April 1, 2014 / 8:26 AM / in 4 years

UPDATE 1-Banks considering alternative debt deal for Italy's Sorgenia

* Banks eyeing debt-to-equity swap - sources

* Sorgenia mulling measure in April to stay afloat

* Sorgenia agrees solar, wind asset sales - source (Recasts lead, adds detail)

By Stephen Jewkes

MILAN, April 1 (Reuters) - Creditor banks have still not reached a deal with Italy’s Sorgenia over debt restructuring and are mulling an alternative as the troubled energy group takes steps to stay in business, Sorgenia’s main owner CIR said on Tuesday.

In a statement CIR, controlled by Italy’s prominent De Benedetti family, said the drying up of credit lines had sapped its loss-making unit of funds, affecting the day-to-day running of its business.

Sorgenia previously said it had cash to last it to the end of March but CIR said on Tuesday it had taken actions involving its working capital to avert a crunch.

“For the current month of April the company is engaged in reducing the risk of situations of financial tension, partly through the completion of some extraordinary transactions,” it said. But completion of such deals was not certain, it added.

Once CIR’s pride and glory, loss-making Sorgenia ran up 1.8 billion euros 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 that proved expensive to run when the economic downturn hit demand and prices.

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

Sorgenia, which is seeking a freeze on debt payments, has said it will sell all its renewable energy assets as well as its exploration and production business in an attempt to reduce debt.

A source with the knowledge of the matter said the company has signed an agreement to sell five megawatts of solar assets for cash of just less than 20 million euros.

Talks are also underway to sell wind project permits in France, the source added.

A source said in February a debt-for-equity deal by the banks was one of the options on the table.

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 the company but has written off the value of the stake and said it was not ready to inject any more cash into the venture.

At 0714 GMT CIR shares were up 1.9 percent, outperforming a 0.2 percent rise in Milan’s all-shares index. (Editing by Sophie Walker)

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