ROME (dpa-AFX) - Telecom Italia SpA (TIAOF.PK, TI) said Thursday that it will sell its entire controlling interest in Telecom Argentine (TEO) to Fintech Group for $960 million.
The entire controlling interest of Telecom Italia Group in Telecom Argentina is held by the company and through its subsidiaries Telecom Italia International, Sofora Telecomunicaciones, Nortel Inversora and Tierra Argentea.
Of the purchase price of $960 million, $859.5 million will be paid as consideration for the sale of: 68% of the voting shares in Sofora held by Telecom Italia and Telecom Italia International, ($750.8 million); 15.53 million Class B shares of Telecom Argentina, representing 1.58% of the outstanding shares, held by Tierra Argentea, ($61.2 million); 2.35 million American Depositary Shares, representing 117, 588 Preferred B shares of Nortel, equal to 8% of the Preferred B shares held by Tierra Argentea, ($47.5 million).
The remaining $100.5 million will be paid pursuant to additional agreements related to the transaction, including an agreement to continue providing the Telecom Argentina companies technical support and other services for up to three years, the waiver by Telecom Italia of certain rights under, as well as amendments to, the current shareholders' agreement relating to Telecom Argentina with the Werthein Group who will retain 32% of the voting shares of Sofora, and commitment Fintech to pay amounts already reserved for dividends by Telecom Argentina, if such dividends are not declared and paid by the Telecom Argentina Group prior to closing.
Telecom Italia Group has received certain guarantees of performance under the agreements, including the pledge by Fintech of American Depository Shares representing Preferred B shares of Nortel, in a number equivalent to an initial average market value of $100 million.
The sale of the Class B shares of Telecom Argentina and the Nortel American Depository Shares held by Tierra Argentea is expected to occur before year end, whilst the sale of the Sofora shares is conditional upon obtaining certain required regulatory approvals. The company said Fintech has represented its intention to launch, to the extent required by applicable law and just prior to the closing of the sale of the shares of Sofora, a tender offer for the publicly traded shares of Nortel and Telecom Argentina that it will not acquire.
Telecom Italia Group holds an economic interest of 22.72% in the Business Unit Argentina, which reported revenues in 2012 of 22.1 billion Argentine Pesos (Euro 3.8 billion) with an Ebitda margin of 29.6%.
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