Tiscali 2008 Annual Report Download - page 30

REPORT ON OPERATIONS
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4.4 Significant events during the financial year
2008 was a year characterized, in the initial phase, by completion
of the industrial developments already launched during the
previous year with the acquisition of the broadband and voice
division of Pipex, and culminating in February 2008 with the
execution of a share capital increase for EUR 150 million to
partially repay the bank loan of EUR 650 million raised in 2007.
The rest of the year was characterized, by contrast, by the plan
for developing strategic assets, launched with the appointment
of a new Chief Executive Officer, and by a series of activities
aimed at rationalizing Italian operations.
The main events during the year are listed below, in chronological
order.
Execution of share capital increase under option
The Board Meeting held on 10 January 2008, resolved a share
capital increase on the basis of the authority assigned to it by the
Extraordinary Shareholders’ Meeting held on 31 August 2007,
pursuant to Article 2443 of the Italian Civil Code, envisaging the
issue of 149,792,880 ordinary shares with a par value of EUR 0.50
each and regular dividend entitlement, offered under option to the
shareholders, at a ratio of 6 new ordinary shares for every 17 shares
held, at a price of EUR 1.00 each, for a total value of EUR
149,792,880. The share capital increase was subscribed, at the
end of the option period, for 146,580,966 shares, corresponding
to 98.75% of the overall amount. Subsequently, between 11 and
15 February 2008 an auction took place for the un-opted shares,
as a result of which the market subscribed for 100% of the amount
under offer. Consequently, the security provided by Banca IMI
S.p.A. and J.P. Morgan Securities Ltd guaranteeing the satisfactory
outcome of the transaction did not need to be activated. The
consideration for the share capital increase (approximately EUR
150 million) was used to repay the bridging loan granted by Intesa
SanPaolo and JPMorgan in July 2007.
Resignation of Tommaso Pompei and appointment of
Mario Rosso as Chief Executive Officer
The Board Meeting held on 27 and 28 February 2008, having
considered the phase for strategic repositioning and equity and
financial enhancement covering the last two years to be at an end,
also on the outcome of the successful completion of the share
capital increase transaction, resolved to launch a new strategic
phase aimed at exploring the options for the further generation of
value for the shareholders associated with the consolidation process
in the telecommunications sector under way in Europe.
The Chief Executive Officer in charge as of that date, Tommaso
Pompei, in mutual agreement with the Company, relinquished his
powers, intending to remain a Board Director until the natural expiry
of the entire Board, and therefore until approval of the 2007 financial
statements on 29 April 2008. The Directors, Gabriele Racugno and
Rocco Sabelli, handed in their resignation at the same time.
The Board of Directors therefore appointed the Director Mario
Rosso to manage and coordinate this new strategic phase for the
Company, appointing him as Chief Executive Officer.
Amendments to the stock option plan
The Board Meeting held on 28 February 2008 resolved to adjust
the exercise price of the options assigned to the employees by
means of applying a ratio of 0.896756, identical to that published
by the Italian Stock Exchange on 11 January 2008 and used to
adjust the option contracts and the futures on Tiscali shares as
a consequence of the share capital increase for around EUR 150
million concluded on 22 February 2008. Consequently, the
exercise price of the options assigned to the employees was fixed
at EUR 2.132 per share.
Furthermore, on the basis of the agreements between the
Company and Tommaso Pompei as a consequence of the
relinquishing of his powers, the options assigned to Tommaso
Pompei are understood to be exercisable for the full amount
resolved (including the second tranche) according to the terms
established in the regulations. As a result of the above-mentioned
adjustment mechanism, the exercise price for the options allocated
to Tommaso Pompei therefore comes to EUR 2.477 per share.
Appointment of financial advisors for strategic
alternative analysis
On 31 March 2008, JPMorgan and Banca IMI were appointed
as financial advisors for the Tiscali Group. The appointment
followed the decision of the Board of Directors to task the CEO
Mr. Mario Rosso with launching a process for maximizing the
Group’s strategic value. Please note that Studio Borghesi Colombo
& Associati is a company consultant.
Merger of Pipex in the UK
During the year, Tiscali UK continued with the programme for
the merger of the Pipex broadband and voice division, acquired
in September 2007. These activities generated reorganization
costs of approximately EUR 32 million during the year.
Execution of the treasury share purchase programme
In accordance with the treasury share purchase programme,
initiated on 19 March 2008, relating to the stock options assigned
to Tommaso Pompei, Tiscali purchased 2,600,000 treasury shares
on 18 April (corresponding to around 0.45% of the share capital),
at an average unit price of EUR 2.379, for a value of approximately