A GROUP of banks is set to write off up to £300m as part of a radical restructuring plan at Polestar, the printing group that was once part of the business empire of Robert Maxwell.

The huge write-off is understood to be part of a debt-for-equity swap plan that is likely to be presented to shareholders and creditors next month.

The group of banks are being represented by a steering committee that includes Deutsche Bank, JP Morgan, Royal Bank of Scotland and fund-management group Blue Bay.

Polestar is one of Europe’s biggest printers, producing more than 42m magazines and newspaper supplements each week. These include popular titles such as Now, TV Times, Woman, Woman’s Own, Country Life and the Radio Times.

The group was created in 1998 by Investcorp, the Bahrain-based private-equity firm, when it bought printing group Watmoughs and merged it with British Printing Company, a private business that was once owned by Maxwell, the late disgraced newspaper tycoon. The deal was structured as an £810m leveraged buyout and was one the largest debt-laden deals of the 1990s.

Though Polestar is expected to make a profit of about £60m this year, the group has been saddled with huge debts.

Polestar is understood to have been forced to start discussions with its banks earlier this year. It also appointed Close Brothers, the investment bank, to advise on a debt restructuring deal.

The move came after Investcorp, which is believed to hold 100% of the shares in Polestar, decided it was no longer prepared to pump in cash to prop up the ailing printing group.

In September, Investcorp advisers, including Thomas Middelhoff, chief executive of German retail group Karstadt Quelle, stepped down as directors of Polestar’s main operating company.

Polestar is thought to have debts of about £500m. Of these about £100m is thought to be worthless. However, a £109m tranche of debt is trading at between 5% and 8% of its face value and another £295m bond tranche is trading at 70% of its value.

At a meeting in September, Polestar is believed to have told its banks that its future could depend on the debt restructuring deal being agreed.

Polestar is also thought to have asked the banks last month to allow it to defer making interest payments on part of its debt.

It is also looking for a further sum to help fund expenses and costs until the end of the year. However, sources close to the talks have played down the chances of Polestar going bust.

Polestar has got into financial difficulties before. In 2001, Investcorp faced a barrage of complaints from bondholders who had seen the value of their investment in Polestar dive by an alleged 80% in three years.