PARIS: French water and waste treatment company Saur's creditor banks could join up with one of three potential bidders to try to reduce its 1.8 billion euro ($2.36 billion) debt, sources close to the talks said.
Saur a rival of France's Veolia Environnement and Suez Environnement is facing pressure on its earnings due to the economic slowdown, which has hit the waste and environmental services sectors.
This has made it difficult to deal with its high debt burden, a portion of which needs to be refinanced by 2014.
Saur said last month that it had received three offers to refinance its debt, which stems from a 2007 leveraged buyout by waste treatment company Seche Environnement, French state bank Caisse des Depots and AXA Private Equity.
The company has until the end of June to reach an agreement with shareholders and creditors to refinance.
Aside from the offer from a consortium of lending banks, the three other bids to restructure the group and assume control came from Seche, a Natixis-led investment fund called Cube and a holding company set up by the former head of commodities firm Louis Dreyfus.
The offer from the banks including BNP Paribas and Royal Bank of Scotland on its own would leave the company with too much debt, according to some sources close to the matter, and has run into opposition from French sovereign wealth fund FSI, which took over the CDC's stake and is now Saur's top shareholder.
None of the other three offers have been able to win approval from the banks, from the FSI or from Saur's other major stakeholder, AXA Private Equity, sources said.
"The banks can block any solution other than theirs," said a participant in the talks. "They are masters of the game."
Saur, bank consortium representatives and the FSI all declined comment on the tie-up scenario.
Saur's debt is equivalent to 10 times its earnings before interest, taxes, depreciation and amortisation (EBITDA), compared with roughly 4 times for its larger competitors Veolia Environnement and Suez Environnement.
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