KKR bids Reuters urge Telecom Italy to discuss mental future with board of directors

Author: Elvira Pollina

MILAN (Reuters) – Telecom Italy is set to face another meeting room after Luigi Gubitosi said it was ready to step down as chief executive if that would help speed up the KKR’s proposed intervention.

Committee Telecom Italia (MI 🙂 (TIM), which meets at 1400 GMT on Friday, will also discuss the impact on the profits of the football rights agreement, which has not contributed to revenue and has contributed to two of Italy’s largest earnings warnings since July.

TIM auditors overturned a 1 billion-euro deal with GAZITI with DAZN on Thursday to watch top-flight Italian football matches and two sources on the issue expressed new concerns, Reuters said.

One source said that a further drop in TIM’s financial outlook has not been ruled out, which would be a new blow for TIM debt owners, which is already four times its main gain.

The company’s debt, already classified as “garbage,” was further cut by the S&P credit rating agency last week.

The U.S. private equity firm KKR was in a hurry to submit its bid after the rating, two other people on the subject said, adding that TIM was in danger of breaking bank agreements.

Gubitosi, who has been attacked by TIM’s chief investor Vivendi (OTC :), has offered to resign from his executive branch without resigning as director.

This means that his responsibilities should be assigned to another director, or else a board member would have to step down to vacate a seat for a new CEO.

In a letter to the board, a copy of which was seen by Reuters, Gubitosi criticized the directors for stopping KKR’s offer to please some of the group’s shareholders.

On Thursday, the general manager told unions that those who spoke out against a change above this week had lost the confidence of the majority of directors, a person familiar with the matter told Reuters.

“We feel like pawns on a chessboard where giants are playing, suddenly interested in a company that has been ignored for years,” TIM union representatives said in Milan.

STRATEGIC ASSETS

Tackling Gubitosi and Vivendi is TIM’s latest board crisis, as it has had three CEOs since 2015, when the French media group began building a 24% stake.

Gubitosi dismissed speculation that he was close to the KKR, and asked the New York fund for access to the company’s data and for the appointment of advisers to management.

The TIM council examined the KKR’s non-binding proposal of € 10.8 billion ($ 12 billion) for private adoption on Sunday.

The KKR, including the net debt estimated by TIM at 33 billion euros, has requested a four-week due diligence analysis.

Gubitosi joined the KKR for the first time last year, reaching an agreement of 1.8 billion euros, giving the fund a 37.5% stake in TIM’s last-mile network to reach people’s homes.

TIM’s full takeover bid comes as Italy prepares to spend € 6.7 billion of the European Union’s recovery fund to accelerate the ultra-rapid deployment of broadband across the nation.

TIM’s fixed network, which the government wants to upgrade to fiber, is Italy’s main telecommunications infrastructure, and Rome said the response to the KKR will depend on its network plans.

Rome has special powers to block the movements of strategic companies like TIM, but Prime Minister Mario Draghi’s executive has welcomed the KKR’s new interest in Italy.

Sources said that the KKR, which consulted the government before submitting its offer, intends to work on the network and give CDP investors – currently the second largest shareholder in TIM – a leading role in overseeing it.

($ 1 = 0.8787 euro)