawdown Proposal”) set out in the term sheet of the Restructuring as agreed in August 2016 and the Restructuring Steps Plan to the Restructuring Agreement (all as defined below), maintaining the initial structure of the transaction. Such Drawdown Proposal required certain amendments to the Term Sheet, the Restructuring Steps Plan, the Restructuring Agreement and the New Money Financing Commitment Letter (all as defined below). On 28 February 2017 the Company announced that it had obtained the required majorities for the implementation of the Drawdown Proposal.
3.- Financial Restructuring and Changes in Corporate Strategy
Since November 0000, Xxxxxxx has gone through a financial restructuring process in order to strengthen our capital structure and secure a better future for Abengoa (the "Restructuring Process"). A vital part of the financial restructuring plan included changing our corporate strategies and refocusing our efforts on certain core businesses while divesting other non-essential businesses.
As part of the updated viability plan announced on August 16, 0000, Xxxxxxx disclosed that it would be focusing primarily on EPC projects for third parties (Conventional Product), while pushing back execution of any new EPC for concessional projects (Integrated Products) until the first quarter of 2018. Xxxxxxx also stated that it would be divesting several projects and sectors.
As part of the new corporate strategy, all efforts will be focused on conventional and renewable energy generation, large transmission systems, and water production and transport. Abengoa is focused on sectors and products with a large growth potential in which we are internationally renowned, resulting in a new project portfolio and commercial opportunities that we expect will provide visible earnings for our business.
Several changes are being made within the organization as part of the updated viability plan. It was necessary to design a smaller organization, adapted to the new reality which encompasses operations in the same sectors and businesses but at a smaller scale, in line with the reviewed strategy and the availability of resources.
The priority of the new structure will be turnkey projects (EPC for third parties). Given that cash flow generation is paramount in this new phase, this type of project will be our main focus. The new business strategy includes the implementation of tools and systems designed to carry out a thorough risk analysis, placing special
emphasis on financial ones. It is also aimed to restore credibility with customers, suppliers, partners and financial institutions, proposing a business model that is less intensive in cash needs.
4.- The restructuring process 4.1.- Background
Following the withdrawal of (i) the comprehensive action plan aimed at improving Abengoa's liquidity position, reducing its corporate leverage and strengthening its corporate governance system announced to the market on September 24, 2015 (the "2015 Action Plan") and (ii) the capital increase of €650 million, with the recognition of the pre-emptive subscription rights of its then existing shareholders, which was approved by the Extraordinary General Shareholders' Meeting of the Company held on October 10, 2015 (the "2015 Capital Increase"), the Company decided to continue negotiations with its creditors with the objective of reaching an agreement to ensure Abengoa's financial viability in the short and medium term. After assessing the possible options arising out of the situation described above, in order to ensure a stable platform to carry out such negotiations, the Board of Directors considered that the most appropriate option was to seek judicial protection under Article 5 bis of the Spanish insolvency law (Ley 22/2003, de 9 de julio, Concursal, −the "Spanish Insolvency Law"−) and filed, together with certain other entities in the Group, the relevant communication on November 25, 2015.
The following chart includes the list of the 48 Spanish Group subsidiaries which, together with Abengoa, as parent company, sought judicial protection by means of filing the communication set forth under Article 5 bis of the Spanish Insolvency Law ("5 bis Companies") throughout 2015:
Abeinsa Asset Management, S.L. Abengoa Xxxxxxxxxx, S.A.U. Centro Tecnológico
Palmas Altas, S.A.
Abeinsa Business
Development, S.A.
Abengoa Hidrógeno, S.A. Ecoagrícola, S.A.
Abeinsa Engineering, S.L.U. Abengoa Research, S.L. Ecocarburantes Españoles, S.A.
Abeinsa EPC, S.A. Abengoa Solar España, S.A. Europea de Construcciones Metálicas,
S.A.
Abeinsa, Ingeniería y Construcción
Industrial, S.A.
Abeinsa Infraestructuras y Medio Ambiente, S.A.
Abengoa Solar NT, S.A. Gestión Integral de Recursos Humanos, S.A.
Abengoa Solar, S.A. Instalaciones Inabensa, S.A.
Abeinsa Inversiones Latam, S.L. Abengoa Water, S.L.U. Micronet Porous Fibers, S.L.
Abencor Suministros, S.A. Abentel Telecomunicaciones, S.A. Nicsa, Negocios Industriales y
Comerciales, S.A.
Abener Energía, S.A. Asa Desulfuración, S.A. Omega Sudamérica, S.L.
Abengoa Bioenergía
Inversiones, S.A.
ASA Iberoamérica, S.L. Siema Technologies, S.L.
Abengoa Bioenergía Nuevas Tecnologías, S.A.
Biocarburantes de Castilla y León, S.A.
Xxxxxx IT, S.A.
Abengoa Bioenergía, S.A. Bioetanol Galicia, S.A. Xxxxxx, Servicios Integrales de
Mantenimiento y Operación, S.A.
Abengoa Bioenergía
San Xxxxx, S.A.
Centro Industrial y Logístico,
Torrecuéllar, S.A.
Sociedad Inversora Línea de Brasil,
S.L.
Abengoa Concessions, S.L. Concesionaria Xxxxx del Sol, S.A. South Africa
Solar Investments, S.L.
Abengoa Finance, S.A. Construcciones y Depuraciones, S.A.
Abengoa Greenbridge, S.A.U. Xxxxxx, Cogeneración Villaricos, S.A.
Teyma Gestión de Contratos de
Construcción e Ingeniería, S.A. Zeroemissions Technologies, S.A.
Additionally, both Inversión Corporativa IC and Finarpisa, the then current main shareholders of Abengoa also filed the communication set forth under Article 5 bis of the Spanish Insolvency Law.
