| Alitalia to raise 1 billion euro capital to ward off collapse |
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ROME: Italian airliner Alitalia SpA, facing a severe cash crunch, is planning a 1 billion euro capital infusion to keep itself on the skies.
The share issue is the only way to prevent bankruptcy of the state-owned airline. It will also part-privatise the company by reducing the government's holding from the current 62 per cent to just below 50 per cent.
Alitalia has a market cap of 800 million euros at the current share price of 6.14 euro a share. The company had lost more than 800 million euros in 2004.
The Italian treasury said the capital hike will be conducted in stages from 14 November to 2 December. New shares will be issued to existing shareholders and debt holders at 0.80 euros. The treasury will buy 489.2 million euros worth of the new shares. It will sell rights to new shares it could exercise, but will not with a view to reduce its holding to below 50, to institutional investors.
Existing equity holders of the company can get 13 shares for every two shares they hold now. Debt holders will get rights for 13 shares for every 60 securities held.
The funds brought in will be used in a restructuring exercise that will reduce jobs, spin off ground services and help the company to a profit regime.
Following months-long talks, a consortium of banks led by Deutsche Bank joining a consortium backing the capital increase. Banca Intesa had agreed to guarantee some 100 million euros of the capital increase as part of an eventual consortium.
The airline, meanwhile sold 49 per cent of its stake in the loss-making ground service unit Alitalia Servizi to the state holding company Fintecna for 92 million euros.
Recently, under chief executive Giancarlo Cimoli, the airline has cut jobs and costs, renegotiated debt, obtained government backing for a 400 million- euro loan and added flights to China under a four-year reorganization.
Alitalia had desired to join the merger of Air France and KLM, which formed the Air France-KLM Group two years ago, but Air France did not accept the proposal in view of the Italian airline's poor financial position.
Posted
on : Sat, 12 Nov 2005 07:20 GMT | General News
By : Mark Richardson
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