* Says creditor talks are constructive
* Shares fell 20 percent on default rumour
* Moody's downgraded on Tuesday
* Deadline for creditor talks June 16
(Recasts, adds closing price, market value, rivals)
By Julien Ponthus
PARIS, May 20 Debt-laden French multimedia firm
Thomson SA TMS.PA, which brings Technicolor to cinemas and
set-top boxes to households, on Wednesday called rumours of its
bankruptcy groundless after its shares dropped steeply.
It said talks with banks and bondholders owed some 2.9
billion euros were "going on and are constructive."
Traders said the shares, which closed down 15 percent after
plunging as much as 20 percent, were hit by rumours the company
was close to bankruptcy.
"It is without foundation, we are not bankrupt," said a
The group, which had a stock market capitalisation of 220
million euros at Wednesday's close, has been given a deadline of
June 16 by its main creditors to complete months-long talks over
To cut debt, Thomson has vowed to sell businesses that
contributed around 1 billion euros to 2008 sales, including
Grass Valley, advertising unit PRN and cinema advertising unit
Credit rating agency Moody's on Tuesday raised the
probability of Thomson defaulting following what Moody's said
was a failure to repay $92.5 million private placements due on
The company, which competes with the likes of Motorola
MOT.N, Siemens (SIEGn.DE) and Sony Corp (6758.T), warned in
January it was likely to breach debt covenants and said it was
in talks with creditors and potential equity investors regarding
its balance sheet, its debt and ways to prevent an acceleration
of its senior debt.
A trader said Thomson credit default swaps traded 5
percentage points wider at about 57 percent upfront, meaning
that the seller of protection is demanding a downpayment of 5.7
million euros to protect 10 million euros of the company's debt
The group has not given much details on its talks with
creditors, but chairnan and chief executive Frederic Rose has
said they covered several options, including the possibility for
creditor banks to exchange debt for equity.
The group's cash position at end-March 2009 stood at 586
million euros and its net financial debt as of March 31 was
2.357 billion euros.
It said on Wednesday it had asked France's financial
markets regulator AMF to probe the share fall which it blamed on
"inaccurate and misleading" information in some media.
(Reporting by Julien Ponthus, Blaise Robinson in Paris and
Natalie Harrison in London, editing by Marcel Michelson and