Euronext Milan-listed Italian Sea Group reported that significant financial losses have eroded its share capital below legal minimum requirements, triggering formal corporate actions and the activation of protective insolvency procedures. The Italian Sea Group includes such brands as Admiral, Technomar, Perini Navi and Picchiotti, as well as repair and service companies NCAS Refit and Cali 1920.

In a statement issued last week, the company’s board of directors acknowledged a material event under Article 2447 of the Italian Civil Code. According to the code, a “material event pursuant to Article 2447” occurs when a joint-stock company (S.p.A.) suffers heavy losses that meet two conditions at the same time:

  • 1) The losses exceed one-third of the company’s share capital.
  • 2) After the losses, the remaining share capital falls below the legal minimum required by law.

Under Article 2327 of the Italian Civil Code, the minimum share capital for an S.p.A. is generally €50,000 ($58,170).

The statement added: “The exact amount is still being finalized through expert evaluations and accounting reviews.”

“Based on the preliminary assessments carried out as of today, it is however already certain that the losses have reduced the share capital below the minimum threshold established under Article 2327 of the Italian Civil Code,” the statement continued. “TISG will prepare an updated statement of financial position, and determine the final amount of the loss within the deadlines set forth by the applicable regulations.”

The board acknowledged the guidelines of TISG’s turnaround plan, aimed at:

  • ensuring the preservation of business continuity, including with reference to relationships with suppliers and customers
  • restoring shareholders’ equity balance within the current financial year
  • restoring financial stability

The turnaround plan will focus on strategic initiatives that include:

  • ongoing renegotiations with numerous ship-owning companies, aimed at recovering part of the extra costs incurred on various orders
  • the revaluation of the company’s real estate assets
  • the potential disposal of non-core real estate assets
  • potential positive effects resulting from an agreement with tax authorities

The statement outlined that the company will promptly update the market regarding developments relating to the ongoing actions, in compliance with the continuous disclosure obligations set forth under Article 17 of Regulation (EU) No. 596/2014 (MAR).