Telecom Italian heavy after the conversion of savings – The Republic

Milan – Sitting difficult for Telecom Italy (follow the title Live) after the accounts released yesterday evening. And – above all – the decision of the board to convert savings. Group Telecom Italy has closed the first nine months of the year with a consolidated turnover of 14.9 billion euro, a decrease compared to the same period of 2014 by 6.9% (-3.9% in organic terms).
The net income attributable to owners of the parent amounted to 362 million euro against 985 million the first nine months 2014.

Last night, in fact, the board of directors of Telecom has put to the vote the draft conversion of savings shares into ordinary fee. The transaction, which had already been investigated several times during the management of Franco Bernabe, expected to be offered to members without voting rights of concambiare their title with one ordinary adding 9.5 euro cents and thus giving up the privilege dividend. This step is optional, but then become mandatory with the end of the offer period to an exchange of 0.87 for each ordinary share of savings. All this will happen before the dividend distribution in 2015, which in fact will be canceled for the savings. For those who opt for the optional conversion premium over the prices of the last six months it is 12.7%, while for the mandatory is 7%. Serve the approval of the shareholders of the savings. If the vote is favorable, those who do not adhere may exercise the right of withdrawal set at EUR 0.9241 against yesterday’s close of 0.98. The ordinary closed at 1.19 euro. The company reserves the right to suspend the conversion if the withdrawal will cost more than 100 million Euros. The assembly to amend the Constitution of Telecom, needed to start the transformation, it is convened on December 15th. December 17 will be the turn of the savings shareholders.

This action also changes the scenario in which it moves Telecom Italy today object of the interest of several foreign groups including the media giant Vivendi (former partner 20.5% of the capital) and the French entrepreneur Xavier Niel (which bought options on 15.2% of the capital). If the operation was successful the participation of Vivendi would drop to about 14% of the ordinary share capital of the new Telecom while for Niel you should check if this extraordinary event could trigger the clauses of early conversion of options.

In addition, Telecom Italy the operation creates value in so many ways. First, the company will collect about 600 million euro from the market; second – eliminating 166 million extra coupons related to savings shares and discounting this value to the weighted average cost of capital – the group that is to save around 2.3 billion. And so, between collection and lower costs, Telecom creates about 2.9 billion greater value of 19 billion shares (assuming full conversion of rnc in ordinary) translates to about 15 cents more per share. The transaction must be approved by the shareholders ordinary Telecom, with a two-thirds majority.

Arguments:

telecom Italy

Vivendi

Starring:

Xavier Niel