Tiscali 2008 Annual Report Download - page 39

REPORT ON OPERATIONS
38
In order to ensure consistency with the data provided in former
reports, the above table includes VAT receivables under current
financial receivables and guarantee deposits under other cash
equivalents.
The table below provides a reconciliation of the above financial
position with the same statement prepared in accordance with
Consob resolution n. DEM/6064293 dated 28 July 2006.
EUR (mln) 31.12.2008 31.12.2007
Consolidated net financial debt 601.1 636.5
Other cash, cash equivalents and current financial receivables 15.3 20.9
Consob consolidated net financial debt 616.4 657.4
As indicated in the comments on the business continuity,
please note that the Group finalized a suspension period (so-
called standstill agreement) with the lending institutions until
June 2009. In this period, the parties agreed the suspension
of the payment of interest and the principal portion of the
financial debt (with the exception of leasing on machinery).
This agreement also concerns short-term bank facilities and
envisages the freezing of the financial covenants (present in
senior bank debt for EUR 100 million and not observed at 31
December 2008).
The main changes in the debt situation during the year are
attributable to the following factors:
1)The use of an additional EUR 50 million relating to the RCF
Banca Intesa & JP Morgan loan;
2)Reclassification of the Senior Term Loan Banca Intesa &
JP Morgan from medium-term to short-term debt, on a
consistent basis with the standstill request with the process
for the renegotiation of the debt under way, in relation to
which reference should be made to the sections “Events
subsequent to the end of the year” on page 45 and
“Assessment of the business as a going-concern and
business outlook and prospects” on page 46. Note that
the reclassification of the debt complies with the approach
required by IAS 1, section 64.;
3)The conversion into equity of the convertible bond subscribed
by Management&Capitali in December 2007 for EUR 60
million at a nominal rate of 6.75% per annum.
4)Repayment of the Banca Intesa & JP Morgan bridging loan
for EUR 150 million following the share capital increase in
February 2008.
The change in operating cash for the year, before interest on
the debt, is negative for a total of EUR 12.5 million. The overall
change is negative for around EUR 110 million, a figure which
reflects investments for around EUR 174 million and charges
for interest and other costs on debt amounting to approximately
EUR 76 million.
4.6 Events subsequent to the end of the year
Appointment of Luca Scano as General Manager
of Tiscali Italia
On 19 January 2009, the Company announced the
appointment of Luca Scano as General Manager of Tiscali
Italia S.p.A., reporting directly to Mario Rosso, Chief Executive
Officer of Tiscali Italia and the parent company Tiscali S.p.A..
Luca Scano is also responsible for the role of Finance Director
of the Italian subsidiary.
Reduction of the interest holding by Management
& Capitali
On 21 January 2009, M&C informed Consob that it had reduced its
interest holding in Tiscali S.p.A.’s capital under the threshold of 2%.
Renewal of the voluntary incentive redundancy
programme
On 27 January 2009, the Trade Union Organizations SLC-CGIL,
FISTel-CISL and UILCOM-UIL renewed the agreement signed
with the Company at the end of December, with the aim of
achieving a further 60 incentive redundancies by the end of 2009.
Furthermore, as a result of transactions for internalizing activities,
the Company has planned the re-location of 70 workers by means
of professional mobility processes.
As of the date of approval of the financial statements, the initiative
had led to the termination of another 47 permanent employment
contracts (by means of voluntary incentive redundancy) for a
total of 96 terminations and 36 collaboration agreements.
Inclusion of Renato Soru once again on the Board
of Directors
On 19 March 2009, Tiscali Spa’s Board of Directors resolved the
return of Mr. Renato Soru, Company founder and shareholder,
to the Board of Directors.
Agreement for the disposal of Tiscali International
Network (TiNet)
On 3 February 2009, Tiscali, BS Private Equity SpA and BS
Investimenti SGR announced that they had agreed the sale of
the activities held by Tiscali International Network BV, a
company controlled by Tiscali S.p.A., for a total Enterprise
Value of around EUR 47 million inclusive of a potential earn-
out of EUR 7 million. Also subsequent to the acquisition, TiNet
will continue to be the IP services supplier for the Tiscali Group.