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Telecom Italia agrees to sell telephone-directories business

Posted on: Wednesday, 11 June 2003, 06:00 CDT

ROME (AP) -- Telecommunications giant Telecom Italia SpA said Wednesday it had agreed to a Ç3.03 billion (US$3.5 billion) sale of the telephone-directories unit of its Seat-Pagine Gialle SpA business to a private equity consortium.

The sale, Europe's largest private equity deal of the year, will allow Telecom to cut its debt-burden by Ç3.7 billion (US$4.3 billion) and is part of the company's debt-cutting strategy.

Under the deal, Telecom sold its 61.5 percent stake in the core directory business of Seat to a private equity consortium led by BC Partners, along with Capital Partners Ltd., Permira and Investitori Associati.

The consortium is paying Ç0.50 (US$0.60) for each of Telecom Italia's shares in a new company called New Seat, which will be created to house the directories business. It also said it will offer the same price to minority investors as it attempts to buy up the whole company.

The BC Partners-led consortium outbid three other consortia, including teams led by Carlyle Group LP and Kohlberg Kravis Roberts & Co.

Telecom is trying to cut its debt in the wake of its merger with indebted parent company Olivetti SpA. The directories unit carries Ç708 million (US$826 million) in debt.

Under the agreement, Seat-Pagine Gialle will be split into two companies: New Seat, which will include the directories business that accounted for 73 percent of the old company's revenues; and Telecom Italia Media, which will comprise the Buffetti office supplies unit, two small television networks and Tin.it, Italy's largest Internet Service Provider.

Wednesday's deal does not include Seat's non-directories businesses, Telecom said.

The company's split-up is expected by the end of the summer. After then, the deal will be finalized.

(dj/ar/tr)

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