First step in divestment plan
Mr. Buora: "We have seized a significant opportunity to sell off non-strategic assets whose value was not fully perceived by the market"
Telecom Italia has signed an agreement to sell its interests in the former satellite consortia converted into joint-stock companies Eutelsat, Intelsat, Inmarsat and New Skies Satellites, corresponding respectively to 20.5%, 2.8%, 2.1% and 3.9%, to the Lehman Brothers Merchant Banking Partners II L.P. fund in partnership with other investors including Intesa BCI, Interbanca and Mediocredito Centrale.
The operation shall be undertaken through the establishment of a new company (Newco) to which Telecom Italia will transfer its entire minority holdings in the former satellite consortia. Lehman Brothers Merchant Banking will subsequently acquire 70% of the Newco.
The portfolio Telecom Italia is transferring to the Newco has been valued at 550 million euros. After its investment in the Newco, Telecom Italia will cash in 450 million euros and book a capital gain, after tax, exceeding 100 million euros at parent company level. Telecom Italia shall retain a 30% stake in the Newco and will be able to appoint a member of the board in Eutelsat and in the Newco.
The monetization of Telecom Italia´s stake in the Newco is expected to take place subsequent to the stock market quotation of Eutelsat, Intelsat and Inmarsat.
The sell-off of these minority holdings in the former satellite consortia, which are of limited strategic value, falls under the guidelines of the new industrial plan, which is targeted at focusing on core business, and will enable a significant reduction in Telecom Italia´s indebtedness.
Credit Suisse First Boston has acted as an advisor to Telecom Italia.
Telecom Italia CEO Carlo Buora stated: "I would like to express my satisfaction at the deal struck with the Lehman Brothers fund. It is a significant step in Olivetti-Telecom Italia Group divestment of non-core interests. Telecom Italia has seized a significant opportunity for selling off non-strategic interests, the value of which has not been fully perceived by the market."
Notes to Editors: Lehman Brothers Merchant Banking Partners II L.P. is a $2.0 billion institutional merchant banking fund focused on investments in established operating companies. Through some of its prior investment funds, Lehman Brothers Merchant Banking has already participated as a leading investor in satellite, broadcasting and telecommunications related companies such as Infinity Broadcasting, L3-Communications and Loral Aerospace-Space Systems/Loral.
Eutelsat operates a network of 21 geostationary satellites, including the established HotBird satellite neighbourhood at 13 degrees East. The recently privatised company is a leading European FSS operator, delivering a broad range of broadcasting, consumer and professional telecom and multimedia services. Eutelsat is one of the preferred satellite capacity providers to the European broadcasting industry, feeding approximately 1,000 digital and analogue television channels to close to 100 million satellite and cable homes across Europe, the Middle East and Africa. Last August, Eutelsat announced a strategic partnership with Hispasat, which included a minority equity participation in the Spanish satellite operator.
Intelsat operates a global network of 21 satellites and represents one of the largest satellite fleets in the world in terms of total transponder capacity. Officially established in 1973, Intelsat has since then become a leading global provider of traditional voice, data, broadcasting and internet trunking services reaching approximately 200 nations. Intelsat was privatized on July 2001.
Inmarsat operates a global network of nine geostationary satellites, providing mobile communication services, principally to the maritime and aeronautical markets. Inmarsat offers voice, fax, intranet and internet access and other data services through a global network of approximately 200 distributors and service providers operating in over 150 countries.
NSS was established as an independent company in 1998, following its spin-off out of Intelsat. NSS currently operates a global network of five geostationary satellites, providing capacity to the public telecommunications, broadcasting, internet and corporate business markets. NSS went public in October 2000 on the Amsterdam Stock Exchange and the New York Stock Exchange.