* Unipol says will drop plan after July 20 if conditions not
* Premafin cash call may have to be revoted
* Rival advisers gave different estimates of Unipol net
* Prosecutors want regulators to clarify
By Emilio Parodi and Stephen Jewkes
MILAN, June 29 Italian insurer Unipol
issued an ultimatum on Friday over its controversial rescue plan
for troubled peer Fondiaria-SAI, saying it would drop
the offer if its conditions were not met by July 20.
In a letter sent on Friday to Premafin, the
holding controlling Fondiaria-SAI, Unipol said that if Premafin
did not respect the agreement by the July 20 deadline "the
investment agreement should be considered definitively nul and
It also said it could sue Premafin for not having met its
part of the agreement.
In January, investment bank Mediobanca brokered a
deal in which Unipol was to save Fondiaria in a complex four-way
merger involving three capital increases.
But the deal has been undermined by a judicial probe,
regulatory hurdles and disputes between Unipol and the Ligresti
family which controls Fondiaria through debt-laden Premafin.
Premafin has already approved a 400 million euro capital
increase reserved for Unipol which will in turn be used to fund
a 1.1 billion euro rights issue at Fondiaria to beef up its
depleted capital base.
Unipol has also agreed a similar 1.1 billion euro capital
hike as part of the operation.
But earlier this week a court administrator holding 20
percent of Premafin stock called for another shareholder meeting
to re-examine and possibly revoke the capital hike approval, in
the latest setback for Unipol's plan.
The loss-making Fondiaria has around 8 million clients and
insurance watchdog ISVAP is keen that its stretched balance
sheet be repaired as fast as possible.
ISVAP may be forced to place the group under special
administration if its solvency ratio - a measure of financial
strength - is not restored above a 120 percent base.
A rival bid for Fondiaria from two private equity funds
which had previously expired was renewed this week, piling
further pressure on Unipol.
Unipol's 1.7 billion euro ($2.16 billion) offer has already
received clearance from most regulatory bodies but is still
awaiting the green light from market watchdog Consob.
In yet another twist to the saga, a judicial source said on
Friday that Italian prosecutors probing the Ligrestis business
dealings would ask regulators to verify conflicting estimates
about Unipol's financial strength.
Goldman Sachs, which advises Fondiaria in the deal,
said in a confidential document seen by Reuters that Unipol's
net asset value would be negative for 209 million euros after
its 1.1 billion euro capital increase.
However Lazard, which advises Unipol, said Unipol's net
asset value would be positive for 1.5 billion euros.
"It's obvious that there is a huge difference (between the
two estimates), especially given that these are the numbers on
which the merger's share swap ratios will be based," the source
Unipol, which is controlled by a group of cooperatives, has
disputed Goldman Sach's assessment.
An industry source told Reuters on Thursday that Unipol had
invested a lot in its plans to take over Fondiaria and could
suffer repercussions if the deal was called off.