* Unipol says will drop plan after July 20 if conditions not met
* Premafin cash call may have to be revoted
* Rival advisers gave different estimates of Unipol net asset value
* 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 void."
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 told Reuters.
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.