July 22, 2014 / 5:00 PM / 3 years ago

UPDATE 1-Sorgenia restructuring deal with banks very close

* UniCredit CEO sees no further problems for Sorgenia debt deal

* Sorgenia restructuring deal expected by Wednesday - sources

* Sorgenia CEO will be kept on after shake-up - source (Recasts lead, adds sources, details)

By Giancarlo Navach and Stephen Jewkes

MILAN, July 22 (Reuters) - Italy’s Sorgenia, controlled by holding company CIR and Austria’s Verbund, is close to reaching a deal that will restructure debt and hand control of the energy group to creditor banks, a lender and sources said on Tuesday.

Loss-making Sorgenia - 53 percent owned by CIR, which is in turn controlled by Italy’s De Benedetti family - invested heavily in gas-fired power plants that proved expensive to run when the economic downturn hit demand and prices.

It has run up 1.85 billion euros ($2.6 billion) of debt and is presently in talks with creditor banks to restructure its debt pile and agree a share issue of 400 million euros.

Sorgenia owes money to about 20 Italian and foreign banks including UniCredit, Banca Monte dei Paschi di Siena and Italy’s biggest retail lender Intesa Sanpaolo.

As part of the debt restructuring, the firm is seeking to extend a freeze obtained earlier this year on repayments.

“I don’t know if we have materially signed already but we are very close. I don’t expect any further problems on the debt standstill agreement,” UniCredit Chief Executive Federico Ghizzoni said on the sidelines of an event in Milan.

A source close to the matter said a debt standstill accord between Sorgenia and the lenders was imminent, as well as a broader framework deal between banks and Sorgenia shareholders.

“It’s a complex process because there are a lot of banks involved and a lot of paperwork. There should be a preliminary deal today or tomorrow,” the source said, adding a final agreement would take another month or so.

A second source with knowledge of the matter said a preliminary deal could be signed as early as Tuesday.

The sources declined to be named because the matter is confidential.

Complex restructuring talks are focusing on a conversion of debt into equity by the banks that would leave them with around 98 percent of Sorgenia, separate sources have said.

CIR and Verbund - which holds 46 percent of Sorgenia - have written off the entire value of their investments in the energy company, the No. 2 electricity supplier for Italian businesses, behind Enel.

Sorgenia, which had revenues of around 2.3 billion euros in 2013, is planning to sell assets to help shore up its balance sheet.

One of the sources said Sorgenia’s CEO Andrea Mangoni would be kept on to manage the company after the ownership shake-up.

$1 = 0.7426 Euros Additional reporting by Georgina Prodhan; Editing by Pravin Char

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