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Rioforte sought €2 billion of new capital just before collapsing

bessalgadoarrestRioforte, the bankrupt offshoot of the Espírito Santo Group, identified capital needs of approximately €2 billion just weeks before seeking protection from creditors.

This amount was the capital increase that the sole shareholder Espírito Santo International authorised in early July when attempting to sell shares to new investors.

An extraordinary general meeting on July 9, Espírito Santo International, the holding company that controls Rioforte, approved a management proposal that the authorised share capital would be raised to €3.3 billion.

Given that the capital of Rioforte was €1.3 billion, the administration authorised a capital increase of €2 billion with the knowledge that the company has crippling problems.

The increase in share capital was twice that referred to publically by disgraced Espírito Santo doyen Ricardo Salgado as being Rioforte’s capital needs.

Thanksfully, Rioforte did not have time to go to the market as events overtook the failed business and it applied for protection in a Luxembourg court. From that moment the company was prevented from issuing new shares or any other securities.

Meanwhile, the Swiss based Bank Privée Espírito Santo, announced in a circular sent to its customers on Monday 1 September that those holding shares in Espírito Santo International face losses of 98% of their investments. The circular suggested that shareholders in Rioforte would get between 20% and 25% of the nominal share value, and investors in Espírito Santo Financière, between 10% and 12%.

The law firms representing shocked shareholders are circling with Correia, Seara, Caldas, Simões and Associados acting on behalf of “dozens of clients who have lost many millions of euros."

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+4 #1 Brian Thompson 2014-09-02 20:38
The problem for Portugal is that it reinforces the image that this is a bandit country. Which oddly so many Portuguese seem keen to portray !

For a foreigner here, trusting a Portuguese to be thinking what is in your best interests can be fatal to your wallet. Their concern being just for their interests.

And here we have Banking ... which is also all about trust or 'heavy' wallets get damaged.

Another major player in the financial world, Goldman Sachs is also nursing a very strong grievance against Portuguese banking. And presumably Portugal itself.


So GS have passed part of their debt onto ... Vulture Funds.

Which are still giving Argentina such trouble, 10 years after originally defaulting on their 70 billion debt. An economy X3 larger and just half of what Portugal owes ! :sad:

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