Spain's Abengoa to step up asset sales to generate cash (updated)

Starlog Enterprises

31/07/2015 18:55

* Says to sell up to 1.9 billion euros in assets this year 
    * Targets 500 mln eur of free cash flow from operations 
    * Total gross debt reaches 9.8 billion euros at June 30 
 
 (Recasts with asset sale and free cash flow targets) 
    By Tracy Rucinski  and Jose Elías Rodríguez 
    MADRID, July 31 (Reuters) - Spain's Abengoa  ABG.MC  
 ABGek.MC  will step up asset sales and cut costs to generate 
free cash flow this year, its CEO said on Friday, attempting to 
regain market confidence after sharp declines in its stock and 
bonds. 
    Shares in the Seville-based engineering and renewable energy 
company have dropped 16 percent since July 23 on concerns over 
its liquidity, now valuing the firm at 1.9 billion euros ($2.1 
billion). 
    "We have no question that this is a key priority and we will 
be generating a very significant free cash flow in the coming 
years thanks to our position in global markets in 
infrastructure, power and water," CEO Santiago Seage said on a 
conference call. 
    Abengoa - which has biofuel and solar thermal plants in the 
United States - said on Friday it will divest assets worth 1.8 
billion to 1.9 billion euros to shore up finances, up from a 
previous target of 1.6 billion euros. 
    The group also trimmed its 2015 targets, with EBITDA now 
seen falling by 4 to 7 percent year-on-year to between 1.31 
billion euros and 1.36 billion euros, down 20 million euros from 
a previous target.   
    Full-year revenues are forecast at between 7.3 billion euros 
and 7.7 billion euros, up 2 to 8 percent from a year earlier but 
down from a previous target for 7.75-7.85 billion euros.     
    Seage said the divestments would help generate corporate 
free cash flow of between 600 and 800 million euros in 2015 
after a negative figure of 87 million euros in the first half. 
    However, investors are concerned about its ability to 
generate cash beyond asset sales. The firm had negative cash 
flow from operations of 201 million euros in the first half, but 
said this would be positive at around 500 million euros at 
year-end. 
    The company said it will cut some 15 million euros in costs 
this year and 50 million euros in 2016 through measures such as 
staff cuts and streamlining business functions across regions 
where it operates. 
    Total consolidated gross debt reached 9.8 billion euros at 
June 30, while first-half earnings before interest, taxes, 
depreciation and amortisation (EBITDA) came in at 650 million 
euros, up 9 percent from a year earlier. 
    Last week, Abengoa decided to give its convertible and 
exchangeable bonds the same guarantees as its high-yield bonds 
to prevent what it called "irrational" trading in its debt. 
 ID:nL5N1035H9   
    The company had a debt to equity ratio of 7.1 in 2014 versus 
a sector average of 0.62, according to Thomson Reuters data.  
($1 = 0.9085 euros) 
 
 (Editing by Julien Toyer and Elaine Hardcastle) 
 ((tracy.rucinski@thomsonreuters.com; +34 91 585 2153; Reuters 
Messaging: tracy.rucinski.thomsonreuters.com@reuters.net)) 
 
Keywords: ABENGOA RESULTS/