September 19, 2019 / 1:23 PM / 24 days ago

Small shareholders fight to salvage Carige's rescue plan

MILAN (Reuters) - Thousands of small shareholders in Carige (CRGI.MI) have signed up to attend a meeting on Friday in an attempt to push through a last-ditch rescue plan that could be sunk by the Italian bank’s mercurial top investor.

FILE PHOTO: The Carige bank logo is seen in Rome, Italy, April 16, 2016. REUTERS/Stefano Rellandini

With a 27.5% stake that makes it the single largest investor in Carige, the billionaire Malacalza family has the power to again derail rescue efforts, after blocking a 400 million euro ($442 million) cash call in December and prompting the European Central Bank to place the bank under special administration.

Capital needs have since swollen to 900 million euros and Carige faces liquidation or a resolution process should it fail to plug the gap with funds grudgingly provided by healthier peers.

The Malacalzas have not made clear whether or not they back measures that would drastically reduce a stake they have spent more than 400 million euros on and which is now worth 23 million euros. Their absence on Friday would ensure the plan’s approval.

Malacalza Investimenti declined to comment.

A source close to the matter said expected attendance stood so far at around 80% of Carige’s capital. An attendance rate of at least 90% and a majority of two thirds of votes are needed to counter a potential rejection by the Malacalzas.

“Shareholders must close ranks and bite the bullet”, said Davide Viziano, a small builder who has invested in Carige in the past and is now working with other businessmen to boost attendance on Friday.

“Carige is a great asset for our economy and it would be awful for us to lose it,” he added.

The Liguria region’s maritime economy has been battered by the global shipping slump, a domestic recession and last year’s deadly collapse of a bridge which severed the port of Genoa’s main link to France.

Viziano said the local community had sent “smoke signals” to the Malacalzas in the hope they either desert the meeting altogether or leave the room during the vote.

“I understand they may not want to vote in favor, but this what they could do to show they care about Genoa like they did in the past when they stepped in to save Carige.”

Carige, which had a market value of 85 million euros when its shares were suspended from trading in January, has tapped shareholders for more than 2 billion euros in the last five years.

Weakened by decades of mismanagement and an excessive local exposure, Carige has piled up more than 1.6 billion euros in losses since 2014, mostly due to bad loans.

Under the rescue package, a new share issue would hand control of Carige to a fund financed by Italian lenders before rival Cassa Centrale Banca can exercise an option to take over the bank.

Reporting by Andrea Mandalà; Editing by Valentina Za and Mark Potter

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