We’re not sure whether this can be right, but shall share in any case:
Tiscali, the hopelessly ambitious Italian alternative telco, was trading at €3.70 earlier in Milan, having fallen from €4 at the open on Monday.
After hours, we got news of a rescue rights issue – not a huge surprise, since the company has been in debt restructuring talks with JPMorgan and Intesa Sanpaolo for months. Ernst & Young questioned its going-concern status in April, and founder Renato Soru had to return to the board to try and sort out the mess.
What is shocking is the stated price: some 180m euros being raised at just 10 euro cents a share.
Some 1.8bn new shares are being created, along with 1.8bn five year warrants – 20 of which will give holders the right to buy 1 extra share at 80 cents a piece.
The statement indicates the cash call is underwritten:
This capital increase is part of the broader plan to restructure the debt of the Tiscali Group, as already announced to the market, in which the Senior Lenders, the shareholder Mr. Renato Soru, Video Networks International Ltd (former shareholder of Tiscali UK) have made a commitment to subscribe for a total of approximately EUR 180 million.
But new stock at 10 cents? That’s a 97.5 per cent discount.
Related links:
Auditors highlight concerns on Tiscali’s future – FT