* Loss widens to 696 mln euros after accounting fraud
* Debt restructuring comes with high rates, tight covenants
* Some analysts see value in stock after 75 pct slide
* Swiss criminal investigation new worry for investors
By Geert De Clercq
AMSTERDAM, March 18 Dutch engineering services
group Royal Imtech said it would focus on debt
reduction as it recovers from an accounting fraud scandal that
hammered its share price last year.
The firm, once one of the star performers on the Amsterdam
bourse, said on Tuesday its losses widened and revenue fell in
2013 in the wake of the fraud that led to the departure of its
chief executive and chief financial officer.
It announced a debt restructuring that will force it to pay
high interest rates and adhere to strict covenants that could
give its creditors an equity stake in the company if it does not
meet an agreed debt reduction target.
The 150-year old firm - which put the first electric
lighting in Dutch buildings in the 19th century - said it had
agreed to cut debt by at least 650 million euros ($904 million)
by the end of June 2015. Its net debt stood at 745 million euros
at the end of last year.
Industry specialists say the restructuring is a humiliation
for Imtech, which in the decade after its 2001 stock market
listing more than doubled its turnover through dozens of
takeovers and became a leading European player in outsourced
building services like heating, cooling, ventilation and other
electrical and mechanical engineering contract work.
Imtech, which has a strong presence in the Benelux, Germany
and Scandinavia, competes with French Vinci unit
Cegelec, GDF unit Cofely, privately held Spie, German
engineering and services group Bilfinger and Finnish
building services and maintenance firm Caverion.
Analysts say the firm remains a force to be reckoned with in
the fragmented engineering services industry, but its financial
problems are set to damage its client relationships.
"The question is whether customers keep confidence in the
firm," Kepler Cheuvreux analyst Andre Mulder said, noting that
the firm's fourth-quarter order remained weak.
The firm's 2013 net loss widened to 696 million euros from
241 million euros in 2012 as revenue fell to 4.9 billion euros
from 5.3 billion in 2012. Its order intake stood at 4.7 billion
at the end of 2013, down from 6.5 billion a year before
Mulder said, however, its stock might present a buying
"Things are going in the right direction, despite the
losses, maybe now is the time to buy," he said. He added he saw
a potential upside of 10 percent, but was less optimistic than
four to five months ago, when he saw an upside of 30 percent.
Since Imtech warned of irregularities at its Polish theme
park and green power projects in Feb. 2013, its stock has fallen
75 percent and now trades below 2004 levels.
The firm was forced to make an emergency 500 million euro
rights issue in July after taking write-downs of 370 million
euros, and has announced 2,250 redundancies.
At the end of last month, it faced more bad publicity when
its Swiss unit's chief resigned over an ethics issue.
Imtech said on Tuesday that its initial findings confirmed
that there was a "non-business like relationship" between former
management of Fritz & Macziol Schweiz and certain civil
servants, which was reflected in "excessive entertainment,
overly informal contacts and questionable business behaviour".
"The potential financial exposure of this affair is
difficult to assess, but judged to be limited," t said.
A Swiss criminal investigation into the case is ongoing.
The debt restructuring announced on Tuesday gives the firm
access to 1.3 billion euros of committed credit facilities and
843 million euros of committed guarantee facilities.
If it fails to reach its June 2015 debt reduction target,
fees of 25 million euros will accrue at the end of June and
September 2015 and twice a year thereafter.
It would also be required to issue warrants to its
financiers for up to 10 percent of capital.
"We do not recommend buying the stock; we have not seen the
end of the company's troubles yet," said ESN/SNS Securities
analyst Edwin De Jong.
($1 = 0.7188 euros)
(Editing by Pravin Char)