MILAN, Dec 3 (Reuters) - Italian banking foundations will pay the Treasury 750 million euros ($980 million) to convert preferred shares they hold in state-owned financing company Cassa Depositi e Prestiti (CDP) into ordinary shares, the CDP head said on Monday.
The conversion to ordinary shares will see the foundations’ stake in CDP fall to 16.7 percent, from the 30 percent they currently hold, said CDP chairman Franco Bassanini on the sidelines of a conference.
Foundations will subsequently buy CDP shares from the Treasury to lift their stake back up to 20 percent.
The 750 million euros the foundations will pay the Treasury will go towards paying down public debt stock.
The foundations, which control the country’s biggest banks like Intesa Sanpaolo and UniCredit, have to convert the preferred shares into ordinary stock by year-end to respect the CDP’s bylaws.
Some commentators estimated the foundations might have to to pay as much as five billion euros to carry out the conversion.
An exit of all the foundations from CDP would make the state the company’s sole shareholder, meaning debt would be booked as state debt.
“It is important to keep this shareholder structure,” Bassanini said. “It is a safer way to make sure CDP debt is not consolidated with public debt.”
The foundations leaving the CDP might also mean the CDP would be barred from investing in private companies according to European Union rules on state aid.
The CDP is an investor in some of Italy’s most strategic companies like oil and gas group Eni, gas transport operator Snam and power grid player Terna.
$1 = 0.7650 euros Reporting By Giulio Piovaccari, writing by Stephen Jewkes, editing by Nick Zieminski