Factbox-Corporate debt woes are on the rise

LONDON (Reuters) – From Britain to Sweden and France, debt-laden firms are starting to feel the strain from high inflation and interest rates.

Here’s a snapshot of some European companies whose financial woes are now in the spotlight.

1/ Thames Water

Significance: Britain’s biggest water supplier.

Size of debt: 14 billion pounds ($18.33 billion).

What’s at stake: The UK government is considering temporary state ownership if Thames Water cannot raise more funds to drive its turnaround.

Action taken: Since last year Thames Water has asked shareholders for an extra 1 billion pounds of investment on top of the 500 million pounds they provided in March, to strengthen its balance sheet and fund the necessary upgrade of ageing infrastructure. The firm said earlier in July shareholders would provide 750 million pounds, but warned it would need an extra 2.5 billion pounds between 2025-2030.

Deadlines to watch: By Oct.2, England and Wales’s largest water companies must provide the regulator with their business plans for 2025-2030.

2/ Casino

Significance: France’s sixth-biggest food retailer by market share; employs more than 50,000 people in France.

Size of debt: 6.4 billion euros ($7.19 billion) in net debt.

What’s at stake: Casino faces 3 billion euros of debt repayments in the next two years, with rating agencies Moody’s and Standard & Poor’s warning a default is likely. The holding company through which veteran entrepreneur Jean-Charles Naouri controls Casino is also heavily indebted.

Action taken: In May, Casino started court-backed talks with creditors; in June, it asked interested parties to table offers entailing at least 900 million euros of new money to fund a relaunch.

Czech billionaire Daniel Kretinsky is the frontrunner to take over Casino after rival bidders 3F Holding pulled out of the race. Kretinsky submitted a revised offer over the weekend proposing a 1.2 billion euro equity injection and the conversion of close to 5 billion euro debt into equity.

Deadlines to watch: Casino aims to secure an agreement with creditors by July 27.

3/ SBB

Significance: One of Sweden’s largest commercial landlords.

Size of debt: 81 billion Swedish crowns ($7.95 billion).

What’s at stake: SBB has been fighting for survival since its shares plunged in May on concern over its financial position and the refinancing of its debt pile. Its problems, together with worries about a weakening economy and rising interest rates have hurt Sweden’s crown.

The firm scrapped a planned rights issue after its credit rating was downgraded to junk in May.

Sweden meanwhile is investigating whether SBB broke accounting rules in its 2021 annual report.

Action taken: SBB is looking to find a buyer for all or parts of its business to improve its finances. It has sold almost all of its stake in property company Heba, and plans to sell the remaining 51% of its education subsidiary EduCo to Brookfield.

Deadlines to watch: SBB aims to reach an agreement for the EduCo stake sale by end July.

4/ Celsa

Significance: Spain’s largest private industrial company; employs 4,500 staff in Spain.

Size of debt: close to 3 billion euros.

What’s at stake: The 2020 COVID crisis affected Celsa’s business due to lock-downs and difficulty obtaining raw materials, leading to a 364 million euros loss. While performance has since improved, creditors argue the company is in default and its equity is worthless.

Action taken: Creditors in September submitted a restructuring plan under a new insolvency law that would see them cutting the debt by around 1.29 billion euros and taking control of the firm. But shareholders are contesting their valuation as they try to retain control of the group.

Deadlines to watch: Following a six-day court hearing in July, a Barcelona judge is expected to rule on the restructuring plan in September.

($1 = 0.7638 pounds)

($1 = 0.8895 euros)

($1 = 10.1947 Swedish crowns)

(Reporting by Chiara Elisei and Dhara Ranasinghe, editing by Christina Fincher)