PIRELLI RECONFIGURES 173.5 MILLION EURO CREDIT WITH PRELIOS INTO SHARES AND EQUITY LINKED BOND DESTINED FOR CONVERSION
SUBSCRIBES TO NEWCO CAPITAL INCREASE FOR 23 MILLION EURO AND DIRECTLY IN PRELIOS TO A MAXIMUM OF 2.3 MILLION EURO
EQUITY LINKED BONDS DESTINED FOR CONVERSION AND STAKES IN PRELIOS AND NEWCO WILL BE CONFERRED TO A SPECIFIC COMPANY VEHICLE
PIRELLI CONFIRMS STRATEGIC FOCUS ON TYRE BUSINESS
Pirelli & C. S.p.A, in relation to the extraordinary operation of the re-launch of the Prelios group announced to the market today, states – in its role of financier to Prelios S.p.A – that it expressed its participation in the operation along with the other parties involved. For Pirelli, the operation entails the following: • the contribution of “new” funds to a total maximum value of 25.3 million euro, of which: - approximately 23 million euro to subscribe to the capital increase of the newly constituted company vehicle (“NewCo”), in which Intesa Sanpaolo S.p.A., Unicredit S.p.A. and Feidos 11 S.p.A. (a company controlled by Feidos S.p.A.) also have stakes. The new funds will be used by Newco to subscribe to new Prelios shares (Category B) which are without voting rights, not traded and convertible into ordinary shares when certain events come to pass (category B shares) - approximately 2.3 million euro to subscribe to a portion of any part of the Prelios capital increase offered as an option to its shareholders that is eventually not taken up by the market; • the reconfiguration of the entire 173.5 million euro of credit towards Prelios on December 31st, 2012, which is variable as a function of the degree to which the market subscribes to the capital increase. In the event of maximum non-subscription, the reconfiguration will take place as follows: - approximately 26.3 million euro in ordinary Prelios shares not bound by a lock-up; - approximately 147.2 million euro in equity linked bonds destined for conversion, with a cash option for Prelios (of 7 years’ duration) and with possible early conversion if certain events come to pass, of which about 65.3 million euro confer the right of conversion into Category B shares and around 81.9 million euro which confer conversion rights into ordinary Prelios shares. At the conclusion of the first phase of the operation it is foreseen that Pirelli will have a maximum direct stake of 17% in the voting capital of Prelios and approximately 33% of NewCo and a share of equity linked bonds destined for conversion which could vary in value between a minimum of 147.2 million euro and a maximum of 173.5 million euro depending on the degree to which the market subscribes to the capital increase offered by Prelios to its shareholders. Once the operation is finalized, Pirelli will confer the equity linked bonds destined for conversion and the stakes held in Prelios and Newco to a specific fully controlled company vehicle. Pirelli’s credit with Prelios amounts to 173.5 million euro, including interest matured up to December 31st, 2012 on the 160 million euro credit line conceded by Pirelli in favour of Prelios in 2010, at the time of the operation of separation from Pirelli Re. At the time, Pirelli committed to maintaining that credit line at the request of the financing banks to enable the separation from the real estate sector which permitted Pirelli to proceed on its course of strategic focus on tyre activities as outlined in the Pirelli industrial plan for 2009-2011, which transformed the company into a pure tyre player with excellent results. Pirelli’s participation in the operation of re-launching Prelios, announced today, does not change in any way Pirelli’s strategic focus on the core tyre business, but has as its sole objective the strengthening of Prelios’s equity and finances with the aim of maximizing the value of the credit Pirelli has with Prelios. Pirelli, Intesa Sanpaolo, Unicredit and Feidos 11 also defined the term sheet that establishes the terms and conditions essential for the constitution of NewCo, as well as its governance, for the transferability of the stakes held in it and the relative divestment, including mechanisms in specific cases of early exit for Feidos 11 and of acquisition for the other members of NewCo. It is expected that the parties will finalize the definitive agreements by the time of the Prelios shareholders’ meeting called to decide on the operation. The finalization and execution of the operation are subject to the conditions already communicated by Prelios. These include: - subscription to the definitive agreements of reconfiguration of the debt between Prelios and its credìtors; the compliance of the Prelios plan in accordance with article 67, paragraph 3, letter d). bankruptcy law; the concession by Consob of an exemption from the obligation of promoting full tender offer for Prelios shares held by all the parties involved and approval by Prelios’s shareholders of the capital increase and the new Prelios bylaws and the release of all further authorizations or necessary all-clears for the operation’s execution. Pirelli’s decision to participate in the operation was approved by Pirelli’s Board of Directors, with the favourable opinion of the dedicated Committee for Operations with Related Parties (in accordance with the procedure adopted by Pirelli, it is to be considered an operation with related parties of great significance). The required information document will be available in accordance with the terms set by law.