Olivetti chief soothes UK investors

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The Independent Online
Olivetti, the ailing Italian information technology group, is to strengthen its board by recruiting up to five overseas executive and non-executive directors in an effort to placate foreign investors holding a majority of the company.

The offer was made yesterday by Olivetti's new chief executive, Roberto Colaninno, during ameeting in London with institutional investors who own about a quarter of the shares.

Meanwhile, judicial sources in Italy said Olivetti's founder and former chairman, Carlo De Benedetti, had been placed under investigation for false accounting.

Mr Colaninno, brought in last month from the car components company, Sogefi, by Mr De Benedetti, pledged to improve the flow of financial information to overseas investors, including a move to quarterly reporting.

The overseas investors, who took part in a pounds 913m rescue rights issue last December and include ING Barings Asset Management and PDFM, were promised that they would be the "primary focus" of Mr Colaninno's attention.

The meeting at the Grosvenor House hotel in Park Lane appeared to placate the investors, who have grown increasingly alarmed as Olivetti has stumbled from one crisis to another while they been left in the dark about its financial position. One investor said afterwards: "At least Olivetti now has a strategy and we know where we stand."

Olivetti intends to appoint three more members to its executive committee to take responsibility for business development, its telecoms business and external relations. None of them will necessarily be Italian.

Mr Colaninno also said he would bring in two non-executive directors from overseas to beef up the board, one of whom may be British. At present the board is loaded with supporters of Mr De Benedetti who, though forced to retire as chairman at the onset of the crisis, remains Olivetti's largest shareholder with a 15 per cent stake.

Although Mr Colaninno was brought in by Mr De Benedetti and although Mr De Bene-detti controls 40 per cent of his company, Sogefi, Olivetti's new chief executive insisted he had been given a free hand and full independence.

Part of his terms for accepting the job were that Mr De Benedetti would be treated like every other investor. He could offer advice but Mr Colaninno was free to ignore it.

Mr Colaninno also spelt out the restructuring plans he has for Olivetti, saying he had taken the job to relaunch the company and not preside over its liquidation. He has pledged to raise 1,200bn lire by selling off its personal computer division and stakes in other businesses and has set himself a target of reducing its debt from 2,400bn lire now to 1,600bn lire by the middle of next year. The sale of the PC division along with an 8 per cent stake in the mobile telephone business Omnitel and disposals of other smaller businesses is due to be completed in the next three to four months.

The sale of other overseas marketing businesses and the flotation of a minority stake in its office services business, Lexicon, will follow next year. Mr Colaninno believes he can save a further 300bn lire a year through improved cashflow controls and efficiency measures. Olivetti's main bankers have given Mr Colaninno until early next year to demonstrate the strategy is paying off.

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