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An Abengoa logo is seen at Campus Palmas Altas, Abengoa’s headquarters in the Andalusian capital of Seville, southern Spain, February 2, 2016. REUTERS/Marcelo del Pozo

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  • The SEPI rejects a state aid of 249 million euros
  • SEPI source says that its viability, loan repayment is not guaranteed
  • Abengoa confirms its rejection of state aid
  • The rejection could trigger one of the biggest bankruptcies in Spain

MADRID, June 28 (Reuters) – The Spanish government has rejected state aid to Abenewco1, a unit of Spanish engineering and energy group Abengoa (ABG.MC), bringing it closer to bankruptcy.

The company had applied for a 249 million euro ($263 million) temporary state aid package to stay afloat while it assesses a takeover bid from Los Angeles-based private equity fund TerraMar Capital LLC worth 200 million euros.

A source from the Spanish state vehicle SEPI said that because the company’s viability and loan repayment were not guaranteed, the firm was not subject to state aid.

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On Tuesday, Abengoa said in an email to Reuters that it “indeed received a response from SEPI … in the last few hours to ratify the conclusions of the first report issued.”

In that report, SEPI considered that “certain eligibility criteria of the application lacked sufficient accreditation” without providing financial details, Abengoa said last week.

A SEPI spokesman declined to comment.

The Seville-based company has borrowed heavily over the past decade to finance an aggressive expansion into clean energy from its traditional infrastructure projects.

A proposed restructuring to deal with Abengoa’s €6bn mountain of debt was unraveled in February 2021 after the Andalusian government withdrew a €20m financing offer as part of a €250m global deal. of euros.

Abengoa shares have been suspended from trading since July 2020.

MAJOR BANKRUPTCY

In 2016, Abengoa avoided bankruptcy after reaching a debt refinancing agreement worth 9 billion euros ($10 billion), which handed over control of the company to creditors.

The rejection of state aid could now make it one of the biggest creditor contests in Spanish business history after the property developer Martinsa-Fadesa in 2008.

On Monday, Abengoa chairman Clemente Fernandez said he could start work on a plan B if the aid request is rejected, filing bankruptcy proceedings for some business units to at least exercise some damage control and save some key units. reported the Expansión newspaper.

In February 2021, Abengoa filed for voluntary bankruptcy after its creditors refused to extend the deadline to negotiate a restructuring agreement.

The subsidiary Abenewco1, which owns most of the assets and liabilities of its parent company and employs most of the group’s 13,500 workers, was not part of that insolvency proceeding.

($1 = 0.9458 euros)

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Information from Jesus Aguado; Additional reporting by Emma Pinedo; edited by

Our standards: The Thomson Reuters Trust Principles.

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