Milan Prosecutors Reject Risanamento Restructure Plan -Source

MILAN (MF-Dow Jones)--Italian prosecutors Monday rejected a plan to restructure beleaguered Italian real estate firm Risanamento SpA (RN.MI), paving the way for a Milan judge Tuesday to announce a hearing on the case in early October, a judicial source said Monday.

A Risanamento spokeswoman wasn't immediately reachable for a comment.

Risanamento, a Milan-based real estate developer company, is facing bankruptcy after two Milan-based prosecutors in July filed an insolvency request due to the company being EUR2.8 billion in debt.

Risanamento's creditor banks, which include Italy's two largest lenders, Intesa Sanpaolo SpA (ISP.MI) and UniCredit SpA (UCG.MI), have already pledged to support a capital increase worth up to EUR135 million and have said they would also back-up a bond of around EUR270 million.

Separately, Intesa Sanpaolo's chief executive, Corrado Passera, Monday said he yet had to be informed of the rejection and reiterated the soundness of the restructuring plan.

Shares of Risanamento tumbled in Milan Monday, as investors believe the company is going to be declared insolvent. At 1415 GMT share were down 10% at EUR0.50.

-By Alessandro Mocenni, Rosario Murgida and Sabrina Cohen, Dow Jones Newswires, [phone]; [e-mail]