COPENHAGEN | Thu Jul 19, 2012 5:06am EDT
COPENHAGEN (Reuters) - Shares in troubled Danish shipping firm Torm (TORM.CO) surged more than 60 percent on Thursday after a newspaper said the company is close to reaching a deal with banks on its $1.9 billion of debt.
Torm, a dry-bulk and tanker operator which has been in talks with 14 banks for months, said negotiations continued.
It is one of a several shipping companies fighting for survival in a sector slump now in its fourth year, caused by a weak global economy, oversupply of vessels and freight rates at loss-making levels.
"Torm will make a company announcement upon reaching an agreement," Torm A/S said, without elaborating on when it expected to reach a deal.
Torm said on June 1 it expected the banks to agree soon to a further extension of a freeze on repayments.
Shares in Torm leapt on Thursday after Copenhagen daily paper Berlingske said, without citing sources, that only minor paperwork remained to be done for a deal with the banks.
The shares, which lost nine-tenths of their value last year and have been volatile at low levels in 2012, traded up 63.3 percent at five-month high of 4.49 crowns by 4.48 a.m. EDT.
Berlingske said Nordic banking group Nordea (NDA.ST) had played a key role in efforts to bring Torm's foreign lenders, including the Export-Import Bank of China and Societe Generale (SOGN.PA), which had been reluctant, to agree to the plan.
Berlingske gave no detail about what kind of deal would be reached with the creditors which also include Danske Bank (DANSKE.CO) and Danish Ship Finance.
"I cannot comment on it. We have said that we expect a deal to go through as soon as possible," Torm's spokesman Jakob Risom said.
At Torm's annual shareholder meeting in April, a preliminary deal was unveiled that would leave current shareholders with 7.5 percent of the company, while Torm's lenders and charter partners would end up with 92.5 percent.
"The content of the negotiations is in line with the main principles communicated at the Annual General Meeting on 23 April 2012," Torm said on Thursday.
Berlingske said China Exim and Societe Generale had resisted that plan until now because they wanted to get out of shipping altogether, and some charter partners are still unhappy.
The vessel charter partners are stakeholders in the talks because they have preliminarily agreed to reducing Torm's charter rates to market levels to give the troubled company breathing space.
($1 = 6.0652 Danish crowns)
(Reporting by John Acher; Editing by Erica Billingham)
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