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The  European  Commission  has  decided  to  extend   by  six  months,  until
1 July 1997, the Andreatta-Van Miert Agreement concluded at the end  of 1993.
The Agreement  provides for  a gradual reduction  in the indebtedness  of the
state  holding   company  IRI,   and  the   privatization   of  its   various
subsidiaries. It  was originally  agreed that the  process of debt  reduction
was  to be  completed by  the end  of 1996,  but that  an extension  might be
allowed in order to take account of the situation on the market.

The  extension authorized  today  is subject  to  compliance by  the  Italian
authorities with the following undertakings:

-    The Autostrade  company is to be privatized before  June 1997. IRI has a
     20% holding  in Autostrade, and the  remaining 80% is held  by Fintecna,
     which  is itself a wholly owned  IRI subsidiary. Autostrade has debts of
     LIT 5 165 billion.

-    The shipping company Finmare is to be privatized.  It is wholly owned by
     IRI, and has debts of LIT 1 136 billion. Minority  holdings such as that
     in Banca  di Roma are to be sold off: IRI has a 35% stake in the holding
     company which controls Banca di Roma,  and a 14% stake in Banca di  Roma
     itself.

-    Stet Telecommunications is to be sold to the  Treasury, for a book value
     of LIT 11 200 billion.

-    The  Seat company is to  be privatized in the  first few months of 1997.
     Seat is a  division of  the Stet group,  and has an  estimated value  of
     LIT 3 200 billion.

It  is expected  that compliance with  these undertakings will  enable IRI to
reduce its debts by about LIT 19 000 billion.

Under  the Andreatta-Van Miert  Agreement the  Commission  accepted that  the
Italian  State  should  be  liable  for  the  debts  of  these  companies  in
accordance  with  Article 2362  of  the  Italian  Civil  Code.  That  Article
provides  that a  sole shareholder  has unlimited  liability;  the Commission
took the view that in the circumstances  this unlimited liability constituted
state aid. The Commission allowed the aid, and  as a quid pro quo the Italian
Government  had to  undertake gradually  to reduce  the  indebtedness of  the
companies to a  level where it would be acceptable to a private investor in a
market economy. Once  this operation is complete the Italian  Government will
have to  reduce its  holding in  any company  which  is wholly  owned by  the
Treasury,  so that  the unlimited  liability of  a  single shareholder  under
Article 2362 of the Italian Civil Code will no longer cover any fresh debt.

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