The Italian financial police (Guardia di Finanza) is investigating on 2011 buyout deal by Vision Capital fund on glass bottles and glass container products manufacturer Bormioli Rocco spa, MF-Milano Finanza writes today. The daily newspaper confirms then a previous article of DebtWire telling that the group’s headquarters in Fidenza (Parma) has been searched by the police in relation to the sale of the 94.1pct stake of the shareholders capital of the group from Banco Popolare to the private equity operator which was financed by a 250 high yield bonds issue.
At the moment it is not christal clear yet which is the reason why the police is investigating. One of the reasons seems to be an alleged false communication to the market (Art. 2621 of the Italian Civil Code) during the sale. However the investigation seems to be one of the many which the police is conducting on a mandate by Italian Inland Revenue targeting previous leveraged buyout deals.
Lbo deal are completely legal in Italy since 2003 thanks to Art. 2501-bis of the Italian Civil Code. However on the fiscal side it doesn’t exit yet a formal reading of the law and this is why there is some grey area where Inland Revenue may try to get back some money. The Inland Revenue generally disputes every merger leveraged buy out (Mlbo) deal where a newco acquires a majority stake of a target company thanks to debt financing and then merges with the target, taking down the debt on the targets’ books. Inland Revenue aims at avoinding that company revenue tax base is reduced by deductions due to interest expenses related to debt financing.
Last May 20th, Bormioli Rocco Holdings sa (the parent company of Bormioli Rocco spa) issued a press release (download here the press release) admitting that “Bormioli Rocco Holdings sa (“Bormioli Rocco Holdings”) has been notified that its subsidiary, Bormioli Rocco spa, is the subject of investigation by Guardia di Finanza in Italy. Bormioli Rocco Holdings believes Bormioli Rocco Holdings and its subsidiaries (the “Bormioli Rocco Group”) has at all times been in full compliance with all applicable laws and regulations and will cooperate fully with all relevant authorities”.
Last April the group announced a company reorganization as it will transform its four business units in four different subsidiary companies: Pharmaceutical Glass; Pharmaceutical Plastic; Tableware and Food & Beverage. The announcement followed the sale of Bormioli’s perfumery and cosmetics activities in December 2013 (see a previous post of BeBeez),