Italy readies special administration plans for ArcelorMittal steelworks

By Giuseppe Fonte and Alvise Armellini

ROME (Reuters) - The Italian government on Tuesday approved a decree that would allow it to later put the troubled former Ilva steel company under special administration, officials told Reuters, amid a clash with main shareholder ArcelorMittal.

The fate of Acciaierie d'Italia (ADI), as the group is known, is a major headache for Prime Minister Giorgia Meloni, as its closure would cost thousands of jobs and have serious knock-on effects for the Italian manufacturing sector.

ArcelorMittal, the world's second-largest steelmaker, owns 62% of ADI after taking it over in 2018, with public investment agency Invitalia holding the remaining 38%.

The special administration regime would put ADI under the responsibility of government-appointed managers as a way to buy time for the government to look for a new industrial partner, or, in its absence, re-nationalise the company.

A statement from Meloni's office said Rome had approved a decree to strengthen existing measures aimed at keeping struggling companies such as ADI afloat.

A high-level government source said the decree would make it easier to put the steel company under special administration by providing funding, as well as provisions to safeguard jobs and production levels.

Earlier this month, Meloni's cabinet proposed that Invitalia inject 320 million euros into ADI and then raise its stake to 66%, as part of a broader plan to strengthen the group's capital.

ArcelorMittal, however, refused to provide guarantees that it would continue to finance ADI as a minority shareholder, sinking Rome's plans, separate people familiar with the matter said.

ADI's main shareholder has made a counteroffer of selling its entire stake to Invitalia, but the state agency rebuffed this proposal hours before the government approved the decree, the people added.

Weighed down by an increase in energy prices and a drop in rolled steel coil prices, ADI has run out of cash and has accumulated a huge debt pile with suppliers including energy giant Eni.

An administrative court on Monday cleared the way for ADI's gas supplies to be cut due to unpaid bills, but the steel producer said it would appeal, staving off the risk of an immediate shutdown.

ADI's plant in the southern Italian city of Taranto is one of the largest in Europe, employing some 8,200 people, and a further 3,500 are employed in related industries, but the facility is operating far below capacity due to its crisis.

(Editing by Leslie Adler)