M&A

30 November, 2009

UPDATE 2-France's Thomson SA to restructure debt by Feb

* Shareholder EGMs planned on Dec. 14 and Jan. 27

* Lenders committee to vote Dec. 21, bondholders Dec. 22

* 'Safeguard' proceeding to end in February

* Shares suspended on Monday, to resume trading Tuesday (Rewrites with statement from company)

By James Regan and Dominique Vidalon

PARIS, Nov 30 (Reuters) - French media technology group Thomson SA (TMS.PA) has obtained a "safeguard" proceeding to protect it from creditors in the hope of restructuring its debt by February, it said on Monday.

Thomson, a supplier of set-top boxes, DVDs and video and telecommunications equipment, said it plans to ask creditors to vote on a restructuring plan on Dec. 21 and Dec. 22, while it will hold a general meeting for shareholders on Jan. 27.

"After 10 months of constructive discussions with a majority of our creditors, I am satisfied that we have now a clear timetable for closing our debt restructuring," Chief Executive Frederic Rose said in a statement.

"This allows us to provide clarity and certainty to our employees, customers, suppliers and shareholders."

The company has breached its debt covenants and has been in talks since February with creditors to restructure a balance sheet that had negative shareholder equity of 134 million euros ($201.5 million) at the end of 2008.

Thomson, which competes with Motorola (MOT.N), Siemens (SIEGn.DE) and Sony Corp (6758.T), has been hit by a weak operating performance and loss-making activities that have burnt through its cash pile.

Thomson said on Monday it has enough liquidity and will continue to operate under normal conditions during the period of "safeguard," a French equivalent of Chapter 11 creditor protection.

The restructuring plan will be based on terms agreed by a majority of its senior creditors on July 24, Thomson said.

Then, the company said it had reached a debt-for-equity restructuring deal to slash 45 percent of its 2.9 billion euros of debt, with 1.289 billion euros of senior debt to be converted into newly issued shares. [ID:nL0331877]

To cut debt, Thomson SA has vowed to sell businesses that contributed around 1 billion euros to its 2008 sales, including broadcast and TV/film equipment maker Grass Valley, advertising unit PRN and cinema advertising unit Screenvision.

Shares of Thomson SA were suspended on Monday at the request of stock market watchdog AMF and the company, pending the announcement. The shares closed at 1.06 euros on Friday, giving Thomson a market capitalisation of 135 million euros. Trading is set to resume on Tuesday, stock market operator Euronext said. ($1=.6650 Euro) (Editing by David Cowell and Steve Orlofsky) ((dominique.vidalon.reuters.com; +33 1 49495432; Reuters Messaging:dominique.vidalon.reuters.com@reuters.net))

Source: http://www.reuters.com