Finmeccanica SpA rose for a fifth consecutive trading day after saying it will raise 777 million euros ($1.06 billion) by selling most of its stake in power-plant unit Ansaldo Energia SpA.
Finmeccanica advanced as much as 4 percent and traded 2 percent higher at 5.34 euros as of 10:38 a.m. in Milan, valuing the Italian manufacturer at 3.1 billion euros. The stock has jumped 21 percent this month.
Italian state lender Cassa Depositi & Prestiti SpA will buy a 40 percent stake of Ansaldo Energia held by Finmeccanica, paring the Rome-based manufacturer’s holding to 15 percent, with private-equity firm First Reserve divesting its 45 percent share, the engineering company said on Oct. 4. Initial proceeds will amount to 273 million euros when the deal is completed, probably this year, with additional funds due through 2017, Finmeccanica said.
“The risk of a capital increase has clearly fallen,” David Perry, a London-based analyst at JPMorgan Chase & Co. said in a research report. He raised his recommendation on the stock to neutral from underweight.
The CDP fund has the option to purchase the remaining Finmeccanica shares in the second half of 2017.
Finmeccanica, in which the Italian government holds a stake of almost 30 percent, has been trying for more than a year to raise at least 1 billion euros via asset sales to cut almost 5 billion euros in debt. A management reshuffle, inconclusive Italian elections in February and opposition from unions and lawmakers have delayed the process.
The maker of M-346 military-jet trainer aircraft and parts for Boeing Co. 787 Dreamliners is also seeking to sell stakes in unprofitable, wholly owned trainmaking unit AnsaldoBreda and possibly in its publicly traded Ansaldo STS SpA rail-signaling business, which Finmeccanica controls with a 40 percent holding. The company will receive 260 million euros for its stake in aircraft engine maker Avio following a sale of the business to General Electric Co. by private-equity firm Cinven Ltd.
Finmeccanica and the CDP fund have agreed to “assess opportunities for strategic cooperation” in the railway sector, including the potential to bring in foreign investors, the company said.
Debt at Finmeccanica has been given junk ratings this year by the three biggest credit reporting companies in the absence of disposals. The company, Italy’s biggest aerospace manufacturer, said Aug. 1 that net debt will probably fall to
3.3 billion euros by the end of 2013, even without asset sales.