UPDATE 1-Oerlikon proposes 1 bln Sfr rights issue

* Oerlikon proposes capital cut to 5 pct

* Some debt cut, some converted to equity

* Plan gets backing of main shareholder Renova

* Shares fall some 6 percent

By Catherine Bosley

ZURICH, March 23 (BestGrowthStock) – Technology group Oerlikon
(OERL.VX: ) on Tuesday proposed a rights issue of about 1 billion
Swiss francs ($941.6 million) to help ease a large debt load,
sending its stock down some 6 percent.

It said the plan would cut the company’s capital to about 5
percent of current share capital. The news comes just one day
after Reuters reported that key parties had reached a deal.

“The Company has submitted to its lenders a recapitalization
plan to ensure long-term and sustainable financing,” it said.

Shares in Oerlikon were down 5.8 percent at 34.70 Swiss
francs at 1105 GMT, underperforming the Swiss Leader Index
(.SLI: ).

Oerlikon, in which Russian billionaire Viktor Vekselberg
holds a controlling stake, has been striving to reach a deal
with its lenders on how to repay debt it took on to buy car
parts and machinery maker Saurer in 2006.

It is due to pay the first tranche of 600 million francs by
the end of March. [ID:nLDE61903S]

According to the proposed plan, some debt would be cancelled
and some turned into equity, said Oerlikon, which makes products
ranging from the coatings used in Formula One racing cars to the
machines used to make solar cells.

It said the share issue would include subscription rights
for present shareholders, and that a committee of Vekselberg’s
holding group Renova as well as lending banks and non-bank
lenders had indicated support.

“We fully support the proposal that Oerlikon has made. We
think its a good deal for shareholders,” a spokesman for Renova

More than 20 banks and other institutions have been involved
in the negotiations. Some of the banks sold their debt on to
other players, including private equity groups and hedge funds,
which has made the talks more complex.

Investing Advice

($1=1.062 Swiss Franc)
(Editing by Rupert Winchester)

UPDATE 1-Oerlikon proposes 1 bln Sfr rights issue