Rising costs
Abengoa intends to expand on its asset and capex in light of the Abengoa 3.0 strategy.

Abengoa, a Spanish multinational corporation that includes companies in the domains of energy, telecommunications, transportation, and the environment, today announced a capital raise of €650 million ($713.5 million) to complement its strategy of new asset sales, reported Nasdaq.

The board of directors unanimously voted to submit to an Extraordinary Shareholders Meeting for the approval of the capital increase with pre-emptive rights.

Proceeds will be used to reduce corporate debt by €300 million ($329.2 million), additionally to existing commitments and to reinforce the balance sheet.

Abengoa’s largest shareholder and holding company, Inversion Corporativa, has stated that it will participate in the capital raise with new money.

Bioenergy divestment

Additionally, Abengoa launched a new plan of divestitures for a total of €500 million (548.8 million), including the €400 million ($439 million) plan announced on 31 July and the additional divestitures of bioenergy assets.

The company expects to obtain all of the proceeds no later than Q1 2016.

Growth strategy

The capital increase and the divestiture programme are fully consistent with Abengoa’s strategy explained on at the end of last month, that being:

  • Abengoa intends to expand on its asset and capex in light of the Abengoa 3.0 strategy.
  • Abengoa will take the actions necessary to reduce its cost of financing and reaffirms its commitment to improve its rating.

These new significant actions are a direct response to the higher capex in 2015, given significantly lower financing expected in the Brazilian transmission lines.

Plan to attain BB- rating

The board of directors will meet later today to review and consider the approval of an updated strategic plan that will include cash flow objectives and maximum capex limits for the next few years, allowing to reach a BB- rating by the end of 2016.

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Nicolette Pombo-van Zyl has been working in the African power, energy and water sectors since 2011, first with African Utility Week and now as the Editor of ESI Africa. She is also an Advisory Board member of the Global and African Power & Energy Elites publications. With her passion for sustainable business and placing African countries on the international stage, Nicolette takes a keen interest in current affairs and technology trends.