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Merkur Creditors Back Repayment Plan, Group Reports First Profit

Naklo/Ljubljana, 15 July (STA) - The light at the end of the tunnel is shining ever brighter for Merkur, as the creditors of the insolvent technical goods trader have accepted its debt restructuring plan. Merkur also reported on Friday its first monthly profit since its ran into trouble.

The proposed debt restructuring plan at Slovenia's top hardware retailer and wholesaler has been confirmed by 95% of creditors, well above the 60% threshold required, according to documents published by Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES) on Friday.

The vote was the last step in a process launched in the autumn of last year by the management of the technical goods trader in a bid to stave of receivership.

As part of the four-year court-supervised plan for reducing its debt, Merkur has pledged to repay creditors 62% of their claims.

Creditors have been given the choice between converting their claims into ownership stakes at a rate of EUR 57.5 per share or agreeing to a 60% repayment of the claim in five annual instalments running through 2015.

According to documents from AJPES, the offer for converting claims into ownership stakes - which Merkur shareholders confirmed in February - has been accepted by a sufficient number of creditors.

A total of 325 creditors owed EUR 97.6m took up the offer, the document shows, which is EUR 12.6m more than needed for the offer to succeed.

As part of the debt-to-shares deal, the creditors will now become majority owners of the Naklo-based technical goods trader.

To complete debt restructuring Merkur must now repay the remaining EUR 231m in debt to creditors holding regular claims by 2015.

As part of efforts to repay the debt, Merkur has put in place a streamlining plan and launched a divestment programme, which are also bearing results.

In May the group registered its first profitable month since it found itself collapsing under the weight of mounting debts stemming from a failed management buyout 18 months ago.

Hailing the news that creditors had accepted debt restructuring, the group said in a press release on Friday that "efforts to make the company successful again were beginning to bear fruit".

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