TRANSACTIONAL AGREEMENT REACHED FOR THE CLOSURE OF LEGAL DISPUTES WITH THE BRAZILIAN PENSION FUNDS AND COMPANIES OF THE BRASIL TELECOM GROUP
NET CAPITAL GAIN OF 195 MILLION EURO FOR TELECOM ITALIA
Brasilco S.r.l., a company held in trust by Credit Suisse for the exclusive benefit of Telecom Italia International NV, has signed an agreement for the sale to the Brazilian pension funds Previ, Petros and Funcef, of 38% of Solpart Participações S.A. (“Solpart”), for a consideration of $515 million.
At the same time, the Telecom Italia Group has reached an agreement, effective on finalization of the Solpart stake sale, to resolve in a transactional manner the legal disputes and arbitrational proceedings pending between the Telecom Italia Group, on the one hand, and the pension funds and entities which are part of the Brasil Telecom control chain on the other. Under the terms of the tracational agreement, the parties will also abandon all claims, even future ones, connected to their respective participations in Brasil Telecom or, however, derived from the Solpart joint venture.
Telecom Italia International N.V., as the sole beneficiary of the trust, will receive the revenues deriving from the sale of the Solpart stake.
Applying current exchange rates, the operation will determine a reduction in the Telecom Italia Group’s net financial debt of 354 million euro and will have a positive impact on the Group’s net profit of 195 million euro.
Finalization of the stake sale in question will take place at least 60 days from the agreement’s signing date and, however, only once ANATEL has approved the operation.
Techold Participações S.A., a shareholder in Solpart alongside Brasilco S.r.l., holds the remaining 62% of capital and, in accordance with shareholder agreements, has a right of first refusal for the acquisition of the Brasilco S.r.l. stake in Solpart, on the same terms and conditions agreed with the pension funds.
The operation, among other things, will allow the Telecom Italia Group to put an end to the burdensome controversies which have plagued the investment in Brasil Telecom over the years and to focus its efforts in Brazil through subsidiary TIM Brasil.
Milan, 19 July 2007