The exams at the end of October are more difficult than expected. By 31 October, at least on paper, it is necessary to find a solution to various thorny cases, from Seat Pagine Gialle to the Ferretti shipyards. Different companies but with one thing in common: both pay, as happened in the past to other companies with a good industrial structure (see Saeco) the incursions of financial investors, primarily private equity, in search of "value creation".
Next Monday Seat Pg should pay the installment, 52 million, of interest against the bonds held by the Luxembourg Lighthouse fund (1,3 billion) and other bondholders. But the company has already communicated that, in the absence of an agreement with all the players in the matter (bonholders, shareholders, creditor banks), it will not pay the amount due to avoid the risk of incurring the rigors of the law in the event of default. The prospect is anything but theoretical because the company, forced to go into debt to distribute the extraordinary dividend distributed in 2006 (3,6 billion) is today unable to bear the financial costs together with the necessary investments, despite a considerable operating margin gross (between 4 and 500 million). Hence the frantic hunt for a solution involving advisors (Rothschild and Lazarad), legions of lawyers and consultants. No big results, for now.
Today, after intense diplomatic work that raised the fierce protests of private equity shareholders (Cvc, Investitori Associati and Permira) excluded from this round of talks, the plenary meeting between companies, creditor banks and bondholders for debt restructuring was to be held (a total of 2,7 billion euros). But the meeting was postponed because the solution has not yet been found to guarantee the banks, exposed for almost 700 million, without denying Lighthouse (owned by various hedge funds) the full availability of the securities to trade with the shares resulting from the conversion of bonds in shares, as envisaged by the plan. Yet the agreement seemed to be a done deal, on the basis of various possible paths: the creation of an unlisted operating company to be pledged, the creation of a holding company upstream of Seat Pagine Gialle, or the issue by Seat Pagine Gialle of "dormant" warrants. Finally, for the banks, it was envisaged that the company's profits would serve the interest on the debt until the threshold of 450 million was reached and then start paying the coupons to the shareholders again. But something didn't work. It is therefore easy to resort to extra time (the month of November) to untangle the skein.
Even because the thorniest issue remains: the conversion value of the Lighthouse bond. Private shareholders, for once forced to present themselves as representatives of minorities too (including the over 200 shareholders who have bought shares of up to 7 euros to find securities worth a double-zero telephone area code) are offering Lighthouse the 75 % but they are also asking for the issuance of warrants to be triggered based on the company's performance. Lighthouse requires 95%, without exclusion for warrants as long as they are paid. And so it starts again. The risk is that a healthy company, but squeezed like a lemon several times since the privatization of 1996 onwards, will not be able to get by, despite the brilliant industrial performance.
Ma among the matches to be defined by the end of October, that is next Monday, there is not only Seat Pagine Gialle. The fate of the children is also in the balance Ferretti shipyards, another story of a made in Italy company, this time of global excellence, passed under the pressure of private equity, from Permira to Candover, banks generous with business plans and IPO proposals in the good years (at the end of 2007 Mediobanca Scurities calculated the Ferretti titles based on luxury multiples, such as Hermès or Bulgari). Past history: under the skies of the crisis in the sector, construction sites now only in the hands of the creditor banks (640 million) which own 53% of the capital in the form of guarantees. They received only one offer, reduced compared to a few months ago due to the deteriorating situation, that of the Chinese of Shantui, who propose 240 million to take over the debt plus 100 in the form of liquidity. An offer already rejected, also due to the extremely rigid clauses envisaged by the governance anticipated to the managers and to Norberto Ferretti himself. Alternatively, the banks, led by Rbs, are preparing an offer for Ferretti himself to take over the rest of the capital and then proceed with the integration of Ferretti with other European shipyards that ended up in default in these hard times for pleasure boating. Something will be known after the company board convened for tomorrow, the same date as the Seat Pg summit.
Meanwhile another troubled game has come to an end: that of Arena spa. JP Morgan has communicated to the company that following the occurrence of certain events it intends to make use of the early termination clauses of the 2009-2013 bond. The US bank has reserved the right to request early repayment of all sums due in relation to the bond, amounting to around 17,08 million at the end of September. The standstill agreement signed between Arena and JP Morgan on 12 May last, then modified on 21 June, which envisaged that the US bank would not exercise the rights conferred by the bond regulation until 31 December 2011, is therefore also terminated, unless certain events leading to ipso jure early termination. In the event of an advance repayment request and in the event that Arena fails to meet it, JP Morgan could enforce the pledges granted as guarantee on the 'Arena', 'Agrarena' and 'Tu in cucina' brands.
