25th Apr 2005 17:40
Telefonica SA25 April 2005 ANTONIO J. ALONSO UREBA Director, General Secretary and Secretary to the Board of Directors TELEFONICA, S.A. Telefonica S.A., as provided in article 82 of the Spanish Stock Market Act (Leydel Mercado de Valores), hereby reports the following SIGNIFICANT EVENT The Board of Directors of Telefonica, SA., at its meeting held on April 20th,2005, has unanimously resolved to call the Annual General Shareholders' Meetingto be held in Madrid on May 30th and 31st, 2005, 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' Meeting, that has been approvedin the aforesaid Board's meeting, is the following: AGENDA I. Examination and approval, if applicable, of the Annual Accounts and Management Report of Telefonica, S.A. and its Consolidated Group ofCompanies, as well as the proposal for the application of the results ofTelefonica, S.A., and that of the management of the Company's Board ofDirectors, all for the 2004 financial year. II. Shareholder remuneration: A) Distribution of dividends with acharge to the Additional Paid- in capital reserve and B) Extraordinary non-cashdistribution of additional paid- in capital. III. Examination and approval, if applicable, of the Proposed Mergerof Telefonica, S.A. and Terra Networks, S.A. and approval, as the Merger BalanceSheet, of Telefonica, S.A.'s Balance Sheet closed on December 31, 2004.Approval of merger between Telefonica, S.A. and Terra Networks, S.A. by means ofthe absorption of the latter by the former, with the extinction of TerraNetworks, S.A. and the en bloc transfer of all of its assets and liabilities toTelefonica, S.A., with the provision that the exchange shall be satisfiedthrough the delivery of treasury shares of Telefonica S.A., all in accordancewith the provisions of the Merger Plan. Application of the special tax regimeset forth in Chapter VIII of Title VII of the Restated Text of the CorporateIncome Tax Law in connection with the merger. Establishment of procedures tofacilitate the exchange of shares. Delegation of powers. IV. Appointment of Directors. V. Designation of the Accounts Auditor for Telefonica, S.A. andits Consolidated Group of Companies, under the provisions of article 42 of theSpanish Commerce Code (Codigo de Comercio) and article 204 of the SpanishCorporations Act (Ley de Sociedades Anonimas). VI. Authorization for the acquisition of treasury stock, directlyor through Group companies. VII. Reduction of share capital through the amortizing of treasurystock, with the exclusion of the right to opposition by creditors, through theredrafting of the article in the Bylaws that refers to the share capital. VIII. Delegation of powers to formalize, construe, correct andexecute the resolutions adopted by the Annual 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 April 27th, 2005. 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. Please find below the full text of the official announcement of the calling ofthe Annual General Shareholders' Meeting. Madrid, April 25th, 2005 TELEFONICA, S.A. Annual General Shareholders' Meeting The Board of Directors of "Telefonica, S.A." (the Company) has resolved to CALLthe Annual General Shareholders' Meeting of the Company, to be held in Madrid onMay 30th, 2005 at 12:00 a.m. on first call at IFEMA (Feria de Madrid), Campo delas Naciones, Parque Ferial Juan Carlos I, Pabellon 3, and on May 31st, 2005 at12:00 a.m. on second call in the same place, if necessary legal quorum is notreached on first call. The purpose of this call is to submit to the consideration and approval of theAnnual General Shareholders' Meeting, the items stated in the Agenda below. AGENDA I. Examination and approval, if applicable, of the AnnualAccounts and Management Report of Telefonica, S.A. and its Consolidated Group ofCompanies, as well as the proposal for the application of the results ofTelefonica, S.A., and that of the management of the Company's Board ofDirectors, all for the 2004 financial year. II. Shareholder remuneration: A) Distribution of dividends with acharge to the Additional Paid- in capital reserve and B) Extraordinary non-cashdistribution of additional paid- in capital. III. Examination and approval, if applicable, of the Proposed Mergerof Telefonica, S.A. and Terra Networks, S.A. and approval, as the Merger BalanceSheet, of Telefonica, S.A.'s Balance Sheet closed on December 31, 2004.Approval of merger between Telefonica, S.A. and Terra Networks, S.A. by means ofthe absorption of the latter by the