Brazil
On January 29, 2016, Xxxxxxx'x Brazilian subsidiaries "Abengoa Concessões Brasil Holding, S.A.", "Abengoa Construção Brasil, Ltda." and "Abengoa Xxxxxxxxxx Brasil Holding, S.A." filed requests for creditors protection (recuperação judicial), which were admitted by the Brazilian court of competent jurisdiction on
February 22, 2016. This protective measure was undertaken on the grounds of the economic and financial crisis (crise econômico-financeira) incurred by Xxxxxxx, which is contemplated in Brazilian Law 11,101/05. The "recuperação judicial" consists of a specific proceeding provided for by the Brazilian legislation which allows corporations to restructure their debt in an orderly manner and continue as a going concern once the financial difficulties are overcome. General Assembly with creditors is foreseen to be celebrated in late May 2017.
In parallel to the process described above, on 28 July 2016 the Brazilian electricity market regulator (Agência Nacional de Energia Elétrica – “ANEEL”) informed the Abengoa companies owners of the transmission lines under construction (“ATEs”) of the initiation of administrative procedures for breach of the relevant concession contracts. One of the possible consequences could be the expiration of the concession contracts granted for those transmission lines currently under construction (valued at €142 million as of Abengoa’s latest financial statements of December 31, 2016), As of the date of this Prospectus, ANEEL has not yet made a final declaration on the matter; however, Xxxxxxx expects to reach a friendly settlement with no significant impact. On 28 June 2016, ANEEL Board authorized the SFE (Electricity Service Inspection Office) and SFF (Economic and Finance Inspection Office) to communicate to the shareholders of the assets under construction (ATEs) about their contractual breach, and the possibility of declaring the concession extinguished. On 21 July 2016, the communication by XXXx'x shareholders was formally received and the administrative process was initiated. On 2 December 2016, the Court ruling the Judicial Recovery delivered a writ on which stated: (i) To include the administrative process in the Judicial Recovery; and (ii) the suspension of the administrative process in order to preserve and protect the holding shareholders companies patrimony under Judicial Recovery.
Abengoa seeks for the best solution and negotiation of its debts (including the ones arising from the ATE’s debts) under the judicial reorganization on behalf of the creditors. The proposed settlement includes a plan to restructure the companies under recuperação judicial and divestment of certain assets in order to improve the recovery rate of Abengoa Brazil's creditors. The success of the negotiations will depend on the approval from the creditors but also the regulatory agents, in the sense that an agreement with creditors shall imply a solution for the ATEs.
Mexico
Furthermore, on July 25, 2016, Banco Base, in its condition as creditor of Abengoa's Mexican subsidiary Abengoa México, filed a judicial petition for the declaration of the commercial insolvency (concurso mercantil) of Abengoa México. Said procedure was filed before the Sixth Court in Civil Affairs of Mexico City, which, despite the report of the expert appointed by the Court (visitador) to the contrary, by judgement dated December 16, 2016, ruled on the declaration of Abengoa México´s commercial insolvency. Despite the declaration, the control of Abengoa México remains with the current management. Abengoa México, the visitador and Banco Base as well filed an appeal against said judgment. Currently, the process is at conciliatory state, with a legal duration of 185 calendar days, term that can be extended by the court, after which, as per Mexican applicable law the reorganization agreement that is to be reached by the debtor and the majority of its recognized creditors must be executed and filed before the Court. See "Risk Factors—Risks relating to possible judicial actions filed in the context of the Restructuring".
To this respect, on March 17, 0000 Xxxxxxx Mexico entered into a lock-up agreement with the majority of the holders of Mexican bonds (Certificados Bursátiles Estructurados or “CEBURES”) as well as with certain of its suppliers and local and international xxxxx. The lock-up agreement contemplates the approval of the proposed reorganization agreement and obtained the support of more than 60% of the creditors (well above the 50% required by Mexican law). Those creditors that entered into this lock-up agreement are contractually bound to support the reorganization agreement to be filed within the Mexican court in June/July 2017.
United States of America
On December 15, 2016, the U.S. Bankruptcy Court for the District of Delaware issued a confirmation order of the plan filed by Xxxxxxx’x main subsidiaries in the engineering and construction and solar businesses (the Original Debtors, the Additional Debtors and the Maple Debtors, as defined in "4.4.- Chapter 15 and Chapter 11 Proceedings in the United States—The EPC and Solar Debtors’ Cases") in the bankruptcy procedure started late March 2016. This confirmation order showed the support by the creditors of Xxxxxxx'x aforementioned businesses in the United States of America. The plan contemplates the liquidation of some of the subsidiaries and the reorganization of others to allow their activity in the engineering and construction and solar businesses
and sets forth certain conditions precedent that the Company estimates to completely fulfill by completion of the restructuring, which is expected to take place on March 31, 2017. Additionally, regarding the Missouri bankruptcy procedure filed by some of Abengoa’s bioenergy subsidiaries (the ABI/ABIL Debtor Group and the Bioenergy Debtor Group as defined in "4.4.- Chapter 15 and Chapter 11 Proceedings in the United States—The Bioenergy Debtors’ Cases"), on January 25, 2017 these subsidiaries filed the joint liquidation plan which is expected to be approved in a hearing by April 2017. The liquidation plan contemplates and agreed and orderly liquidation of all the aforementioned subsidiaries that would imply recoveries of approximately 31% for the Bioenergy Debtor Group and 100% for the ABI/ABIL Debtor Group.
See "4.4- Chapter 15 and Chapter 11 Proceedings in the United States" below for further information on the judicial proceedings carried out in the United States in the context of the restructuring process.
As the date of the Prospectus, the Spanish, Brazilian, Mexican and US proceedings described above are the main relevant ongoing insolvency proceedings related to Abengoa or its subsidiaries.
4.2.- The Standstill Agreement
The restructuring of the Company’s debt and thus, negotiations with the Company’s main creditors, had to be based on a business plan to ensure the continuity of business in the short and medium term. On January 25, 2016, the Company announced that the independent consulting firm "Xxxxxxx & Xxxxxx" had presented to its Board of Directors an industrial viability plan defining the structure of Abengoa's future activity on an operating basis, focusing on the activity of Engineering and Construction either developing its own technology or using technology developed by others (the "Industrial Viability Plan").
