Filed by Telecom Italia
S.p.A.
This communication is filed pursuant
to Rule 425 under the United States Securities Act of 1933
Subject Company: Telecom Italia S.p.A.
Commission File Number: 001-13882
Date:
November 18, 2015
IMPORTANT
INFORMATION:
In
connection with the proposed transaction, Telecom Italia expects to file a
registration statement on Form F-4, which will include a prospectus (the
“prospectus”), and a Tender Offer statement on Schedule TO (the “Schedule TO”).
The proposed offer will be made exclusively by means of, and subject to, the
terms and conditions set out in, an offer document containing and setting out
the terms and conditions of the offer and a letter of transmittal to be filed
with the United States Securities and Exchange Commission (the “SEC”) and
mailed to shareholders.
The
release, publication or distribution of this material in certain jurisdictions
may be restricted by law and therefore persons in such jurisdictions into which
this material is released, published or distributed should inform themselves
about and observe such restrictions.
SHAREHOLDERS
ARE URGED TO READ ANY DOCUMENTS REGARDING THE PROPOSED OFFER WHEN THEY BECOME
AVAILABLE (INCLUDING THE EXHIBITS THERETO) AS THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED OFFER.
TELECOM ITALIA S.p.A.
Registered
Office in Milan, Via Gaetano Negri no. 1 and Haedquarter and Branch Office in
Rome, Corso d’Italia no. 41
PEC
(Certified Electronic Mail): telecomitalia@pec.telecomitalia.it
Share
capital Euro 10,740,236,908.50 fully paid up
Tax Code/VAT Code and Registration Number with Milan
Companies’ Register 00488410010
SPECIAL
MEETING OF THE HOLDERS OF SAVINGS SHARES
17 December 2015, at 2:30 pm (CET) Rozzano (Milan), Viale Toscana
no.3
ITEM ON THE AGENDA
Exchange of savings
shares for ordinary shares: (i) offer to the holders of savings shares of one
ordinary share in exchange for each savings share held, plus a cash payment;
and (ii) the mandatory exchange of the savings shares not so exchanged at the
end of the offer referred to in point (i) for ordinary shares. Amendments to
articles 5, 6, 14, 18 and 20 of the company’s bylaws. Approval, pursuant to
article 146, paragraph 1, letter b of the legislative decree 24 February 1998,
no. 58, of the proposal of mandatory exchange of the savings shares for
ordinary shares. Approval of any relevant and consequent resolution.
REPORT BY THE COMMON REPRESENTATIVE OF SAVINGS SHAREHOLDERS
By notice of call published
on 5 November 2015 in accordance with applicable law, the Board of Directors of
the Company called an extraordinary shareholders’ meeting, with a single call, on
15 December 2015 at 11:00 am (CET), to vote on the following item on the
agenda:
1)
Exchange of savings shares for ordinary
shares: (i) offer to the holders of savings shares of one ordinary share in
exchange for each savings share held, plus a cash payment; and (ii) the
mandatory exchange of the savings shares not so exchanged at the end of the offer
referred to in point (i) for ordinary shares. amendments to articles 5, 6, 14,
18 and 20 of the company’s bylaws. Approval of any relevant and consequent
resolution.
On 5 November 2015, the Board of Directors of
the Company, by another notice of call also called the special shareholders’
meeting of savings shareholders, with a single call, on 17 December 2015 at 2:30
pm (CET), to vote on the following item on the agenda:
1)
Exchange of savings shares for ordinary
shares: (i) offer to the holders of savings shares of one ordinary share in
exchange for each savings share held, plus a cash payment; and (ii) the
mandatory exchange of the savings shares not so exchanged at the end of the
offer referred to in point (i) for ordinary shares. Amendments to articles 5,
6, 14, 18 and 20 of the company’s bylaws. Approval, pursuant to article 146,
paragraph 1, letter b of the legislative decree 24 February 1998, no. 58, of
the proposal of mandatory exchange of the savings shares for ordinary shares.
Approval of any relevant and consequent resolution.
Subsequently, on 15 November 2015, Vivendi,
holder of the Company’s ordinary shares, submitted to the Company a request to
supplement the agenda of the ordinary shareholders’ meeting with the following
item “The appointment of 4 (four) Directors, subject
to having changed the number of the members of the Board of Directors from 13
(thirteen) to 17 (seventeen). Related and consequent resolutions.”
On the same date, the Company, acknowledging
Vivendi’s request, announced by way of a press release that a meeting of the
Company’s Board of Directors would be called in the coming days to resolve on
the relevant issues.
