Thomson SA wins time to seal debt-for-equity deal

* Creditors extend waivers to July 24

* Made restructuring proposal to creditors

* Proposal involves debt-for-equity swap

* Existing holders could take part in recapitalisation

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By Domininique Vidalon PARIS, June 15 (Reuters) - French media technology company Thomson SA (TMS.PA) has won time to seal a debt-for-equity restructuring, and now has waivers until July 24 from creditors owed 2.9 billion euros ($4.0 billion).

Thomson SA, which had until June 16 to reach an agreement or face the risk of bankruptcy, said on Monday its main creditors, were considering a restructuring proposal it had made.

"The proposal contemplates a significant reduction of the group's debt through a conversion of debt into equity, as well as the ability for existing shareholders to participate in the recapitalisation of the company," it said in a statement.

The group did not disclose the terms of the proposal made to private placement noteholders and lenders under a syndicated credit facility.

Thomson SA breached debt covenants and has been in talks since February with its main creditors to restructure a balance sheet, which showed negative shareholder equity of 134 million euros at end-2008.

The supplier of set-top boxes, DVDs and video and telecom equipment, holds a shareholder meeting on June 16 from 1400 GMT, at which it was expected to give and update on its debt talks.

Thomson SA, which competes with Motorola (MOT.N), Siemens (SIEGn.DE) and Sony Corp (6758.T), has been hit by a weak operating performance and from loss-making activities.

Thomson SA shares closed up 1.4 percent at 0.80 euro, giving it a market capitalisation of 212 million euros. Its shares have fallen around 18 percent this year, having plunged 90 percent in value in 2008.

To cut debt, Thomson SA has vowed to sell businesses that contributed around one billion euros to 2008 sales, including Grass Valley, advertising unit PRN, and cinema advertising unit Screenvision.

A debt-for-equity swap had been widely expected with analysts saying it was likely to be very dilutive to existing shareholders.