The Industrial Viability Plan, which confirmed Xxxxxxx'x viability, was the starting point of the negotiations held between the Company and a group of its creditors comprised of xxxxx and holders of bonds issued by the Group, which resulted in the agreement announced by the Company on March 10, 2016 (the "Base Agreement"), which contained the essential elements to achieve a restructuring agreement.
With the purpose of allowing the Company and its creditors to continue negotiating with a view to agreeing the final restructuring of the financial debt of the Group and its recapitalization, in a form consistent with the Base Agreement, on March 18, 2016, the Company and certain of its creditors agreed on a standstill agreement (the "Standstill Agreement"), pursuant to which the Company requested from its financial creditors to stay certain rights and actions vis-à-vis the relevant Abengoa companies during a period of seven months from the date of the Standstill Agreement. On March 28, 2016, the Company filed with the Mercantile Courts of Seville an application for the judicial approval (homologación judicial) of the Standstill Agreement (the "First Homologation Proceeding"), which obtained the support of 75.04% of the financial creditors to which it was addressed, being therefore over the legally required majority (60%). On April 6, 2016, the Mercantile Court No. 2 of Seville granted the homologación judicial of the Standstill Agreement (the “First Homologation Order”), extending the effect of the stay of the obligations referred to in the Standstill Agreement until 28 October 2016 (inclusive) to the financial creditors who did not signed the Standstill Agreement or expressed their disagreement to it.
4.3.- The Restructuring Agreement
Following the judicial homologation of the Standstill Agreement, the Company reviewed its viability plan and continued to negotiate with its main creditors and a group of investors in order to reach a final restructuring agreement before the end of the standstill period. On August 11, 2016 the Company announced that it had reached an agreement with regards to the terms and conditions for the restructuring of its financial indebtedness and recapitalization. On August 16, 2016, such terms and conditions along with the revised Viability Plan were presented to the market.
On September 24, 2016, the Company announced that it had made available for accession by financial creditors the Restructuring Agreement (as defined in "Risk Factors" above), which had been signed before a Notary in Spain by the Company, a group of its subsidiaries with debt that was subject to the restructuring and a group of financial creditors that would also be participating in the new money and new bonding facilities. The Company further announced that, in line with the terms of the Restructuring Agreement, once the homologation request with respect to the Restructuring Agreement was filed with the Mercantile Courts of Seville, the following procedures would be initiated: (i) a Company Voluntary Arrangement (“CVA”) in England and Wales at the request of Abengoa Concessions Investments Limited (“ACIL”) in accordance with Part I of the English
Insolvency Xxx 0000; and (ii) various procedures under Chapter 11 (“Chapter 11”) of the U.S. Bankruptcy Code at the request of various subsidiaries incorporated in the United States. The Restructuring Agreement was based on the agreement reached on August 2016 which terms are described below.
On October 28, 2016, after the finalization of the initial accession period to the Restructuring Agreement, certain financial creditors filed with the Mercantile Courts of Seville an application for the judicial approval (homologación judicial) of the Restructuring Agreement (the "Second Homologation Proceeding") which had obtained the support of 86.00% of the financial creditors to which it was addressed, being therefore over the legally required majority (75%). On November 8, 2016, the Mercantile Court No. 2 of Seville granted the homologación judicial of the Restructuring Agreement, extending the Standard Restructuring Terms (as defined below) to the financial creditors who had not signed the Restructuring Agreement or have expressed their disagreement with it (the “Second Homologation Order”).
For the purposes of tis Section 4.3 “the date of completion of the Restructuring” or the “Restructuring Completion Date” shall mean the date of commencement of effective trading of the Securities for which admission to listing is sought by way of this Prospectus, which is expected to be 31 March 2017.
4.3.1.- Financial restructuring
The Restructuring Agreement provided for (i) the restructuring of the so called “Affected Debt”; and (ii) the granting of new financing that would allow the Group to restart the business and ensure its viability in the short and medium term.
Restructuring of Affected Debt
The financial debt of the Group which was object of the Restructuring Agreement amounted to a nominal amount of €9.479.391.813,42 and consisted of different financial instruments, documented in the form of loans, notes, discount facilities, reverse factoring facilities, called bonds and corporate guarantees and other type of instruments (the “Affected Debt”). The amount of Affected Debt at the date of execution of the Share Capital Increases had increased from that initially foreseen when the Restructuring Agreement was signed (i.e. a nominal amount of 7,523M€) due to the calling of bonds and the execution of corporate guarantees during that period (i.e. contingent claims).
The Affected Debt is composed of (in nominal amounts):
(a) “Non-Compromised Debt”.
The total amount of Non-Compromised Debt which has been restructured is € 569.876.236,71.
The Non-Compromised Debt is the financing granted to the Group by some of its creditors during the period of the negotiations of the Restructuring Agreement in order to finance its cash needs during such period. Such financing, composed of (i) €165M facility agreement entered into by Abengoa, certain entities within the Group and a group of financial entities on 23 September 2015 (the “September 2015 Facility Agreement”), (ii) €106M facility agreement entered into by Abengoa Concessions Investments Limited, Abengoa, certain entities within the Group and a group of financial entities on 24 December 2015 (the “December 2015 Facility Agreement”), (iii) €137M facility agreement entered into by Abengoa Concessions Investments Limited, Abengoa, certain entities within the Group and a group of financial entities on 21 March 2016 (the “March 2016 Facility Agreement”), and (iv) USD211M facility agreement entered into by Abengoa Concessions Investments Limited, Abengoa, certain entities within the Group and a group of financial entities on 18 September 2016 (the “September 2016 Facility Agreement”), was secured by in rem security over certain shares of Atlantica Yield (“ABY”).The Non- Compromised Debt has been restructured in the context of the Restructuring in accordance with the Alternative Restructuring Terms (i.e., repaid in cash or refinanced under the New Money Tranche 1 or New Money Tranche 2, as applicable).
(b) “Compromised Debt”
The total amount of Compromised Debt which has been restructured is € 8.909.515.576,71.
