Europcar shares slump as ailing rental firm launches debt talks

PARIS (Reuters) - Shares in Europcar EUCAR.PA tumbled 30% in early trading on Tuesday, after the car rental group, battered by the coronavirus pandemic as travel dwindles worldwide, said it aimed to try and restructure its debts.

Most companies exposed to the tourism sector and other industries hit the hardest by the crisis made it through the first few months of the pandemic, thanks in part to government aid, such as state-backed loans.

But some are now reaching a crunch point which is forcing them to address their debt piles. French steel pipe maker Vallourec VLLP.PA, which works with the energy and construction sectors, said earlier this week it would hold talks with all its banks and bondholders, while digital media company Technicolor TCH.PA said it had reached an initial agreement to trim its debt in June.

Loss-making Europcar said on Monday evening that it would ask creditors to allow it to appoint an ad hoc representative as part of the negotiations. Investment bank Rothschild and lawyers Darrois Villey Maillot Brochier, Gide Loyrette Nouel et Kirkland & Ellis are advising on the talks.

Europcar shares were down 30.5% at 0830 GMT.

Investment firm Eurazeo EURA.PA, its main shareholder with a 29.9% stake, had been exploring a sale of the company and had asked potential bidders to submit offers by September, sources close to the matter had told Reuters in July.

Germany's Volkswagen VOWG_p.DE had expressed interest in buying back the rental group it had previously sold off in 2006, but had yet to present a firm offer, the sources had said.

“The debt renegotiation announced yesterday evening is raising fears of a capital hike further down the line that would involve creditors taking equity,” said one analyst, who declined to be named.

Europcar said in its statement it was working on a transformation plan to offer customers more digitalised services, for example.

Reporting by Sarah White, Blandine Henault, Gwenaelle Barzic, editing by Louise Heavens