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MILAN, June 30 Italy's CIR is close to
reaching an agreement with banks over debt restructuring at its
energy group Sorgenia that will see the holding company give up
control of the troubled unit, CIR's chairman said on Monday.
Loss-making Sorgenia, 53 percent owned by CIR which in turn
is controlled by the De Benedetti family, has run up around 1.9
billion euros of debt, 600 million euros of which must be
cleared to keep it afloat in the short term.
It is presently in talks with creditor banks to restructure
its debt pile in a deal that could see the lenders take control
of the energy company.
"Advanced talks are under way over reaching an agreement
between banks and Sorgenia shareholders," Rodolfo De Denedetti
said at a CIR shareholder meeting.
He said that after an initial agreement it would take
several more to wrap up the technicalities of the restructuring.
Sorgenia, 46 percent owned by Austrian utility Verbund
, invested heavily in gas-fired power plants that
proved expensive to run when the economic downturn hit demand
The company now owes money to 19 Italian and foreign banks
including bailed-out lender Banca Monte dei Paschi di Siena
and Italy's top two banks Intesa Sanpaolo and
Talks are concentrating on a conversion of debt into equity
by the lenders that would leave them with around 98 percent of
Sorgenia, sources have said.
The banks would subscribe to a 400-million euro capital
increase to service the conversion of debt into equity while
also underwriting a convertible bond of 200 million euros, the
"Initially we proposed alternative solutions but I want to
point out... the current solution being discussed guarantees the
company (Sorgenia) remains a going concern," De Benedetti said.
Both CIR and Verbund have written off the entire value of
their investments in Sorgenia.
Earlier on Monday CIR said its revenues in the first quarter
had fallen 13.8 percent due to a weaker performance at Sorgenia.
At 1110 GMT CIR shares were down 1.2 percent.
(Reporting by Giancarlo Navach, writing by Stephen Jewkes;
Editing by Sophie Walker)