Press Release - Prelios Group equity strengthening and industrial relaunch plan

Massimo Caputi Deputy Chairman Prelios

Prelios Group equity strengthening and industrial relaunch plan

Milan 8th May - The extraordinary Shareholders’ Meeting approved the Prelios group equity strengthening, finalized also with the envisioned entry of a new industrial partner (Feidos 11 lead by Massimo Caputi, the appointed Deputy Chairman of Prelios SpA), in the broader framework of the extraordinary transaction, already approved by the Board of Directors of 27 March 2013 and disclosed to the market (also referred to in the press release of this morning issued after the meeting of the Board of Directors that, among other things, approved the Interim Report at 31 March 2013), which also envisages the rescheduling of the current financial debt in line with the new business plan.

Within the scope of the aforesaid extraordinary transaction, pursuant to art. 2446 of the Italian Civil Code the Shareholders’ Meeting resolved upon the full coverage of the losses at 31 December 2012 through the share capital reduction to € 4,881,622.50.

The Shareholders’ Meeting also approved to make – concurrently - the grouping of ordinary shares in a ratio of 1 ordinary share every 10 ordinary shares held, subject to prior cancellation of no. 1,171,777 ordinary shares held by the Company without share capital reduction, also in order to allow the overall transaction reconciliation as well as to streamline the overall transaction management, also considering that the purposes for which the treasury shares had been acquired in the past no longer exist.

The Meeting also approved the capital increase of € 185 million in total, to be made in two tranches, through:
* divisible capital increase against payment, for a total amount up to € 115,009,511.53, with option rights to all Company shareholders, through the issue of maximum no. 193,195,887 ordinary shares, that will have regular enjoyment and features identical to those of the outstanding shares upon their issue, to be subscribed by cash or possibly even by the offsetting or waiving of receivables claimed from the Company, and to be performed within one year from resolution date. Camfin, Assicurazioni Generali, Mediobanca and Intesa Sanpaolo, among the current parties to the Prelios shareholders’ agreement, confirmed that they will underwrite a stake of approximately € 25 million in total, while the residual € 90 million approximately will be guaranteed by the Company Lenders1 by cash for about € 5 million (secured by creditors Intesa Sanpaolo, Unicredit and Pirelli & C.) and by conversion of the claimed receivables up to about € 85 million (with a pro rata guarantee of all Company lenders);
* indivisible capital increase against payment, for a total amount of € 70,005,789.37, reserved to a newly incorporated special purpose vehicle (so-called “NewCo”) - participated by Feidos 11 S.p.A., Pirelli & C. S.p.A., Intesa Sanpaolo S.p.A. and UniCredit S.p.A. – and, consequently, excluding the option right, through the issue of no. 117,597,496 B shares, convertible into ordinary shares, to be subscribed by cash, and to be made within the term of one year from resolution date. NewCo wil be participated with a shareholding of about € 20 million by the industrial investor Feidos 11 and for the residual € 50 million approximately by creditors Pirelli & C. S.p.A., Intesa Sanpaolo S.p.A. and UniCredit. For B shares the listing will not be requested and, as already mentioned, such shares will be convertible into ordinary shares pursuant to: The “Lending Banks” from the so-called “Club Deal” and Pirelli & C. S.p.A.

Prelios new By-Laws, as amended following to the resolutions adopted on today’s date, in case of transfer to third parties or in case of a takeover bid and/or exchange of Company shares. Such increase will be proposed for both tranches at the subscription price equal to € 0.5953 per share, after the grouping transaction. It should also be noted that the commitments undertaken by the various entities will ensure to the Company a cash capital increase of at least € 100 million of new resources. It is hereby specified that, in relation to the capital increase with option rights, the relevant ratio (ratio for the attribution of shares resulting from the capital increase with option rights) will be newly issued shares every 10 ordinary shares of the Company held after the grouping. Finally, the Shareholders’ Meeting approved the assignment of the mandate to the Board of Directors, pursuant to art. 2420-ter, par. 2, of the Italian Civil Code, to issue convertible debentures up to a nominal amount of € 269,000,000 (“convertible debentures”) to be converted into ordinary shares and/or B shares, excluding any option right, with consequent divisible share capital increase for the exclusive service of the conversion, of a total of € 297,644,375.01, to be made through the issue of a maximum number of 499,990,551 ordinary shares and 144,678,117 B shares. This mandate shall be exercised within the term of one year from resolution date at the latest.

For the transaction in question, Prelios is assisted by Lazard S.r.l. as financial advisor and by Labruna Mazziotti Segni Law Firm as legal advisor. Feidos 11 is assisted by Leonardo & Co. as financial advisor and by Gianni, Origoni, Grippo, Cappelli & Partners as legal advisor.