former, with the extinction of TerraNetworks, S.A. and the en bloc transfer of all of its assets and liabilities toTelefonica, S.A., with the provision that the exchange shall be satisfiedthrough the delivery of treasury shares of Telefonica S.A., all in accordancewith the provisions of the Merger Plan. Application of the special tax regimeset forth in Chapter VIII of Title VII of the Restated Text of the CorporateIncome Tax Law in connection with the merger. Establishment of procedures tofacilitate the exchange of shares. Delegation of powers. IV. Appointment of Directors. V. Designation of the Accounts Auditor for Telefonica, S.A. andits Consolidated Group of Companies, under the provisions of article 42 of theSpanish Commerce Code (Codigo de Comercio) and article 204 of the SpanishCorporations Act (Ley de Sociedades Anonimas). VI. Authorization for the acquisition of treasury stock, directlyor through Group companies. VII. Reduction of share capital through the amortizing of treasurystock, with the exclusion of the right to opposition by creditors, through theredrafting of the article in the Bylaws that refers to the share capital. VIII. Delegation of powers to formalize, construe, correct andexecute the resolutions adopted by the Annual General Shareholders' Meeting. PARTICIPATION OF PUBLIC NOTARY IN THE ANNUAL GENERAL SHAREHOLDERS' MEETING The Board of Directors has agreed to request the presence of a Public Notary todraw up the minutes of the Meeting, in accordance with article 114 of theSpanish Corporations Act (Ley de Sociedades Anonimas) in relation with articles101 and 103 of the Mercantile Registry's rules and regulations (Reglamento delRegistro Mercantil) RIGHT TO INFORMATION In relation to points I and VII on the Agenda and in accordance with theprovisions of articles 144, 212 and related provisions of the SpanishCorporations Act, it is placed on record that the shareholders have the right toexamine and obtain at the Company's registered office or to request the Companyto send them, immediately and free of charge, a copy of the following documents: - Annual accounts ( Balance Sheet, Profit and Loss Statement andNotes to the Accounts) and Management Reports of Telefonica, S.A. and itsConsolidated Group of Companies, with the corresponding Auditors' Reports, aswell as the proposal for the application of the results. - Proposal on the reduction of share capital and the mandatoryReport of the Board of Directors on this proposal. In relation to point III on the Agenda, and in accordance with the provisions ofarticle 238 and related provisions of the Spanish Corporations Act, it is placedon record that the shareholders, debenture holders and holders of special rightsother than shares have the right to examine and obtain at the Company'sregistered office or to request the Company to send them, immediately and freeof charge, the full text of the following documents: - The Merger Plan. - The report of the Independent Expert on the Merger Plan. - The reports of the Directors of each of the companies takingpart in the merger on the Merger Plan. - The Annual Accounts and Management Reports for the last threeyears for each of the companies taking part in the merger, with thecorresponding Auditors' reports. - The Merger Balance Sheet for each of the companies taking partin the merger, accompanied by the verification report issued by the Auditor (inboth cases this Balance Sheet is the Balance Sheet for the year ended December31st, 2004, to be approved by their respective Annual General Shareholders'Meetings). - The current Bylaws of each of the companies taking part in themerger. No amendment of the Bylaws of Telefonica, S.A. is contemplated as aresult of the merger. However, it is placed on record that the General Meetingwill deliberate on the reduction of share capital referred to in point VII ofthe Agenda. - The list of first names, surnames, ages, nationalities andaddresses of the Directors of each of the companies taking part in the merger,the date on which they took office and, where appropriate, the same informationin relation to the people who are going to be proposed as Directors as a resultof the merger. The same documents will be available to the employee representatives forexamination in the Company's registered office. The proposed resolutions in relation to all the other points on the Agenda arealso available to the shareholders at the registered office. All the documents referred to above will be accessible on-line via the