The Compromised Debt has been restructured in accordance with either (1) the Standard Restructuring
Terms (as defined below), €390.924.499,37; or (2) with the exception of intragroup creditors, if the relevant creditor has so elected, in accordance with the Alternative Restructuring Terms (as defined below), €8.518.591.077,34, and can be divided into the following categories: (i) intragroup debt owed by some obligors to intragroup creditors; (ii) bonds (avales); (iii) existing bonding facilities (avales); (iv) other guarantees; (v) corporate financing; (vi) NRDP (or non-recourse debt in progress); (vii) PPBs (or payments by xxxxx – confirming lines); (viii) reverse factoring; (ix) derivatives which were closed-out as at the date of the Restructuring Agreement; and; (x) any guarantees given by the Spanish obligors in respect of non-closed out derivatives as of the date of the Restructuring Agreement.Based on the above principles, the Restructuring Agreement provided each creditor with the option (at its sole discretion) to agree to restructure its Affected Debt either in accordance with the “Standard Restructuring Terms” or the “Alternative Restructuring Terms” (as defined below). If a financial creditor did not enter into the Restructuring Agreement or entered into the Restructuring Agreement but failed to elect the Alternative Restructuring Terms, the Standard Restructuring Terms would apply (either due to the misselection of the Alternative Restructuring Terms or by application of the homologación).
Standard Restructuring Terms
The Standard Restructuring Terms consisted of:
(a) A 97 per cent. write-off (quita) of its nominal value applicable to all outstanding amounts (including, without limitation, principal, interest, default interest, fees and contingent claims or amounts such as guarantees or indemnities, but excluding any Administration Costs) calculated as of the date on which the Restructuring was completed.
Exceptionally, as it was estimated that the liquidation value of the following Obligors was greater than 3%, the write-off (quita) applicable to the Affected Debt owed by such Obligors, was as follows:
(i) in the case of Ecocarburantes Españoles, S.A. the write-off (quita) was equal to 69.40 per cent.;
(ii) in the case of Biocarburantes xx Xxxxxxxx y Leon, S.A. the write-off (quita) was equal to 76.10 per cent.;
(iii) in the case of Centro Industrial y Logístico Torrecuellar, S.A. the write-off (quita) was equal to
71.60 per cent.;
(iv) in the case of Construcciones y Depuraciones, S.A. the write-off (quita) was equal to 83.10 per cent.;
(v) in the case of Abengoa Research, S.L. the write-off (quita) was equal to 69.00 per cent.;
(vi) in the case of Abengoa Hidrógeno, S.A. the write-off (quita) was equal to 72.00 per cent.;
(vii) in the case of Xxxxxx IT S.A. the write-off (quita) was equal to 93.80 per cent.;
(viii) in the case of Abeinsa Operation and Maintenance, S.A. the write-off (quita) was equal to 73.90 per cent.;
(ix) in the case of Abengoa Energy Crops, S.A. the write-off (quita) was equal to 0.00 per cent.;
(x) in the case of Solargate Electricidad Tres, S.A. the write-off (quita) was equal to 61.70 per cent.;
(xi) in the case of Solargate Electricidad Cuatro, S.A. the write-off (quita) was equal to 72.40 per cent.;
(xii) in the case of Abengoa Solar LLC, Abener Construction Services, LLC, Abeinsa Holding, Inc., and Abeinsa EPC LLC, the write-off (quita) was equal to the percentages prescribed in the relevant Disclosure Statement of their Chapter 11 cases.
(b) an amendment applicable to all payment obligations of the Obligors under the Affected Debt (including, without limitation, principal, interest accrued but not been paid as at the date of completion of the
Restructuring, default interest that has accrued but not been paid as at the date of completion of the Restructuring, fees, costs, expenses, mandatory prepayment events and contingent claims or amounts such as guarantees or indemnities but excluding any Administration Costs), calculated as of the date of completion of the Restructuring, such that all such amounts (as written down and amended in accordance with these Standard Restructuring Terms) fall due on the date that falls 10 years (espera) after the date of completion of the Restructuring (the “10 Year Maturity Date”);
(c) zero percent (0 per cent.) coupon applicable to all of the Affected Debt (the result of which being that no interest –either ordinary or default interest– shall accrue or otherwise be payable in respect of the Affected Debt from and including the date of completion of the Restructuring); and
(d) the Affected Debt instruments would continue to exist in full force and effect with the same original Obligors but will be deemed automatically amended to apply the Standard Restructuring Terms including an immediate permanent disapplication of any mandatory prepayment events, covenants, undertakings, representations, events of default, acceleration events and/or termination events or any clauses of similar effect (howsoever described) which provide or imply that the Obligors are obliged to pay any amounts pursuant to or in connection with the Affected Debt or the Affected Debt instruments (with the result being that no default or event of default shall exist in respect of such Affected Debt and Affected Debt instruments upon the date of completion of the Restructuring and no default or event of default shall arise in respect of such clauses prior to the 10 Year Maturity Date).
Alternative Restructuring Terms
The Alternative Restructuring Terms consisted of:
(i) For the Non-Compromised Debt: The financial debt derived from the September 2015 Facility Agreement, the December 2015 Facility Agreement, the March 2016 Facility Agreement and the September 2016 Facility Agreement , held by creditors who elected the Alternative Restructuring Terms, was refinanced or exchanged for new money (Tranche 1A, 1B or 2 depending on the facility that was being refinanced or exchanged), except for any fees set out in those agreements the payment of which could be postponed at the option borrower in accordance with terms of those agreements.
(ii) For the Compromised Debt: The financial debt derived from Compromised Debt instruments, being loans/notes, bonding facilities and other financial instruments held by creditors who elected the Alternative Restructuring Terms, was treated as follows:
(a) 70% write-off (quita) or capitalisation, depending on the creditors’ election on whether or not to receive shares, receiving in exchange 40% in aggregate of the share capital of Abengoa, post- restructuring. Prior to such capitalization and in order to allow it, Xxxxxxx entered into an agreement with those other Group companies by virtue of which the debts arising out of the foregoing pre-existing credits, were assumed by Xxxxxxx with effects from the date on which all conditions precedent to the restructuring steps commencement date were satisfied and all the new financing agreements became effective. Simultaneously, Xxxxxxx entered into an agreement with AbeNewco 2 by virtue of which AbeNewco 2 assumed 30% of the debt previously assumed by Abengoa from the Group companies in order to refinance such debt with the old money debt instruments described below, remaining the rest of the pre-existing debt (i.e., 70%) in Abengoa for the purposes of its capitalization.
