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Cmc, the real estate cooperative at bankruptcy risk

13 November, La Repubblica

The Ravenna real estate cooperative Cooperativa Muratori & Cementisti (Cmc) has chosen the worst period to be on a crisis. The company is currently struggling with its accounts, as it found itself short of liquidity. The future of the company and its 6,900 employees depend on how the next 30 days will go. By the end of November, the advisors Mediobanca and Studio Trombone will present a company reorganisation plan and will try to convince Legacoop to issue some funds (about several tens of millions) to patch up the group’s financial situation. The second phase will involve the renegotiation of the debts towards banks amounting to 165 million due at the end of 2019 and an agreement with the bondholders. One year ago, Cmc issued 500 million in bonds and last Friday it announced that it would not be able to repay the coupons. If the company is not able to find the money by the 15th of December or it will not reach an agreement with the underwriters, Cmc will risk to default.

The crisis of the construction sector in Italy has already impacted some famous company, like Astaldi, Trevi and Condotte. The crisis of the company from Emilia, however, was unexpected and it was apparently caused by some overdue payments that crashed its fragile financial structure. According to the reports, the Cmc accounts have always been solid: never a red. Moreover, commissioned works rose from 1.34 billion to 4.6 billion in the first part of the year (most of the commissions are abroad). The newly-appointed general director Paolo Porcelli spoke about an offer to reconstruct the Morandi bridge in Genoa in a recent interview, launching a reassuring message: “Our situation is not comparable to that of the companies currently in difficulties. The coupons on the bonds will be paid”.

We’ll see how it’ll go. However, Cmc is an example of the cooperative world, where companies struggle on many aspects and have to deal with a government which is not exactly on their side. However, there have been some signs of change recently. The former Anas Ceo Vittorio Armani, recently fired by the Minister for Instructure Danilo Toninelli, repaid Cmc for a debt amounting to approximately to 58 million. The amount was part of the 108-million past-due payments that caused the crash, but it clearly wasn’t enough to save Cmc.

Firstly, it will be necessary to find some cooperatives eager to borrow money to save one of the former jewels of the cooperative world. The problems of this sector, from mass retailing to real estate, are many and the available funds are limited. But if Legacoop is not willing to help, it will be way more difficult to convince the banks and the bondholders (including the speculative funds) to pay and it will be even harder to save Cmc. There’s little hope in the help from the Government. As Beppe Grillo ironically commented in 2012: “Cmc plays at doing the socialist with Italians’ money. I wonder how they get so many commissions without political support. I want to apply for a job there”. It’s unlikely he would do it now.

Source: La Repubblica

Translator: Cristina Ambrosi