UPDATE 1-Italy's Sorgenia asks banks for debt repayment freeze

Wed Dec 18, 2013 1:10pm EST

* Asks for debt stand-still to July 1, 2014

* Calls on banks to start debt restructuring talks

* To sell all renewable assets, focus on power generation

* To cut operating costs by 20 pct from 2014 (Recasts lead, adds detail, background)

By Stephen Jewkes

MILAN, Dec 18 (Reuters) - Italian energy company Sorgenia, controlled by holding company CIR, has asked for a six-month freeze on its debt repayments as it seeks to address a lack of growth and high indebtedness.

Sorgenia, 46 percent owned by Austrian utility Verbund , said on Wednesday it had presented a new business plan to its creditor banks, asking them to start a debt restructuring process.

The loss-making company, which has debt of almost 1.8 billion euros, generates electricity and sells power and gas.

It has invested heavily in gas-fired power plants, even as the economic downturn deterred rivals, and falling power demand from industry has undermined margins.

Sorgenia, led by new CEO and chairman Andrea Mangoni, said the new 2014-2020 plan would focus on its core power generation business, adding it would sell all its renewable energy assets as well as its exploration and production business.

"Given the continuing difficulties of the sector which are likely to continue in the next three years, Sorgenia does not expect to recover operating profitability in the short or medium term," it said.

The company expects core earnings of around 110-120 million euros per year in the three years 2014-2016. In the first nine months of 2013, hefty writedowns on generating assets led to an operating loss of 196 million euros.

It said it will cut operating costs by 20 percent from 2014.

Sorgenia owes money to around 20 Italian and foreign banks. Its main creditor is troubled Banca Monte dei Paschi di Siena . Other creditor banks include Intesa Sanpaolo , UniCredit and Mediobanca.

A source with knowledge of the matter recently told Reuters around 850 million euros of debt maturing in the next two years would be the subject of refinancing talks with the banks. (Editing by Isla Binnie and Mark Potter)

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