The Common Representative, having received
notice of these calls, considered it appropriate to prepare the following
report, in the interest of the class, and to obtain the opinion of an independent
advisor on the proposed exchange ratio, which will be provided to the savings
shareholders as soon as it is available and, if possible, no later than 21 days
before the special meeting of savings shareholders. The Common Representative reserves
the right to undertake further initiatives in the future, including at the
meeting.
The definitions contained in the Explanatory
Report of the Board of Directors in accordance with article 125-ter of
Legislative Decree 58/1998 (the “Explanatory Report”) to which the
reader is referred, shall also be used in this report.
********
As explained in the Explanatory Report prepared
by the Board of Directors, the Transaction (as defined below), if approved in
accordance with applicable law, would allow the Company to simplify its capital
structure, thereby reducing the necessary corporate action and costs related to
the existence of different classes of shares. The issuance of ordinary shares
upon cancellation of savings shares may expand the total free float of the
ordinary shares, creating increased liquidity for the shares and, consequently,
increased interest from the market in general and institutional investors in
particular.
Moreover, the
Transaction comprises two proposals: the first, a voluntary offer, and the
second, in alternative to the first, a mandatory exchange. The holders of
savings shares will be offered one ordinary share issued in exchange for each
savings share held plus cash consideration equal to Euro 0.095 for each share
(the “ Voluntary Offer”). Holders of savings shares who do not accept
the offer in the Voluntary Offer will, mandatorily, at a ratio of 0.87
ordinary share for each savings share held, receive ordinary shares in exchange
for savings shares held, with no cash consideration (the “Mandatory Exchange”
and, together with the Voluntary Offer, the “Transaction”).
The Transaction is subject in its entirety to
the condition that the proposal, as described, will be approved by the
Extraordinary General Meeting of the holders of ordinary shares convened on 15
December 2015, and will be subsequently approved by the Special Meeting of
savings shareholders convened, in a single call, on 17 December 2015. The Mandatory
Exchange is subject to the additional condition that the aggregate liquidation
value of the savings shares for which the right of withdrawal has been
exercised, calculated in accordance with art. 2437-ter, of the Italian
Civil Code, does not exceed Euro 100,000,000. This condition of the Mandatory
Exchange is for the benefit of the Company, which may subsequently decide to
waive it.
The Board of Directors deems that the Transaction
may entail benefits for all shareholders. In particular, the Transaction would
permit:
(i)
all savings shareholders to benefit from the
rights given to ordinary shareholders; to receive a more liquid security in
terms of trading volumes and thus their relative weight in stock market indices
and, at the same time to liquidate the value of the financial privileges that
are attributed to the savings shareholders under the Company’s Bylaws and which
is reflected in the market price;
(ii)
those savings shareholders participating in the Voluntary
Offer to benefit from an implied premium equal to 56.1% as of 4 November 2015,
it being understood that there is an obligation to pay a cash contribution. (Please
note that different market conditions after 4 November 2015 could cause the
premium to diminish significantly or completely.)
(iii)
those savings shareholders not participating in
the Voluntary Offer, and thus subject to the Mandatory Exchange, to benefit
from an implied premium equal to 27.0% as of 4 November 2015. (Please note that
different market conditions after 4 November 2015 could cause the premium to
diminish significantly or completely.)
In addition, the Board of Directors clarified
that the Transaction will bear no encumbrance, cost or commission to be paid by
the savings shareholders. However, the savings shareholders will become ordinary
shareholders and thus will lose all financial privileges that are attributed to
the savings shareholders under the Company’s Bylaws, which are the following:
(i)
the net profit shown in the duly approved
financial statements, less the amount to be allocated to the legal reserve,
must be distributed to the savings shares up to five per cent of Euro 0.55 per
share;
(ii)
the net profit that remains after the allocation
to the savings shares of the preferred dividend referred to in (i) above,
payment of which must be approved by the ordinary shareholders’ meeting, shall
be divided among all the shares in such a way that the dividend per savings
share is higher by two per cent of Euro 0.55 per share;
(iii)
when the dividend paid on savings shares in a
financial year is less than that indicated in (i) above, the difference shall
be added to the preferred dividend in the next two financial years;
(iv)
in the event of a distribution of reserves, the
savings shares have the same rights as the ordinary shares;
(v)
if the net profit for the year is nil or
insufficient to satisfy the financial privileges referred to in the preceding
two subsections, the ordinary shareholders’ meeting called to approve the
financial statements may resolve to satisfy the right referred to in subsection
(i) and/or the right to the premium referred to in subsection (ii) by drawing
on the reserves;
(vi)
payment made by drawing on the reserves
described in point (v) above shall exclude application of the mechanism for
carrying over the right to preferred dividends not received through the
distribution of profits referred to in subsection (iii) to the two following
financial years;
(vii)
share capital reductions due to losses do not
affect savings shares, except for the amount that is not covered by the portion
of share capital represented by the ordinary shares; and
(viii) upon dissolution of the Company, savings shares shall have priority
in the repayment of the capital up to Euro 0.55 per share.