(b) The remaining 30% of the pre-existing amounts was refinanced through new debt instruments (the “Old Money”) that substituted the existing ones and that were senior or junior depending on whether those creditors participated or not in the new money. Moreover, the Restructuring Agreement foresaw that those creditors could elect to refinance their debt in the form of either loans or notes and, in case they would not elect any of those options, such creditor would receive the same type of instrument in respect of its debt that it held as at the date it signed or acceded to the Restructuring Agreement. Those instruments have a maturity of 66 and 72 months respectively, with the possibility of an extended period up to 24 additional months, and an annual accrual of interests of 1.50% (0.25% paid in cash and 1.25% capitalisation or payment in cash only under certain conditions). The junior instrument (the “Junior Old Money”) could be subject to a further write off (that in no case will exceed 80% of the original nominal value of such instrument) if due to the calling of uncalled bonds and/or execution of corporate guarantees (i.e. crystallization
of contingent claims), after the signing date of the Restructuring, of creditors that have signed the Restructuring Agreement and elected the Alternative Restructuring Terms, the Affected Debt of such creditors, once restructured, exceeds €2,700 million. In this case, the Junior Old Money shall be automatically reduced by the amount of such excess. The senior instrument (the “Senior Old Money”) benefits from first ranking security over 100% of the shares in AbeNewco 2 (as defined in "Corporate restructuring" below); and the Junior Old Money benefits from second ranking security over 100% of the shares in AbeNewco 2.
New Financing
The viability of Abengoa required the injection of new financing, in order to (i) refinance or replace the Non- Compromised Debt as per the description of the Alternative Restructuring Terms above; (ii) ensure the completion of some key projects; and (iii) fund general corporate purposes ensuring that Abengoa is able to restart its day-to-day operations. The new money commitments amounted to €1,169,600,000 (the "New Money"), and the new bonding facilities commitments to €307 million (of which €98 million was a roll over bonding tranche) (the "New Bonding Facilities" and, together with the New Money, the "New Financing").
The New Financing has been drawndown on 28 March 2017 in the following currencies: New Money Tranche 1A in USD, New Money Tranche 1B in €, New Money Tranche 2 in € and New Money Tranche 3 in USD, as per the below details.
(i) The New Money was structured through three different tranches with their own security packages:
(a) New Money Tranche 1: In an amount of €945.1 million (comprising (i) Tranche 1A in an amount of €839.1 million (USD894.3 million), documented in the form of loans and Notes; and (ii) Tranche 1B, in an amount of €106 million documented in the form of loans) with a maximum maturity of 47 months secured by means of security over certain assets, including among others the project Abent 3T in Mexico and the shares of Atlantica Yield property of the Company. The financing entities have received a 30% in aggregate of the new share capital of Abengoa post- restructuring by offsetting the amount of the credits held against the Company as Capitalisation Fees (as defined below). The funding of this Tranche 1 was made to ABG Orphan HoldCo who then on-lent the funds directly to ACIL Luxco 2 and A3T Luxco 2 (please see below for further information on these companies).
(b) New Money Tranche 2: In an amount of €194.5 million (249.3M€ including refinancing of Tranche 1B PIK Interests; as of the date of this prospectus, this incremental amount has not been drawndown), documented in the form of loans and notes, with a maximum maturity of 48 months secured by means of security over, among others, specific assets of the engineering business. The financing entities have received 15% in aggregate of the new share capital of Abengoa post- restructuring by offsetting the amount of the credits held against the Company as Capitalisation Fees (as defined below). The funding of this Tranche 2 was made to Abenewco 1 (please see below for further information on these companies).
(c) New Money Tranche 3: It is a contingency credit line that goes up to a maximum amount €30 million (USD31.9 million), with a maximum maturity of 48 months, documented in the form of loans, secured by means of security over certain assets, including among others the project Abent 3T in Mexico and the shares of Atlantica Yield property of the Company and the exclusive goal of assuring the additional financing that may be required for finishing the construction of the Abent 3T project. The financing entities have received a 5% in aggregate of the new share capital of Abengoa post-restructuring by offsetting the amount of the credits held against the Company as Capitalisation Fees (as defined below).
The entities providing for the financing under Tranche 1, 2 and 3 of the New Money will be collectively referred to in this Prospectus as the "New Money Financing Providers".
(ii) The New Bonding Facilities (líneas de avales) were structured through three different tranches: (a) new syndicated bonding tranche; (b) new bilateral bonding tranche; and (c) roll over bonding tranche. The main purpose of these new bonding lines is to allow the Group to continue presenting tender offers in relation to new projects set out in the Viability Plan and therefore, ensure the continuity of the business going forward. The new bonding facility providers (the "New Bonding Facilities Providers") have
received a 5% in aggregate of the new share capital of Abengoa post-restructuring by offsetting the amount of the credits held against the Company as Capitalisation Fees (as defined below).
The New Bonding Facilities were secured by means of security over, among other assets, the shares in and shareholder loans made to AbeNewco 1 (as defined in the following section "Corporate restructuring") and other material members of the Group (other than AbeNewco 2 and OrphanCo and its subsidiaries) and all material assets of the Obligors under the Restructuring Agreement.
For the purposes of this section "Capitalisation Fees" means the structuring fees to be paid by Xxxxxxx to the New Money Financing Providers and the New Bonding Facilities Providers (whether fully in cash or fully in kind), in addition to all fees payable to the New Money Financing Providers and/or the New Bonding Facilities Providers pursuant to the commitments to provide for new financing. Xxxxxxx elected to pay the Capitalization Fees in kind.
