Pininfarina Needs Cash
March 11, 2008

Famed Italian car design house Pininfarina announced Monday night it is in dire need of cash after a disastrous 2007 and money-losing 2006.

The Turin, Italy-based company said it needs $154 million in new capital, following its reported net loss of $176 million for 2007 and a loss of $34 million in 2006, the Financial Times reported Tuesday. Banks supporting the company have demanded the capital increase in exchange for restructuring of debt.

In addition, the company implied that it would be scaling back its car production activities radically.

Pininfarina, in its announcement Monday, talked of a “more selective approach to contract vehicle manufacturing,” the London newspaper reported. That likely will mean a huge cut in the company’s current level of annual revenues, which totaled about $985 million in 2007.

Pininfarina’s stock has been dropping precipitously. Shares in the company are worth 60 percent less than they were six months ago, putting the market value of the company at $142 million –- less than the company is seeking in outside funding. Analysts predict further declines in Pininfarina stock on the latest news.

The Pininfarina family, which owns 55 percent of the group, said it would contribute its share to the company’s capital needs. So, too, might Vincent Bolloré, the French financier with whom the company apparently is collaborating on a new venture in electric cars. Pininfarina is doing an about-face on Bolloré, as the company had insisted in January that Bolloré’s possible entrance into the group’s share capital — as mentioned in some media reports — was “absolutely without foundation.”

Pininfarina has been working with investment bank Rothschild and consultant Roland Berger on a revival plan.

Analysts say Pininfarina’s problems stem from the fact that it took too much work two or three years ago from big companies, such as Volvo, Mitsubishi and Fiat, causing it to struggle with quality control and costs. Some of the models Pininfarina produced, such as the Alfa Romeo Brera and Mitsubishi Colt CZC, have sold poorly due in part to delays from recalls and other problems that made the sporty cars unavailable for summer deliveries. Sources told the Financial Times quality has improved substantially in recent months.

Photos by Alfa Romeo, Mitsubishi
1 - Alfa Romeo Brera
2 - Mitsubishi Colt CZC

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