Telecom Italia Media acquires 40% of Webfin for 287 million euros

06/28/2004 - 00:00 PM

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Seven hundred million euro Webfin dispute resolved with the De Agostini Group

TI Media and Telecom Italia targets remain unaffected


TI Media announces that it has reached agreement with the De Agostini Group over the controversy currently subject to arbitration proceedings regarding a contract signed on September 20, 2000, concerning the acquisition of a 40% equity interest in Webfin (which owns 66% Matrix, owner of the portal Virgilio).

Under the terms of the agreement – which now supersedes the contract signed on September 20, 2000 – De Agostini Invest is to transfer its entire Webfin holding to TI Media (which already has a controlling 60% stake in the company). TI Media shall pay 287 million euros rather than the originally-agreed price of 700 million euros, and an additional 38 million euros for the amounts paid out by De Agostini Invest since July 2001 to cover Webfin’s losses and recapitalize the company.

This agreement is incurring a temporary 325 million euros increase in TI Media’s debt, corresponding to the total loan Telecom Italia granted at market rates, making good the obligation undertaken by the latter during the disposal of its controlling stake in the "new" Seat company (the beneficiary company of the 2003 split that brought TI Media into being), in order to supply TI Media with the funds required to cover debts and commitments existing at the time the split became effective.

TI Media is to improve its financial and balance sheet position through the following actions:
• disposal of the Webfin equity acquired from De Agostini Invest, to Vertico (wholly-owned by Telecom Italia, and already holder of a 33.3% stake in Matrix). This sale, undertaken at a price of 42.6 million euros, as assessed by valuation carried out by both companies, will enable TI Media to retain its control over Matrix while reducing its financial exposure to the parent company; at the same time, it will be consolidating existing Internet commercial agreements between Telecom Italia and Matrix/Virgilio;
• a paid increase of capital under option for a total amount of approximately 120 million euros (inclusive of share premium), to be carried out between now and the end of the year. The Company Board of Directors is scheduled to announce the date for the Shareholders’ Meeting called to adopt this proposal by the end of July 2004. On said occasion, the Board of Directors will also anticipate the approval of final first half accounts, in order to provide the market with as much information as possible.

Telecom Italia shall support this operation by subscribing its share of the capital increase, and any unsubscribed shares from the rights issue.

As a result, TI Media S.p.A. earnings will include a net loss of 130 million euros. Telecom Italia S.p.A. will take a net loss of around 113 million euros.

At Group level the net loss will correspond to around 189 million euros for the TI Media Group and 116 million euros for the Telecom Italia Group.

The above transactions will result in an approximately 162 million euro increase in TI Media’s consolidated net debt at the end of 2004. This will have been reduced to around 70 million euros by the end of 2006. The corresponding figures for Telecom Italia are approximately 280 million euros for the end of this year, and 186 million euros for the end of 2005.

The above mentioned events are not expected to affect the targets previously announced to the market by Telecom Italia and TI Media.


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The information contained herein does not constitute an offer of securities for sale in the United States.

The securities that may be offered or sold as part of any capital increase referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold, directly or indirectly, in the United States except pursuant to an exemption from registration.