Italy's Seat shares jump with debt deal in sight

Italy's Seat shares jump with debt deal in sight

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MILAN (Global Markets) - Shares in Italy's Seat Pagine Gialle (PGIT.MI) leapt about 18 percent on Friday as support secured for a restructuring of its 2.7 billion euro ($3.6 billion) debt pile raised hopes the yellow pages firm will avoid bankruptcy protection.

Turin-based Seat said it had won support for its debt restructuring proposal from committees representing 30 percent of its senior bondholders and more than 50 percent of its junior bondholders.

Seat's private equity shareholders, including CVC, also endorsed the deal.

"It's good news. If we understand well there are only a few technical points to be solved and then a positive conclusion to this never-ending saga will be achieved," Mediobanca analyst Marco Greco said in a note.

But he added that "as the devil is in the details, it is too early to assume that the bankruptcy risk is totally over."

By 0916 GMT, the stock was up 18.6 percent at 0.0492 euros in volatile trade. Its market value has fallen about 99 percent from its peak in 2007.

Seat has defaulted twice on its debt obligations in the last few months and postponed several times the deadline to reach a final agreement. The latest deadline is March 7.

A majority of at least 75 percent is needed from each of its three creditor categories - bank lenders, senior and junior bondholders - for the proposal to go through, Seat has said.

"On paper it looks like an agreement is within reach. The only hurdle to solve is (full approval from) bank lenders," a source familiar with the situation said.

Seat has about 70 Italian and foreign bank lenders, including Britain's Royal Bank of Scotland (RBS.L).

The deal foresees the conversion of a 1.2 billion euro portion of junior debt into equity.

A failure to reach agreement on restructuring would see Seat fall into special administration under Italy's so-called Marzano law which gives protection from creditors.

Seat was bought in 2003 by private equity firms in a 5.7-billion euro leveraged buyout. CVC, Permira and Investitori Associati now hold about 49.5 percent of Seat.

($1 = 0.7501 euros)

(Reporting by Danilo Masoni; Editing by Mark Potter)