Concerning the article published in today´s "Repubblica" newspaper entitled "Seat, Procura di Torino Investigates Telecom Accounts" by Carlo Bonini and Giuseppe D´Avanzo, Telecom Italia reaffirms that the integration of Seat Pagine Gialle and Tin.it was carried out with maximum transparency at every stage of the process and in the interests of the market and of shareholders, and in accordance with the relevant rules and principles of corporate governance.
This was one of the most significant operations of industrial synergy, creating a participant of international scale in one of the economy´s most advanced sectors. Further this transaction was reviewed by the Tribunale and by the Procura of Turin in the context of the approval of the merger of Seat and Tin.it.
As regards the contents of the article, Telecom Italia asserts however that a number of clarifications are necessary.
In the first instance, in relation to the position of Board Members Roberto Colaninno and Emilio Gnutti, it is worth reaffirming that the Company has already formally communicated that at the moment the 15 March 2000 Board meeting considered the acquisition of Seat Pagine Gialle and the integration with Tin.it, both informed the Board and the Audit Committee, which noted the same, of their theoretical conflict of interest arising from an indirect holding in Huit, a company which in turn controlled Seat Pagine Gialle. In compliance with the relevant rules both Board members subsequently abstained from voting.
What is more, the indirect shareholdings held in Seat Pagine Gialle by Roberto Colaninno and Emilio Gnutti resulting from an indirect investment in Seat held by Hopa SpA since 1997 through a closed investment fund, were absolutely marginal in terms of size. Roberto Colaninno´s total holding in Hopa was 5.04 %, while Emilio Gnutti´s was 6.78 %. At 15 March 2000 these holdings implied indirect participations in the share capital of Seat Pagine Gialle equal to 0.034 % for Roberto Colaninno and of 0.046 % for Emilio Gnutti.
With all Board members voting in favour, excepting the two abstentions, a detailed and reasoned motion of approval was agreed on the basis of which the Board conferred on Chairman and Chief Executive Roberto Colaninno the necessary powers to launch and conclude the transaction.
Also in light of the strong industrial and strategic rationale of the Seat-Tin.it project, a view unanimously shared by the members of the Board, the objectives of the transaction were described during the Board meeting as "properly presented to the market and certainly legitimate".
As to the hypothetical conflict of interest referred to in the article relating to Mr Lorenzo Pellicioli as the beneficiary of compensation in the form of a holding in Huit II (a company which at that time controlled the majority of the share capital of Seat Pagine Gialle) it should be noted that this compensation package was part of the agreement dating back to 7 July 1999 between investors that won the competitive auction for the privatisation of Seat.
This agreement, to which Telecom Italia was made party in August 1997, could therefore not have had any possible connection with the project to integrate Seat and Tin.it which was launched in March 2000 following agreements between the majority shareholders in Seat, grouped in Huit, and Telecom Italia. According to the relevant rules and regulations no information in this connection was required to be included either in the details of the project and or of the demerger or the merger in connection with the integration of Seat and Tin.it. Details of the compensation due to Mr Pellicioli were made known in a timely way by both Seat Pagine Gialle and Telecom Italia, via paid notices in Il Sole 24 Ore on 6 and 20 August 2000, the details of which were also reported in the press on the same days.
In his role as Chief Executive of the company (Seat Pagine Gialle) that was the subject of the sale but not party to the contract - on the basis of the project approved by the controlling shareholders of Seat and Telecom Italia in March 2000 - Mr Pellicioli could not have found himself in a position of conflict of interest.
In its Annual Report to the Shareholders´ Meeting the Audit Committee of Telecom Italia examined the transactions relating to the integration of Seat and Tin.it, underlining "the conformity of the above-mentioned transactions with the law, the company´s statutes and with general financial criteria", excluding any possibility of a conflict of interest and concluding not to have found "atypical and/or unusual transactions with third parties, related parties or infragroup".