Abengoa went from fixing electrical installations in war-torn Spain in the 1940s to building the world’s largest solar power plant in the US — a remarkable success story until its uncontrolled growth pushed it to the brink of bankruptcy.
The struggling renewable energy giant on Wednesday presented a debt restructuring plan which will see its creditors wrestle control of the firm from the family that founded the company 75 years ago.
It is an unexpected ending for a company which just six years ago was praised by US President Barack Obama after it announced it would build the world’s biggest solar plant in Arizona.
At the time the company was a global leader in cutting edge sectors like biofuels and solar thermal energy and it posted a net profit of 207 million euros ($230 million) on an annual turnover of 5.5 billion euros.
“It was a big multinational, focused on renewable energy and with a production model based on technological innovation. It was an extremely attractive model,” Carlos Sebastian, a former Abengoa board member between 2005 and 2011, told AFP.
“But it grew at an absolutely excessive pace and based, in addition, on indebtedness,” added Sebastian, who left the board of the company in 2011 due to disagreements with the president of the company at the time, Felipe Benjumea.
– From Seville to world –
The company was founded by Felipe’s father Javier Benjumea, who lost his own father at the age of 13, and four of his friends in the southern city of Seville.
It was dedicated at the time to fixing electrical installations in the region.
“He went around on a bicycle or motorcycle around all of Seville with pliers in his hand fixing electrical installations,” his biographer, Javier del Hoyo, told AFP.
Spain at the time was ravaged by the country’s 1936-39 civil war and Abengoa found steady work.
In 1949 the company was awarded a contact to electrify Spain’s railway, which has headed at a time by one of Javier Benjumea’s uncles.
After that the company — which had solid connections with the right-wing dictatorship of General Francisco Franco — grew spectacularly.
Turnover grew from 45 million pesetas, the former Spanish currency, in 1950 to 4.9 billion pesetas in 1970 as the firm took on projects in Latin America and entered new sectors like water management, telecommunications and transportation.
When Javier Benjumea in 1991 passed the reins of the company to his son Felipe, Abengoa had over 100 subsidiaries and 7,000 employees.
King Juan Carlos honoured him by giving him the title of marquis.
But the best years were still to come. Under Felipe Benjumea, Abengoa was transformed from a firm that operated mainly in Spain into an innovative multinational with 28,700 workers and most of its activity centred in the United States and Brazil.
“It was a great feat on the part of Felipe Benjumea but like everyone who is successful, he was too impulsive and didn’t listen,” said Sebastian.
– The fall –
The risky bet on unprofitable biofuels, Spain’s cuts to renewable energy subsidies during a sharp economic downturn and the Benjuema family’s refusal to raise Abengoa’s capital out of fear of losing control of the company pushed it to the edge of bankruptcy.
The company ended 2015 with a debt of 9.4 billion euros. It announced in November that it was filing for preliminary protection from creditors in Spain.
Abegoa, which is racing to reach an agreement with its banks and bondholders by March 28, said Wednesday its debt would fall to 4.9 billion euros after its restructuring.
It said creditors that had signed up to the restructuring deal so far represented about 40 percent of the financial debt. Abengoa needs to get the backing of 60 percent of creditors for the deal to go through.
The deal will leave the Benjumea family with a small stake of just 2.5 percent, marking the fall of a lineage that was widely respected in Seville.
“To talk in Seville of industry is to talk of Abengoa,” said Miguel Rus, president of the business confederation of Seville.
Highly discreet, Felipe Benjumea — who stepped down as head of Abengoa in September — never granted media interviews.
He is under investigation for serious mismanagement and is criticised, even by board members who used to praise him, for taking a compensation package of 11 million euros.
Economy Minister Luis de Guindos said it was “not very ethical”.