Fiat Says It Could Eventually Own 20.1% of RCS

MILAN--Italian auto maker Fiat SpA (F.MI) said Friday it might double its stake in RCS MediaGroup SpA (RCS.MI) to slightly more than 20% should the troubled publisher complete a capital increase, an operation that has been contested by some shareholders.

RCS, which owns the influential daily Corriere della Sera, is preparing for a capital increase of about 400 million euros ($521 million) to help strengthen its finances.

The operation, to be conducted next month, has been a divisive issue for shareholders, some of whom have decided not to exercise their subscription rights. These shareholders have criticized the proposed capital increase, saying it is too dilutive and favors the creditors.

RCS is offering three new ordinary shares for every one held at a price of EUR1.235 apiece.

On Friday, RCS shares fell 7.47% to close at EUR1.37 in Milan.

In a statement, Fiat said it held 11.5 million shares for 10.5% of the total.

By exercising its subscription rights to the capital increase and buying additional rights from other shareholders, Fiat said it would come to own 87.3 million shares, or 20.1%, should the operation by fully subscribed.

RCS will use the fresh capital to offset losses sustained from overpaying for past acquisitions. Under the weight of EUR1.17 billion of net debt, it is laying off employees and selling assets such as magazines like Novella2000.

For the first quarter, it reported a net loss of EUR107.1 million on revenue of EUR285.3 million, hit by a decline in advertising in its two main markets, Italy and Spain.

Write to Gilles Castonguay at [e-mail]

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