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Italy Open for Bids for Unprofitable Alitalia

Reuters
Friday, 29 Dec 2006 | 4:07 AM ET

Italy opened the bidding process for state-controlled airline Alitalia on Friday, hoping private investors will succeed in reviving the unprofitable carrier after repeated injections of state aid failed to do so.

Italy has invited bids for at least 30.1% of Alitalia's shares, and as much as the entire Treasury stake of 49.9%, until Jan. 29, 2007, the Treasury said in a statement posted on its Web site (www.mef.gov.it).

In setting the terms of the bidding process, it said interested parties would have to have capital of at least 100 million euros ($131.5 million).

They would have to keep a stake of at least 30.1 percent in Alitalia until they met the targets of their industrial plan, as well as maintain the carrier's "national identity", it said.

Under Italian law, a buyer of more than 30% of a company must make a public offer for the rest of the oustanding shares.

Should the competitive bidding process fail, Italy may also use a public offer or share swaps to cede its Alitalia stake, the Treasury said.

The Treasury owns Alitalia convertible bonds due in 2010 with a nominal value of about 450 million euros.

It reiterated it would pick the winning bid based on its economic offer and the ability of its industrial plan to "develop and relaunch" the ailing airline.

Alitalia, which has a market capitalisation of 1.37 billion euros, has not made an operating profit in the last 5 years.

Italy plans to conclude the process within six months, Economy Minister Tommaso Padoa-Schioppa said earlier this month.

Analysts have speculated on possible bids for the airline by rivals such as Air One and long-time potential suitor Air France KLM, but no leading contenders have emerged so far.

Air France and Alitalia each own a 2% stake in each other.

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