Elektrim defaults on debt repayment, future uncertain

Elektrim moved back to the edge of bankruptcy on Monday when it pulled out of a life-saving debt restructuring deal due to fear it could not make payments on time. In July, the company had struck a deal with creditors to restructure euro 480 million in defaulted bonds. The deal, brokered with the help of BRE Bank envisaged Elektrim paying back euro 100 million of the debt in September, another euro 100 million in December and the rest later. "In the light of present market conditions we cannot in good faith carry out the previously agreed conditions of debt restructuring because of the difficulties in selling our key assets," the company said in a statement. Elektrim, whose shares plunged 12.6% on Monday, had planned to issue new bonds, and BRE Bank was to have bought euro 100 million of the new bonds from the creditors, securing them with Elektrim's 49% stake in Elektrim Telekomunikacja (ET), a joint venture with France's Vivendi that controls Eastern Europe's largest mobile operator PTC. But last month Elektrim, whose market cap sank to $50 million from a peak of $1.5 billion during Europe's telecoms boom two years ago, said it failed to reach a deal with BRE on the sale of its ET stake. A source close to the bondholders told Reuters: "We are shocked by this decision." Elektrim was also considered selling its stake in power group PAK and cable television operator Aster City but a market slump cut valuations of its assets. "If a company backs out from final agreements and it is not able to reach a deal with bondholders, then it means we will soon see a new bankruptcy motion. Shares may fall steeply tomorrow," said Magdalena Lapsa, an analyst with SG Securities in Warsaw. (Reuters)