Not for distribution in the United States of America
This press release does not constitute an offer of the medium-term notes in the United States. The medium-term notes that will be offered by Telecom Italia and any other securities issued under the Global Note Program have not been and will not be registered under the U.S. Securities Act of 1933 or any U.S. state securities laws and may not be offered or sold in the United States or to U.S. persons unless registered under the U.S. Securities Act of 1933 or an exemption from the registration requirements of the U.S. Securities Act of 1933 is available. The medium-term notes that will be offered by Telecom Italia will be offered and sold only outside the United States in reliance on Regulation S under the U.S. Securities Act of 1933.
Telecom Italia announces that the medium-term note issue of €1.5 billion announced on January 22, 2002 to be issued under the Telecom Italia Group’s Global Note Program was a resounding success on the international market. In light of high investor demand, the aggregate amount of the issue has been increased to € 2.5 billion.
The transaction, which is the first of this kind in 2002 by a European telecommunications operator, was in great demand by institutional investors and was oversubscribed by three times the initial offering amount. The allocation was equally distributed among European capital markets and attracted primarily non-banking institutional investors.
The lower yield on this offering, compared to the Groups’ issuances in 2001, confirms the improvement in Telecom Italia’s creditworthiness resulting from the initial steps taken by new management to implement its business strategy.
The interest shown by institutional investors allowed a reduction in the margins initially offered on the two tranches, with the margin over the mid-market swaps rate falling to 100 basis points for the five-year tranche and the margin over the mid-market swaps rate falling to 125 basis points for the ten-year tranche. The notes do not contain any “step-up” clause.
The following are the main characteristics of the issue:
Tranche I
Principal Amount: €1.25 billion
Issue Date: February 1, 2002
Maturity Date: February 1, 2007
Interest Rate: 5.625%
Issue Price: 99.841
Redemption Price: 100
Margin over mid-
market swaps rate: 100 bp
Listing: Luxembourg Stock Exchange
Tranche II
Principal Amount: €1.25 billion
Issue Date: February 1, 2002
Maturity Date: February 1, 2012
Interest Rate: 6.25%
Issue Price: 98.952
Redemption Price: 100
Margin over mid-
market swaps rate: 125 bp
Listing: Luxembourg Stock Exchange
The proceeds of this issue will be used to refinance the Telecom Italia Group’s short term debt, without affecting its overall size.
This transaction is part of the Company’s strategy of lengthening the average maturity of its debt by reducing reliance on short-term credit facilities.
J.P. Morgan Securities Ltd., Lehman Brothers International (Europe), Mediobanca – Banca di Credito Finanziario S.p.A. and Merrill Lynch International acted as joint lead managers and joint bookrunners.