Tiscali 2009 Annual Report Download - page 25

Tiscali Group: Annual Report 2009
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On 30 April 2009, the Shareholders’ Meeting resolved the approval of the 2008 financial statements and
the partial covering of the Parent Company’s accumulated losses through the full use of the share premium
reserve, retaining the residual part of EUR 151.8 million.
Signing of the Framework Agreement and activities carried out at the date of preparation of the 2009
financial statements
On 8 May 2009, the Board of Directors approved the guidelines of the Group debt restructuring plan, in line
with the financial and equity requirements of the Tiscali Italia business plan, which the financial institutions
have pledged to support.
In particular, the following primary objectives have been outlined:
• the reduction, conversion and review of debt conditions, also through the use of proceeds from the sale
of assets (primarily Tiscali UK, the UK subsidiary).
• strengthening of the Group’s equity base, to be carried out in one or more capital increases, also under
option, for a total amount up to a maximum of EUR 236.5 million with the guarantee, on the part of
Senior Lenders and some shareholders, of subscription of a portion of shares that remain un-opted,
through the waiver of receivables due from the Group.
It is appropriate to highlight the existing link, from the moment of definition of the above objectives by the
Board of Directors, between the resolution of the sales of assets - which under current market conditions
would have probably caused a loss from disposal - and the decision to carry out share capital increases
already entirely guaranteed by Senior Lenders.
In fact, at the same date, the Board of Directors also approved the sale of companies operating in the UK.
It sold Tiscali UK Ltd to Carphone Warehouse Group Plc (through the sale of 100% of the share capital of
Tiscali UK Ltd and the associated subsidiaries, by parent company Tiscali UK Holdings Plc, in turn held
through two Dutch subsidiaries, by Tiscali S.p.A.), for a total amount of GBP 236 million (net of roughly GBP
20 million constituted by the assumption of certain financial debts by the Purchaser), of which roughly GBP
35.4 million bound to secure certain contractual commitments (‘Escrow’).
The decision – subject, among other things, to a settlement agreement with the Tiscali UK Ltd (“VNIL”)
minority shareholder and creditor for the repurchase of the minority share and partial settlement of the debt
of the UK subsidiary owed to VNIL – was subject to the normal regulatory approvals and to finalisation of the
Group’s overall debt restructuring agreements.
In fact, the goals of the Board of Directors incorporated inter-related transactions, one chosen based on the
other. In particular, the presumed sale of companies operating in the UK was considered subordinate to
finalisation of the Group’s overall debt restructuring agreements (and with it the guarantee obligation from
Senior Lenders in respect of share capital increases) and the approval of the shareholders’ meeting of the
company’s share capital increase (which took place on 30 June 2009). The latter was, in turn, necessary for
the issue of the certification of reasonableness of the restructuring plan pursuant to article 67, paragraph 3,
letter d) of Royal Decree no. 267 of 16 March 1942.
Therefore, on 28 May 2009, Tiscali S.p.A.’s Board of Directors approved the so-called Framework Agreement
aimed at restructuring the Group’s debt, particularly with regard to:
• roughly EUR 500 million in Senior Debt, plus the associated interest, subject of the standstill agreement;
• roughly EUR 100 million of debt owed to Tiscali UK (VNIL) minority shareholders;
• roughly EUR 30 million of debt owed to Andalas, company held by shareholder Renato Soru.