Economy & finance

Burgo Group undergoes equity restructuring

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The fund owned by QuattroR sgr, a company specialized in corporate restructuring, has received the exclusive right to manage its shareholding in the capital of Burgo www.burgo.com, the historic paper making group from Altavilla Vicentina. This has been reported by the leading Italian financial newspaper Il Sole 24 Ore. The operation is expected to occur by means of a capital increase of about 70 million euro, in collaboration with the Marchi family who currently controls the group with a 50.59% share, and to foresee a debt restructuring plan of about 500 million euro.

The exclusive right to negotiate is said to have been granted in recent weeks, after the first talks of December 2019. In spite of the Coronavirus health emergency, the negotiation is expected to be finalized soon.

To date, Burgo is controlled by Holding Marchi Spa with a 50.59% share, both directly and through Palladio Group spa. Shareholdings in its capital are owned by Mediobanca (22.12%), Unicredit (3.83%), as well as by Allegro (Generali Financial Holdings) and Italmobiliare (11.68% each respectively).

The other major player is Pillarstone Italy, which, at the end of 2015, bought its shares in the capital of Burgo from Unicredit and Intesa Sanpaolo together with receivables from Orsero, Cuki, Lediberg, Manucor and Alfa Park, for a total amount of receivables of a billion euro.

The transfer of Burgo’s receivables to Pillarstone came following an agreement for debt repayment under article 67 of the Bankruptcy Law, which was signed by the paper group with banks at the end of 2015 after negotiations lasting over one year. Back then, the receivables were converted into equity financial instruments referring to short- and medium-term debts worth 200 million euro in total. The equity financial instruments had been subscribed by Mediobanca, Unicredit, Intesa Sanpaolo and the then Banco Popolare. Following the conversion, Burgo had reduced its indebtedness from 900 million to 690 million euro.

Burgo’s 2018 balance sheet was closed with operating income and revenues worth 1.883 billion euro, down from the 2 billion euro registered in 2017, because in that year the group had sold its business branch Burgo Energia carrying out energy and gas sales, which was no longer considered a strategic one. The Ebitda was 137 million euro in 2018 (+3.8% from the 132 million euro registered in 2017) and the net financial indebtedness decreased to 487 million euro, down from the 535 million euro registered in 2017. As regards the debt, in the communication released in May 2019 by Burgo on balance sheet data the group reminded that on 12th March 2019 the group signed an update of the agreements with banks concerning short-term credit lines. The new agreement foresees short-term credit lines worth 200 million euro in total, expiring on 21st March 2022.

The group had started investments related to the reconversion of Line 9 of the plant in Verzuolo (Cuneo) for the production of graphical papers and containerboard, to the improvement of energy efficiency and to the group’s productive capacity of pulp production. Following the reconversion project, in April 2018 the production of paper for containerboard in the Avezzano plant was launched.