Company'swebsite (www.telefonica.es). In addition, it is placed on record that in accordance with the provisions ofsubsection 4 of provision one of Order ECO/3722/2003, the Annual CorporateGovernance Report for the 2004 financial year, approved by the Company's Boardof Directors in a meeting held on March 30th, 2005, is available to theshareholders and is accessible on-line via the Company's website(www.telefonica.es). In accordance with the provisions of article 112.1 of the Spanish CorporationsAct, up until the seventh day before to that foreseen for holding the GeneralMeeting, shareholders may request such information or clarification as they deemnecessary or ask questions they consider pertinent regarding matters on theAgenda or information available to the public that may have been provided by "Telefonica, S.A." to the Spanish National Securities Market Commission (ComisionNacional del Mercado de Valores) since April 30th , 2004, the date the lastGeneral Meeting was held, by completing the corresponding form available on theCompany web page or by writing to the Shareholder Assistance Service (Serviciode Atencion al Accionista) of the Company at its registered office at Gran Via28, planta 3(a), 28013 Madrid, Spain. Information relating to the Merger Proposal In accordance with the provisions of article 240.2 of the Spanish CorporationsAct, we set out below the minimum information on the Merger Plan required bylaw. 1 Identification of the Entities Participating in the Merger. 1.1 Telefonica, S.A. (the Acquiring Company). Telefonica, S.A., domiciled in Madrid, at calle Gran Via, 28, which wasincorporated for an indefinite time by means of a notarial instrument executedbefore Mr. Alejandro Rosello Pastor, a Madrid Notary, on April 19, 1924,recorded under entry number 141 in his notarial register. Telefonica, S.A. is registered with the Commercial Registry of Madrid in Book12.534, Folio 21, Page M-6.164. Telefonica, S.A.'s Tax ID number is A-28/015.865. 1.2 Terra Networks, S.A. (the Acquired Company). Terra Networks, S.A., domiciled in Barcelona, at, calle Nicaragua, 54,incorporated for an indefinite time as Telefonica Comunicaciones Interactivas,S.A., by means of a notarial instrument executed before Mr. Jose AntonioEscartin Ipiens, a Madrid Notary, on December 4, 1998, and recorded under number5,276 in his notarial register, which changed to its current company name bymeans of notarial instrument executed before Mr. Francisco Arriola Garrote, aMadrid Notary, on October 1, 1999 and which moved to its current domicile byresolution approved at the Ordinary General Shareholders' Meeting held on June8, 2000, which resolution was converted into a public instrument before Mr.Nicolas Ferrero Lopez, a Notary of Pozuelo de Alarcon, on August 3, 2000, andrecorded under entry No. 2,893 in his notarial register. Terra Networks, S.A. is registered with the Commercial Registry of Barcelona, inBook 32.874, Folio 165, Page B-217.925. Terra Networks, S.A.'s Taxpayer ID number is A-82/196.080. 2 Merger Exchange Ratio. The exchange ratio for the shares of the entities participating in the merger,which was determined on the basis of the actual value of the corporate assets ofTelefonica, S.A. and Terra Networks, S.A., will be as described below (with nosupplemental cash compensation): Two (2) shares of Telefonica, S.A., each having a par value of one (€1) Euro,for every nine (9) shares of Terra Networks, S.A., each having a par value oftwo (€2) Euros. The determination of the exchange ratio took into consideration the dividendsthat both companies are expected to distribute, to which reference is made inSection 8 of the Merger Plan and Section 4 below. 3 Procedure for the Exchange of Shares. The procedure for the exchange of shares of Terra Networks, S.A. for shares ofTelefonica, S.A. shall be as follows: (a) Once the merger has been approved at the General Shareholders' Meetingsof both companies and the merger document has been recorded with the CommercialRegistry of Madrid (after having been evaluated by the Commercial Registry ofBarcelona), the shares of Terra Networks, S.A. will be exchanged for shares ofTelefonica, S.A. (b) The exchange will take place beginning on the date indicated in theannouncements to be published in the Official Gazette of the CommercialRegistry, in one of the widely-circulated newspapers in Madrid and Barcelona,and, if necessary, in the Official Gazettes of the Spanish stock exchanges. Afinancial institution shall be appointed to act as an Agent for such purposes,and such institution shall be named in the above-mentioned announcements. (c) The exchange of the shares of Terra Networks, S.A. for shares ofTelefonica, S.A. will take place through participants in Sociedad de Gestion delos Sistemas de Registro, Compensacion y Liquidacion de Valores, S.A.