Court approves Abengoa plant sales, closings expected in 30 days

The sale of Abengoa’s five first-generation plants was given final approval by the U.S. Bankruptcy Court on Aug. 29. The judge will be signing the sales orders, which provides court approval that the assets are to be sold free and clear, explained Chris Wu, partner with Carl Marks Advisors, who handled the showing of the assets and the auction process. “The next step is to work on closing the transactions, which is expect in 30 days.”

Green Plains purchased two 90 MMgy plants located in Madison, Illinois, and Mt. Vernon, Indiana, for $200 million, and the 56 MMgy in York, Nebraska, for $37.75 million plus working capital. The stalking horse bid from BioUrja Inc. for the York facility was overbid at the auction.  A subsidiary of KAAPA Ethanol purchased the 90 MMgy plant in Ravenna, Nebraska, for $115 million plus working capital. The fifth, idled plant located in Colwich, Kansas, was sold to ICM Inc. for $3.15 million, overbidding two other qualified bidders.

More than 250 potential buyers were contacted and over 80 participated in the process.  Wu said his firm was pleased with the results. Early in the process, the Ravenna plant had been valued at $63 million, Wu said, so they were pleased that it sold for $113 million. The three large Vogelbush plants, a relatively uncommon process design in the U.S., were sold for an average of $1.17 per gallon, “and therefore sets a precedent value,” Wu said.

The strategic bidders represented a variety of companies interested in the industry, as evidenced by the stalking horse bid offered by BioUrja, a midstream ethanol distributor, seeing an opportunity to integrate into the production side. “BioUrja wasn’t the only one interested,” he added. The successful sale confirms the viability of the corn ethanol industry in the U.S., he said, showing both the confidence from strategic investors and lenders willing to extend credit. “It’s an important watershed,” Wu said,

In Spain, Abengoa S.A. announced Aug. 11 that it had reached an agreement with its main lenders for the terms and conditions of the financial restructuring agreement and recapitalization. An Aug. 16 presentation on the company website described the updated viability plan, saying at least 75 percent of the creditors must agree for the restructuring to be successful and liquidation avoided.  

The company, the bank coordination committee and the new money investor group signed the restructuring term sheet Aug. 10, which secures 1.17 billion euros of new money and 307 million euros of bonding lines, enabling Abengoa to initiate normalized operations starting in the fourth quarter. 

Progress has been made on the sale of noncore assets, according to the presentation, “under attractive terms for the company, allowing for the streamlining and derisking of the company.” The list of disposals includes projects in Egypt, Brazil, Chile, Europe, Africa and the United States, including its bioenergy assets in the U.S. and Europe, which were described as being in advanced stages of completion. 

A timeline shows the anticipated signing of the restructuring agreement should be by the end of September followed by a general shareholders meeting.

Abengoa has worked in the energy and environment sectors, generating electricity from renewable resources such as solar, wind or cogeneration, producing drinking water from sea water and producing biofuels. It has an engineering and construction division and operates power generation and transmission concessions.  

If the current restructuring is accepted by 75 percent of its creditors and approved by regulators in the home country of Spain, the company will end a chapter beginning in December, 2015.