The latest misadventures of the Italia Independent Group's owner and chairman, Lapo Edovald Elkann, does not seem to have unduly upset the company's board of directors. His brother John Philip Elkann, chairman of the powerful Fiat Chrysler group, has decided to join him in the recapitalization of the company, financing two-thirds of the capital increase by injecting a total of €10 million. Lapo raised his stake from 50.9 percent to 63.7 percent on Dec. 15, and John became the second-largest shareholder with a share of 8.6 percent. His support came in handy after a major drop of more than 70 percent in the share price in the course of the last 12 months.
The 39-year-old Lapo Elkann, grandson of the Fiat empire's former chairman, Gianni Agnelli, had spent the last weekend of November in the company of a transsexual escort in New York consuming sex, drugs and alcohol. When the drugs ran out, Lapo didn't have enough cash for more; at the ATM machine his account was dry, and the dealer wouldn't accept credit cards.
At that point, Italia Independent's chairman tried to obtain extra money by asking members of his family to pay a $10,000 ransom that a woman he claimed was holding him prisoner, was allegedly demanding, threatening to harm him. John Elkann came to his rescue by getting a representative of the family to contact the New York police, who organized the handing-over of the ransom.
The police found Lapo Elkann and the escort near the latter's apartment and the two men were taken into custody. Charges against the escort were later dropped, but Elkann was charged with faking his own kidnapping and ordered to appear before a criminal court for arraignment.
News of the scam resulted in an instant 8.7 percent fall in Italia Independent's share price on the Italian stock exchange, taking it down to €2.74, though it was back up a few days later and has now settled at €6.00. Lapo Elkann is no newcomer to such episodes. He came close to death after suffering a drug overdose back in 2005 in the apartment of a transvestite in Turin.
The latest incident has come at a difficult moment for Italia Independent, which on June 30 closed the first half of its financial year with revenues down by 34.5 percent and Ebitda down by 148.4 percent, leading to a net loss of €2.6 million for the period and raising the need for a capital increase. The drop in revenues for the full year should level out at 20-25 percent, which can be seen as normal after many years of double-digit growth.
Members of the company's top management have their work cut out protecting the firm from its chairman's behavior. Andrea Tessitore, co-founder of the company, recently asked Giovanni Carlino to take over the role of chief executive, not because he wanted less responsibility, but in order to give full attention to his new role as vice chairman. Carlino has worked for the Boston Consulting Group and various investment firms.