Making its proposed rights issue even harder to get away, Ing C Olivetti & Co SpA saw its shares plunge 10% as soon as trading started yesterday, and the plunge triggered an automatic suspension. When trading resumed, it went on falling, and in late morning was off 13%. Olivetti is firing yet another 5,000 employees, will seek to sell $250m in assets, and wants to raise $1,400m – far more than even pessimists feared – in a three-for-two rights issue in November. The issue is being underwritten by Mediobanca SpA, and the bank is certain to end up as Olivetti’s second largest shareholder after Carlo de Benedetti’s interests. Italian Prime Minister Lamberto Dini said he was worried by what was happening at Olivetti but said the crisis will be overcome, De Benedetti remains firmly committed to the recovery of the company. The company, having promised break-even this year, also stunned with a first-half loss of $680m, after extraordinary charge for restructurings of $562.5m. In an effort to quell talk of crisis, Olivetti said it would raise its stake in the Omnitel-Pronto Italia SpA cellular telephone venture to 41.3% by buying the 8% holding of Lehman Brothers Holdings Inc for $175m – and said it would increase its stake still further if the opportunity arose. In return, Lehman Brothers will buy 120m new Olivetti shares in the rights issue. Olivetti wants the rights cash to cut its $1,240m debt to near zero by next year, meet restructuring charges and invest in new businesses. Of the 5,000 job cuts, 1,800, 41% of its current staff, go in the personal computer arm. We will make more PCs with half the people by the end of next year, said managing director Corrado Passera. Staff at the computer division fall to 2,700 from 4,500 now; at the office products division, the cut is 1,000, to 6,100; systems and services will fall to 15,500 from 17,700. Carlo De Benedetti said he could not rule out seeking a separate stock market listing for the computer division, but not for over a year. The firm did not identify the $250m of property and non-core businesses to be sold.
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