UPDATE 1-Thomson SA seals debt-for-equity deal with creditors

* Signs debt restructuring deal with majority of creditors

* Deal to cut gross senior debt by 45 pct to 1.55 bln euros

* Debt conversion deal includes 350 mln euro rights issue

* Preliminary H1 EBIT 51 million euros

(Adds details from statement)

PARIS, July 24 (Reuters) - French media technology company Thomson SA
TMS.PA said on Friday it had reached a debt-for equity restructuring deal with
a majority of its senior creditors, which will slash its gross debt by 45
percent.

Last month, the supplier of set-top boxes, DVDs and video and telecom
equipment made a balance sheet restructuring proposal to creditors owed 2.9
billion euros ($4.12 billion). It had until July 24 to seal a deal crucial to
its survival.[ID:nLR123488]

Under the deal announced on Friday, 1.289 billion euros of senior debt will
be converted

* Into newly issues shares through a 350 million euros rights issue.

* Into notes redeemable into shares (ORA) for 639 milion euros.

* Into disposal proceeds notes (DPN) for 300 million euros.

Existing Thomson shareholders will be able to participate in the 350 milion
rights issue, the statement said.

Existing shareholders can retain up to 52 percent of the capital but no
less than 15 percent of the company's share capital, depending on the rights
issue takeup and ORA subscriptions.

Thomson breached debt covenants and has been in talks since February with
creditors to restructure a balance sheet which had negative shareholder equity
of 134 million euros at end-2008.

Thomson, which competes with Motorola MOT.N, Siemens (SIEGn.DE) and Sony
Corp (6758.T), has been hit by a weak operating performance and loss-making
activities that have burnt through its cash pile.

The group's key clients range from film studios, software and games
producers such as Microsoft (MSFT.O) and Electronic Arts ERTS.O, to European
and American broadcasters, satellite operators and telcos such as France Telecom
(FTE.PA).

To cut debt, Thomson SA has vowed to sell businesses that contributed around
1 billion euros to its 2008 sales, including broadcast and TV/film equipment
maker Grass Valley, advertising unit PRN, and cinema advertising unit
Screenvision.

Thomson shares closed up 5.6 percent at 0.71 euros on Friday, giving it a
market capitalisation of 182 million euros.

The shares have lost 30 percent this year after slumping 90 percent last
year.