Reuters: Private Equity: UPDATE 1-Fondiaria rescue to go ahead as probe widens

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UPDATE 1-Fondiaria rescue to go ahead as probe widens Mar 28th 2012, 16:36 Wed Mar 28, 2012 12:36pm EDT * Milan probe widens to include market manipulation-source * Premafin says deal with Unipol to proceed * Fondiaria shares down 4 pct, underperform sector (Adds investigative source, details, background) MILAN, March 28 (Reuters) - Italy's Premafin, controlled by the Ligresti family, said on Wednesday plans for Italian insurer Unipol to take over its troubled insurance unit Fondiaria-SAI would go ahead, even though a judicial investigation could complicate the deal. "There are no grounds for changing the announced plans, all the companies involved in the project are committed to executing it," Premafin said in a statement. Milan prosecutor Luigi Orsi launched a probe last year into allegations that Salvatore Ligresti, the patriarch of the family controlling Fondiaria, had withheld information from market regulator Consob in a failed takeover bid by French insurer Groupama for Fondiaria, Italy's No.2 insurer. A source with direct knowledge of the investigation told Reuters on Wednesday that Orsi had now widened the probe to encompass allegations of market manipulation involving control of foreign trusts. Consob said in a filing last month that Ligresti was the beneficiary of two Bahamas-based funds - The Heritage Trust and Ever Green Security Trust - which own respectively around 12 percent and 7.8 percent of Premafin. The Ligresti family owns just over 50 percent of Premafin. RESCUE DEAL Over the last few days, Orsi has also heard from the auditors of Fondiaria and Premafin over issues that include consultancy fees paid by Fondiaria to Ligresti and communication to the market about the Unipol bid. These developments have fuelled speculation in the Italian media over whether Premafin's 2011 accounts will be signed off and whether the rescue plans for Fondiaria will go ahead. The Ligresti family took over the reins of power at Fondiaria ten years ago. The loss-making insurer has seen its market capitalisation wither to 550 million euros from 5 billion euros five years ago. Its solvency margin - a measure of capital strength - fell to an alarming 75 percent at the end of 2011 though it has since improved thanks to an easing of Italy's sovereign debt crisis. Premafin said on Wednesday it had called a board meeting on March 30 to discuss results and restructuring operations. In January, Bologna-based insurer Unipol, Italy's No.3 insurer, agreed to a 1.7 billion euro deal to save Fondiaria through a four-way takeover and three capital hikes. Since Unipol's plans were released, Fondiaria SAI shares have risen more than 100 percent. Italian private equity funds Palladio Finanziaria, with roots in Italy's rich northeast, and Sator, founded by turnaround specialist Matteo Arpe, have launched a rival bid for the Fondiaria SAI group. These funds have raised questions with Italian regulators over the Unipol bid. Premafin and Fondiaria were not immediately available for comment. Shares in Fondiaria SAI were down 4 percent at 1415 GMT while the European insurance index was 0.86 percent lower. ($1 = 0.7506 euros) (Reporting by Antonella Ciancio, Emilio Parodi, Stephen Jewkes. Editing by Jane Merriman) Link this Share this Digg this Email Reprints

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