(Securities Registration, Clearing, and Liquidation Systems Management Company,Inc.) (IBERCLEAR) that are depositaries thereof, in accordance with theprocedures established for the book-entry system, pursuant to the provisions ofRoyal Decree 116, 1992, of February 14, and with the application of theprovisions of Section 59 of the Corporations Act, to the extent applicable. (d) Shareholders who hold shares representing a fraction of the number ofshares of Terra Networks, S.A. designated as the exchange ratio may purchase ortransfer shares in order to exchange them in accordance with such exchangeratio. Notwithstanding the foregoing, and pursuant to the provisions of theMerger Plan, the companies participating in the merger expect to establishmechanisms for the purposes of facilitating the implementation of the exchangefor those shareholders of Terra Networks, S.A. who own a number of shares thatis not a multiple of nine (9), including the designation of an Odd-Lot Agent. (e) As a result of the merger, the shares of Terra Networks, S.A. willbecome extinguished. Pursuant to the provisions of Section 249 of the Corporations Act and of theregulations governing treasury stock, the shares of Terra Networks, S.A.controlled by Telefonica, S.A. will not be exchanged for shares of Telefonica,S.A. 4 Date from which the Shares Delivered in Exchange Will Carry theRight to Participate in Corporate Earnings. Given that the shares of Telefonica, S.A. to be used for the exchange arealready in existence, and of the same class and series as the other currentlyoutstanding shares of Telefonica, S.A., they shall give their holders the right,after delivery thereof, to participate in corporate earnings as from January 1,2005 on the same terms as the other outstanding shares. In distributions made after the registration with the Commercial Registry of themerger document, all shares of Telefonica, S.A., including those delivered tosatisfy the exchange, shall participate equally in proportion to the par valueof each share. It is hereby noted for the record that, pursuant to the provisions of the MergerPlan, Telefonica, S.A. has made or plans to make, as the case may be, thefollowing distributions of dividends: (i) The payment of a dividend of a fixed sum of 0.23 Euros pershare charged to earnings for the fiscal year ending December 31, 2004, whichwill be paid on May 13, 2005. Shareholders of Terra Networks, S.A. who becomeshareholders of Telefonica, S.A. as a result of the merger will not benefit fromsuch dividend. (ii) The distribution of treasury stock of Telefonica, S.A., at the ratioof one share of treasury stock for each twenty-five shares owned by theshareholder, charged against the reserve for additional paid-in capital. It isexpected that the delivery of the shares will occur after the GeneralShareholders' Meeting and, in any event prior to the registration of the mergerof Telefonica, S.A. and Terra Networks, S.A. with the Commercial Registry. Theshareholders of Terra Networks, S.A. who become shareholders of Telefonica, S.A.as a result of the merger will not benefit from such distribution. (iii) The payment of a dividend for a fixed amount of 0.27 Euros per sharewith a charge against the reserve for additional paid-in capital, which must bepaid on November 11, 2005, provided that prior to such date, the merger documenthas been registered. The shareholders of Telefonica, S.A. as well as theshareholders of Terra Networks, S.A. who become shareholders of Telefonica, S.A.as a result of the merger, will benefit from this distribution. For its part, and also in accordance with the provisions of the Merger Plan,Terra Networks, S.A. plans to pay a dividend of 0.60 Euros per share, with acharge against the "Reserve for Additional Paid-In Capital" account, subject tothe corresponding approval by the shareholders at the Ordinary GeneralShareholders' Meeting of Terra Networks, S.A. Only the shareholders of TerraNetworks, S.A. will benefit from such distribution. 