Bloomberg News

Fondiaria Rises for Sixth Day on Debt Swap Report: Milan Mover

February 07, 2012

Feb. 7 (Bloomberg) -- Fondiaria-SAI SpA rose for the sixth consecutive day after Il Sole 24 Ore said bank creditors of Italy’s second-largest insurer and its main investor may convert loans into equity.

UniCredit SpA and Mediobanca SpA are among banks that may swap as much as 200 million euros ($263 million) of Premafin Finanziaria SpA’s debt into equity, Il Sole reported today, without saying where it got the information. Mediobanca may also convert part of its 1 billion euros of loans made to Fondiaria, the newspaper said.

“This report may help to explain the increase in the Fondiaria stock price, if the debt conversion takes place at a higher share value than the market price,” Matteo Ghilotti a Milan-based analyst at Equita SIM SpA wrote in a note today.

Unipol Gruppo Finanziario SpA, Italy’s third-largest insurer, agreed last week to buy new shares in Premafin, the controlling investor of Fondiaria. The purchase will allow Premafin to participate in a 1.1 billion-euro share sale announced by Fondiaria on Jan. 30. After the recapitalization, the companies will merge to become Italy’s second-biggest insurer after Assicurazioni Generali SpA.

Fondiaria rose as much as 18.4 percent to 1.57 euros, its highest since Oct. 31, 2011, before being halted. Unipol climbed as much as 17.5 percent to 37.2 cents, the highest price since July 6, 2011, before being suspended.

An outside spokeswoman for Fondiaria wasn’t immediately available for comment on the matter.

--Editors: Dan Liefgreen, Jon Menon

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net Francesca Cinelli in Milan at fcinelli@bloomberg.net

To contact the editor responsible for this story: James Ludden at jludden@bloomberg.net Frank Connelly at fconnelly@bloomberg.net


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