12th May 2006 17:52
Telefonica SA12 May 2006 TELEFONICA S.A., as provided in article 82 of the Spanish Securities MarketAct (Ley del Mercado de Valores), hereby reports the following SIGNIFICANT EVENT The Board of Directors of TELEFONICA, S.A., at its meeting held on May 12nd,2006, has unanimously resolved to call the Annual Shareholders' Meeting to beheld in Madrid, on June 20th and 21st, 2006 at first and second callrespectively. Based on experience in previous years, the aforementioned Meetingis expected to be held at second call. The Agenda of the Annual General Shareholders's Meeting, that has been approvedin the aforesaid Board's meeting, is the following: AGENDA I. Examination and approval, if deemed appropriate, of the Individual Annual Accounts, of the Consolidated Financial Statements (Consolidated Annual Accounts) and of the Management Report of both Telefonica, S.A and its Consolidated Group of Companies, as well as of the proposed application of results of Telefonica, S.A. and of the management of the Board of Directors thereof, all with respect to Fiscal Year 2005. II. Examination and approval, if deemed appropriate, of the Merger Plan of Telefonica, S.A. and Telefonica Moviles, S.A. and approval, as the Merger Balance Sheet, of the Balance Sheet of Telefonica, S.A. as of December 31, 2005. Approval of the merger of Telefonica, S.A. and Telefonica Moviles, S.A. through the absorption of the latter by the former, with the termination of Telefonica Moviles, S.A. and the transfer en bloc and as a whole of all of its assets to Telefonica, S.A., with the provision that the exchange of shares will be carried out by means of the delivery of treasury shares of Telefonica, S.A., all of the foregoing in compliance with the provisions of the Merger Plan. Application to the merger of the special tax regime set forth in Chapter VIII of Title VII of the Restated Text of the Corporate Income Tax Law . Establishment of the procedure to facilitate the exchange. Delegation of powers. III. Re-election, ratification, and appointment, as applicable, of Directors: III.1 Re-election of Mr. Carlos Colomer Casellas. III.2 Re-election of Mr. Isidro Faine Casas. III.3 Re-election of Mr. Alfonso Ferrari Herrero. III.4 Re-election of Mr. Luis Lada Diaz. III.5 Re-election of Mr. Antonio Massanell Lavilla. III.6 Ratification of the interim appointment of Mr. David Arculus. III.7 Ratification of the interim appointment of Mr. Peter Erskine. III.8 Ratification of the interim appointment of Mr. Julio Linares Lopez. III.9 Ratification of the interim appointment of Mr. Vitalino Manuel Nafria Aznar. IV. Approval, if appropriate, of a long-term incentive plan consisting of the delivery of shares of and which is linked to changes in the listing price of shares of Telefonica, S.A. V. Authorization to acquire the Company's own shares, directly or through Companies within the Group. VI. Authorization to the Board of Directors to increase the share capital under the terms and conditions of Section 153.1.b) of the Business Corporations Law, with a delegation of the power to exclude preemptive rights pursuant, in this latter case, to the provisions of Section 159.2 of the Business Corporations Law. VII. Delegation of powers to formalize, interpret, remedy and carry out the resolutions adopted by the shareholders at the General Shareholders' Meeting. Likewise, it is hereby stated that it is foreseen to make public the officialannouncement of the calling of the Annual General Shareholders Meeting in theOfficial Gazette of the Mercantile Registry ("Boletin Oficial del RegistroMercantil") and in at least a daily newspaper of Madrid, on May 16th, 2006. Asfrom the publication date of this notice of the meeting, the relevant documentswill be available to the shareholders, debenture holders and holders of specialright other than shares, as well as to the employee representatives at theCompany's registered office, and sent to the regulatory bodies and stockexchanges of the different markets where Telefonica's shares are quoted.Additionally, these documents will be accessible on-line via the Company'swebsite: www.telefonica.es. The full text of the official announcement of the calling of the Annual GeneralShareholders' Meeting is enclosed to this notice. Madrid, May 12th, 2006 TELEFONICA, S.A. Annual