5 Date of Accounting Effects of the Merger. January 1, 2005 is hereby established as the date from which the transactions ofTerra Networks, S.A. shall be deemed for accounting purposes to have taken placeon behalf of Telefonica, S.A. 6 Special Rights. There are no special shares of Terra Networks, S.A. Nor are there any owners ofspecial rights other than shares, except for those belonging to thebeneficiaries (employees, officers and Directors of the companies in the TerraNetworks, S.A. Group) of the stock option plans of Terra Networks, S.A. referredto in Section 5 of the Merger Plan. Following the implementation of the merger,Telefonica, S.A. will succeed Terra Networks, S.A. as the entity bound by suchplans. The Terra Networks, S.A. stock option rights shall be automaticallyconverted into Telefonica, S.A. stock option rights, upon the terms resultingfrom the exchange ratio established in the Merger Plan. All references to TerraNetworks, S.A. or, as applicable, to Lycos Inc. or to Lycos Virginia in suchoption plans shall be deemed to be made to Telefonica, S.A. starting on the dateof registration of the merger. The shares of Telefonica, S.A. that are delivered to the shareholders of TerraNetworks, S.A. pursuant to the merger contemplated in the Merger Plan shall notgive the holders thereof any special rights whatsoever. 7 Benefits Extended to Directors and the Independent Expert. No benefits of any type shall be extended to the Directors of any of theentities participating in the merger, or to the independent expert participatingin the merger process. RIGHT TO ATTEND Every shareholder shall be entitled to attend the Annual General Shareholders'Meeting who holds, at least, 300 shares entered in the shareholder's name in thecorresponding registry of book entries no less than five days before the date onwhich the General Meeting is to be held, and provided, also, that eachshareholder documents such circumstance by means of the corresponding attendancecard, or else, by producing a certificate issued by any participating entities("entidades depositarias participantes") affiliated to the Spanish ManagementCompany of Securities Registration, Clearing and Settlement Systems (Sociedad deGestion de los Sistemas de Registro, Compensacion y Liquidacion de Valores) orby any other means contemplated under the legal provisions in force. Any shareholder entitled to attend shall be allowed to delegate his or herrepresentation at the General Meeting upon another person, who needs not be ashareholder. This representation may be granted through the filling in of thesection on the attendance card that refers to delegation, or in any way that isaccepted by the Law. In the documents that reflect the representations for theShareholders' Meeting, the instructions regarding voting will appear, and it isunderstood that should no specific instructions be given the representative willvote in favour of the proposed resolutions drawn up by the Board of Directorsregarding the points included on the Agenda, and in accordance with his/her owncriteria regarding any other matter not included on the Agenda and submitted forvoting by the Shareholders' Meeting, as at the date of delegation this matterwas unknown. Should the delegation form not reflect the specific person in whomthe shareholder has delegated, it will be understood that the vote favours theChairman of the Board of Directors of "Telefonica, S.A." or, should the casearise, the vote will be cast in favour of the person responsible for presidingover the Annual General Shareholders' Meeting. If on the basis of the foregoingindications the representative has a conflict of interest in relation to thevote on any of the proposals that are put to the vote at the General Meeting,whether or not they are on the Agenda, the representation will be deemed to beconferred on the General Vice Secretary of the Company in his capacity as ashareholder with the right to attend. Shareholders who hold a lesser number of shares shall be allowed at any time todelegate the representation thereof upon a shareholder enjoying the right toattend the Meeting, and they shall also be entitled to join other shareholdersin a similar situation, in order to reach, jointly, the required number ofshares and bestowing the right in writing. CONVENING OF MEETING ON SECOND CALL Shareholders are advised that based on experience in previous years, the General Meeting may foreseeably be held on second call at 12:00 a.m. on May 31st, 2005 at the address given earlier. General Secretary and Secretary of the Board of Directors Antonio J. Alonso Ureba This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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