Bankruptcy Looms For Spain's Green Energy Giant
STEVE INSKEEP, HOST:
Spain's prime minister was among those dignitaries who attended the opening of the climate summit in Paris this week. Back home, his country's biggest renewable energy company is in trouble. It could soon become Spain's biggest ever bankruptcy, affecting a company that operates in the United States and received U.S. taxpayer help. Reporter Lauren Frayer is covering this story. Hi, Lauren.
LAUREN FRAYER, BYLINE: Hi, Steve.
INSKEEP: What went wrong?
FRAYER: Well, the company is called Abengoa. It's a 70-year-old Spanish electric company that now runs solar plants, power lines, water desalination plants all over Spain and all over the world. And one of the landmark projects that it runs is the massive Solana project in Arizona. It's the biggest solar plant of its kind, a parabolic trough plant. It's also a huge player in California's solar industry. The company runs half a dozen ethanol biofuel plants in places like Kansas, Missouri. And overall, it's got some $3 billion invested in the U.S. alone, employing 29,000 people worldwide.
INSKEEP: Well, that all sounds pretty impressive, so why bankruptcy?
FRAYER: Well, Spain was a leader in renewable energy, until two years ago. The Spanish government, strapped for cash at the height of the economic crisis here, decided to cut virtually all the subsidies it was offering for solar and wind power. That put the renewables industry here in Spain in shambles. Some firms went out of business. The survivors, big companies like Abengoa, were left living on loans. And in fact, even the U.S. government has given it some $2 billion in loan guarantees. But last week, Abengoa saw a deal with a new investor worth a third of a billion dollars fall through. And the company really needed that money to stay afloat. Since then, the CEO has resigned. The stock price has fallen by 50 percent, and the company is applying for creditor protections. It's the first step toward bankruptcy.
INSKEEP: Well, Lauren, many people here in the United States will remember the company Solyndra. It was much publicized that the company went under, taking many millions of dollars of U.S. subsidies with it. Are you saying that U.S. government money, taxpayer money, could disappear in this bankruptcy?
FRAYER: Well, President Obama did personally pledge federal money to Abengoa's Arizona plant five years ago. That plant did create lots of jobs there. It's too soon to tell what'll happen to the company's U.S. subsidiaries and employees. They could be spun off, sold off. Abengoa has four month to salvage its finances before bankruptcy kicks in. The company's debt, though, is likely in the billions, maybe even tens of billions. Just down the road from me here in Madrid, Abengoa's lawyers were up all night at the offices of KPMG, the auditor going through their books to figure this out. The biggest losses would likely be for Spanish banks. Already, Spanish banking stocks are down. Spain's banking sector, as you recall, got a bailout from Europe three years ago. This could destabilize Spanish banks just at the moment they're getting on firm footing again.
INSKEEP: Lauren Frayer is in Madrid. Lauren, thanks.
FRAYER: You're welcome.
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