The FINANCIAL — 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, according to Borsa Italiana Spa.
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.
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