Abengoa S.A. Spain was looking to finance up to 17 separate commercial contracts between its subsidiary Abener Energia S.A. and Siemens Industrial Turbomachinery AB of Sweden (Siemens). The contracts would provide for the delivery and installation of 16 conventional steam turbines and one gas turbine to be used in concentrated solar thermal power sites being constructed by Abener Energia, S.A. in Spain, the US, Morocco, and Algeria. Following construction, Abengoa would be producing 750 MW of electricity in Spain, 530 MW in the US, and 150 MW in Algeria through the use of parabolic trough technology.

Financing this contract on a one-by-one basis would be administratively burdensome and costly.

Abengoa strategically desired to arrange the financing of the 17 Siemens contracts where it was likely that a conventional ECA financing (contract per contract) would have been too inefficient, time consuming and costly to implement. A committed framework agreement encapsulating the financing of turbines for 17 separate projects enables the use of ECA financing to meet this need, and provides the company with long-term financing at highly competitive levels. The framework agreement also provides commitments to a series of defined future contracts and could be easily amended to include new contracts.

This project needed to address the following key issues:

• Many projects where, individually, they are not of a size that would make efficient use of ECA financing.
• A series of contracts/potential contracts between Siemens and Abengoa for which Abengoa desired a financing commitment even though, for some projects, the commercial contracts were not yet signed.
• Potential deliveries stretching out until mid-2014, hence the requirement of an unusually long overall loan tenor.

The following objectives were therefore specified:

• Long-term financing: the framework expires in 2022.
• Competitive pricing: through AB Svensk Exportkredit’s (SEK’s) funding support, an attractive pricing was offered on a floating and, where applicable, fixed-rate basis.
• Limited administrative burden on the company (streamlined documentation).
• Financing commitment secured for even future, unsigned contracts.
• Improved cash flows: the reimbursement of payments already made to suppliers under existing contracts (in the period between 2008 and 2010) brought significant cashflow relief.

The solution was for Abengoa to enter into a long-term committed framework financing facility covering all the contracts. The framework agreement expires in 2022 and the financings benefit from comprehensive insurance cover provided by Exportkreditnämnden (EKN), the Swedish export credit agency.

Funding is being provided on a floating and potentially fixed-rate basis, with the involvement of SEK as a CIRR rate provider. Both interest rate options are offered at highly competitive levels, implying Abengoa’s access to long-term funding at advantageous pricing.

Citi and Deutsche Bank worked with Abengoa and the EKN to provide this highly attractive EUR-based financing. In line with Abengoa’s request, the €300m transaction was completed within a very tight timeframe. Linklaters were employed as legal counsel for the arrangers.

As Jesús García-Quílez Gomez concludes, “Abengoa believes this is a world-class export agency finance solution in partnership with EKN, SEK, Citi and Deutsche Bank, who provided a strong source of financing for our parabolic trough technology.”