UPDATE 1-France's FSI confident in Saur debt restructuring talks

Fri Jun 7, 2013 12:32pm EDT

* State holding company confident in Saur restructuring

* Banks offer to halve debt to 900 mln and take over Saur

* Three other bids on the table

By Matthieu Protard

PARIS, June 7 (Reuters) - French state holding company FSI said it was confident of a positive outcome to debt restructuring talks at Saur, the water and waste treatment company in which it is the leading shareholder.

Saur, burdened by 1.8 billion euros ($2.3 billion) of debt, is trying to negotiate a restructuring with its lenders and shareholders before June 30, after which the firm risks being put under a court-sanctioned reorganisation scheme.

"Important progress has been made in the past few days. We expect a positive outcome for these talks," FSI Chief Executive Jean-Yves Gilet told Reuters.

With 13,000 jobs at risk, court protection for Saur would be an embarrassment for President Francois Hollande, who has made the fight against unemployment a top priority.

"The ambition of the FSI is to preserve the future and the development of this company and, consequently, the jobs it provides," Gilet said.

Sources close to the talks say Saur's lenders are willing to cut the firm's debt to 900 million euros in exchange for full ownership of the firm.

Saur's main creditors are represented by a lenders' committee including BNP Paribas, Royal Bank of Scotland and Natixis.

Its debt stems from a 2007 leveraged buyout by waste treatment company Seche Environnement, French state bank Caisse des Depots and AXA Private Equity.

Following the creation of FSI in 2008 and a restructuring of the French state holdings in Saur, FSI now owns 38 percent of Saur's capital.

The other shareholders are Seche Environnement with 33 percent, Axa Private Equity with 17 percent and infrastructure fund Cube with 12 percent.

A rival of France's Veolia Environnement and Suez Environnement, Saur is facing pressure on its earnings due to the economic slowdown, which has hit the waste and environmental services sectors.

This has made it difficult to service its debt, a portion of which needs to be refinanced by 2014. Saur had 2012 revenue of 1.7 billion euros.

In April, Saur received four offers to restructure its debt, from the creditors' consortium, from shareholders Seche Environnement and Cube, and from entrepreneur Jacques Veyrat - offers which are still on the table.