Troubled Spanish PET packaging group La Seda de Barcelona, struggling since last autumn to achieve a debt restructuring agreement with its creditors, has finally thrown in the towel.
After several abortive attempts to reach a refinancing deal, satisfactory both to its lenders and shareholders, the company has ran out of time. Now, directors have taken the remaining option allowing LSB to continue in business and have filed for voluntary insolvency.
The Catalan group was forced into the decision when it failed to secure approval from the lenders of 75% of its syndicated loan for a refinancing plan proposed by the syndicate steering committee in April. LSB managed to win consent from those lending a majority of the sum, but fell short of the required proportion by the deadline, it revealed.
In a statement, Barcelona-based LSB said it regretted failing to reach a deal to satisfy both shareholders and its main lenders, "despite the enormous work and effort deployed by the board of directors."
It said voluntary insolvency should "grant viability to the group" and is the best possible alternative to protect the rights of all its lenders.
Taking the voluntary insolvency route affords the group some shelter from its creditors and allows it another chance of negotiating a new deal with them.