Four banks and the Bank Asset Management Company (BAMC), which hold 80% of Cimos liabilities, opted for the move after concluding that none of the company's problems except capital adequacy would be resolved with a debt-to-equity conversion, BAMC officials said.

The original plan, confirmed by the shareholders on 30 April, involved the conversion of between EUR 112m and EUR 186m of debt to equity, which was seen as a key step in the company's financial restructuring.

But the creditors are convinced debt restructuring is better, since it will allow the company to retain customers and preserve jobs. They have already drawn up a plan in cooperation with all stakeholders, according to senior BAMC officials.

BAMC and other major creditors believe debt restructuring is more likely to stabilise the company and improve business processes, head of asset management at BAMC Janez Škrubej told the press.

Asked about the likelihood that the move will succeed, Škrubej said none of the stakeholders were interested in bankruptcy. It is also positive that this is the first major company in which debt restructuring was proposed by creditors, not the debtor.

Cimos's key customers do not oppose the decision and they promise to continue cooperation under the same conditions, he said. The management and the state as a key shareholder do not oppose the plan.

BAMC chief executive Christopher Gwilliam said the company had a portfolio of strategically important products but had been "abused" in the past with misguided business decisions.

The details of the restructuring plan have not been revealed, though Škrubej indicated it would not involve "aggressive restructuring" of liabilities to suppliers.

The Cimos management will be assisted in the restructuring procedure by Admetam, a German management consultancy.

Cimos has a workforce at group level of about 7,000. Long considered as one of the most successful Slovenian companies, Cimos ran up huge debts during the economic boom and had financial liabilities of just under EUR 400m at the end of last year.

The board of Cimos said the decision was "unexpected" as the debt-to-equity conversion had been agreed with the other stakeholders and the creditors received proof of the fulfilment of the conditions.

Debt restructuring is "more risky" that debt-to-equity conversion and constitutes "a demanding test for the creditors and a huge challenge for the company," the company said in a press release.

Under Slovenian bankruptcy law, debt restructuring involves creditors accepting losses on their claims in return for recovering a share of their liabilities over a designated period of time.

The Ministry of Finance meanwhile expressed the hope that the process will improve the company's capital adequacy and preserve jobs.