Amara Stakeholders Near Agreement on Debt Restructuring Proposal; Bondholders to Contribute to New Money, Receive Equity in Return for Circa 70% Haircut

Amara NZero, sponsor Cinven and a steering committee of bondholders are nearing an agreement on the key terms of a debt restructuring, sources told Octus. The deal is expected to feature a roughly €40 million new-money injection and a debt-for-equity swap, with some 70% of the €265 million outstanding 10.25% bonds due July 2028 to be exchanged into a stake of the Spanish B2B energy transition solutions provider’s equity, the sources said.

The new money would be provided by both Cinven and the bondholders, roughly with a 50:50 split, and would be open to all investors for contribution on a pro-rata basis, the sources added.

As reported, some of the bonds not being written off could be reinstated at Holdco level. This would enable the company to achieve significant deleveraging at the operating level as the debt reinstated at the Holdco level would have no further direct claim on the operating assets of the business, while preserving the noteholders’ recovery prospects. Under the upcoming deal, the bank debt is expected to remain whole and be extended as the group needs the lines to continue operating.

Amara NZero’s €270 million 10.25% bonds due July 2028 are indicated in the low teens, according to Solve. Some small blocks have recently traded despite an increasing number of bondholders going restricted, according to sources.

On Jan. 5, Amara NZero announced that it agreed key principles with its Spanish bilateral working capital banks and principal shareholder for a comprehensive recapitalization of the group and reduction in the group’s debt, aimed at stabilizing and strengthening its financial position and supporting its long-term sustainable growth following near-term sector-wide headwinds. While the terms of the deal were still being worked out, the banks agreed to ensure full availability of existing working capital facilities, and the majority of the noteholders agreed to equivalent standstill arrangements. Amara NZero did not make its roughly €13.5 million scheduled coupon payment to noteholders on Jan. 15, 2026.

After the company submitted an initial proposal, the SteerCo drafted a counter proposal. The parties aim to implement the deal on a consensual, out-of-court basis, the sources said.

Following the January announcement, S&P lowered its ratings on the senior secured notes to CCC- from CCC+ and placed the ratings on CreditWatch with negative implications. The agency said it continues “to see Amara as a going concern and remaining current on its obligations to trade creditors on sufficient liquidity, with continued support from its working capital banks that ensure the facilities’ availability during the ongoing negotiations, alongside equivalent standstill arrangements with its majority noteholders.” Subsequently, it withdrew the ratings at the issuer’s request.

On Jan. 21, Fitch Ratings downgraded the issuer rating to C, from CCC- and the senior secured debt rating to C from CC and withdrew both ratings for commercial reasons. Fitch had previously downgraded the notes in December to CC from CCC+, citing heightened liquidity concerns in the short term, stemming from continued expected negative free cash flow, which will require further debt to be raised; unsustainable leverage of over 15x; and a low EBITDA interest coverage of about 0.5x in 2025 and 2026. It said at the time that it does not expect the group’s key metrics to improve sufficiently, even if market conditions improve, which affects its ability to refinance without restructuring.

Background

In December, bondholders formed a SteerCo representing more than 60% of the bonds at the time. The SteerCo members include Arini, DWS, Nordea, Schroders, Systems 2 and Triton. As reported, bondholders are working with PJT Partners and Milbank as financial and legal advisors, respectively, while the company is advised by Houlihan Lokey, Cuatrecasas and Kirkland & Ellis.

Amara NZero posted a mixed set of third-quarter results, with revenue showing some good growth, which did not translate into an increase in EBITDA. It generated €169.5 million in revenue in the quarter ended Sept. 30, up 18% year over year, driven by strong growth in all the business segments apart from smart grid, which experienced a 12% drop due to a temporary shift in demand from solar electrification to broader network maintenance projects. On a year-to-date basis, revenue stood at €480.8 million, up 8% year over year.

On the flipside, adjusted third-quarter EBITDA amounted to €7.7 million, down 8% year over year and down on the €10.2 million generated in the second quarter, interrupting the growth trend that the company had been seeing since the fourth quarter of 2024. Summer is traditionally a period of weaker performance. On a year-to-date basis, adjusted EBITDA totaled €25.1 million, 8% below the same period a year earlier, reflecting a lag effect from the high module prices in the first half of last year.

On the third-quarter earnings call, management acknowledged that the revenue increase has not translated into an EBITDA increase yet, noting that a large part of the revenue increase comes from the solar division, which is a lower-margin business, as well as from new contracts in the services segment in Brazil, which also had low margins as often happens with new contracts, sources earlier said.

LTM pro forma EBITDA totaled €35.4 million, which includes adjustments reflecting discontinued businesses and savings from the existing program and new initiatives. Management noted that spillovers from the discounted businesses may still affect the fourth quarter but should fade away next year. Operating cash flow at the end of September was €2.7 million, while free cash flow was negative €43.1 million.

The company closed the quarter with about €105 million liquidity, consisting of €20.7 million cash, €37 million undrawn under the RCF, €35 million available under an €80 million global nonrecourse factoring facility and €12 million of other lines with local banks. Amara NZero also said in its financial statement that it signed other options to fund future investments through loan agreements with Spanish banks. However, the company has no plans for future investments for the time being.

As of end of third quarter last year, Amara NZero was 9.4x levered, up from 8.7x in the prior quarter, based on about €334 million of net debt and €35.4 million of pro forma LTM EBITDA, as reported.