The Board of Directors has not indicated the
timing and the terms upon which the Transaction will be implemented. However,
it has been indicated that the period to participate in the Voluntary Offer
will be agreed between the Company and Borsa Italiana S.p.A. and, in any event,
will not commence prior to the date on which the resolution of the
extraordinary general shareholders’ meeting (assuming it has, in turn, been
approved by the special meeting of the savings shareholders) has been
registered in the Companies’ Register. The Board of Director stated that the terms
of the implementation of the Transaction will be disclosed to the public by way
of a report that will be published in accordance with applicable law no later
than the trading day preceding the beginning of the Voluntary Offer period.
On the Effective Dates of the Voluntary Offer and of
the Mandatory Exchange, which will be agreed with Borsa Italiana S.p.A.,
disclosed to the public by way of a notice published on the Company’s website
and in a daily newspaper, savings shares will be cancelled concurrently with
the allocation of ordinary shares to holders of savings shares.
As of today, it is not possible to determine the
number of ordinary shares that will be issued, since it will depend on the
participation in the Voluntary Offer by the Company’s savings shareholders.
However, the Transaction will not in any case result in a change in the
Company’s share capital in absolute terms but only in the number of the
outstanding shares and a potential change in their implied book value. By way
of illustration, the Company explained that:
(i)
if there is full participation in the Voluntary
Offer by holders in respect of all of the savings shares outstanding as of the
date of this Explanatory Report, 6,027,791,699 ordinary shares will be issued
and the remaining the share capital of Euro 10,740,236,908.50 will be divided
in 19,527,703,470 ordinary shares, with no par value, with a dilution of the
ordinary share capital equal to 30.9%;
(ii)
if there is no participation in the Voluntary
Offer and the Mandatory Exchange is executed in respect of all of the savings
shares outstanding as of the date of this Explanatory Report, 5,244,178,778
ordinary shares will be issued and the remaining share capital of Euro
10,740,236,908.50 will be divided in 18,744,090,549 ordinary shares, with no
par value, with a dilution of the ordinary share capital equal to 28.0%;
The Company has indicated that it intends to use any liquidity
deriving from the Voluntary Offer for general corporate purposes and in
particular toward planned investments in Telecom Italia’s landline and mobile
networks.
As for issues raised by the Transaction, the
Directors, in the Explanatory Report, note the following:
(i)
on the Effective Date of the Voluntary Offer
and/or the Mandatory Exchange, savings shareholders will cease to benefit from
the financial privileges given to them pursuant to the Company’s Bylaws. The Explanatory
Report notes that the Transaction, if executed, is expected to be effective
prior to the payment of any possible dividend that could be distributed after
the approval of the 2015 financial statements, which was taken into account
when setting the ratio and cash contribution.
(ii)
on each of the Effective Dates, ordinary
shareholders will be diluted proportionally to the number of savings shares subject
to the Transaction.
(iii)
in the event that the Voluntary Offer takes
place but the Mandatory Exchange is not effected (due to the amount of
Withdrawn Shares exceeding €100,000,000, where such condition is not waived by
the Company), the savings shares still outstanding at the end of the offer
period for the Voluntary Offer will be less liquid. There is a risk that such
liquidity may be deemed sufficiently low that Borsa Italiana S.p.A. could
revoke the listing of the savings shares and/or the New York Stock Exchange
could revoke the listing of the American Depositary Shares representing the
savings shares.
(iv)
shareholders should consider, when deciding on
how to vote on the Mandatory Exchange, the following factors (among others):
(a) all options available to the savings shareholders (Voluntary Offer, Mandatory
Exchange, right of withdrawal as well as sale of their savings shares on the
market); and (b) the uncertainty concerning future trends in the market price
of ordinary shares.
