Tiscali 2008 Annual Report Download - page 146

group of around 10,000 former minority shareholders of World
Online International N.V, summonsed World Online International
NV (currently 99.5% owned by Tiscali) and the financial
institutions tasked with the stock market listing of the Dutch
subsidiary, disputing, in particular, the incomplete and incorrect
nature, as per Dutch law, of certain information contained in the
listing prospectus and of certain public statements made,
immediately prior to and after the listing (on 17 March 2000), by
the company and by its chairman.
By means of provision dated 17 December 2003, the first level
Dutch court deemed that in certain press releases issued by
World Online International NV prior to 3 April 2000, sufficient
clarity was not provided regarding the declarations made public
by its former chairman at the time of listing relating to his
shareholding. Consequently, World Online International NV was
held responsible vis-à-vis the parties who had subscribed the
shares of the company at the time of the IPO on 17 March 2000
(start date of trading) and who acquired shares on the secondary
market up to 3 April 200o (date on which the press release was
issued, specifying the effective shareholding held by the former
chairman of World Online International NV). World Online
International NV appealed against this decision, deeming that it
was not necessary to provide further clarification, citing the
correctness of the information prospectus.
On 3 May 2007, the Amsterdam Court of Appeal partially
amended the decision of the first level court, deeming that the
prospectus used at the time of listing was incomplete in some of
its parts and that World Online International NV should have
corrected certain information relating to the shareholding held by
its former chairman, reported by the media before said listing;
furthermore, it was deemed that the company had created
optimist expectations regarding the activities of World Online
International NV. The sentence restricts itself to ascertaining the
company’s responsibility and that of the financial institutions
tasked with the stock market listing, but does not pass judgement
with regard to the existence and the amount of any damage,
which will have to form the subject matter of new and separate
proceedings, as yet not started up. On the basis of this verdict,
the investors who became shareholders of World Online
International NV between 17 March 2000 and 3 April 2000,
could undertake action for the compensation of the related
damages before the competent Court.
On 24 July 2007, the Dutch association and the foundation
mentioned above proposed an appeal before the Dutch Supreme
Court against the sentence of the Court of Appeal. On 2
November 2007, World Online International NV and the financial
institutions tasked with the stock market listing filed their counter-
appeal. On 6 February 2009, the Director of Public Prosecution
expressed his opinion in an advisory role complying, in part, with
the appeal petitions. The Court sentence is expected to be
pronounced by the end of May 2009.
A dispute of a similar nature to that described above was
forwarded by another Dutch foundation, Stichting Van der
Goen WOL Claims, in August 2001, and letters were
subsequently received from other parties, in which the
hypothesis of being able to proceed with similar action is
advanced, if the conditions should apply.
These disputes are potentially significant; therefore, at present
there are not enough sufficiently defined elements for
quantifying the potential liability. Therefore, no provision has
been made at the moment in the financial statements.
KPNQWest Bankruptcy dispute
The subsidiary Tiscali International Network BV is involved in a
dispute furthered by the receivership of the company KPNQWest
Bankruptcy, a joint venture formed between the Dutch KPN and
the US Qwest, currently in liquidation. The dispute, which arose
in previous years, concerns a 5-year IRU agreement entered into
between Tiscali International Network BV and KPNQWest, which
envisaged the payment by the former of an amount of EUR 3.1
million for the performance of services by the second. Following
the liquidation of KPNQWest, the provision of services was
interrupted after only 5 months and Tiscali International Network
BV received and recognised invoices for the sum of EUR 1.5
million. KPNQWest has demanded payment of the entire amount
stipulated in the agreement.
Tiscali in turn objected to a demand for payment of this amount
given the damages sustained from interruption of the service.
On 17 March 2006, Citybank (acting as liquidator of KPNQwest)
filed a precautionary attachment request for a value of around
EUR 5 million on the bank current accounts of Tiscali
International Network BV which did not bring about any
significant result.
By means of provision in August 2008, the Rotterdam Court
ordered Tiscali to pay an amount of US$ 1,318,720.80 plus
interest and related charges. This amount reflects the first of
the three instalments envisaged in the IRU agreement. Given
the essentially positive outcome of the trial, Tiscali complied
with the ruling which became final in November 2008 further
to failure by the parties to appeal. The main dispute has
therefore definitively concluded.
Mobistar dispute
The indirect subsidiary, Tiscali International BV, is involved in a
dispute furthered by the company Mobistar NV (a Wanadoo
Group company) in June 2006. The dispute concerns the
termination by Wanadoo Belgium of a dial-in traffic termination
agreement with Mobistar NV, following the acquisition in Spring
2003 by Tiscali Belgium of 100% of Wanadoo Belgium’s shares.
The contract for the sale of the Wanadoo Belgium shares
between Wanadoo SA and Tiscali Belgium envisaged the
possibility of early termination of the Contract, a circumstance
also confirmed by Tiscali’s legal advisors.
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