On April 28, 2007, a group of investors (the “
Investors
”) made up of Assicurazioni Generali S.p.A. (“
AG
” and, together with the AG group companies (Alleanza Toro S.p.A., formerly
known as Alleanza Assicurazioni S.p.A., INA Assitalia S.p.A., Generali Lebensversicherung AG, formerly known as Volksfürsorge Deutsche Lebenversicherung AG, and Generali Vie S.A.) that became investors on October 25, 2007 pursuant to the October 25th Amendment (as defined below), together “
Generali
”), Sintonia S.A. (“
SI
”), Intesa Sanpaolo
S.p.A. (“
Intesa Sanpaolo
”), Mediobanca S.p.A. (“
Mediobanca
” and, together with Generali, SI and Intesa Sanpaolo, the “
Italian Investors
”) and Telefónica S.A., the Spanish-based telecommunications operator (“
Telefónica
”),
entered into a co-investment agreement (as subsequently amended by an amendment agreement on October 25, 2007 (the “
October 25th
Amendment
”), the “
Co-Investment
Agreement
”). The Co-Investment Agreement established the terms and conditions for their participation in Centotrenta 4/6 S.r.l., an Italian company with registered office at Galleria del Corso 2, Milan, Italy, fiscal code n. 05277610969 subsequently transformed into an Italian joint stock company and renamed as Telco S.p.A. (“
Telco
”), an Italian corporation. On November 15, 2007, the registered
office of Telco was transferred to Via Filodrammatici 3, Milan, Italy.
Through Telco, the Investors purchased the entire share capital of Olimpia S.p.A. (“
Olimpia
”), which in turn held at that time 2,407,345,359 Telecom Italia Shares or approximately 18% of the ordinary share capital, of Telecom Italia, from Pirelli
& C. S.p.A. (“
Pirelli
”) and Sintonia S.p.A. and SI (together, “
Sintonia
”). The closing of the purchase of the entire share capital of Olimpia, divided into 4,630,233,510 ordinary shares (the “
Olimpia Shares
”) pursuant to the Share Purchase Agreement occurred on October 25,
2007, following the receipt of the announcement of forthcoming governmental approvals from the Brazilian telecommunications authority on October 23, 2007 (the “
Announcement
”), an unofficial English translation of which was previously filed on Schedule 13D as Exhibit 13.
In addition to Telco’s participation in Telecom Italia’s ordinary share capital through its interest in Olimpia, on October 25, 2007 pursuant to the Co-Investment Agreement, Generali and Mediobanca contributed to Telco the Telecom Italia Shares they held on that date. These shares amounted to 5.6% of Telecom
Italia’s ordinary share capital, with the individual contributions of Generali and Mediobanca amounting to 4.06% and 1.54%, respectively, of Telecom Italia’s ordinary share capital, and brought Telco’s direct and indirect participation in Telecom Italia’s ordinary share capital to approximately 23.6%. Copies of the Co-Investment Agreement and the October 25th Amendment were previously filed on Schedule 13D as Exhibits 5 and 11, respectively.
On April 28, 2007, the Investors also entered into a shareholders agreement (as subsequently amended, the “
Shareholders Agreement
”), pursuant to which the Investors set out, among other things, the principles of corporate governance of Telco and Olimpia, respectively,
the transfer of Telco’s shares and any Olimpia Shares or Telecom Italia Shares directly or indirectly owned by Telco and the principles of designation, among the Investors, of candidates to be included in a common list for the appointment of directors of Telecom Italia under the voting list mechanism provided for by Telecom Italia’s by-laws. A copy of the Shareholders Agreement was previously filed on Schedule 13D as Exhibit 7.
Pursuant to the October 25th Amendment, the Investors acknowledged the content of the Announcement and each of the Investors undertook to implement the content thereof through
appropriate
actions within the time frame set forth therein. On November 19,
2007, the Investors entered into an Amendment to the Shareholders Agreement and to the Bylaws (the “
November 19th
Amendment
”) to address the content of the Announcement, and each of the Investors undertook to implement such content through appropriate legal measures and
actions including amending the Shareholders Agreement and by-laws of Telco as provided in the November 19th Amendment. A copy of the November 19th Amendment was previously filed as Exhibit 16 and an unofficial English translation of the amended and restated by-laws of Telco (the “
Telco By-laws
”) was previously filed on Schedule 13D as Exhibit 17.
Separately, on November 6, 2007, pursuant to the Shareholders Agreement, Telco and Telefónica entered into a Call Option Agreement (the “
Option Agreement
”) to grant Telefónica an option to purchase Telecom Italia Shares or Olimpia Shares, as the
case may be, from Telco in the event that a decision to dispose or encumber Telecom Italia Shares or Olimpia Shares, as the case may be, or any rights attached thereto, including but not limited to voting rights, is taken by the board of directors of Telco by simple majority and Telefónica is a dissenting party. A copy of the Option Agreement was previously filed on Schedule 13D as Exhibit 18. On November 15, 2007, pursuant to Article 5 of the Option Agreement, Olimpia
adhered to and accepted all the terms and conditions of the Option Agreement. A copy of the Olimpia adherence letter was previously filed on Schedule 13D as Exhibit 19.
In March 2008, Telco acquired 121,530,000 Telecom Italia Shares, representing 0.91% of Telecom Italia’s share capital. As a result, Telco’s holding in Telecom Italia increased from 23.6% to 24.5% equal to 3,278,702,623 Telecom Italia Shares.
On October 28, 2009, SI requested, pursuant to Article 11(b) of the Shareholders Agreement, the non-proportional de-merger of Telco, with the assignment of its pro rata share of the assets and liabilities of Telco (comprised of Telecom Italia Shares held by Telco representing approximately 2,06% of Telecom Italia share capital).
On the same date, the Investors other than SI, namely Intesa Sanpaolo, Mediobanca, Generali and Telefónica (collectively, the “
Non-Exiting Shareholders
”) acknowledged SI’s decision and, by entering into a Renewal Agreement dated October 28, 2009
and effective as of April 28, 2010 (the “
Renewal Agreement
”), agreed (i) not to request the non-proportional de-merger of Telco, with the assignment of their corresponding share of Telecom Italia Shares at that time; and (ii) to renew the Shareholders Agreement for an additional term of three years until April 27, 2013 substantially on the same terms and conditions, except to provide that (a)
the
right of the Non-Exiting Shareholders to request the non-proportional de-merger of Telco not later than six months prior to the new expiry date will only be exercisable in the period between October 1, 2012 and October 28, 2012, and (b) for an early withdrawal right period exercisable between April 1, 2011 and April 28, 2011
(such Shareholders Agreement, as amended and renewed, the “
New Shareholders Agreement
”). A copy
of the Renewal Agreement is filed as Exhibit 20 hereto.
The Non-Exiting Shareholders also agreed, in the Renewal Agreement, to consider and evaluate – together with SI – mutually agreed alternative ways to permit SI to exit Telco, other than through non-proportional de-merger.
In connection with the Renewal Agreement, separately on October 28, 2009, Telco and Telefónica entered into an Amendment Deed to the Call Option Agreement (the “
Amendment to Option Agreement
”) (i) to extend the term of the Option Agreement to coincide
with the expiration date of the New Shareholders Agreement, and (ii) to exempt certain transactions
regarding the Telecom Italia Shares, namely those related to the exercise of de-merger and early withdrawal rights pursuant to Article 11(b) of the Shareholders Agreement
. A copy of the Amendment to Option Agreement is filed as Exhibit 21 hereto.
Items 3, 5, 6 and 7 of the Schedule 13D are hereby amended and supplemented to add the following: