ROME--RCS MediaGroup SpA (RCS.MI) said Monday its board has
approved a 500 million euro ($651 million) capital increase, a move
aimed at bolstering its balance sheet though contested by investors
outside the consortium that controls the publisher of Italy's
leading newspaper Corriere della Sera.
RCS MediaGroup's board decided late Sunday to set the date for
the shareholder assembly--needed to approve the rights issue--as
May 30.
The company said it plans to issue up to EUR400 million in new
ordinary shares and a further EUR100 million in savings shares.
The board approved a plan to forge a "pre-guarantee" deal, with
a group of banks organizing the share placement, requiring them to
cover any unbought shares.
Intesa Sanpaolo SpA (ISP.MI) unit Banca IMI and BNP Paribas SA
(BNP.FR) are joint global coordinators, while other guarantor banks
working on the deal include divisions of UBI Banca SpA (UBI.MI),
Mediobanca SpA (MB.MI), Commerzbank AG (CBK.XE) and Banca Aletti
& C. SpA.
The price of the shares will be set closer to the actual date of
their issuance, the company said. RCS MediaGroup's current market
capitalization is EUR575 million.
The fresh capital will go to offset losses due to overpriced
acquisitions in the past, which have left RCS MediaGroup struggling
under a heavy debt load and forced to fire employees, as well as
consider selling Corriere's historic Milan headquarters.
As of March 31, the company had EUR1.17 billion in net debt 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.
Less than one in six RCS MediaGroup shares trade freely on the
market, as the rest are owned largely by a consortium comprising
storied Italian industrial names--including Fiat SpA (F.MI) and
Pirelli & C. SpA (PC.MI). However, there are large rival
shareholders outside that consortium, including Tod's SpA (TOD.MI)
founder and Chairman Diego Della Valle.
Fiat and Intesa Sanpaolo said they would buy some of the shares
which other members of the consortium may choose not to purchase,
RCS MediaGroup said in its statement.
Mr. Della Valle and the Benetton family, who together own almost
14% of the publisher's shares, told the board they do not approve
of the operation, the company added.
Write to Christopher Emsden at chris.emsden@dowjones.com
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