Italy's Assicurazioni Generali Won't Take Part in RCS Mediagroup Capital Hike

By Gabriele La Monica and Manuela Mesco

MILAN--Italian insurer Assicurazioni Generali (G.MI) said Tuesday it will not take part in an upcoming capital hike aimed at reviving loss-making Italian publisher RCS Mediagroup (RCS.MI), of which it owns nearly 4%.

Speaking at the annual shareholders' meeting, chief executive Mario Greco said the insurer will avoid any future non-core investments, but added that the choice of getting rid of current non-core assets depends on the situation of the asset in question.

He added that the company will not take part in a capital hike that was approved by the publisher earlier in the week, which should total up to 500 million euros ($653.26 million).

RCS said it plans to issue up to EUR400 million in new ordinary shares and a further EUR100 million in savings shares.

The fresh capital is needed to offset losses due to overpriced acquisitions in the past, which have left RCS MediaGroup struggling under a heavy debt load and forced it to fire employees.

The publisher had EUR1.17 billion in net debt as of March 31 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.

Generali's decision follows opposition from other stakeholders in RCS--which publishes one of the most influential Italian dailies, Corriere Della Sera.

Tod's (TOD.MI) founder and chairman, Diego Della Valle, and the Benetton family, who together own around 14% of the publisher's shares, previously said they don't approve of the operation.

RCS MediaGroup's board has scheduled for May 30 a shareholder assembly to approve the rights issue.

Write to Manuela Mesco at [e-mail]

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