Finally,
the Mandatory Exchange, if approved, will result in an amendment to the
provisions in the Company’s current Bylaws that relate to savings shareholders’
financial privileges, and will give rise to a right of withdrawal by the
savings shareholders who did not vote to adopt the resolutions of the Special
Meeting, pursuant to art. 2437, paragraph 1, lett. g) of the Italian Civil
Code, to which reference is made, to be exercised in the manner prescribed by
law. Please note that the Mandatory Exchange and, thus, the effectiveness of
the savings shareholders’ withdrawal rights are subject to the condition that
the liquidation value of the withdrawal rights actually exercised does not
exceed Euro 100,000,000. As stated by the Board of Directors, this
condition is for the benefit of the Company, which may subsequently decide to
waive it. The relevant information concerning the terms and conditions of the
right of withdrawal will be disclosed by the Company, by way of a notice
published in accordance with applicable laws. If one or more savings
shareholders exercise the right of withdrawal, the liquidation will be
conducted in accordance with article 2437-quater of the Italian Civil
Code. Upon effectiveness of the Mandatory Exchange, the liquidation value of each savings share was
calculated in accordance with article 2437-ter, paragraph 3, of
the Italian Civil code will be equal to Euro 0.9241, which is the arithmetic
mean of the closing prices of the savings shares on the market in the six
months before the date of publication of the call notice of the Special
Meeting, giving rise to the withdrawal rights. Please note that, pursuant to article 2437-bis, paragraph 3, of the Italian
Civil Code, the right of withdrawal cannot be exercised, and if already
exercised will be ineffective, if the Company revokes the resolution within 90
days.
As indicated above, the Board of Directors has calculated an
exchange ratio equal to 1 ordinary share for each savings share, plus a cash
payment in the amount of Euro 0.095 per savings share with respect to the Voluntary
Offer, and equal to 0.87 ordinary share for each savings share, without any
cash payment, with respect to the Mandatory Exchange. The savings shareholders
will then receive an implied premium equal to 56.1% in case of Voluntary Offer
and equal to 27.0% in case of Mandatory Exchange. Please note that, to
calculate the applicable exchange ratio, the Board of Directors considered
analyses provided by the financial advisors as well as a sample of substantially
similar transactions (22 transactions in which the concentration of the
different classes of existing shares took place mandatorily and 8 transactions
in which the shareholders could choose to take part in the transaction)
conducted in the Italian market since 1999 to the date of disclosure of the
Transaction.
Set
forth below is the chart included by the Board of Directors in its Explanatory
Report, which illustrates the implied premiums for participating in the Voluntary
Offer and the Mandatory Exchange compared to the closing price of 4 November
2015 and the average prices observed on different periods until 4 November
2015.
|
Voluntary
Portion
|
Mandatory
Portion
|
Conversion
ratio
|
1.00
|
0.87
|
Cash
consideration per share
|
€0.095
|
-
|
Price
for each savings share on 4 November 2015
|
€0.9995
|
€0.9995
|
Price
for each ordinary share on 4 November 2015
|
€1.2160
|
€1.2160
|
Implied
premium on price on 4 November 2015 per savings share
|
12.2%
|
5.8%
|
Average
price on the month preceding 4 November 2015 of savings share
|
€0.9246
|
€0.9246
|
Average
price on the month preceding 4 November 2015 of ordinary share
|
€1.1194
|
1.1194
|
Implied
premium on 1-month average price
|
10.8%
|
5.3%
|
Average
price on the three months preceding 4 November 2015 of savings share
|
€0.9284
|
€0.9284
|
Average
price on the three months preceding 4 November 2015 of ordinary share
|
€1.1209
|
€1.1209
|
Implied
premium on 3-month average price
|
10.5%
|
5.0%
|
Average
price on the six months preceding 4 November 2015 of savings share
|
€0.9241
|
€0.9241
|
Average
price on the six months preceding 4 November 2015 of ordinary share
|
€1.1362
|
€1.1362
|
Implied
premium on 6-month average price
|
12.7%
|
7.0%
|
On
this topic, additional data is set forth in the following chart, which
summarises historical data of certain exchange ratios for savings shares in
exchange for ordinary shares of certain listed companies, as prepared by the
Common Representative on the basis of publicly available information.
