London investors see Olivetti plunge into free fall

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London investors who own more than 30 per cent of Olivetti saw the value of their holdings plunge further yesterday as shares in the struggling Italian computer group went into free fall within minutes of trading resuming after a two-day suspension.

Officials on the Milan bourse had to suspend the shares again almost immediately as they opened 17 per cent down at 619 lire against a price of 749 lire before dealings were suspended last week.

London-based fund managers, including ING Barings Asset management, Nomura Asset Management and PDFM, have seen the value of their investments plunge by almost 40 per cent since they took part in a pounds 913m rescue rights issue last December.

Francesco Caio, Olivetti's chief executive, was due to travel to London yesterday to see important customers but his trip did not take in any of the key investors who will help determine Olivetti's fate.

Those shareholders are still attempting to arrange meetings with the company after the shock departures last week of Carlo De Benedetti, its chairman for 18 years, and Renzo Francesconi, who precipitated the current crisis by resigning as chief operating officer after questioning Olivetti's half-year results.

An official from Consob, the Italian stock exchange regulator, said that trading in the shares would resume this morning but added that Olivetti had been given 24 hours to respond to a list of seven questions about its first-half figures when the company reported a loss of 440bn lire.

Earlier it had been another day of chaos on the Milan bourse. Shares are normally suspended automatically if they fall by more than 10 per cent but Olivetti shares were already down by more than this in pre-trading before the official market opening. The cut-off point was stretched to 15 per cent and then 20 per cent to allow trading to start.

Meanwhile, there are fears of a further 5,000 job losses in Olivetti's 18,000 strong workforce as the group struggles to end years of losses.

In a speech on Sunday night Mr Caio confirmed his intention of selling off Olivetti's computer division in order to concentrate on telecommunications.

"We have to make choices," he told a political rally in Modena.

"We are busy looking for partners to whom we can entrust our PC sector in order to concentrate on development areas."

The possibility of a domestic rescue by the Stet TLC holding company was ruled out by Mr Caio himself who stressed that Stet and Olivetti's Omnitel mobile phone division were competitors and would remain so.