By Gabriele La Monica and Manuela Mesco
MILAN--Italian insurer Assicurazioni Generali (G.MI) said
Tuesday it will not take part in an upcoming capital hike aimed at
reviving loss-making Italian publisher RCS Mediagroup (RCS.MI), of
which it owns nearly 4%.
Speaking at the annual shareholders' meeting, chief executive
Mario Greco said the insurer will avoid any future non-core
investments, but added that the choice of getting rid of current
non-core assets depends on the situation of the asset in
question.
He added that the company will not take part in a capital hike
that was approved by the publisher earlier in the week, which
should total up to 500 million euros ($653.26 million).
RCS said it plans to issue up to EUR400 million in new ordinary
shares and a further EUR100 million in savings shares.
The fresh capital is needed to offset losses due to overpriced
acquisitions in the past, which have left RCS MediaGroup struggling
under a heavy debt load and forced it to fire employees.
The publisher had EUR1.17 billion in net debt as of March 31 and
paid-up equity of EUR139 million. It had a gross operating loss of
EUR84 million in the first quarter, when its labor costs alone
accounted for almost 75% of its consolidated revenue.
Generali's decision follows opposition from other stakeholders
in RCS--which publishes one of the most influential Italian
dailies, Corriere Della Sera.
Tod's (TOD.MI) founder and chairman, Diego Della Valle, and the
Benetton family, who together own around 14% of the publisher's
shares, previously said they don't approve of the operation.
RCS MediaGroup's board has scheduled for May 30 a shareholder
assembly to approve the rights issue.
Write to Manuela Mesco at manuela.mesco@dowjones.com
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