(iii) The former shareholders of the Company currently hold the remaining 5% of the new share capital of Abengoa post-restructuring pro rata to their shareholdings immediately prior to execution of the Capital Increases, together with the Abengoa Warrants in respect of up to an additional 5% of the Company's post-restructuring share capital.
Amendment of the drawdown mechanism of the New Money financing
As anticipated, on February 14, 2017, the Company announced a proposal for the adjustment of the drawdown mechanism of the New Money financing under the Restructuring Agreement (the “Drawdown Proposal”), which, although maintaining the initial structure of the Restructuring, required the prior approval of a majority of the creditors under the Restructuring Agreement of certain amendments to the terms and conditions of the Restructuring Agreement and other related documentation (the “Amendments”).
On February 28, 2017, the Company publicly informed that it had obtained the consent of such a majority under the Restructuring Agreement to approve the Amendments required to implement the Drawdown Proposal.
The Amendments principally comprised:
(i) a new two-tiered drawdown of New Money Tranche 1A which provided for:
(a) approximately €627 million (USD 664.6M) to be made available (net of fees) to ABG Orphan Holdco immediately following utilisation (the “NM1A ABY Tranche”); and
(b) approximately €212 million (USD 224.7M) to be funded (net of fees) into an escrow arrangement, to be released upon the satisfaction of certain conditions relating to the Mexican insolvency proceedings, Mexican anti-trust approvals and conditions precedent relating to A3T (the “NM1A Escrow Tranche”);
(ii) a minimum return on investment of 1.17x in respect of New Money Tranche 1A;
(iii) the temporary subordination of New Money Tranche 1B to New Money Tranche 1A;
(iv) amendments to the terms and conditions under which the Company is entitled or obliged to dispose of ABY shares;
(v) additional conditions precedent specific to the Drawdown Proposal which, at the date of this Prospectus and in respect of NM1A ABY Tranche, have been fulfilled; and
(vi) the postponement of the then current long-stop date for the completion of the Restructuring from February 28, 2017 to March 22, 2017, which, as discussed below, was approved and then further extended.
Further extension of long-stop date for the completion of the Restructuring
Finally, due to the complexities of the transaction, the Company requested two further extensions of the long- stop date for the completion of the Restructuring which is now 31 March 2017.
Post-Restructuring Debt
As a result of the Restructuring:
The Non-Compromised Debt has been fully repaid or refinanced under NM1 or NM2, as the case may be.
The Compromised Debt has been restructured as per the Alternative Restructuring Terms or Standard Restructuring Terms, as described above, resulting in debt amouts summarized below (in nominal amounts):
Amount (in million) | ||||
Senior Old Money | Junior Old Money | |||
€ | USD | € | USD | |
Alternative Restructuring Terms | 968.1 | 469.5 | 829.8 | 415.8 |
Standard Restructuring Terms | 11.7€ |
Main creditor's following the date of completion of the Restructuring
Below is a chart identifying the Group's main creditor's, meaning creditors who hold more than 50M€ in debt instruments post-restructuring (new financing agreements and old money) following the date of completion of the Restructuring:
Creditor Name
% total post- restructuring debt
instruments
Banco Santander, S.A. | 4,64% |
Arvo Investment Holdings Sarl | 4,05% |
Atlantica Yield Plc | 3,20% |
Crédit Agricole CIB | 3,46% |
Caixabank, S.A. | 3,11% |
Bankia, S.A. | 2,70% |
Banco Popular Español, S.A. | 2,41% |
Canyon Capital Finance S.A.R.L | 2,03% |
Banco xx Xxxxxxxx, S.A. | 1,84% |
X. X. Xxxx Xxxxxxxx Intl | 1,73% |
HSBC Bank Plc | 1,66% |
X.X. Xxxx Valence International Inc | 1,56% |
BPI 23 S.À R.L. | 1,45% |
Instituto de Crédito Oficial | 1,39% |
Total | 35.23% |
Summary of the main terms and conditions of Senior Old Money, Junior Old Money and New Financing
Below is a chart summarizing the main terms and conditions of the Senior Old Money, the Junior Old Money and the New Financing:
Old Money | New Financing | |||||
Senior Old Money | Junior Old Money | New Money | New Bonding | |||
Tranche 1 | Tranche 2 | Tranche 3 | ||||
Borrower | Abenewco 2 | AbeNewco2, fully subordinated to the Senior Old Money Loans/Notes | ABG Orphan Holdco | AbeNewco 1 | ABG Orphan Holdco | AbeNewco 0 |
Xxxxxxxxxx | Xxxxxxx and some of its subsidiaries other than AbeNewco 2, Abenewco 1 and the NM1 Group | Same as Senior Old Money Loans/Notes but fully subordinated to the Senior Old Money Loans/Notes | NM1 Group: ABG Orphan HoldCo, ACIL, ACIL Luxco1, ACIL Luxco 2, A3TLuxco 1, A3TLuxco 2, A3T and Stichting Seville, which is the parent company of ABG Orphan HoldCo, (and, at any time before the date of completion of the Restructuring, A3T HoldCo) On a subordinated basis, all NM2 Guarantors (other than AbeNewco 1 and AbeNewco 2) | Certain members of the Group (including, without limitation, Abengoa, but excluding AbeNewco 2, AbeNewco 1 and the NM1 Group) | NM1 Group: ABG Orphan HoldCo, ACIL, ACIL Luxco1, ACIL Luxco 2, A3TLuxco 1, A3TLuxco 2, A3T and Stichting Seville, which is the parent company of ABG Orphan HoldCo, (and, at any time before the date of completion of the Restructuring A3T HoldCo) On a subordinated basis, all NM2 Guarantors (other than AbeNewco 1 and AbeNewco 2) | Certain members of the Group (including, without limitation, Abengoa, but excluding AbeNewco 2, AbeNewco 1 and the NM1 Group) |
Amount (M) | € 968.1 + USD469.5 | €829.8 + USD415.8 | Tranche 1A: USD894.3 Tranche 1B: €106 | €249.3 (including refinancing of Tranche 1B payment in kind (PIK) Interests;.as of the date of this prospectus, this incremental amount has not been drawndown) | USD31.9 | €322.6 (due to the renovation of pre-existing bonds (avales)) |
Purpose | Restructuring of Compromised Debt | Restructuring of Compromised Debt | • Refinancing/repayment of Non-Compromised Debt; • Funding certain projects; • Servicing interest and fee payments on the Debt Instruments; and • General corporate purposes | Refinancing / Repayment of Non- Compromised Debt as well as refinancing NM1B PIK Interests and fees | Funding any A3T costs including, without limitation, increased construction costs, increased operating expenditure and increased commercialisation costs | Issuance of Bonds |
