"This is the place where the interests of the shareholders must come together while in the Board of Directors the interest to be considered is only that of the company". so theCEO of Telecom Marco Patuano, the meeting opened this morning (50,7% of the capital was present at the beginning) which will vote, as the first item on the agenda, the revocation of the board, at the end of a campaign which, the manager observed, " it kindled spirits and aroused a debate that very soon left its ambit before arriving in its proper place”.
There was no shortage of sparks, right from the opening bars. Franco Lombardi, president of Asati (small Telecom shareholders) withdrew his availability for the candidacy for the board given to Findim to avoid the accusation of conflicts of interest but, addressing the director Aldo Minucci of Telco who leads the Telecom he attacked: “you do the same. Leave the place – to Calvosa or Fitoussi, Zingales”.
"I'm not here by choice, mine is only a procedural assignment, according to the statute, with the resignation of the president, the acting task falls to me" replied Minucci asking for a tone down. "It's time to overcome the controversies and conspiracies and return to focus on the future of Telecom" exhorted Marco Patuano. ”What is certain is that we are witnessing an extraordinary example of corporate democracy for all Italian and European finance. The decisions that will be taken today with more than 50% of the capital present must be accepted with a great sense of responsibility. In any case, this translates into an important message to the market so that Telecom's governance is further strengthened and any doubts about the functioning of the board can be dispelled".
The CEO defended the new industrial plan which "puts investments at the centre, without forgetting debt reduction" with "a radical change of perspective since it is based on an industrial vision based on investments and innovation to which the vision financial". "And not vice versa - final hit to Franco Bernabé – as has happened in the past”.
So far the skirmishes, waiting for the head-on collision. In Piazza Affari the title floats just below parity, while the various parties are trying to count. Among the proxy advisers, Glass Lewis and ISS recommended a vote in favor of the revocation; Ecgs, which should carry around 3% of the capital, suggests voting against. Telco, which controls 22,4% of Telecom Italia, intends to vote against the revocation. The holding is owned, in terms of voting rights, by Telefonica with 46,18%, by Intesa Sanpaolo and Mediobanca with 11,62% each and by Generali with 30,58%. According to Telecom data, at the end of June of this year, 46,99% of the capital is in the hands of foreign institutions, 4,8% in Italian institutions and 19,42% in other Italian shareholders. BlackRock, the group's leading institutional investor, registered at the meeting with 5,94%. The forecast is that the US giant abstains.
Meanwhile, the clarification comes from Rome that "there are no suspects for the crime of obstructing surveillance or for any other crime". This was stated in a note by the public prosecutor of Rome Giuseppe Pignatone and the deputy Nello Rossi referring to to the news of Franco Bernabè's hearing, former president of the company, given with great emphasis by the newspapers. The proposal to revoke the board of directors requires the favorable vote of the absolute majority of the shares with which those entitled to vote participate in the meeting.
In the event of non-approval, however, only two directors will be appointed who will integrate the board currently in office. It is precisely a question of replacing Bernabé and Catania but not Cesar Alierta and Julio Linares, whose resignations do not authorize the meeting to proceed with the possible appointment of directors to replace them. The matters of the extraordinary part require the presence of shareholders with a number of shares greater than 1/5 of the ordinary share capital of the company.
With regard to this part, the agenda includes the elimination of the indication of the nominal value of ordinary and savings shares and the amendment of the by-laws as well as the capital increase with the exclusion of the option right through the issue of shares ordinary shares, to service the convertible for 1,3 billion euro.
The US fund Blackrock is not far from the 10% threshold in Telecom Italia, a critical level that could open the door to new moves by Telefonica TEF.MC and put at risk the majority premium on the shares of Italian shareholders in Telco. Telefonica does not currently intend to increase its stake in Telecom Italia. It is difficult to make predictions about what he will do in the future, because there are several variables that can have an impact, from regulatory issues in Brazil and from the meeting on Friday the 20th on the revocation of the board of directors.
The provisions of the agreement and two possible implications for Telefonica's decisions.
THE LIMITS BY PHONE
Telco, which controls 22,4% of Telecom Italia, is owned by Telefonica with 46,18% in terms of voting rights, by Intesa Sanpaolo ISP.MI and Mediobanca with 11,62% each and by Generali with 30,58%. At present, following the agreements signed on September 24 of this year, Telefonica cannot purchase Telecom Italia shares with voting rights, "also through derivatives, warrants, option rights or stock lending transactions", according to the extract from the pacts. This "limitation will not apply in the event that any person or entity (acting, directly or indirectly, alone or in concert with other related parties) purchases or announces its intention to purchase or undertakes to purchase" shares or the right to purchase shares, “with voting rights greater than 10%”.
ITALIAN TELCO SHAREHOLDERS COULD LOSE MAJORITY PRIZE If in some way the situation envisaged in the agreements which gives the go-ahead for the purchase of Telecom Italia shares materialises, the Spanish group could buy shares on the market, therefore at a price of 65-70 cents compared to the 1,1 euro envisaged in the agreements . In fact, Telefonica has an option to acquire 100% of Telco at a valuation of Telecom Italia at 1,1 euro per share, an operation which would take it to 22,4% of the Italian group. If he decides to buy shares at the market price, he could avoid exercising the call and therefore paying the majority premium to Italian shareholders.
WITH A 15% TAKEOVER THRESHOLD, THE STATUS QUO IS CONVENIENT Again in the event of the derogation provided for by the agreements being made, Telefonica could rise to over 15% theoretical of Telecom Italia, a relevant threshold for the purposes of a possible mandatory takeover bid, in the event of a change in the legislation. The president of Consob, Giuseppe Vegas, has said on several occasions that the best solution is to keep the mandatory takeover bid threshold at 30% and add a new threshold of 15% for public companies, which would therefore also apply to Telecom Italia. Even the promoter of the law Massimo Mucchetti aims at this goal. In terms of voting rights, the Spanish group now transparently controls 10,34% of Telecom Italia. It did, however, increase its stake in Telco, but with new non-voting shares. Upon liquidation of the holding company, scheduled for February 2015, its stake would amount to 14,78%. A takeover bid threshold between 11 and 14% could trigger a liquidation offer obligation of the holding company, a 15% threshold effectively locks control of the Spaniards, barring a hostile offer from a third party. If Telefonica were to buy shares on the market, in February 2015, with the possible liquidation of Telco, it would probably find itself increasing its stake to more than 15%, triggering the mandatory offer. If it remains in its current situation, it would instead be just below the takeover bid threshold, therefore in the best position to defend control of the company. In this context, it is therefore unlikely that the Spanish group will increase its stake by purchasing securities on the market, because it would probably be more than satisfied with its 14,78% stake it will have in Telco liquidation.
