One of the world's biggest renewable energy firms, Spain's Abengoa, said today it had been given a seven-month breathing space by its creditors for restructuring that should stave off the threat of immediate bankruptcy.
The company ended 2015 with a debt of 9.4 billion euros (USD 10.5 billion), which it hopes to slim to 4.9 billion.
It announced in November that it was filing for preliminary protection from creditors and had been given a March 28 deadline to strike a deal with at least 60 per cent of its debt-holders.
Under the "standstill" deal announced today, 75.04 per cent of creditors agreed to the grace period. In parallel, the company plans to file for Chapter 11 protection from creditors for its affiliates in the United States.
"This (is a) key step in the restructuring process of Abengoa and will permit the company to complete the Financial Viability Plan that has already been accepted by lenders in order to stabilise business and protect its leadership in the energy and environmental sectors," the company said in a statement.
Abengoa, which employed 28,700 people worldwide in 2015, wants to refocus on core activities. It has already signalled its intentions to sell off its biofuels assets and other holdings, on a case-by-case basis.
A family-owned company founded 75 years ago, Abengoa rose from being a local electrical firm, fixing installations damaged in Spain's 1936-39 civil war, to a major player in solar energy and other renewables.
But risky bets on biofuels, Spain's cuts to renewable energy subsidies during an economic downturn and the Benjumea family's refusal to raise capital out of fear of losing control of the company pushed it to the edge of bankruptcy.
The company's head, Felipe Benjumea, stepped down last September. He is under investigation for serious mismanagement and under fire for taking a compensation package of 11 million euros.