General Shareholders' Meeting By decision of the Board of Directors of TELEFONICA,S.A., the shareholders are hereby called to the Annual General Shareholders'Meeting, to be held in Madrid, at the premises of IFEMA (Feria de Madrid), Campode las Naciones, Parque Ferial Juan Carlos I, Pabellon 10, at 10:00 p.m. on June20, 2006 on first call and, if the legally required quorum is not reached andtherefore the Meeting cannot be held on first call, at 12:00 p.m. on June 21,2006 on second call at the same place, in order to discuss and adopt resolutionsregarding the matters included on the following AGENDA I. Examination and approval, if deemed appropriate, of the Individual Annual Accounts, of the Consolidated Financial Statements (Consolidated Annual Accounts) and of the Management Report of both Telefonica, S.A and its Consolidated Group of Companies, as well as of the proposed application of results of Telefonica, S.A. and of the management of the Board of Directors thereof, all with respect to Fiscal Year 2005. II. Examination and approval, if deemed appropriate, of the Merger Plan of Telefonica, S.A. and Telefonica Moviles, S.A. and approval, as the Merger Balance Sheet, of the Balance Sheet of Telefonica, S.A. as of December 31, 2005. Approval of the merger of Telefonica, S.A. and Telefonica Moviles, S.A. through the absorption of the latter by the former, with the termination of Telefonica Moviles, S.A. and the transfer en bloc and as a whole of all of its assets to Telefonica, S.A., with the provision that the exchange of shares will be carried out by means of the delivery of treasury shares of Telefonica, S.A., all of the foregoing in compliance with the provisions of the Merger Plan. Application to the merger of the special tax regime set forth in Chapter VIII of Title VII of the Restated Text of the Corporate Income Tax Law . Establishment of the procedure to facilitate the exchange. Delegation of powers. III. Re-election, ratification, and appointment, as applicable, of Directors: III.1 Re-election of Mr. Carlos Colomer Casellas. III.2 Re-election of Mr. Isidro Faine Casas. III.3 Re-election of Mr. Alfonso Ferrari Herrero. III.4 Re-election of Mr. Luis Lada Diaz. III.5 Re-election of Mr. Antonio Massanell Lavilla. III.6 Ratification of the interim appointment of Mr. David Arculus. III.7 Ratification of the interim appointment of Mr. Peter Erskine. III.8 Ratification of the interim appointment of Mr. Julio Linares Lopez. III.9 Ratification of the interim appointment of Mr. Vitalino Manuel Nafria Aznar. IV. Approval, if appropriate, of a long-term incentive plan consisting of the delivery of shares of and which is linked to changes in the listing price of shares of Telefonica, S.A. V. Authorization to acquire the Company's own shares, directly or through Companies within the Group. VI. Authorization to the Board of Directors to increase the share capital under the terms and conditions of Section 153.1.b) of the Business Corporations Law, with a delegation of the power to exclude preemptive rights pursuant, in this latter case, to the provisions of Section 159.2 of the Business Corporations Law. VII. Delegation of powers to formalize, interpret, remedy and carry out the resolutions adopted by the shareholders at the General Shareholders' Meeting. SUPPLEMENT TO THE CALL TO GENERAL SHAREHOLDERS' MEETING Pursuant to the provisions of Section 97.3 of theBusiness Corporations Law, shareholders representing at least five percent ofthe share capital may request the publication of a supplement of this call tothe General Shareholders' Meeting, including one or more items in the Agenda.This right must be exercised by means of verifiable notice (which will includethe corresponding documents evidencing shareholder status) that must be receivedat the Company's registered office (Gran Via, numero 28, planta 9(a), Madrid,codigo postal 28013, to the attention of the General Secretary & Secretary ofthe Board of Directors) within five days of the publication of this call toMeeting. PARTICIPATION OF A PUBLIC NOTARY IN THE ANNUAL GENERAL SHAREHOLDERS' MEETING The Board of Directors has resolved to request thepresence of a Public Notary to draw up the minutes of the Meeting, pursuant toSection 114 of the Business Corporations Law in connection with Sections 101 and103 of the