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Linpac Group has confirmed it is in talks over refinancing, but has played down claims in a Sunday newspaper that a banking consortium could take control of the company.

The statement was made in the wake of an article published in The Sunday Times that claimed that Linpac Group is under threat of being seized by a consortium of its lenders after a debt-restructuring proposal from its private equity owner Montagu was turned down.

The Sunday Times reported that a consortium of lenders, led by Deutsche Bank, has threatened to take control of the business, which is reported to have £600m of debt, and potentially "wipe out its private equity owner's stake".

In response, Linpac has issued a statement that said that the company continues to trade ahead of expectations and is maintaining its strong market position.

"However, like many others, the company has been affected by the decline in sterling, increased raw materials costs and some softening of consumer demand for our products."

According to the article, Linpac's banks are believed to be unhappy about the debt-restructuring proposal put forward by Linpac's private equity owner Montagu.

Linpac said: "The company's lenders remain very supportive and discussions have been initiated with them in order to adjust financial arrangements in light of the global downturn.

"These discussions are progressing well and are expected to conclude by the end of the summer."

It is believed the restructuring plan put forward by Linpac would require the banks to reduce the amount owed by the company.

The Sunday Times wrote that the banks have put forward a counter offer, which would see them invest in Linpac, potentially raising capital externally.

Australian business publication Business Spectator speculated that investors may now view Linpac as a "cheaper bet" than Rio Tinto's Alcan Packaging division.

Europa Partners' packaging expert Nicholas Mockett disagreed.

"I think it's a slightly different buyer population from Alcan," he said. "It's unlikely to be seen as a substitute asset for Alcan buyers."

"Transit packaging may have caused a few problems for Linpac. I suspect the rest of the company has performed relatively well."