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Italians left in the cold on Fantuzzi

September 6, 2009

By Guy Dinmore in Rome, published on FT on 6 September 2009

port equipment

port equipment maker was taken over by Terex Corp

Italian holders of bonds issued by Fantuzzi, an ailing port equipment maker taken over by Terex Corp of the US, risk losing several million euros at a vote to be taken without their knowledge at an emergency meeting in London on Tuesday.

Exclusion of Italian bondholders from the list of invitees was said to be due to different regulatory regimes within Europe. But the omission has angered those bondholders who have found out about it, and could result in one of Italy’s first class action legal suits.

Holders of bonds in Fantuzzi, which defaulted on payments, have been asked at three weeks’ notice to vote on a resolution that would return their total outstanding principal of €50m ($71m), but not the interest due since 2007. The bonds have a coupon of 10.75 per cent which was not paid in 2008 nor 2009.

A notice of the meeting, issued on August 17 to bondholders outside Italy, states that holders in Italy will not be invited or informed of the meeting. But neither will they be excluded should they turn up at the meeting.

Terex, contacted in Westport, Connecticut, said it had no immediate comment. Fantuzzi, based in the Italian region of Emilia Romagna, did not comment.

A person close to the organisers said informing Italian bondholders would have required a full tender offer which would have taken several months.

He said it was a “decent” deal on offer for a bond that had been in default, trading well below par. He stressed that Italian bondholders could still vote.

“How can Italian retail investors vote if they don’t know about the meeting? This is the scandal,” said Marco Elser, a partner in AdviCorp, a London-based investment bank and holder of almost €1m in Fantuzzi bonds.

Mr Elser said his representatives would vote against the plan, and that he would consider launching a class action legal suit in defence of Italian holders. Italy’s parliament has only recently passed legislation allowing such suits.

Notice of the resolution states that bondholders representing 55 per cent of the outstanding principal have already agreed to the offer by Terex to forego missed interest payments.

A vote requires 75 per cent of bondholders to attend the meeting, otherwise the quorum is reduced to 25 per cent participation at a second meeting to be held within 42 days.

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