Regulations of the Commercial Registry. RIGHT TO RECEIVE INFORMATION In connection with Items I and VI on the Agenda, andpursuant to Sections 212, 144, 159 and related provisions of the BusinessCorporations Law, it is stated for the record that shareholders have the rightto examine and obtain at the Company's registered office, or to request theCompany to send them, immediately and free of charge, a copy of the followingdocuments: - Individual Annual Accounts, Consolidated Financial Statements (Consolidated Annual Accounts) and Management Reports of Telefonica, S.A. and of its Consolidated Group of Companies, the corresponding audit reports, and the proposed application of results. - Proposed authorization to the Board of Directors to increase the share capital as set forth in Item VI on the Agenda, together with the mandatory Directors' Report. In connection with Item II on the Agenda, and pursuantto Section 238 and related provisions of the Business Corporations Law, it isstated for the record that the shareholders, debenture holders, and holders ofspecial rights other than shares have the right to examine and obtain at theCompany's registered office, or to request the Company to send them, immediatelyand free of charge, the full text of the following documents: - The Merger Plan. - The report of the Independent Expert regarding the Merger Plan. - The reports of the Directors of each of the companies participating in the merger regarding the Merger Plan. - The Annual Accounts and the Management Report for the last three fiscal years of each company participating in the merger, with the corresponding Auditor's reports. - The Merger Balance Sheet of each company participating in the merger, accompanied by the verification report issued by the Auditor (in both cases, such Balance Sheet is the annual Balance Sheet as of December 31, 2005 to be approved by the shareholders at the respective General Shareholders' Meetings). - The current By-Laws of each company participating in the merger. No amendments will be made to the by-laws os Telefonica, S.A. as a result of the merger. - A list of names, surnames, age, nationality and address of the Directors of each of the companies participating in the merger, the date on which they took office, the same information on the persons, if any, to be proposed as Directors as a result of the merger. The above-mentioned documents will be available for inspection by the workers' representatives at the Company's registered office. - In addition, the text of the proposed resolutions relating to all other items on the Agenda is made available to the shareholders at the registered office, as well as a brief description of the professional profile of each of the Directors whose position is subject to re-election, ratification or appointment under Item III on the Agenda. All of the documents set forth above will be availableelectronically on the Company's website (www.telefonica.es). Furthermore, it is stated for the record that, pursuantto the provisions of paragraph 4 of the first provision of Order ECO/3722/2003,the Company's Annual Corporate Governance Report for fiscal year 2005, approvedby the Company's Board of Directors at its April 26, 2006 meeting, is availableto the shareholders and may be accessed electronically on the Company's website(www.telefonica.es). Pursuant to Section 112.1 of the Business CorporationsLaw, the shareholders may, until the seventh day prior to the date on which theGeneral Shareholders' Meeting is scheduled to be held by completing the formposted on the Company's website for such purpose, or by postal correspondencesent to the Company's registered office (Gran Via, numero 28, planta 3(a),Madrid, codigo postal 28013, to the attention of the Servicio de Atencion alAccionista (Shareholder Service)), request such information or clarifications asthey deem necessary, or ask such questions as they deem appropriate, regardingthe matters included on the Agenda or about the information available to thepublic that has been provided by Telefonica, S.A. to the National SecuritiesMarket Commission since May 31, 2005, i.e., the date on which the last GeneralShareholders' Meeting was held. Statements Regarding the Merger Plan In compliance with the provisions of Section 240.2 ofthe Business Corporations Law, below is the minimum legally required informationregarding the Merger Plan. 1. Identification of the Entities Participating in the Merger. 