Will Fincantieri increase the capital?

Will Fincantieri increase the capital?

Fincantieri recorded losses yesterday in Piazza Affari weighed down by press rumors on a capital increase in the event of the acquisition of Oto Melara and Wass put up for sale by Leonardo. Yet Bono had ruled out capital increases …

Fincantieri's stock tumbles on the stock exchange due to rumors about the capital increase.

Yesterday the shares of the Trieste shipbuilding group lost more than 4.6%, closing the session at € 0.61.

According to Il Messaggero , a due diligence has been underway for a few weeks for the sale of Oto Melara and Wass (now the Defense Systems division) by Leonardo, based on two non-binding offers.

The first of around 700 million by the Franco-German group Knds and the second of 450 million by Fincantieri. For the latter, the press speaks of a capital increase of one billion, supported by the controlling shareholder Cdp. The naval group led by Giuseppe Bono is controlled with 71% by Cdp Industria (Cdp group).

A recapitalization of this entity compares with Fincantieri's current market capitalization of around € 1 billion.

“The assumed size is significant, equal to once the current market cap”, underlined Equita in a note taken up by MF . "And higher than what Fincantieri would offer for the two companies, 450 million, according to journalistic sources", highlighting, if confirmed, "the desire to also strengthen the financial structure of the group".

The CEO Giuseppe Bono is therefore denied that he had excluded a capital increase in 2021. "Fincantieri does not need a capital increase that would only be necessary in the event of an extraordinary operation that is not currently in sight", Bono declared , on the sidelines of the Confindustria assembly last September.

Yet already at the time rumors were circulating about the ongoing negotiations conducted by Fincantieri for the naval assets of Leonardo's Defense Systems division. The former Oto Melara with surface naval activities and torpedoes would in fact contribute to the consolidation of the group in the military sector.

All the details.

CAPITAL INCREASE IN SIGHT FOR FINCANTIERI?

According to media reports, for the acquisition of Oto Melara, Fincantieri would need a substantial capital increase, estimated at 1 billion.

The operation would be supported by Cdp, controlling shareholder with 71%.

THE SHAREHOLDERS OF FINCANTIERI

Currently the share capital of Fincantieri, equal to Euro 862,980,725.70, is held for 71.32% by Cdp Industria; the remainder is distributed on the indistinct market.

Cdp Industria is 100% controlled by Cassa Depositi e Prestiti, which in turn is controlled by the Mef for 82.77% of its share capital.

WHAT WILL CDP DO?

But what will the Treasury do?

Already at the end of 2020 , a 1.5 billion euro capital increase was assumed for Fincantieri to absorb the impact of the Covid crisis.

Among other things, in the summer of 2020, the Mef had already approved the Sace guarantee on the 1.15 billion credit lines granted by a pool of banks to the group led by Giuseppe Bono .

AFTER THE RETURN OF SACE TO THE MEF

In the meantime, the Mef also pushed for the exit of the export insurance company (Sace) from the perimeter of Cassa Depositi e Prestiti (Cdp) towards Mef.

"Under Cdp – wrote Startmag recently – Sace's governance was short-circuited due to the split between a single reference and controlling shareholder (Cdp) – who is also the beneficiary of the services – and a substantial guarantor (Mef, given that 90% of Sace's old and new foreign commitments have been moved to the state budget), but without the company's governance. The emblematic case of Sace's concentrated risk is that of Fincantieri: alone, the company led by the CEO, Giuseppe Bono, committed approximately 34% of the entire Sace portfolio at the end of 2020 (25.7 billion in resolution with 5 billion of CDP loans) ".

END OF THE SHORT-CIRCUIT FOR GOVERNANCE (WITH THE EMBLEMATIC CASE OF FINCANTIERI)

An emblematic case of this short circuit in Sace's governance under Cdp is Fincantieri.

Sace's adviser, Federico Merola, in the essay contained in “Lo Stato promotore. How does public intervention in the economy change ", he pointed out: " In a few years the share of the business reinsured by the Mef has gone from irrelevant percentages of Sace's portfolio (therefore of the stock of loans) to over 40% of the 2019 and aim straight for 60% prospect ". In a note to the text, Merola writes: “It is worth noting that cruising, put in serious crisis by the Covid-19 pandemic, has long been one of the most active and most impacting sectors on the concentrated risk transferred to the Mef. It alone committed approximately 34% of the entire Sace portfolio at the end of 2020 (25.7 billion in resolution with 5 billion in CDP loans) ".

THE COMMENT OF EQUITA

According to Equita Sim, the capital strengthening on Fincantieri seems to be “the most probable scenario. The assumed size is significant, equal to once the current market cap and higher than what Fincantieri would offer for the two companies, 450 million, according to journalistic sources ". Highlighting, if confirmed, "the desire to also strengthen the financial structure of the group". The Milanese SIM believes that the uncertainty linked to the capital increase "may continue to weigh on the stock also in consideration of the potential overhang (excess supply, ed) in the event of confirmation of the size of the transaction".

AND THAT OF BANCA AKROS

Banca Akros believes that yesterday's indiscretion is negative for Fincantieri and not discounted in the market value, confirms the hold rating and the target price of 0.8 euro.

HOW DO THE GROUP'S ACCOUNTS GO

Furthermore, Fincantieri is profitable, has a total workload of 36 billion (approximately 6.9 times the 2020 revenues) with orders acquired in the period for 2.3 billion.

At the end of September, the group's debt stood at 1.05 billion. A figure not unlike that of the end of December and in line with expectations for 2021.

THE WORDS OF BONO

Finally, in the spring the number one of Fincantieri did not rule out a capital increase of his company (of which the market has been rumors for months).

In an interview with the weekly Affari e Finanza di Repubblica in March, Giuseppe Bono stressed that the increase is not needed for current activities: “We have cash in the processing phase of the ships, when the delivery takes place we cover ourselves. Typical dynamics of this business, no financial stress. For extraordinary operations we will see ".

In September, however, Bono always declared that "Fincantieri does not need a capital increase which would be necessary only in the event of an extraordinary operation that is not currently in sight".

Extraordinary operation which revealed itself with the possibility for Fincantieri to acquire Leonardo's strategic assets.


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/fincantieri-avra-bisogno-di-aumentare-il-capitale/ on Thu, 25 Nov 2021 06:20:24 +0000.