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.
LSB, which has syndicated bank loans amounting to some 462 million euros and total debt of more than 600 million euros, admitted that the refinancing process, essential to guarantee the group's normal activity, is now blocked.
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.
LSB began the debt refinancing process back in September 2012 because of "adverse market conditions" over the past two years. It was hit by oversupply, high raw material prices and poor margins, it said.
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.