Tiscali 2003 Annual Report Download - page 39

With regard to redemption of the EUR 250 million bond issue maturing in July 2005, the directors plan to fund this as follows:
• existing financial resources and cash flow from ordinary operations, expected to be generated from the last quarter of 2004,
should provide the bulk of the funding;
• further resources should be made available following the disposal of investments on non-core markets, which the board of
directors has approved and which is currently being implemented;
• given the level of investment required to sustain growth, particularly on the broadband market, Tiscali plans to refinance all
or part of the bond due in 2005, with the aim of optimising its financial structure. The necessary financing may be obtained
from banks, or the equity or bond markets (which may include a convertible issue); this will also help minimise the inherent
risk of its strategic plan, which is to be implemented in a new and highly competitive market, while maximising the Group’s
financial flexibility.
In view of the market prospects and Tiscali’s competitive position, given:
• a high level of operating efficiency, following the completion of the Group reorganisation;
• an improvement in its internal planning activities.
The Group’s target of achieving a better financial structure is well within its grasp, as the business plans, the disposal program-
me for non-core assets and the refinancing strategy indicate.
The targets set by the strategic and financial plan, including the disposals, are key to improving Tiscali’s financial position and
achieving a better financial structure; and therefore to ensuring that the Group is able to redeem the next bond issues falling due
and comply with the related covenants, and that it will be able to raise the finances necessary to sustain growth, particularly in
broadband services.
We would like to specify that the Company is not in any financial difficulty and has no problems in its dealings with customers or
suppliers, apart from minor delays and/or disputes with certain suppliers and customers arising in the normal course of operations
of Group companies.
Ongoing disputes
Tiscali is currently involved in a number of legal disputes. However, even assuming a negative outcome, the Group’s management
does not expect any of the cases pending to have a major impact on its consolidated financial position or on future results. The
main cases pending at 31 December 2003 are listed below, in respect of which Tiscali has made provisions of around EUR 3 mil-
lion, corresponding to the amount the Group is prepared to pay the counterparties by way of settlement.
• In July 2001, Dutch foundation Vereniging van Effectenbezitters, which represents a Group of minority shareholders in World
Online International N.V. made a claim for damages against World Online (currently 99.5%-owned by Tiscali) and the financial
institutions involved in its stock market listing, alleging, in particular, that some of the information provided in the IPO pro-
spectus and in certain public statements issued by the Company and its chairman at the time was incomplete and inaccura-
te. The Dutch court ruled on 17 December 2003 that the IPO prospectus did not contain any misleading information and that
many other claims were groundless. In the same ruling, however, the Dutch judges upheld the claim that a press release issued
by World Online did not do enough to clarify comments made by its former chairman at the time of the listing regarding her
own shareholding. World Online plans to appeal against this decision, as it claims it did not need to provide any further clari-
fication, given that the IPO prospectus was not deemed to be inaccurate. Furthermore, any damages to be paid will have to be
established in a new court case, with the onus on the shareholders’ association to substantiate the causal link and the amount
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