Finmeccanica Board : Company To Be Privatized By June 30, 2000
The Board of Directors of Finmeccanica met today to examine the plan of re-capitalisation and privatisation of Finmeccanica that IRI, following the indications received by the Italian Government, is committed to complete by 30 June of next year. This plan will bring government ownership of the Finmeccanica share capital to below majority control, although not below 30%, as recorded in the Decree of the Italian President of the Council of Ministers (DPCM), published on 12 October 1999. The Decree also envisages the introduction in the Finmeccanica by-laws of a clause that will attribute to the Minister of the Treasury one or more special powers as per Italian Law 474/94, in consideration of the Company's presence in the defence sectors. The content of such clause will be determined by an appropriate Ministerial Decree and its introduction in the by-laws will require approval at the Shareholders' Meeting. The Board has approved the following proposals that will be submitted to the General Shareholders' Meeting called for on 23 November 1999 in 1st call and on 30 November 1999 in 2nd call.
Merger Plan The Board of Directors approved the proposed plan to merge by incorporation Microelettronica Italiana - MEI Srl into Finmeccanica SpA. MEI's principal assets are its 50% share interest in STMicroelectronics Holding N.V., which owns approximately 45% of STMicroelectronics N.V., a company listed on the New York, Paris and Milan stock exchanges, and cash of approximately 2.200 billion lire. The Board of Directors of Finmeccanica and MEI, supported by their respective advisors, Lehman Brothers and Merrill Lynch, on the basis of an exchange ratio of 1,37 between the relative economic values of MEI and Finmeccanica, have determined the merger exchange ratio of n. 6,0565 (rounded off) new shares of Finmeccanica for every thousand Lira fraction of the share interests in the capital of MEI. The experts nominated by the President of the Court of Rome, Reconta Ernst & Young for Finmeccanica and Price Waterhouse SpA for MEI, will express their fairness opinions on the exchange ratio in accordance with the requirement of the Italian Law. The merger will be implemented without increasing the share capital of Finmeccanica, incorporating company, except for rounding adjustments. The existing shares will be cancelled and new shares will be issued, at a lower nominal value, to the existing Finmeccanica shareholders and to those of MEI. This will involve the issuance of a total of n. 8.392.324.500 ordinary shares, with a nominal value of Lire 430 each, of which n. 3.541.068.000 in favour of the existing shareholders of Finmeccanica, including n. 60.199.160 saving shares, and n. 4.851.256.500 ordinary shares in favour of the shareholders of MEI. Specifically, the government's share interests after the merger will increase from 59,8% to 83,0%, 1,9% of which is dedicated to the conversion of existing warrants. This increase will be temporary in light of the privatisation of the company expected by June 30, 2000. The merger will generate for Finmeccanica a merger reserve of approximately 700 billion Lire, substantially in line with the net assets of the incorporated company less the rounding adjustments of the nominal share value. The shareholding in STMicroelectronics Holding will be booked in Finmeccanica SpA financial statements at net assets value, the same principle adopted by Finmeccanica for all its controlling equity interests including those of joint venture investments. The consequent adjustment will create a reserve in Finmeccanica's net assets. MEI's activity will be attributed to the Finmeccanica financial statements as of 1 January 1999, and therefore its results for the current year will be included in the overall results of Finmeccanica 1999. At completion of the merger, Finmeccanica will own a significant interest in one of the leading high technology companies. In addition, it will acquire a capital and financial structure appropriate to the implementation of a strategy of consolidation and development of its strategic business.
Convertible bonds The Board approved a proposal to issue to the public convertible bonds for a nominal value of 1.700 billion Lire, consisting of no more than n. 1.133.333.333 bonds with a nominal value of not less than Lire 1.500 each. Pursuant to article 2441, section 5 of the Italian Civil Code, options rights for the existing shareholders will be excluded. A corresponding share capital increase will follow to accommodate the conversion of the bonds in the ratio of 1 share for each bond. This public issue is schedule for the year 2000 following completion of the merger. The issue price of the bonds will be determined at the time of issue and will take into account the then prevailing market conditions including the price of Finmeccanica shares. Reconta Ernst & Young will issue a fairness opinion on the minimum nominal value of the bonds in accordance with article 2441 section 6 of the Italian Civil Code.
Management Stock Incentive Plan The Board has approved the adoption of a Stock Incentive Plan for the management of the Group through assignment of options to underwrite new shares. These options will be reserved for a number of managers with top management responsibility in the company and its subsidiaries. For this purpose, in accordance with the article 2443 of the Italian Civil Code, the Board of Directors has approved the proposal to authorise the Board to issue no more than 35.000.000 paid ordinary shares, with exclusion of options rights for the existing shareholders, reserved for the exercise of stock options pursuant to the plan. This proposal is made in the context of implementing actions that increase shareholder value by aligning the interests of management with those of shareholders also in response to market expectation in light of the upcoming privatisation of Finmeccanica.
Conversion of savings into ordinary shares The Board has also approved a proposal for the mandatory conversion of saving shares into ordinary shares, in the ratio of one ordinary share for each saving share, without any payment adjustment. This proposal seeks to simplify the capital structure of Finmeccanica, eliminating the existence of shares, the price of which could be affected by a limited float. There is also been convened the Extraordinary Meeting of the Savings Shareholders on 23, 24, and 25 November 1999, respectively in 1st, 2nd and 3rd call in order to approve the above proposal.
-ends-
Finmeccanica Board : Company To Be Privatized By June 30, 2000
