22nd Dec 2005 11:09
Telefonica SA22 December 2005 NOTIFICATION OF SIGNIFICANT EVENT Telefonica, S.A., in compliance with article 82 of Law 24/1988, July 29, of theSecurities Market Law and related provisions, and in order to make public aNotice of Corporate Action,. hereby reports the following SIGNIFICANT EVENT Yesterday, Telefonica Moviles, S.A. ("TEM"), subsidiary of Telefonica, S.A., andits partner in Mexico, Mr Alejandro Burillo Azcarraga, reached an agreement forTEM's acquisition of 8% of Telefonica Moviles Mexico, S.A. de C.V.'s sharecapital owned by Mr Burillo, thus allowing TEM to reach a 100% stake of itsMexican subsidiary. Both parties have informed the competition authorities ofthe transaction, as provided for under Mexican legislation. This transaction allows TEM to acquire 100% of Telefonica Moviles Mexico, S.A.de C.V. share capital prior to its call options exercise period, that permittedthe acquisition of 4% of the share capital during third quarter of 2007 and theremaining 4% of the share capital during third quarter of 2008 (or 8% in theabsence of partial exercise during 2007) This acquisition implies a disbursement for TEM of 177 thousand euros. Thistransaction performed by TEM and structured thorough an exchange of TelefonicaMoviles Mexico S.A. shares for Telefonica S.A. shares allows Mr Burillo tobecame shareholder of the head company of the Telefonica Group. This operationdoes not imply a material increase in TEM's debt as, following the InternationalAccounting Standards, the minimum Group Burillo's put option exercise price wasaccounted as debt and as of November 30, 2005 (counting interest earned to thatdate) amounted to 153 millions euros. The acquisition by TEM of 8% Telefonica Moviles Mexico, S.A. de C.V., sharecapital, which was already provided for under the shareholders agreement enteredinto with Burillo Group in 2002, terminates those agreements, and resolves theput and call options over Telefonica Moviles Mexico, S.A. de C.V. shares ruledby those agreements. Mr. Alejandro Burillo Azcarraga, will remain as a member of TEM Board ofDirectors as well as linked to Telefonica Moviles Mexico, S.A. de C.V. as anstrategic advisor. Attached find press announcement distributed to the media. Press Release TELEFONICA MOVILES BRINGS FORWARD THE ACQUISITION OF 100% OF ITS MEXICANSUBSIDIARY • Telefonica Moviles has reached an agreement to acquire the 8% ofTelefonica Moviles Mexico held by Alejandro Burillo, bringing forward the timeframe established by the accord between the shareholders, which set the firstdate for executing the call and put options on the shares in the third quarterof 2007. • Through this acquisition, Telefonica Moviles increases its stake in acompany with high growth potential and significant scope for cash flowgeneration in the medium term. • Alejandro Burillo, Chairman of Grupo Burillo, will become ashareholder of Telefonica, S.A. and will continue as a member of the Board ofDirectors of Telefonica Moviles. Madrid, 21 December 2005.- Telefonica Moviles has reached an agreement toacquire the 8% stake of Telefonica Moviles Mexico held by its partner AlejandroBurillo. As a result, Telefonica Moviles now owns 100% of its Mexicansubsidiary. The transaction, which has been made known to the Mexican Anti-Trust Authority(Cofeco), represents a cost to Telefonica Moviles of 177 million euros. It isbeing carried out by Telefonica Moviles and structured via the exchange ofshares of Telefonica Moviles Mexico S.A. for shares of Telefonica S.A., so thatAlejando Burillo will become a stockholder of the parent company of theTelefonica Group. The operation will not involve any significant increase in Telefonica Moviles'debt as, under International Financial Reporting Standards (IFRS), the minimumprice for Grupo Burillo's put option has been booked as debt. At 30 November2005, calculated according to interest paid to that date, it had a value of 153million euros. The acquisition of 8% of Telefonica Moviles Mexico will allow Telefonica Movilesto increase its holding in a company which has high growth potential andsignificant scope for cash flow generation in the medium term, bringing forwardthe dates established in the agreement made between the shareholders for thisacquisition. That agreement established the first date for executing the calloption in the third quarter of 2007 (4% stake) and the third quarter of 2008 forthe remaining 4% (or 8% if the option was not partially exercised in 2007). The Mexican cellular market, with a penetration rate of around 43% at the closeof 2005, has significant growth potential with market consensus forecastssuggesting that the penetration rate will be over 60% by the end of 2008 (nearly70 million customers). The same forecasts imply that the Mexican market couldgenerate service revenues of over 10 billion euros in 2008. The transaction is yet another example of the Telefonica Group's commitment tothe economy and in particular to the telecoms sector of Mexico , which the groupconsiders to a strategic market. Alejandro Burillo will stay on as Telefonica Moviles' strategic advisor inMexico, bringing with him his extensive knowledge of the Mexican economy. Hewill also remain on Telefonica Moviles' Board of Directors. More information in the web page: http://www.telefonicamoviles.com Direccion de Division de Comunicacion Tel: +34 91 423 40 44Paseo de Recoletos, 7 y 9 Fax: +34 91 423 40 1128004 Madrid e-mail: [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TDE.L