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MILAN, June 30 (Reuters) - 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 and prices.
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 UniCredit.
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 sources said.
“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