Intesa Sanpaolo,Generali,Others Clarify Telecom Italia Terms"

MILAN -(Dow Jones)- Italian bank Intesa Sanpaolo and other financial institutions Wednesday clarified, at the request of stock-market regulator Consob, the terms of their recent purchase of control of Telecom Italia.

A Spanish-Italian consortium including Telefonica, Intesa Sanpaolo, Assicurazioni Generali, Mediobanca and Sintonia acquired Pirelli's 18% stake in Telecom Italia on Saturday.

Assicurazioni Generali, Intesa Sanpaolo, Mediobanca and Sintonia Wednesday said they have the first right of refusal when purchasing Telecom Italia shares sold by other members of the group. Within the group, Spain's Telefonica has a subsequent right of refusal after the four Italian companies.

Before Telefonica can exercise its right to buy the shares, the Italian companies have the right to suggest possible new Italian investors in Telecom Italia. Telefonica is entitled to express its opinion on the names put forward.

The Spanish-Italian consortium Saturday acquired an investment vehicle called Telco, which holds 23.6% of Telecom Italia, for EUR4.1 billion.

That price "is a temporary price taking into account that a final price can only be set" once the financial position of Olimpia, the predecessor of Telco, is determined, Wednesday's statement said.

The Italian-Spanish deal came after the Italian government pushed for a solution aimed at keeping Telecom Italia under Italian control. The company is the country's largest telecoms operator by market share and is seen as a strategic asset.

The sale agreement gives the Italian-Spanish consortium veto rights over certain decisions on share ownership changes, dividend policy and asset sales.

Telefonica has 42.3% of the investment vehicle Telco, Generali has 28.1%, Intesa Sanpaolo has 10.6%, Mediobanca 10.6% and Sintona SA 8.4%, the statement said.

If Telefonica does not agree to foreign asset sales of more than EUR4 billion or foreign alliances, it has the right to exit Telco.

The statement said that decisions at Telco will be taken by qualified majority - which means that Telefonica's approval is not necessary - regarding "certain important transactions" including spinoffs, mergers and capital increases.

If there is stalemate in the absence of a qualified majority, the necessary decisions can be taken by simple majority, it added.

A qualified majority is also required for approval of Telco's dividend policy, but not for that of Telecom Italia.

It said that further shareholder agreements will be published according to the timetables set by Italian securities law.

-By Jennifer Clark, Dow Jones Newswires; +39 02 58 21 9904; jennifer.clark@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 2nd May 2007