UPDATE 1-Italy backs Finmeccanica plan to sell assets

Thu Mar 20, 2014 8:45am EDT
 
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* Govt says sale of transportation activities is essential

* Finmeccanica aims to sell assets in shortest time possible

* Shares rise more than 2 percent (Adds comments from CEO and analysts, background, share price)

By Danilo Masoni

MILAN, March 20 (Reuters) - The Italian government led by Matteo Renzi has endorsed plans by state-owned Finmeccanica to sell its rail assets, raising hopes that a deal to help the group focus on its more profitable aerospace and defence businesses may be closer.

Finmeccanica put up for sale its loss-making unit AnsaldoBreda, a train maker, and its stake in rail signalling firm Ansaldo STS more than two years ago to cut a heavy debt pile accumulated under a previous management.

But opposition from politicians and trade unions to foreign takeovers as well as a management reshuffle after a corruption scandal delayed the process, prompting rating agencies to cut the group's 3.3 billion euros ($4.6 billion) net debt to junk.

Finmeccanica's decision to sell its rail assets was an essential element for the success of the group's plans, the finance and industry ministries said in a joint statement on Wednesday.

The much-awaited endorsement comes only one month after a new government led by centre-left leader Renzi took power. Finmeccanica is 30 percent owned by the Italian state and needs its backing for sensitive strategic issues like disposals.   Continued...