Spain's Indebted Abengoa Cutting Stake

Indebted Spanish renewable energy and engineering firm Abengoa said on Thursday it was cutting its controlling stake in its U.S. unit and shedding some assets as it tries to improve its financial structure.

The company, which has been struggling with a heavy debt pile after its home market went through a deep economic downturn, recently came under scrutiny from investors over the way it accounts for some its borrowings.

Abengoa said it would sell up to 10.6 million shares in Abengoa Yield, its Nasdaq-listed U.S. and Latin American power generation arm, in which it has a 64 percent stake.

The share offering could cut that holding to just over 51 percent, Abengoa Yield said in a filing. Abengoa said in its own statement that it was not reducing its stake below that threshold.

In recent weeks, however, Abengoa's management had said it would look to sell down its Abengoa Yield holding to below half, as this would allow it to remove the debt from the U.S. subsidiary from its own balance sheet.

A spokeswoman for Abengoa said the company's strategy had not changed but that it had a specific timetable to stick to in terms of a sell-down. She did not detail the time frame.

Having a controlling stake allowed Abengoa to designate the majority of Abengoa Yield board members, though the Spanish company also said on Thursday it was reviewing the role of independent directors at the U.S. unit.

Investors were spooked when Abengoa said in its results presentation in November that debt issued by one of its other subsidiaries, Abengoa Greenfield, was classified as non-recourse, meaning it was not included in some debt calculations.

The Spanish firm had just over 9 billion euros ($11 billion) in total net debt at the end of September, including non-recourse debt.

Abengoa also said on Thursday it was also looking to create a joint venture for Abengoa Greenfield and bring in new partners who would help it invest in the building of assets.

Separately, Abengoa said it was also selling two of its own assets to Abengoa Yield, for up to $200 million.

Abengoa shares were up 3.7 percent in Madrid at 2.08 euros per share, while Abengoa Yield shares were falling 2.5 percent to $26.2 at around 1515 GMT.

Reporting by Jose Elias Rodriguez in Madrid and Robert Smith at IFR in London; Writing by Sarah White