The moment of truth has arrived for Tim: the Vivendi directors have resigned, including the chairman Arnaud de Puyfontaine. As a result, the entire board of directors is terminated. The floor passes to the shareholders who will decide the future of the new Tim on May 4, the new date set for the meeting. “It's a cynical and selfish act” commented the Elliott Fund which had asked for the revocation of the six direct expression directors of the French shareholder at the meeting of 24 April and which now sees the goal moving away. Among the resigners there is also Giuseppe Recchi: the delegations for security pass to Franco Bernabè (in the past twice CEO of Telecom Italia) who becomes vice president and managing director and will therefore play a role of regency pending the definition of the future top positions.
This is the epilogue of the board meeting held in Rome on Thursday 22 March. A meeting that opened with a complicated dossier on the table, namely the request for revocation of 6 direct expression directors of Vivendi presented by the Elliott Fund, owner of 5,75% of the capital and second shareholder of Tim. The request also envisaged that it be placed on the agenda of the meeting the appointment of 6 new directors to replace them.
We went even further and the press release issued by Tim in the evening specifies that there are 8 directors in all who will resign with effect from 24 April, the date of the shareholders' meeting already called in ordinary session. The names of the resigners are promptly listed in the official communication: there are the six directors whose revocation the American fund had requested, namely the executive president Arnaud de Puyfontaine, the directors Frédéric Crépin, Felicité Herzog, Anna Jones and Hervé Philippe. They were also joined by the other two directors Marella Moretti and Camilla Antonini, independent but still in Vivendi's share. Having resigned by majority vote (eight out of fifteen directors) the board of directors expires.
The challenge now moves to May 4 and there we will see how the battle will end: if the Elliott Fund manages to overturn Tim's governance, gathering the support of other institutional investors at the meeting, the French led by Vincent Bolloré will still be able to remain in the minority (with 5 directors) relying on their 23,9% . In the meantime, Franco Bernabè, an independent and non-resigning director, "assumes the position of Deputy Chairman and the powers over the Security function and over the company's activities and assets relevant to defense and national security". Having decided - by a majority of the directors and not unanimously - to set the new date of the meeting at 4 May for the full appointment of the new board with the list system (the shareholders owning at least 0,5% of the share capital with voting rights), the Board deemed Elliott's request superseded and postponed everything to May.
At the end of the board, the president of Tim Arnaud de Puyfontaine he stated: “As chairman of Tim and in the interest of all shareholders, I want to free the board from the climate of uncertainty that has arisen and which diverts attention from what is our priority, i.e. the rapid implementation of the DigiTim strategic plan. I confirm my commitment to Tim's transformation project and I am convinced that this decision will give further stability and support to our Amos Genish and his team, allowing him to create value for all our stakeholders ”.
In fact, time has been bought in view of the final battle on governance. The field is open, the market awaits the next moves. The focus is not only on the new turnaround that is looming in Telecom Italia but questions above all on the fate of the access network, the main asset of the national telecommunications company. The Elliott Fund is pushing for the spin-off while Tim's CEO, Amos Genish, and the French controlling shareholder are more cautious. A hypothesis cannot be excluded spin-off and listing on the Inwitt model, the company of the towers successfully listed on the Stock Exchange. But times would be long and the Americans instead want everything immediately.
The Eliott fund reacts: it says it is “engaged in a campaign to improve both the performance and governance of Telecom, it is not surprised by the resignation of seven directors linked to Vivendi. Unable to make any arguments on the merits, the Board simply abandoned its positions." In a note, the US fund, a 5,74% shareholder of Telecom, judges the decision of the Tim directors linked to Vincent Bolloré as "cynical and selfish" because in this way it "does not allow shareholders to cast their vote at the next meeting" on 24 April. This, concludes Elliott's note, "is another example of how the rights of minorities in Telecom Italia are canceled and how corporate governance best practices are ignored". The US Fund also points out that it has been a shareholder of Telecom since 1999, "before the arrival of Vivendi in the group".
(Updated Fri Mar 23 at 10:28am)
