Settlement months off, attorney says

Elektrim's negotiations to repay the disgruntled holders of €480 million worth of its defaulted bonds could take almost three to four months to complete and still lead the company into bankruptcy if the two parties fail to reach an agreement, an attorney representing a group of the bondholders said last week. A Warsaw court last Wednesday quashed a petition filed by the bondholders in early January, calling for Elektrim's bankruptcy, and ordered the distressed telecom and energy conglomerate to start a debt-restructuring process in an effort to reach a settlement with the bondholders. According to court procedures, Elektrim now has until Feb. 13 to submit a list of its creditors and the amounts they are owed. When the list is ready for the final debt restructuring proposal, or composition, the court will call a meeting for the firm's creditors. "In our justification of the verdict (on Wednesday), the court said if Elektrim does not satisfy or present an offer that satisfies creditors, the next step will be bankruptcy," said Paweł Ciećwierz, an attorney at local law firm Wardyński i Wspólnicy, which represents three quarters of the bondholders. The process could take up to three or four months as some creditors could dispute the amounts they are due while others could surface, he said. But he added that the period could be shortened somewhat since the judge overseeing the proceedings appeared to want to speed up the process. Yet, if the creditors reject the settlement offer when the meeting is held, the court may establish a second voting day within two weeks, Ciećwierz said. If a settlement is still not reached, the court would close the composition procedure and the following day the creditors would be able to file another bankruptcy petition in which Elektrim could not request a second court-supervised composition process. The bondholders filed the bankruptcy petition in response to Elektrim's request for court-brokered restructuring proceedings earlier this month when it proposed a 40% reduction of the amount owed to its creditors and a three-year grace period to pay them the remaining sum. Bondholders, however, said the proposal was unacceptable and wanted full repayment. Elektrim defaulted on the €480 million worth of bonds when they matured last December. At the court session last Wednesday, Elektrim's chief executive officer Waldemar Siwak said that Elektrim would have to sell some of its assets to pay bondholders, according to Reuters. The company estimates its assets at zł. 3.2 billion ($800 million) and debt at zł. 2.2 billion ($550 million). Siwak also stated that Elektrim wanted to give the bondholders a substantially better offer for repaying the debt, but offered no concrete details of the improved bid. Ewa Bojar, Elektrim's spokeswoman, would give no details about the firm's plan to propose an improved offer and had no further comments on the proceedings. Despite Elektrim's intention to offer a better repayment deal, bondholders are holding fast to their demand of "full and immediate payment," Ciećwierz said.