SPANISH POWER COMPANY FECSA MAY SUSPEND PAYMENTS
Spain's financially troubled power
company <Fuerzas Electricas de Cataluna S.A.> (FECSA) may
suspend payments if it fails to reach agreement with creditors
on renegotiating its 594 billion peseta debt, a company
official said.
    "We would only take this step in the event of a lack of
co-operation on the part of our creditors," FECSA assistant
general manager Jose Zaforteza told Reuters in a telephone
interview. "It is unlikely they will refuse to renegotiate."
    He said creditors would obtain a better deal by negotiating
than under a suspension of payments.
    FECSA is scheduled to begin formal talks with its creditors
on April 6, and foreign banks holding some 184 billion pesetas
of debt said they were angered over what they called a lack of
information on the company's situation.
    The spokesman for one U.S. Bank creditor said in reply to
inquiries "It has been two months since we first detected signs
of serious trouble at FECSA, and we still have no idea of how
the company plans to restructure its finances."
    The spokesman said no foreign bankers had been notified
when FECSA yesterday, in an action unrelated to a possible
total payments suspension, suspended payment on its debt
principal.
    FECSA's Zaforteza said, however, that telexes had been sent
to creditors notifying them of the move, which he said was
unavoidable.
    He said the decision did not affect payment of interest on
loans and debentures. FECSA faces repayment of 60 billion
pesetas in interest and 30 billion on principal this year.
    The U.S. Bank spokesman said foreign banks "were now more in
the dark" than ever.
    FECSA called for renegotiating its debt when the Madrid
stock exchange on February 6 suspended trading in its shares, a
move which officials said was meant to protect shareholders.
    Zaforteza said the company will ask its creditors to switch
old debt to new loans at lower interest rates, postpone
interest payments and possibly convert some debt into shares.
    Foreign bankers said they assumed the government was
involved in the control and management of the electricity
sector.
    They added that lending policy toward the industry could be
affected if the banks lost money in FECSA.
    Foreign banking sources said they considered likely a fresh
postponement of a 10 billion peseta Chase Manhattan Bank
<CMB.N> led syndicated loan to power company <Hidrolectrica de
Cataluna S.A.> (Hidruna).
    The facility was scheduled to be signed in mid-February but
was postponed when the bourse suspended FECSA's shares.
    "We planned to sign this month but that looks unlikely under
the present circumstances," a foreign banker said.
 REUTER
