PT Dumps Telefonica Request To Boost Dividend Linked To Vivo Bid

Portugal Telecom SGPS S/A (PT) said Monday that it rejected a proposal from Telefonica SA (TEF) to discuss the distribution of an extraordinary dividend if the Portuguese company's shareholders agree to sell the firm's stake in Vivo Participacioes SA (VIV).

Telefonica asked that an extraordinary dividend, of EUR1 a share or more, be included in a shareholders' vote at PT's extraordinary shareholder meeting June 30 to discuss Telefonica's EUR6.5 billion bid for PT's stake in the Brazilian mobile company.

PT said in a filing with regulators that it rejected the dividend proposal on legal grounds. The chairman of PT's shareholders meeting claims the proposed dividend discussion is conditional on the approval of Telefonica's offer at the same meeting, and that dividend proposals need the ratification of the company's directors and its audit committee, and the review of the company's results.

Both Telefonica and PT control Vivo through a 50-50 joint venture in the investment vehicle Brasilcel, which owns 60% of Vivo.

PT has said the offer doesn't value Vivo appropriately but will allow its shareholders to vote over whether it accepts Telefonica's offer on June 30.

Company websites:

http://www.telecom.pt

http://www.telefonica.com

-By Santiago Perez, Dow Jones Newswires, 34 913958119, santiago.perez@dowjones.com

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