Impregilo secures future for Fisia

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The Italian construction giant sold a 49% interest in the thermal desalination specialist to raise money in 2002. Now it is being bought back as Impregilo tightens up its portfolio.

Italian construction giant Impregilo Group gave a vote of confidence in its thermal desalination subsidiary last month with the decision to buy back a 49% share of the company from Luxembourg-based investment fund Equinox for £68.5 million. Fisia is a market leader in thermal desalination plants (its 16.6MIGD multiple stage flash units at Shuweihat in Abu Dhabi won Desalination Plant of the Year in last year’s Global Water Awards). Babcock Fisia, based in Germany, is a leader in waste-to-energy technology.

The deal is part of the rationalisation of Impregilo Group following its refinancing over the summer of 2005, which brought Alberto Lina in as chief executive. Lina, a troubled company specialist, is refocusing the group on its core engineering and construction business and selling off non-core assets, with a view to strengthening the balance sheet and returning the group to profit by 2007.

A 49% share in Fisia had been sold by Impregilo to one of its subsidiaries and then by the latter to Equinox in 2002. The sale was presented at the time as a strategic move to support Fisia’s activities, but was later described by Impregilo in its June 2005 interim report as a merely financial transaction. A judicial inquiry is ongoing to assess whether any irregularities took place.

In a recent interview with Italian financial paper Milano Finanza, Fisia’s chairman Alberto Rubegni was very upbeat about his company’s prospects now that it is fully owned by Impregilo.

He said Fisia intended to further increase its desalination activities – which currently account for 60% of its turnover – and that after reorganising the business in 2006, a 10% increase in sales was expected for 2007.

As for Impregilo, it ended 2005 on a high after managing to draw to a close the financial and operational problems of its subsidiary Fibe. A waste disposal firm, Fibe, was contracted in 2000 to operate in the southern region of Campania. But the area’s problems proved too hard to tackle and the
company’s deficit soared. Waste disposal in Campania is now under administration and the contract with Fisia has been rescinded by the Italian government, much to the relief of Impregilo.

It now appears likely, despite the conservative forecast originally made by new managing director Alberto Lina when he took the job in May 2005, that Impregilo is on course to issue positive financial results starting from the year that has just ended.