1.1 Telefonica, S.A. (Acquiring Company). Telefonica, S.A.: domiciled in Madrid, Gran Via 28, incorporated for anindefinite period of time under a notarial instrument executed before the MadridNotary Mr. Alejandro Rosello Pastor on April 19, 1924 under number 141 of hisbook of notarial records. Telefonica, S.A. adapted its by-laws to the BusinessCorporations Law currently in force under a notarial instrument executed beforethe Madrid Notary Mr. Miguel Mestanza Fraguero on July 10, 1990. Telefonica, S.A. is registered with the Commercial Registry of Madrid in Volume12.534, Folio 21, Section 8, Page M-6164. The Tax ID Code of Telefonica, S.A. is A-28015865. 1.2 Telefonica Moviles, S.A. (Acquired Company). Telefonica Moviles, S.A.: domiciled in Madrid, Goya 24, incorporated for anindefinite period of time under a notarial instrument executed before the MadridNotary Mr. Jose Antonio Escartin on February 14, 2000 under number 582 of hisbook of notarial records. Telefonica Moviles, S.A. is registered with the Commercial Registry of Madrid inVolume 14.837, Folio 155, Section 8, Page M-246786. The Tax ID Code of Telefonica Moviles, S.A. is A-82573759. 2. Merger Exchange Ratio. The exchange ratio for the shares of the entities participating in the merger,which has been determined on the basis of the actual value of the assets ofTelefonica, S.A. and Telefonica Moviles, S.A., will be as follows, without anyadditional cash compensation: Four (4) shares of Telefonica, S.A., each having a par value of one (€1) Euro,for every five (5) shares of Telefonica Moviles, S.A., each having a par valueof fifty (€0,50) Euro cents. In determining the exchange ratio, account has been taken of the dividends thatboth companies plan to distribute and to which reference is made to in section 8of the Merger Plan and in section 4 of this call to Meeting. 3. Share Exchange Procedure. The procedure for exchanging the shares of Telefonica Moviles, S.A. for sharesof Telefonica, S.A. will be as follows: (a) Once the merger is approved by the shareholders acting at theGeneral Shareholders' Meetings of both companies, the equivalent documentsmentioned in Sections 26.1 d), 41.1 c) and related provisions of Royal Decree1310/2005 of November 4 are filed with the National Securities Market Commission(hereinafter, the "CNMV") and the merger instrument is registered with theCommercial Registry of Madrid, the exchange of shares of Telefonica Moviles,S.A. for shares of Telefonica, S.A. will proceed. (b) The exchange will commence on the date specified in thenotices to be published in one of the more widely circulated newspapers inMadrid, in the Listing Bulletins of the Spanish Stock Exchanges and, ifapplicable, in the Official Bulletin of the Commercial Registry. For suchpurpose, a financial institution will be appointed to act as Agent and will benamed in the above-mentioned notices. (c) The exchange of the shares of Telefonica Moviles, S.A. forshares of Telefonica, S.A. will be made through the entities participating inthe Sociedad de Gestion de los Sistemas de Registro, Compensacion y Liquidacionde Valores S.A. (Securities Registration, Clearing and Liquidation SystemsManagement Company) (Iberclear) that are depositaries thereof, in accordancewith the procedures established for the book-entry system, pursuant to theprovisions of Royal Decree 116/1992 of February 14 and applying such provisionsof Section 59 of the Business Corporations Law as may be applicable. (d) Shareholders holding shares that represent a fraction of thenumber of shares of Telefonica Moviles, S.A. designated as the exchange ratiomay purchase or transfer shares in order to exchange them in accordance withsuch exchange ratio. Notwithstanding the foregoing, the companies participatingin the merger may implement mechanisms designed to make such exchange easier forshareholders of Telefonica Moviles, S.A. who hold a number of shares that,according to the agreed exchange ratio, does not entitle them to receive a wholenumber of shares of Telefonica, S.A., including the appointment of an Odd-LotAgent. (e) As a result of the merger, the shares of Telefonica Moviles,S.A. will be cancelled. Pursuant to the mandatory