Pirelli Group Reorganises its Finances

Financial analysts are predicting that the Pirelli & C SpA will separate shares in its tyre business from the holding company. Writing in an investor’s note, Deutsche Bank analysts predicted “near-term action to reduce holding discount by giving shareholders two stocks: a pure tyre company and a pure holding company” and valued the tyre company at between 0.21 euros and 0.33 euros/share.

Good take up of Pirelli Real Estate SpA’s capital increase, which closed on Friday 3 July and was 99.4 per cent subscribed, has also resulted in a 14 per cent reduction in net debt, according to analysts. The company itself reported it raised 397 million euros throught the offer.

Meanwhile it emerged that parent company Pirelli & C SpA (itself Pirelli Real Estate’s 58 per cent shareholder), took up all its rights in what analysts have described as a “deeply discounted…rights issue priced” at 0.50 euros per share. “Pirelli & C has subscribed to part of its share by converting into capital part of its financial credit to Pirelli RE,” the company said in a statement. The remaining rights will be offered on the bourse from 13 July it said.

The funds raised will be used to cut Pirelli RE debt and to give it the necessary flexibility to carry out its business plan, it said.