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Will the Abengoa Financial Restructuring Impact the Vista Ridge Project?

On November 25, 2015, Abengoa Spain filed a request for protection from creditors, the first step in insolvency proceedings. The filing, which buys the company four months (until late March) to negotiate a financial restructuring with creditors, followed a financial performance announcement showing a loss of €194 million from January through September of this year and a potential investor, Gonvarri Corporacion Financiera, cancelling plans to inject €350 million into the company.

Abengoa Spain is affiliated with Abengoa Vista Ridge, LLC—the leader of the project consortium that has executed an agreement with San Antonio Water System (“SAWS”) to deliver up to 50,000 AF/year from Burleson and Milam Counties to San Antonio. At the October 27, 2015 SAWS Board Meeting, Carlos Cosin, Chairman and CEO of Abengoa Water, spoke during a briefing on the project. Cosin said that the company’s financial situation is not affecting the project and noted that the committed equity was assured and warrantied by the company. He also emphasized the priority that the project is for the company and its employees.

After Abengoa’s filing, SAWS President/CEO Robert R. Puente reiterated Cosin’s point.

“The announcement today by Abengoa Sociedad Anónima (S.A.), regarding their debt restructuring is not expected to impact the Vista Ridge pipeline project,” said Puente. “We made sure through last year’s negotiations that financial protections were built into the Vista Ridge project to insulate SAWS customers from risk. The Abengoa Vista Ridge project is financially independent and legally separate from the holding company in Spain. That means the San Antonio Vista Ridge project will continue to move forward.”

Along with Puente’s statement, SAWS officials also noted that Abengoa Vista Ridge has already invested $30 million into the project; the rate adjustment allocated for the project would not be expended until the project’s financial close; and as the project moves forward, SAWS will continue to ensure that ratepayers are insulated from the project’s financial risks.

On December 1, 2015, the SAWS Board of Trustees discussed legal matters related to the project in a closed executive session. On December 24, 2015, Abengoa announced that it had secured a €106 million credit line, which will be used for general corporate necessities and may help stave off a bankruptcy.

(For background on the Vista Ridge project, see “Vista Ridge Regional Supply Project,” JOW February 2015).


Written by Marta L. Weismann