Interest/Issuance Fee (accrued | 1.50% (0.25% payable in cash and 1.25% "Pay If You Can", | 1.50% (0.25% payable in cash and 1.25% PIYC) | Cash Pay interest: 5% for the NM1A ABY Tranche, | Cash Pay interest: 5%. PIK interest of 9.00% | PIK interest of 7.00% on any drawn portion and | 5% |
Old Money | New Financing | ||||||||
Senior Old Money | Junior Old Money | New Money | New Bonding | ||||||
Tranche 1 | Tranche 2 | Tranche 3 | |||||||
annually paid | "PIYC") | NM1B and NM1A | 5.00% on any undrawn | ||||||
quarterly) | Escrow Tranche, in this | portion | |||||||
latter case only after the | |||||||||
release of the funds in | |||||||||
escrow, if not, 0%. | |||||||||
PIK Interest: 9% for | |||||||||
NM1A ABY Xxxxxxx, | |||||||||
XX0X (accrued as | |||||||||
incremental NM2) and | |||||||||
NM1A Escrow Tranche, | |||||||||
in this latter case only | |||||||||
after the release of the | |||||||||
funds in escrow, if not, | |||||||||
14%. | |||||||||
Fees (other than agency fees) | Structuring | NA | NA | (a) (b) | 4.00% of the portion of the total commitments at the date of completion of the Restructuring allocated to creditors that committed by the first acceptance deadline (which was 21 October 2016) 2.00% of the remaining total commitments at the date of completion of the Restructuring | Same as Tranche 1 | (a) (b) | 4.00% of the commitments under New Money Tranche 3 drawn at any time during the availability period of New Money Tranche 3; and 2.00% of the portion of New Money Tranche 3 never drawn during the availability period of New Money Tranche 3 (if any) | 1% |
Old Money | New Financing | ||||||
Senior Old Money | Junior Old Money | New Money | New Bonding | ||||
Tranche 1 | Tranche 2 | Tranche 3 | |||||
Underwriting | NA | NA | 2.00% of the portion of the total commitments of any New Money Financing creditors as at the date the Restructuring Agreement was signed (or such later date as set out in the New Money Financing Commitment Letter) in accordance with the New Money Financing Commitment Letter | Same as Xxxxxxx 0 | XX | XX |
Old Money | New Financing | ||||||
Senior Old Money | Junior Old Money | New Money | New Bonding | ||||
Tranche 1 | Tranche 2 | Tranche 3 | |||||
Back-end fee | NA | NA | Payable in cash in case of prepayments or repayments: • 5% during the first 24 months after the date of completion of the Restructuring. • 10% thereafter. In addition, a make-whole shall be paid in cash in case of prepayments or repayments up to: 10.11% of the portion prepaid or repaid (ignoring PIK interests); less the aggregate amount of interest (other than default interest) and the back-end fee referred above paid or then due and payable on such portion from the date of completion of the Restructuring to the payment date. | Payable in cash in case of prepayments or repayments: • 5% during the first 24 months after the date of completion of the Restructuring. • 10% thereafter. | NA | NA | |
Maturity | 66 months, with the possibility of an extended period up to 24 additional months | 72 months, with the possibility of an extended period up to 24 additional months | 47 months | 48 months | 48 months | 48 months | |
Repayment Schedule | • On the date falling 60 months after the Restructuring Completion Date, 2.00% of the commitments. • If the Maturity Date has been extended, on the date | • On the date falling 60 months after the Restructuring Completion Date, 2.00% of the commitments. • If the Maturity Date has been extended, on the date | Bullet | Bullet | Bullet | NA |
Old Money | New Financing | |||||
Senior Old Money | Junior Old Money | New Money | New Bonding | |||
Tranche 1 | Tranche 2 | Tranche 3 | ||||
falling 72 months after the Restructuring Completion Date, a further 2.00% of the commitments. • if the Maturity Date has been extended, on the date falling 84 months after the Restructuring Completion Date, a further 2.00% of the commitments | falling 72 months after the Restructuring Completion Date, a further 2.00% of the commitments. • if the Maturity Date has been extended, on the date falling 84 months after the Restructuring Completion Date, a further 2.00% of the commitments | |||||
Main Security | First ranking security over 100% of the shares in AbeNewco 2 | Second-ranking security over 100% of the shares in AbeNewco 2 | All material assets of each member of the NM1 Group, (including A3T, all of the shares in A3T and all of the shares currently held by the Group in Atlantica Yield) and security over the shares in and claims into ABG Orphan Holdco, Abengoa Concessions Investments Limited, ACIL Luxco 2, A3TLuxco 2 and A3T Holdco España, S.A. Subordinated security over (i) 100% of the shares in certain members of the Group (other than AbeNewco 2) and (ii) all material assets of each member of the Group (other than AbeNewco 2). No security over shares in AbeNewco 1 | Security over the accounts of ACIL Luxco 2 and A3TLuxco 2 into which the surplus value of the collateral of Tranche 1 is required to be deposited and the collateral surplus proceeds of the collateral of Tranche 1. Security over 100% of the shares in and shareholder loans made to AbeNewco 1. Security over (i) 100% of the shares in certain members of the Group (other than AbeNewco2) and (ii) all material assets of each member of the Group (other than AbeNewco 2), in each case other than the shares in and shareholder loans made to AbeNewco 1 or AbeNewco 2 | Same as Tranche 1 | Same as Tranche 2 although with a different seniority |
Post- Restructuring Equity Participation | 40% | 30% | 15% | 5% | 5% |
4.3.2.- Corporate restructuring / Hive-down
As a consideration to voluntarily acceeding the Restructuring Agreement and electing for the Alternative Restructuring Terms, Abengoa has implemented a corporate restructuring. The purpose of the proposed corporate structure is to grant structural seniority on the one hand to the investors of the new money over the creditors of the pre-existing debt that is being restructured and, on the other, to the creditors of the pre-existing debt that is being restructured over the residual indebtedness that has not been restructured.
