Prepared by Cristian Sgaramella, Maria Progida e Alessandra Ghisio
Due to Covid-19 emergency, several extraordinary measures have been adopted to prevent and contain its expansion and effects on the economic system.
In particular, Law Decree 34/2020 (Decreto Rilancio) authorised Cassa Depositi e Prestiti S.p.A. (“CDP“) to set up a public fund called “Patrimonio Rilancio” (hereinafter, “Patrimonio Destinato“) to which assets and legal relationships will be contributed by the Ministry of Economy and Finance (“MEF“) “in order to implement interventions and operations to support and relaunch the Italian economic-productive system as a consequence of the Covid-19 epidemic” (Article 27).
On March 10, 2012, MEF’s implementing decree (Decree no. 2 dated 3 February 2021) was published in the Official Journal.
The effective date of the Decree is March 25, 2012. However, the relevant effective operation it is subject to the issuance of the resolution by CDP Shareholders’ Meeting and the related Operating Rules.
The Patrimonio Destinato will not be established through the segregation of part of CDP’s assets, but through the contribution of assets by MEF: to this purpose, it is authorized for 2020 the allocation in favor of CDP about government securities or cash up to a maximum of €44 billion.
MEF’s contribution will be matched by the issue by CDP of financial instruments in favor of the same MEF.
In the event in which Patrimonio Destinato is insufficient, the Government should grant an ultimate guarantee on the bonds of Patrimonio Destinato. Subject to specific conditions, the same guarantee may also be granted in favor of the holders of securities issued to finance Patrimonio Destinato.
Patrimonio Destinato will cease to exist 12 years after its creation, although its duration may be extended or reduced by resolution of CDP’s Board of Directors, at the request of MEF.
It is therefore a wholly public fund whose management will be entrusted to CDP and is intended solely for public limited companies, including listed companies and cooperatives.
In order to be eligible for the Patrimonio Destinato, companies have to, among others, meet the following requirements:
- have their registered office in Italy;
- not operate in the banking, financial or insurance sector;
- have an annual turnover of more than EUR 50 million;
- not be in a situation of serious tax or social security irregularity;
- not have received aid deemed illegal or incompatible by the European Commission.
Different methods of intervention of the Patrimonio Destinato are foreseen depending on the reference framework.
1. Interventions on preferential terms under the Temporary Framework available until December 31, 2021, unless further extensions.
Access to the Patrimonio Destinato is available to companies that:
- in the absence of the intervention, would risk losing their business continuity;
- operate in strategic sectors (railways, roads and motorways, rapid mass transit systems for metropolitan areas, ports and interports, airports, cycle routes) or are of significant national interest or of high technological content in particular sectors (defense, security, infrastructure, transport, communication, energy, high-tech research and innovation, tourism, agri-food and distribution, management of cultural and artistic heritage);
- other than companies operating in the above-mentioned sectors, have an annual net turnover of not less than EUR 300 million and are among the 30 % of companies with the highest number of employees in the district where their registered office or production plant is located;
- have not been able to find financing on the markets on affordable terms;
- as at December 31, 2019, were not in difficulty within the meaning of Article 2(18) of Commission Regulation (EU) No 651/2014 of 17 June 2014;
- are not subject to public participation;
- have a rating of not less than B+, or equivalent, issued by an external credit rating agency (ECAI), after 31 December 2019 (for the subscription of subordinated bonds).
The following types of interventions may be made:
- participation in capital increases;
- subscription of subordinated bond loans with a conversion obligation;
- subscription of convertible subordinated bonds;
- subscription of subordinated bonds.
The interventions shall not exceed the minimum necessary to ensure the continuity of the company and, in any case, shall not go beyond the restoration of the capital structure of the company as at 31 December 2019. Specific thresholds are foreseen for each type of intervention, but interventions exceeding EUR 250 million will be subject to the notification and approval of the European Commission.
2. Interventions at market conditions
Companies of national interest operating in one of the strategic sectors referred to in the National Reform Plan (Article 10(5) of Law No. 196 dated December 31, 2009) may apply if they meet the following requirements:
- presenting two of the last three financial statements in profit (of which the last financial statement not prior to 18 months from the date of the request for assistance);
- they must not be in a situation of difficulty, within the meaning of Article 2(18) of Commission Regulation (EU) No 651/2014 of 17 June 2014, on the date of application for and disbursement of the intervention;
- they must not be subject to public participation;
- on the dates of application and disbursement of the intervention, they must not present reports of “systemic non-performing loans” or a ratio between “total cash overdrafts” and “total operational cash lending” greater than 20% in the Centrale Rischi of Banca d’Italia;
- have a rating issued by an external credit rating agency (ECAI), after 31 December 2019 (for convertible bond applications).
The interventions of the Patrimonio Destinato will be carried out through participation in capital increases and the subscription of convertible bonds with a maximum duration of 7 years (listed companies) or 5 years (unlisted companies) made exclusively in the presence of at least a private co-investment of a minimum of 30%.
3. Direct or indirect acquisition or turnaround interventions, always at market conditions.
Interventions in companies of strategic interest may be carried out through:
- purchase of convertible bonds;
- purchase of shares on the primary and secondary markets;
- subscription of OICR shares, managed by asset management companies.
Intervention is also foreseen in relation to corporate restructuring operations of strategic national companies which, despite temporary asset or financial imbalances, are characterized by adequate profitability prospects. One of the methods of intervention is the participation in capital increases, in the presence of at least one co-investor, including current shareholders, who will have to bring in new resources at least equal to those of the Patrimonio Destinato. The intervention will have to exceed EUR 250 million and the requesting company will have to submit a restructuring plan, certified by an independent expert, showing the sustainability of the debt and a business valuation.
Lastly, the Implementing Decree sets out the rules on standardized access and assessment procedures, pricing, CDP’s remuneration, business plan, corporate governance and exit procedures regarding various types of intervention and financial instrument.
For a deeper discussion, please contact:
PwC TLS Avvocati e Commercialisti
PwC TLS Avvocati e Commercialisti