Creditors readying debt proposal for CIR unit: source

MILAN Fri Apr 4, 2014 2:04pm EDT

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MILAN (Reuters) - Creditor banks are close to agreeing a debt restructuring proposal for Italy's Sorgenia which if accepted would mean holding company CIR (CIRX.MI) would no longer own the loss-making energy unit, a source close to the matter said on Friday.

The troubled Sorgenia has ran up 1.9 billion euros of debt - 600 million euros of which must be cleared to keep it afloat in the short term - by investing heavily in gas-fired power plants that proved expensive to run when the economic downturn hit demand and prices.

Under the plan, banks would convert 400 million euros worth of debt into equity while another 200 million euros would be transformed into a mandatory convertible bond, the source said.

All but one Sorgenia creditors have signed the proposal, according to the source. Once all have signed it, the proposal will then have to be submitted for review to CIR, the holding company controlled by Italy's prominent De Benedetti family.

Banks had no official comment and CIR declined to comment.

On Tuesday, CIR said creditor banks had still not reached a deal with Sorgenia over debt restructuring.

Sorgenia owes money to about 20 Italian and foreign banks. Its main creditor is bailed-out lender Banca Monte dei Paschi di Siena (BMPS.MI). Other creditors include Intesa Sanpaolo (ISP.MI), UniCredit (CRDI.MI) and Mediobanca (MDBI.MI).

CIR, which also controls publisher L'Espresso (ESPI.MI), is prepared to inject 100 million euros of fresh capital into the unit but the banks want more, sources have told Reuters.

Austrian utility Verbund (VERB.VI) holds 46 percent of the company but has written off the value of the stake and said it was not ready to inject any more cash into the venture.

($1 = 0.7303 Euros)

(Reporting by Giancarlo Navach, writing by Danilo Masoni, editing by Paola Arosio and Elaine Hardcastle)

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