Pirelli to Invest in Tyre Unit After Olimpia Sale

Pirelli & C SpA chairman Marco Tronchetti Provera is planning to pay of the company’s debt and invest in its tyre unit with cash from the planned sale of its Olimpia unit. According to the AFX news agency, the board “has not taken any decision on any extraordinary dividend or share buy-backs.” Pirelli is expected to receive 3.3 billion euros of cash when its sell Olimpia, which owns an 18 per cent share of Telecom Italia SpA. In the meantime the company is waiting Brazilian regulatory clearance to sell Olimpia.

In a conference call to investors, Tronchetti Provera resolved to reduce debt down to zero, which is currently at 1.3 billion euros, leaving 2 billion euros. Buying back the 39 per cent stake in the tyre business Pirelli sold to a group of banks last year is expected to cost just over 1 billion euros.

Tronchetti also said the unit has resources for expansion in India and Russia, where the unit could invest 100 million euros in each of the two countries.