TopCo AbeNewco Structure
Abengoa has implemented a corporate restructuring of the Group (the "TopCo AbeNewco Structure") by virtue of which:
1. Xxxxxxx has contributed through a contribution in kind (aportación no dineraria) into a newly incorporated Spanish limited liability company (sociedad anónima) named "Abengoa Abenewco 2, S.A.U." ("AbeNewco 2"), incorporated on 3 October 2016, all shares and participations currently owned by Abengoa in its direct Subsidiaries (except for those shares and participations which could not be contributed without the consent of a third party) and certain intercompany loans, and XxxXxxxx 2 has then contributed through a contribution in kind (aportación no dineraria) such shares and intercompany loans into a second newly incorporated Spanish limited liability company (sociedad anónima) named "Xxxxxxx XxxXxxxx 1, S.A.U." ("AbeNewco 1"), incorporated on 18 October 2016; and
2. As a result of these contributions, Xxxxxxx is the sole shareholder of AbeNewco 2, who is the sole shareholder of AbeNewco1, who holds all the shares (except for those shares and participations which could not be contributed without the consent of a third party) and intercompany loans currently owned by Abengoa in the Group.
A3T Double LuxCo Structure
Since part of the New Money Financing is granted for the purposes of financing the completion of the project owned by Xxxxx 0X, Xxxxxxx has implemented a corporate restructuring of Abent 3T (the "A3T Double LuxCo Structure") by virtue of which:
1. The shareholders of Abent 3T (i.e., A3T Holdco and Abener Energía, S.A.) have contributed their respective shares in Abent 3T into a newly incorporated Luxembourg special purpose vehicle company (société anonyme) named A3T Luxco 2, S.A. ("A3TLuxco 2"), incorporated on 24 November 2016.
2. A3T Holdco has contributed into A3TLuxco 2 its receivables under its intercompany loan to Abent 3T (the "A3T Intercompany Loan").
3. A3TLuxco 2 has then contributed its shares in Abent 3T and its rights under the A3T Intercompany Loan into a second newly incorporated Luxembourg special purpose vehicle company (société anonyme) ("A3TLuxco 1"), incorporated on 24 January 2017.
As a result of these contributions, A3T Holdco, and Abener Energía, S.A. are the shareholders of A3TLuxco 2, who is the sole shareholder of A3TLuxco 1, who is the sole shareholder of Abent 3T.
Abengoa Concessions Investments Limited Double LuxCo Structure
Finally, Xxxxxxx has implemented a corporate restructuring of Abengoa Concessions Investments Limited (the "ACIL Double LuxCo Structure") by virtue of which:
1. Abengoa Concessions Investments Limited has contributed all its shares in Atlantica Yield Plc into a newly incorporated Luxembourg special purpose vehicle company (société anonyme) ("ACIL Luxco 1"), incorporated on 23 January 2017, in exchange for shares in ACIL Luxco 1.
2. On 23 January 0000, Xxxxxxx Concessions Investments Limited has incorporated a newly incorporated Luxembourg special purpose vehicle company (société anonyme) ("ACIL Luxco 2") and has then contributed all its shares in ACIL Luxco 1 into ACIL Luxco 2, in exchange for shares in ACIL Luxco 2.
3. As a result of these contributions, Abengoa Concessions Investments Limited is the sole shareholder of ACIL Luxco 2, who is the sole shareholder of ACIL Luxco 1, who is shareholder of Atlantica Yield Plc.
OrphanCo Funding and Security Structure
For the purposes of structuring the funding of Tranche 1 and Tranche 3 of the New Money, on 14 March 2017, lenders under such Tranches set up under Luxembourg law an Orphan company (ABG Orphan HoldCo) who is acting as borrower of Tranche 1 and Tranche 3 and has then on-lent the relevant proceeds to ACIL Luxco 2 and A3T Luxco 2, who has then upstreamed the funds to the Group. As security for such on lending, ACIL Luxco 2 and A3T Luxco 2, as collateral providers, have entered into title transfer collateral arrangements pursuant to which (i) title in the issued shares in ACIL Luxco 1 and A3T Luxco 1, respectively, is transferred from ACIL Luxco 2 and A3T Luxco 2, respectively, to ABG Orphan HoldCo; and (ii) title to the receivable due to A3T Luxco 2 under the intercompany loan between A3T Luxco 2 and A3T Luxco1 relating to the on-lending of the New Money is transferred from A3T Luxco 2 to ABG Orphan HoldCo.
A title transfer collateral arrangement is an arrangement under which a collateral provider (ACIL Luxco 2 and A3T Luxco 2) transfers full legal ownership of the financial collateral to a collateral taker (ABG Orphan HoldCo) for the purpose of securing or otherwise covering the performance of relevant financial obligations, with the collateral taker subject to an obligation to the collateral provider to retransfer the ownership of the collateral (or equivalent collateral, as may be defined in the arrangement documentation) after repayment of the secured obligations.
However, in the event of total or partial non-performance of the secured obligations, the collateral taker will be entitled to retain the collateral transferred to set off against the obligation to retransfer the ownership of the collateral and in discharge of the secured obligations in accordance with the set-off and valuation provisions agreed between the parties.
See "Management’s discussion and analysis of financial condition and results of operations—12.- Financing Arrangements—New Financing Arrangements—NM1/3 Term Loan Facility and NM1 Notes" for a detailed description of OrphanCo funding and security structure.
Following the execution of the corporate restructuring described above, the structure of the Group as of the date of this Prospectus results as follows: