Telefonica SA Coltel capital increase (2641P)
30 August 2017 - 4:25PM
UK Regulatory
TIDMTDE
RNS Number : 2641P
Telefonica SA
30 August 2017
TELEFÓNICA, S.A. ("Telefónica") as provided in article 228 of
the Spanish Stock Market Act (Ley del Mercado de Valores), hereby
reports the following
SIGNIFICANT EVENT
The Shareholders' Meeting of the Colombian company Colombia
Telecomunicaciones S.A. E.S.P ("ColTel"), 67.5% of which is owned,
directly or indirectly, by Telefónica and 32.5% of which is owned
by the Colombian Government - the Ministry of Finance and Public
Credit of Colombia (the "Government"), has approved today:
1. A capital increase for an aggregate amount of 4,800 billion
Colombian pesos (capital and premium), approximately 1,370 million
euros at the current exchange rate (the "PARAPAT-Capital
Increase").
The proceeds from the PARAPAT-Capital Increase will be used to
pre-pay the entire amount of ColTel's debt derived from the
operating agreement dated 13 August 2003 (as amended, the
"Operating Agreement") with Patrimonio Autónomo Receptor de Activos
de la Empresa Nacional de Telecomunicaciones (the "PARAPAT").
The Telefónica Group and the Government will subscribe the
PARAPAT-Capital Increase pro rata to their respective shareholding
in ColTel. The Telefónica Group will disburse 3,240 billion
Colombian pesos, approximately 925 million euros at the current
exchange rate. The Government will assume 32.5% of ColTel's payment
obligations with the PARAPAT.
The disbursement by the Telefónica Group is subject to the
condition precedent of entering into an agreement to terminate the
Operating Agreement with the PARAPAT.
Following the execution of the PARAPAT-Capital Increase,
ColTel's payment obligations vis-a-vis the PARAPAT will be
completely extinguished resulting in the termination of the
Operating Agreement and the transfer to ColTel of the property,
rights and assets earmarked for the provision of telecommunication
services.
As a results of the investments from recent years and the
strengthening of its financial condition derived from the capital
increase, ColTel will reduce its indebtedness and obligations to
make future financial payments, and will face a new phase of growth
and consolidation.
2. A capital increase for an aggregate amount of 1,651 billion
Colombian pesos (capital and premium), approximately 472 million
euros at the current exchange rate (the "Arbitration Award-Capital
Increase").
The proceeds from the Arbitration Award-Capital Increase will be
used to pay the entire amount set forth in the arbitration award
issued in the arbitration proceedings initiated by the Colombian
Ministry of Information Technologies and Communications ("ITC") in
connection with its intention to revert certain assets earmarked
for the provisions of mobile voice services under former
concessions. As indicated in the Significant Events dated 27 July
2017, such arbitration award was not favorable to ColTel and other
telecommunications operator in Colombia.
The Telefónica Group and the Government will subscribe the
Arbitration Award-Capital Increase pro rata to their respective
shareholding in ColTel. The Telefónica Group will disburse 1,114
billion Colombian pesos, approximately 318 million euros at the
current exchange rate. The Government will assume, and consequently
offset, a portion of ColTel's indebtedness.
Telefónica's decision to participate in the Arbitration
Award-Capital Increase is a manifestation of its commitment to the
company, to the continuity in the provision of services and to its
customers and users, but it does not constitute, and should not be
understood as, an acceptance of the sentence imposed by the
arbitration award. Telefónica therefore reserves all of its legal
rights and the exercise by Telefónica or ColTel of any applicable
legal action, national or international.
The execution of these transactions will have no relevant
financial impact on the Telefónica Group, resulting in an increase
in the consolidated net financial debt of the Telefónica Group of
approximately 40 million euros, because 100% of ColTel's payment
obligations with the PARAPAT were already consolidated in the
financial statements of the Telefónica Group.
Madrid, 30 August 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
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