Delfin: board split over reorganisation; LMDV sources express disappointment and concern
No to the extreme scenario in which the holding company acquires a 37.5 per cent stake for 10 billion
(Il Sole 24 Ore Radiocor) - Delfin’s board is divided over the proposed reorganisation. In fact, in the last few hours, the board of directors has failed to approve the letter of ‘patronage’ (i.e. a letter of endorsement) requested for the banks to give the green light to the loan that would allow Leonardo Maria Del Vecchio to acquire shares from (at least) two other heirs and thus secure a relative majority. All this ahead of the shareholders’ meeting on 30 June, where a battle is expected. Meanwhile, at LMDV they would like to understand the reasons that led the board of directors to oppose the plan, leaving negotiations on the future of the Luxembourg ‘treasury’ in limbo. Sources close to Del Vecchio Jr’s family office, in fact, have made no secret to Radiocor of their “disappointment and bewilderment” at a divided board and a family that once again appears “not united”, with a management team that “under these conditions is unlikely to hold up”.
The ‘patronage’ letter, sent by Del Vecchio to the board, was in fact also a way of putting things to the vote. The text of the letter set out the conditions under which Delfin would exercise its pre-emption rights in the event of LMDV defaulting on its obligations to the banks. It set out in black and white that, should Leonardo Maria fail to repay the loan, the holding company would, at a price of 10 billion – as stated in the letter – acquire the entire 37.5 per cent stake held by Leonardo Maria. Not only, therefore, the shareholdings of Luca and Paola (worth 5 billion each) but also that of Leonardo Maria himself. Under this arrangement, Delfin would acquire three stakes, each valued at 3.3 billion. This is a way of preventing the banks from gaining direct access to the holding company should problems arise.
When it came to the vote, however, Delfin’s board of directors was split: Chairman Francesco Milleri and Mario Notari voted in favour, whilst the holding company’s CEO, Romolo Bardin, and the two directors Giovanni Giallombardo and Aloyse May voted against. It is now up to the shareholders’ meeting, but the road ahead remains an uphill struggle.