provisions of Section 249 of the Business CorporationsLaw and related provisions, the shares of Telefonica Moviles, S.A. which areheld as treasury shares or are in possession of Telefonica, S.A. will not beexchanged for shares of Telefonica, S.A. 4. Date as from which the New Shares Delivered in Exchange Carry the Rightto Participate in the Profits of the Company and Specific Characteristics ofsuch Right. January 1, 2006 is set as the date as from which the shares delivered inexchange will entitle the holders thereof to participate in the earnings ofTelefonica, S.A. For this reason, the existing shares of Telefonica, S.A. ofthe same class and series as the other shares of Telefonica, S.A. currentlyoutstanding used to effect the exchange will entitle the holders thereof, asfrom the date of delivery, to participate in the earnings of the company postedas from January 1, 2006, on the same terms as the other outstanding shares. The shares, if any, issued by Telefonica, S.A. under the capital increasereferred to in Item II on the Agenda for the General Shareholders' Meeting willentitle the holders thereof to participate in the profits of Telefonica, S.A.posted as from January 1, 2006. In distributions made after the merger instrument is registered with theCommercial Registry, all the shares of Telefonica, S.A., including thosedelivered in order to carry out the exchange, will participate with the samerights in proportion to the par value of each share. It is stated for the record that, in accordance with the provisions of theMerger Plan, Telefonica, S.A. has made or, as the case may be, plans to make thefollowing dividend distributions: (i) Payment of a gross interim dividend of 0.25 Euro per share,based on the earnings for the fiscal year ended December 31, 2005, which waspaid on May 12, 2006. Such dividend does not benefit shareholders of TelefonicaMoviles, S.A. who become shareholders of Telefonica, S.A. as a result of themerger. (ii) The Board of Directors of Telefonica, S.A. intends todistribute, during fiscal year 2006, an additional gross dividend of 0.25 Europer share, to which end the required corporate resolutions will be adopted. Inany event, such dividend will be paid after the merger is registered with theCommercial Registry of Madrid. Such dividend will benefit both the shareholdersof Telefonica, S.A. and the shareholders of Telefonica Moviles, S.A. who becomeshareholders of Telefonica, S.A. as a result of the merger. For its part, in accordance with the provisions of the Merger Plan, TelefonicaMoviles, S.A. plans to make the following dividend distributions: (i) Previously-announced dividend: Payment of a gross dividend of 0.205 Euro per share to be charged to theunappropriated retained earnings for fiscal year 2005 and to unrestrictedreserves, following approval by its shareholders at the Annual GeneralShareholders' Meeting. It is expected that this dividend will be paid on July21, 2006 and, in any event, prior to the registration of the merger ofTelefonica, S.A. and Telefonica Moviles, S.A. with the Commercial Registry; itwill only benefit the shareholders of Telefonica Moviles, S.A. (ii) Dividends proposed by the Board of Directors of TelefonicaMoviles, S.A. for approval by the shareholders acting at the GeneralShareholders' Meeting: • Payment of a gross dividend of 0.085 Euro per share to be chargedto the reserve for the issuance premium and other unrestricted reserves,following approval by its shareholders at the Annual General Shareholders'Meeting. • Payment of a gross interim dividend of 0.35 Euro per share to becharged to the profits posted between January 1 and March 28, 2006, followingapproval by its shareholders at the Annual General Shareholders' Meeting. The two proposals mentioned above are contingent upon approval of the plannedmerger by the shareholders acting at the General Shareholders' Meeting of bothcompanies. If these proposals are approved by the shareholders at the AnnualGeneral Shareholders' Meeting of Telefonica Moviles, S.A. and if the conditiondescribed above is met, payment of the dividends to which the proposals refer(in the aggregate gross amount of 0.435 Euro per Telefonica Moviles, S.A. share)will be made on July 21, 2006. Accordingly, this distribution will only benefitthe shareholders of Telefonica Moviles, S.A. 