Elektrim pushes back telecom sale

Elektrim will likely reschedule the deadline to mid-December for its exclusive negotiations with BRE Bank and Eastbridge for the sale of its 49% of telecom unit Elektrim Telekomunikacja (ET) and other holdings, analysts said. The agreement between the distressed telecom and power holding company, Poland's BRE Bank and Dutch retail and investment group Eastbridge expires on Monday, but the parties this week will likely agree to a Dec. 15 deadline, the date on which cash-depleted Elektrim would owe holders of its defaulted bonds a second €100 million repayment, analysts said. Elektrim defaulted on €480 million bonds last December. The defaulted bonds are secured against the firm's 49% stake of ET, which controls Poland's biggest mobile operator Polska Telefonia Cyfrowa (PTC). Along with its 49% stake of ET, the sale package includes Elektrim's 49% of Fiat car dealer Carcom, which controls 1% of PTC, and one additional share of PTC. The bondholders, who hold the bulk of Elektrim's debt, made an initial agreement with Elektrim in early June to accept a repayment plan proposed by company officials. Elektrim had said it expected to have a final agreement by mid-July. BRE previously said it would buy €100 million of Elektrim's restructured bonds when the firm reached an agreement with bondholders. Elektrim would use the money for its first repayment to bondholders.

Elektrim can only sell its stake in ET to raise cash to repay its bondholders since BRE Bank, which owns about 20% of the firm, has said it wants to retain its power assets. Elektrim's 49% of ET is estimated to be worth about €350 million. "What (Elektrim) wants to do is have the bondholders off its back and offer (them) generous restructuring terms and come back to the negotiations (with BRE and Eastbridge)," said Dariusz Górski, an analyst at ING Barings in Warsaw. "Otherwise anyone can pull the trigger and declare the company bankrupt." The bondholders, who had threatened to drive Elektrim into bankruptcy, initiated legal proceedings against the firm earlier this year, although the resulting court-ordered restructuring talks failed. But because some creditors have appealed the matter to a regional court, Elektrim would not be able to make a legally valid repayment agreement with only a select group of its creditors until the higher court issues a decision, according to someone with knowledge of the situation. Neither Marian Dąbrowski, the vice president of ET, nor Alicja Kos, BRE's spokeswoman, was available for comment. Another analyst said that a new deadline for the exclusive negotiations would be needed since BRE and Eastbridge could have trouble raising money for a telecom purchase in the current unfavorable environment for telecom investments.