Ferruzzi investors panic, sending shares plunging
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Your support makes all the difference.MORE than three quarters was wiped off the market value of Ferruzzi Finanziaria in early dealings yesterday, after trading in the troubled Italian industrial conglomerate resumed following a two-day suspension, writes Gail Counsell.
The shares initially tumbled by 75 per cent to a new low of just over L100, as investors panicked about the mounting size of the group's losses and the likelihood of its involvement in Italy's corruption scandals, although the price later recovered to close down by a third at L272.8.
Dealings in Ferruzzi were halted on Monday pending an announcement by the new management that an investigation into its finances had showed that disastrous commodity trading had produced losses in the first five months of this year of around L1,165bn ( pounds 500m), more than double previous estimates.
It also said it planned to cover the losses by slashing its share capital, cutting the value of its nominal shares from L1,000 to L5.
Yesterday bankers to the group, which has debts of around L31,000bn ( pounds 13bn) warned that proposals for a reconstruction, originally due at the end of August, would not now be ready until mid-September at the earliest. The delay is said to be the result of the complexity of the operation.
Ferruzzi called in its bankers in June when it said it could no longer keep up debt payments. A group of five Italian banks is working on a package of measures expected to include debt equity swaps and asset sales.
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