LONDON (Reuters) – Lenders to Italian coffee machine maker Saeco International Group are considering a debt-for-equity offer proposed by private equity owner PAI Partners, two sources familiar with the situation said.
PAI has asked for the company’s 562 million euro ($723.3 million) debt to be halved in exchange for injecting more cash into the company, the sources said.
Lenders are yet to approve the request, which includes a call for a standstill agreement, under which creditors agree not to take action to cause a default.
PAI acquired a majority stake in Saeco in December 2003 backed by 405 million euros of debt. That loan was then refinanced in November 2006, with the company then loaded with debt totalling 562 million euros.
BNP Paribas (BNPP.PA) arranged the second loan, with the debt syndicated to a group of banks including Intesa Sanpaolo (ISP.MI), Interbanca, Rabobank RABON.UL and UBM, now a part of Unicredit (CRDI.MI).
Discussions are continuing between all concerned, said the two sources, and no deal is expected imminently.
Trade buyers, including Philips (PHG.AS), may be interested in investing in the company, one of the sources said.
PAI declined to comment.
By Tom Freke
(Additional reporting by Alasdair Reilly; Editing by David Holmes) ($1=.7770 Euro)