US Taxpayer Faces $230 Million Loss As Spain's 'Solyndra' Files For Creditor Protection

"The future of the company seems very black," notes on trader as the bonds and stocks of Spanish renewbles form Abengoa lives up to its name and files for creditor protection, just as we warned was likely. With the stock crashing 70% to 28c and 4-month bonds trading at just 22c on the dollar, market participants face an almost total loss.. but, as we detailed previously, it is the American taxpayer - who thanks to Ex-Im Bank loans to keep this zombie alive - face losses of $230 million as Spain's Solyndra exposes another symptom of the Oligrachic ignorance of where the money comes from.

Restructring efforts of the past have failed, as Bloomberg reports, Abengoa SA’s bonds and stock tumbled to records after the embattled renewable-energy company said it was seeking preliminary protection from creditors following the breakdown of talks with a new investor.

Abengoa’s 500 million euros ($530 million) of bonds maturing in March fell as much as 51 cents on the euro to 12 cents on Wednesday, while its 550 million euros of bonds due February 2018 dropped as much as 32 cents to 9.8 cents, according to data compiled by Bloomberg. Its B shares plunged as much as 69 percent to 28 euro cents.

 

 

Abengoa, which employs more than 24,000 people worldwide, has been seeking to reassure investors that it can generate enough cash to service its debt pile of about 8.9 billion euros of consolidated gross debt. The Seville-based company said earlier this month that Gonvarri Corporacion Financiera, a unit of industrial group Corporacion Gestamp, would become its biggest shareholder after agreeing to acquire a 28 percent stake by injecting new funds.

 

“The future of the company seems very black,” said Carlos Ortega, a trader at Beka Finance Sociedad de Valores SA. “It has a tremendous amount of debt which no bank wants to refinance and now even its partners are backing out.”

Except that, thanks to crony capitalism, US Taxpayers did...

In 2014, as FreeBeacon reports, the Spanish renewable energy company under investigation by at least two federal agencies unveiled a new biofuel production facility that received hundreds of millions of dollars in federal subsidies.

Former employees of the company have alleged that it routinely engages in violations of U.S. immigration, environmental, and workplace safety laws and uses taxpayer funds to hire foreign workers in violation of federal regulations.

 

The company received a $132.4 million loan guarantee and a $97 million grant to build a new biofuel plant Hugoton, Kansas. Energy Secretary Ernest Moniz and Kansas Gov. Sam Brownback attended its ribbon-cutting ceremony on Friday.

 

The announcement of additional subsidies came even as U.S. Customs and Immigration Service and the Department of Labor conduct investigations into potential legal violations by the company.

 

Both agencies have policies against commenting on ongoing investigations.

 

In addition to direct taxpayer support for the company, Abengoa benefitted tremendously from federal mandates for biofuels, according to CEO Manuel Sanchez Ortega.

 

“This would have been simply impossible without the establishment of the Renewable Fuel Standard,” Ortega said, referring to a federal regulation that mandates the use of certain levels of bio energy in transportation fuels.

And now, less than one year later, the company seeks creditor protection, which would normally be shrugged off by an American public - meh, what do we care about the bankruptcy of some Spanish energy firm?

Well... combine political influence... US taxpayer subisides... and corruption... and maybe Americans should care... (as Free Beacon details)

Mike Alhalabi, a former senior lead mechanical engineer at Abengoa subsidiary Abener who worked on the Mojave facility, said the company routinely skipped right to international hiring, preferring to bring in workers from its native Spain.

 

It did so even for menial jobs, Alhalabi recalled.

 

“They [hired] people to move furniture around and they were all Spanish,” he said. “I mean, this is work that you can hire Americans to do. Why would you bring people from Spain to move furniture around?”

 

Potentially illegal hiring practices caught the eye of another employee, who said the company was well aware that it was violating U.S. immigration laws.

 

“What I came to realize, and it took me a while because I didn’t want to realize it, is that they understood. They knew the law. They didn’t care,” said Lydia Evanson, the former human resources director at an Abengoa subsidiary in Arizona.

 

“I really came to believe that they’re so politically connected that it’s just hubris and arrogance,” Evanson said.

 

Alhalabi also saw political connections at work. He noted the involvement of former vice president Al Gore, whose company, Generation Investment Management, bought a stake in Abengoa in 2007.

 

“Behind the scenes, what brought Abengoa to the United States, based on my research, [was] Al Gore,” Alhalabi said in an interview. “He promised to bring U.S. dollars to the company.”

 

Alhalabi also singled out Sen. Diane Feinstein (D., Calif.), saying she was part of Gore’s team working behind the scenes to support Abengoa’s activities in her home state.

 

Feinstein in 2010 asked then-Interior Secretary Ken Salazar to expedite an environmental review of one of its stimulus-backed solar plants, despite concerns that it could impact endangered species in the area.

 

The month after she sent a letter to Salazar making the request, Interior’s Fish and Wildlife Service signed off on the project.

 

Salazar attended Friday’s ribbon-cutting ceremony for Abengoa’s new biofuel facility.

The company’s political connections are emblematic of an industry that remains reliant on taxpayer subsidies, according to William Yeatman, a senior fellow specializing in energy policy at the Competitive Enterprise Institute.

“It could not be more clear that this company could not survive without access to government favors from political friends,” Yeatman said, citing its reliance on the Renewable Fuels Standard and continued financial support from DOE.

 

“Alas, the same can be said for the green energy industry as a whole, which would fast wither and die absent a steady diet of taxpayer and ratepayer subsidies,” Yeatman said.

 

In addition to its DOE subsidies, Abengoa received $185 million in financing in 2012 and 2013 through the U.S. Export-Import bank as former New Mexico Gov. Bill Richardson (D) sat on the boards of both the federal agency and the company it was subsidizing.

 

Despite extensive federal support for the company, Alhalabi described a culture of disregard for workplace safety and environmental contamination. Concern over high costs has led to lackluster engineering work at the company’s Mojave facility that could result in an “environmental disaster,” he said.

Solyndra 2.0? Another one off? Or another symptom of the Oligrachic ignorance of where the money comes from...It appears US taxpayers can kiss that money goodbye...

Abengoa reported a nine-month loss this month. Deloitte, the auditor, said Abengoa’s losses, slumping shares and difficulty accessing financing could generate “significant doubts” over its ability to keep operating.

 

“The reaction in the market is huge,” said Felix Fischer, a credit analyst at independent research provider Lucror Analytics in Singapore. “A financial restructuring would be a very messy and lengthy process. There are so many different layers of different liabilities.”