Olivetti close to bankruptcy

Olivetti close to bankruptcy

Olivetti Computers Worldwide SpA, the Italian PC manufacturer, risks bankruptcy if it fails to convince banks to come up with a cash injection, according to sources close to the company.

The ailing hardware manufacturer has suffered a series of financial crises since it was bought two years ago by Edward Gottesman's Luxembourg-based investment company Piedmont International SA.

Company executives are due to meet Friday with a pool of Italian banks and a representative of the Government to see if they can stave off the impending bankruptcy, according to trade union officials. Around 600 of the company's 1300 workers have been temporarily laid off due to the financial crisis, union officials said.

A shareholders' meeting scheduled for February 22 is ready to consider an application for controlled administration (bankruptcy protection) if they fail to find the necessary funding, said a spokeswoman for one of Olivetti's public relations companies.

The company is seeking around $US76 million in loans, Italian newspapers reported yesterday.

"Friday will be the day of truth," said Giampiero Castano, secretary of the Fiom trade union. "Olivetti Computers Worldwide is a competitive industrial company that participates in international tenders and wins them, but which suffers from financial problems caused by its undercapitalisation," he said. "We are not asking for an injection of public funds, but that the Government use its moral persuasion on the Italian financial system, which doesn't have much of a taste for risk-taking."

Under a new industrial plan the company intends to pull out of the consumer market and concentrate on the production, mainly on demand, of professional PCs and servers for major business clients, Castano said. The strategy appears to be working but the company's progress is being hampered by the lack of funds, analysts said.

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