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Italy's CIR has yet to agree to debt deal for Sorgenia-UniCredit
April 5, 2014 / 2:16 PM / in 4 years

Italy's CIR has yet to agree to debt deal for Sorgenia-UniCredit

CERNOBBIO, Italy, April 5 (Reuters) - Italian holding company CIR has yet to agree to hand control of its Sorgenia unit to bank creditors in a bid to save the debt-laden firm, the chief executive of lender UniCredit said on Saturday.

Sorgenia has run up 1.9 billion euros ($2.6 billion) 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, which proved expensive to run when the economic downturn hit demand and prices.

Sorgenia owes money to about 20 Italian and foreign banks. Its main creditor is bailed-out Italian lender Banca Monte dei Paschi di Siena. Others include Intesa Sanpaolo , UniCredit and Mediobanca.

A source close to the matter told Reuters on Friday creditor banks were close to agreeing to a debt restructuring proposal under which they would take over Sorgenia by converting 400 million euros worth of debt into equity.

Another 200 million euros would be refinanced through a mandatory convertible bond the banks would buy.

UniCredit CEO Federico Ghizzoni said a solution was yet to be found.

“On Sorgenia, the banks’ stance is clear and it entails converting part of the debt into equity,” the banker told reporters on the sidelines of a business conference.

“CIR’s position on the matter however is not clear, talks continue but it is going to require some time,” he said.

CIR, which also controls publisher L‘Espresso, 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 holds 46 percent of Sorgenia but has written off the value of the stake and said it was not ready to invest any more cash into the venture. ($1 = 0.7303 Euros) (Reporting by Valentina Za; Editing by David Holmes)

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