Company
|
Disclosure Date
|
Terms
|
Ratio
|
Discount
|
Premium on
date of disclosure
|
Exor
|
11/02/2013
|
mandatory exchange 1:1 of preferred and savings shares
|
|
0%
|
11.18% e
10.18%
|
Fiat
|
27/10/2011
|
mandatory
exchange 0.85 ordinary share for each preferred share and 0.875 ordinary
share for savings share.
|
0.85x-
0.875x
|
15% -
12.5%
|
17 % and 19%
|
Fiat Industrial
|
27/10/2012
|
mandatory exchange 0.7 ordinary share for preferred share
and 0.725 ordinary for savings share
|
0.7x-
0.725x
|
30%-
27.5%
|
36% and 34%
|
MPS
|
30/11/2011
|
mandatory exchange of savings share 1:1
|
|
0%
|
|
Caltagirone
|
2007
|
mandatory
exchange of savings share 1:1
|
|
0%
|
|
BNL
|
2006
|
mandatory
exchange of savings share 1:1
|
|
0%
|
|
Mondadori
|
2003
|
mandatory
exchange of savings share 1:1
|
|
0%
|
|
Buzzi Unicem
|
2001
|
voluntary offer 25:16
|
0.64x
|
36%
|
|
Indesit
|
2001
|
voluntary offer 3:5 or 1:1 with cash consideration
|
0.6x
|
40%
|
|
Recordati
|
2000
|
conversion 16:25 or 1:1 with cash payment
|
0.64x
|
40%
|
|
CIR
|
2000
|
mandatory exchange 1:1 for both preferred and savings
shares
|
|
0%
|
|
Italcementi
|
07/03/2014
|
mandatory exchange 0.65 ordinary share for savings share
|
0.65x
|
35%
|
19,0% *1
|
RCS
|
28/03/2014
|
mandatory exchange of class B ordinary shares 0,51 for
savings share
voluntary offer of class A ordinary shares 1:1 with cash
payment
0.26 – cat. B 1:1 cash consideration. 0.68
|
|
Mandatory 2.1%
% -
Voluntary 10.1%%
|
Mandatory 2.1% -
Voluntary 20.2%
|
UnipolSai Assicurazioni
|
01/12/2014
|
mandatory Exchange 100 ordinary shares for 1 savings share
|
100x
|
|
25.31% *2
|
*1 In this case the implied premium was
calculated on the basis of average market prices (Borsa) two days prior to the
disclosure date six months before.
*2In this case the implied premium was calculated on the basis
of the average market prices (Borsa) during the six months preceding 7 January
2014, the day after 6 January 2014, which was the date of incorporation of
UnipolSai by way of merger.
With
respect to the proposed Transaction and for the purposes of an evaluation of
the Transaction by the class, the Common Representative highlights, in summary,
the following. The Transaction, with respect to the change in administrative
rights, will result in the simplification of the capital structure by the
issuance, in exchange for cancellation of savings shares, of ordinary shares
with voting rights. The Transaction will also result in a more liquid
underlying market and in a different applicable legal framework with respect to
the applicability, inter alia, of rules on public tender offers (in
particular, mandatory public tender offers), on shareholding structures and on
shareholders rights (as well as on minority shareholders’ rights). On the other
hand, the Transaction, in addition to the removal of the preferred dividend
attaching to the savings shares, will result in a change to the Bylaws rules on
the subordination of savings shares to ordinary shares in case of share capital
reductions due to losses. In addition, upon completion of the Transaction,
savings shares shall no longer have longer priority over ordinary shares in the
repayment of the capital of the savings shares upon
dissolution of the Company and winding-up of its assets.
With
respect to the above, of utmost importance in the evaluation of the
attractiveness of the Transaction is the exchange ratio of the savings shares
into ordinary shares with respect to both the Voluntary Offer and the Mandatory
Exchange. In this respect, the Common Representative has already liaised with a
financial advisor in order to obtain an appraisal on the proposed exchange
ratios, which will be provided as soon as available and if possible no later
than 21 days before the date of the special meeting.
As of
today, on the basis of the considerations and elements mentioned above, the
Common Representative believes that the proposed Transaction addresses the
interests of the class and is in line with international best practices,
allowing the simplification of the capital structure upon cancellation of the
different classes of shares having different rights. In any case, the special
meeting of the savings shareholders shall be free to evaluate the attractiveness
of the Transaction and, by either approving or rejecting the resolution passed
by the extraordinary meeting of the ordinary shareholders, shall be entitled to
decide on the Transaction having taken into account all criteria the
Transaction is based upon.
Kind
regards,
Milan,
17 November 2015
Avv. Dario Trevisan
The Common Representative of the Savings Shareholders of Telecom
Italia S.p.A.
***********
The registration
statement, the Schedule TO and other related documents in relation to the
proposed offer will be available electronically without charge at the SEC’s
website, www.sec.gov, after they have been filed.
Telcom Italia (PK) (USOTC:TIAOF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Telcom Italia (PK) (USOTC:TIAOF)
Historical Stock Chart
From Jul 2023 to Jul 2024