Restructuring of Abengoa, a Global Renewable Energy Company

Situation Overview

Abengoa SA, headquartered in Spain, is a global renewable energy, construction and engineering company that developed a wide range of clean energy projects (solar thermal, biofuels, combined cycle power plants) in Latin America, the U.S., and throughout Europe. The company began to show signs of distress after accumulating massive debt (over $15 billion), fueled by an aggressive expansion plan. Abengoa develops various technologies to generate electricity from renewable resources, converts biomass into biofuels, and produce drinking water from sea water, amongst others. Abengoa was previously one of the world’s top builders of power lines transporting energy across Latin America and a top engineering and construction business, developing and constructing many large renewable energy projects in the U.S.

As the parent company fell behind on its payment obligations, Abengoa’s investors decided that the company’s best option would be to seek pre-bankruptcy protection in Spain. Simultaneously, Abengoa and its creditors began global restructuring negotiations. A key component of this restructuring strategy was to divest certain non-core assets, including projects in Egypt, Brazil, Chile, Europe, and Africa, as well as six ethanol production facilities in the U.S. (Madison, IL, Mt. Vernon, IN, York, NE, Ravenna, NE, Colwich, KS and Portales, NM). 

A Carl Marks Advisors team led by partner Chris Wu, was engaged to run the sale process and auction of Abengoa’s U.S. biofuel facilities, based on its leading position within the broader biofuels industry, extensive first-hand knowledge of the buyer universe for such assets, as well as its demonstrated restructuring expertise and successful track record of maximizing value in difficult circumstances.

Unique Challenges

At the outset of the parent company’s distress, it was uncertain whether or not a global restructuring agreement may be reached with Abengoa’s various lenders. It was also unclear whether Abengoa’s hundreds of subsidiaries would receive the approvals necessary for non-core facilities to be divested. Ultimately, an agreement was reached with a new investor group that contributed cash ($1.31 billion) and additional credit lines needed to improve operations.  Ultimately, Abengoa’s U.S. affiliates won court approvals for nearly $400 million cash proceeds in ethanol plant sales through the sale process run by Carl Marks Advisors.

At the time Abengoa’s U.S. biofuel assets were put up for sale, many domestic producers were still feeling the effects of a recent, though shallow, downturn in the U.S. ethanol industry. However, the market was beginning to show signs of stabilization.  Carl Marks Advisors knew that positioning the Abengoa facilities appropriately with potential buyers would maximize value to the estate, as well as present an attractive opportunity for strategic buyers who were ready to make acquisitions of strong operating assets from a distressed competitor.  Carl Marks Advisors successfully arranged stalking horse bids at all of the operating assets prior to holding the auction. This initial interest confirmed the viability of the ethanol industry in the U.S., as well as the confidence from strategic investors and lenders willing to extend credit, and kicked off a competitive auction.


Carl Marks Advisors created an extremely competitive auction environment, contacting in excess of 250 potential strategic and financial buyers, with more than 80 potential buyers reviewing confidential due diligence materials regarding the opportunity. After a successful marketing period, competitive bids were received for each facility, culminating in the sale these assets at very attractive terms for the estate.

Green Plains, the fourth largest ethanol producer at the time, purchased the Madison, IL and Mt. Vernon, IN plants for $200 million, plus certain working capital assets, as well as overbid the stalking horse bid for the York, NE facility for $37.75 million, plus working capital. The remaining facilities were purchased by other large players in the domestic ethanol industry; KAAPA Ethanol purchased the Ravenna, NE facility for $115 million, plus working capital; and ICM Inc., purchased the idled Colwich, NE facility for $3.15 million after overbidding two other qualified bidders.

Carl Marks Advisors facilitated a very favorable outcome for Abengoa resulting in a total of ~$400 million in value to the estate. Especially notable were the sales of the largest three operating assets, as these utilize certain forms of technology in their production processes that have historically garnered less interest than competing technologies, which sold materially above original valuations, validating both the interest from the buyer universe as well as Carl Marks Advisors’ initial view of the marketplace.

Key Takeaways

  • Complex, bankruptcy cases in which multiple assets with different creditors that are being sold require an investment banker to be intimately familiar with the industry’s market dynamics as well as deep expertise in designing appropriate bankruptcy auction procedures to maximize value. Carl Marks demonstrated not only its leadership in the biofuel M&A market but also its capability in structuring a value maximizing bankruptcy auction in which 3 different stalking horses agreements covering four of the larger assets were negotiated simultaneously with bidding flexibility built into the auction procedures to generate the broadest interest and best results.
  • In a volatile commodity industry, such as ethanol, and in the broader renewable energy sector, securing stalking horse bids prior to an auction is often critical to demonstrating buyer confidence in the future of the industry and establishing baseline valuation of the assets.

Sign Up for Our Newsletter

This field is for validation purposes and should be left unchanged.