Pirelli Granted New Line of Credit

Pirelli Tyre SpA, Europe’s third-biggest tyremaker, has arranged a line of credit worth 500 million euros (£337 million) in an attempt to improve the company’s financial structure and boost flexibility. The Italian banks NP Paribas and Banca Monte dei Paschi di Siena SpA have been hired as lead arrangers to organise the five-year multi-currency credit line. This new credit line is larger than any previous funding, a reflection of the tyre unit’s increased independence from the greater Pirelli group.

Rumours have begun to circulate regarding the possibility of Pirelli listing its shares in an initial public offering (IPO) this spring, however a Pirelli spokeswoman has distanced the company from such talk, stating only that any decision was in the hands of bank shareholders.

Six Italian and international banks have held a 38.9 per cent share in Pirelli Tyre since last year, following a decision to stop a proposed IPO at that time. The banks need to hold onto their stake in Pirelli Tyre for at least 18 months in order to be taxed at the most favourable rate if they profit through selling.