5. Date of Accounting Effects of the Merger. January 1, 2006 is set as the date as from which all transactions of TelefonicaMoviles, S.A. will, for accounting purposes, deemed to have been made on behalfof Telefonica, S.A. 6. Special Rights. There are no special shares or special rights in Telefonica Moviles, S.A. otherthan the shares. However, it is noted for the record that, as set forth insections 5 and 10 of the Merger Plan, the stock option plan of TelefonicaMoviles, S.A. (the MOS Plan) expired on January 3, 2006 and is currently inliquidation, which will be concluded prior to the registration of the merger.Notwithstanding the foregoing, Telefonica, S.A. will succeed Telefonica Moviles,S.A. as the entity responsible for any possible pending liability stemming fromthe above-mentioned liquidation. The shares of Telefonica, S.A. that are delivered to the shareholders ofTelefonica Moviles, S.A. by virtue of the merger will not grant any specialrights to the holders thereof. 7. Benefits attributed to the Directors and to the Independent Expert. No benefits of any kind will be attributed to the Directors of either of theentities participating in the merger or to the Independent Expert that hasparticipated in the merger process. RIGHT TO ATTEND THE MEETING IN PERSON OR BY PROXY The right to attend the General Shareholders' Meetinghereby called applies to shareholders that hold at least 300 shares registeredin their name in the corresponding book-entry registry five days in advance ofthe date on which the Meeting is to be held and who provide evidence thereof bymeans of the appropriate attendance card or by producing a certificate issued byany of the depositaries participating in the Sociedad de Gestion de los Sistemasde Registro, Compensacion y Liquidacion de Valores (Securities Registration,Clearing and Liquidation Systems Management Company) (IBERCLEAR) or by any othermeans allowed under applicable Law. Any shareholder having the right to attend the GeneralShareholders' Meeting may be represented thereat by another person, who need notbe a shareholder. A proxy may be granted by using the proxy-granting formprinted on the attendance card or by any other means allowed by Law. Thedocuments containing proxies for the General Shareholders' Meeting must setforth the instructions regarding the manner of voting, provided that, where noexpress instructions are given, the representative will vote in favor of theproposed resolutions submitted by the Board of Directors regarding the matterson the Agenda, and in accordance with the shareholder's own criteria inconnection with any other matter that, not being included in the Agenda and thusbeing unknown at the time the proxy is granted, might be put to the vote at theMeeting. If the proxy-granting form does not set forth a specific person towhom the shareholder grants the proxy, such proxy will be deemed granted infavor of the Chairman of the Board of Directors of the Company or of such otherperson as may replace him as Chairman of the General Shareholders' Meeting. Inthe event that, in accordance with the foregoing, the representative is involvedin a conflict of interest upon voting on any of the proposals, whether or notincluded in the Agenda, which are put to the vote at the General Shareholders'Meeting, the proxy will be deemed granted to the General Secretary of theCompany in his capacity as a shareholder having the right to attend. Shareholders who do not hold the minimum number ofshares required to attend may grant a written proxy in respect thereof in favorof another shareholder having the right to attend, or come together with othershareholders that are in the same situation such that they reach the requirednumber of shares and grant a written proxy to one of such shareholders. HOLDING OF THE MEETING ON SECOND CALL Shareholders are advised that, based on experience fromprevious years, the General Shareholders' Meeting is expected to be held onsecond call, at 12:00 p.m. on June 21, 2006, at the place indicated above. FOR ANY ADDITIONAL INFORMATION, SHAREHOLDERS MAY CONTACTTELEFONICA'S SHAREHOLDER SERVICE BY CALLING TOLL-FREE AT 900 111 004, FROM 9:00 A.M. TO 7:00 P.M., MONDAY THROUGH FRIDAY. Madrid, May 12, 2006 General Secretary & Secretary of the Board This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TDE.L