Additional information on Timedia-Gruppo Espresso agreements regarding Related Party transactions

04/09/2014 - 07:30 PM

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In accordance with the rules on related party transactions pursuant to CONSOB Regulation 17221 of 12 March 2010, Telecom Italia Media (TIMedia) reports that the agreements signed today with Gruppo Editoriale L’Espresso (GRUPPO ESPRESSO) on the merger of the network operator businesses for DTTV controlled by Telecom Italia Media Broadcasting S.r.l. (TIMB) and Rete A S.p.A. (Rete A), respectively, provide for the finalisation of contracts that will represent for TIMedia highly significant related party transactions according to the special Procedure.

Bearing in mind the uncertainty surrounding legislative developments on the use of frequencies, TIMedia has also reserved the option to purchase the right to use (excluding the infrastructure and the customers) one of the five frequencies (channel 55) that will be controlled by the combined entity created through GRUPPO ESPRESSO’s contribution of 100% of Rete A shares to TIMB.

The agreements with GRUPPO ESPRESSO provide for TIMedia to sign, upon completion of the merger, subject to the required AGCOM authorisation, an option contract with TIMB, which can be exercised from 30 June 2016 for a three-year period, to take over the right to use channel 55 held by TIMB, or rather the entire capital of any newly formed company on which this right is conferred (Newco). The consideration that TIMedia will be required to pay TIMB upon signing the option contract is 5 million euro, whilst the amount payable should the buy option be exercised is 50 million euro, to be adjusted, in the case of the option on Newco’s capital, according to the company’s net financial position.

If the right to use channel 55 is conferred on Newco, there is also the provision — subject to the authorisations being obtained in accordance with current legislation — for Newco and TIMB to sign a lease agreement for channel 55 which will also constitute a highly significant related party transaction for TIMedia, in relation to its value (annual rental of 2.5 million euro). The agreement has a term of about 10 years, with the right of the lessor to withdraw from mid-2016.

Both transactions have been approved by the TIMedia Board of Directors, which met today, having received the favourable opinion of the Board Committee consisting of independent directors. They will be the subject of a disclosure document which will be distributed by TIMedia within the timeframe specified in the CONSOB Regulation.

Rome, 9 April 2014