Abengoa announced that it intends to reduce its participation in Abengoa Yield through a sale of up to 10.6 million shares.
Abengoa, S.A. (MCE: ABG.B/P SM /NASDAQ: ABGB) announced that it intends to reduce its participation in Abengoa Yield (NASDAQ: ABY) through a sale of up to 10.6 million shares, subject to market conditions, by means of a secondary public offering pursuant to a registration statement on Form F-1 filed by Abengoa Yield with the U.S. Securities and Exchange Commission.
1. Abengoa intends to reduce its stake in Abengoa Yield (NASDAQ: ABY) to no less than 51% of the current capital of Abengoa Yield, subject to market conditions. The ROFO agreement between the two companies has been reinforced and the corporate governance of Abengoa Yield will be reviewed to strengthen the role of the independent directors.
2. Accelerate the sale of assets to Abengoa Yield through a second sale, currently under negotiation, and a third sale already under discussion. These two asset sales could represent an equity purchase price of approximately $170 million to $200 million.
3. Continue to develop the Abengoa Greenfield strategy through the creation of a joint venture with external equity partners that will invest in a portfolio of contracted assets under construction as well as in new contracted assets under development. This will allow Abengoa to meet its target of sharing with strong partners the investment phase, reinforcing the asset light model. Abengoa will update on the progress of the Greenfield company during the Q4 earnings call if not earlier.
Manuel Sánchez, CEO of Abengoa has said: “we keep working to strengthen the financial model of our company in order to secure the success of Abengoa in the high growth markets around the globe. We want to have a more independent ABY, while at the same time benefitting even more from Abengoa’s sponsorship. Additionally, we want to bring to Greenfield a selected group of world class equity partners to continue the 20 years of outstanding track record deploying key power and water infrastructure projects in strategic geographies”.
On November 14, 2014, Abengoa Yield announced updated dividend per share guidance of $1.60 for the year 2015 and $1.92 to $2.00 for the year 2016. This guidance assumes the first acquisition from Abengoa for a price of $312 million and a second acquisition currently under negotiation. The third acquisition, to be executed under the call option agreement, is therefore not considered in our current dividend per share guidance
In addition, Abengoa Yield has signed a Memorandum of Understanding with Abengoa under which both companies agree to work to take the appropriate steps to ensure that Abengoa Yield’s board of directors has a majority of independent directors and to increase the list of matters that require approval by the board of directors.
Finally, Abengoa Yield has signed an amendment to the Right of First Offer (“ROFO”) Agreement with Abengoa to include, among other modifications, a right for Abengoa Yield to “call” assets for negotiation, once those assets reach eighteen months of operation.
Santiago Seage, Abengoa Yield’s CEO, said: “With the potential second and potential third acquisitions from Abengoa we aim to accelerate our growth, while making Abengoa Yield a more independent company that will continue growing accretively thanks to a reinforced ROFO agreement with a leading global developer like Abengoa and to third party acquisitions”.
Abengoa Yield is a total return company that owns a diversified portfolio of contracted renewable energy, power generation and electric transmission assets in North America, South America and Europe. We focus on providing a predictable and growing quarterly dividend or yield to our shareholders.
