Main events
Separation of Italgas from Snam
On 28 June 2016 the Snam Board of Directors approved the separation of Italgas from Snam, to be carried out in a combined, concurrent transaction, which includes, among other things, the partial and proportional spin-off of Snam and the resulting listing, on the Mercato Telematico Azionario (MTA) of Milan, of a new spin-off beneficiary company acting as a holding company for the equity investment in Italgas (ITG Holding S.p.A.6). Through the industrial and corporate reorganisation transaction, the entire equity investment currently held by Snam in Italgas, equal to 100% of the share capital of Italgas, will be transferred to the beneficiary company to separate the gas distribution business in Italy. The transaction was based on the fact that the natural gas distribution business has unique characteristics compared with other Snam Group businesses in terms of operational organisation, competitive environment, regulations and growth opportunities.
Specifically, the transaction calls for the following: (i) Snam’s contribution in kind to ITG Holding of an 8.23% stake in the share capital of Italgas leaving Snam, post-spin-off, with a 13.50% stake in the beneficiary company ITG Holding; (ii) Snam’s sale to ITG Holding of a 38.87% stake in the share capital of Italgas, the payment of which will be the purpose of a Vendor Loan for ITG Holding, which would produce an appropriate level of financial debt bearing in mind the business and risk profiles and cash flow generation; (iii) the partial and proportional spin-off of Snam with the assignment to ITG Holding of the remaining portion of the equity investment held by Snam in Italgas (52.90%), and with the resulting assignment to Snam shareholders of the remaining 86.50% of ITG Holding’s capital.
The validity of the entire transaction is subject to legal conditions (including, in particular, approval at Snam’s shareholders’ meeting), Borsa Italiana’s issuance of an order authorising ITG Holding shares for trading on the MTA, the issuance of CONSOB’s equivalence opinion and the approval of Snam’s bondholders.
The Board of Directors called ordinary and extraordinary Shareholders’ Meetings for 1 August 2016. The closing of the entire transaction, which is subject to the above conditions being met, is scheduled to occur by 31 December 2016.
For additional information on the transaction, the following documents are available on Snam’s website (www.snam.it, in the section “Ethics and Governance - Shareholders’ Meetings”): the Spin-Off Plan, the Explanatory Report of directors of the spun-off company (Snam S.p.A.) and the beneficiary company (ITG Holding S.p.A.) and the Information Document prepared pursuant to Article 70, paragraph 6 of the Issuer Regulations.
Transaction funding the beneficiary company of the separation of Italgas from Snam
As part of the process to separate Italgas from Snam, binding loan commitments were signed with eleven leading domestic and international financial institutions. These binding commitments, totalling €3.9 billion, will make it possible to cover the financial requirements of the spin-off beneficiary company for the repayment of amounts owed to Snam, and will provide the company with the financial resources necessary to strengthen its market leadership in the distribution of gas in Italy.
The credit facilities, which differ by their nature and maturity, include a bridge-to-bond totalling €2.3 billion with a term of up to two years, revolving lines of credit totalling €1.1 billion maturing in three to five years, and bilateral bank lines of credit totalling €500 million maturing in three to five years.
A share buyback programme was proposed for up to 3.5% of Snam’s share capital for a total amount of up to €500 million over 18 months
Snam’s Board of Directors has called a shareholders’ meeting for Snam on 1 August 2016 to also request authorisation to purchase ordinary Snam shares pursuant to Articles 2357 and 2357-ter of the Italian Civil Code and Article 132 of Legislative Decree 58/1998 (TUF - Consolidated Finance Act). Authorisation is requested for an amount of up to €500 million, and up to the maximum limit of 3.5% of subscribed and paid-up share capital, bearing in mind the treasury shares already held by the Company, for a duration of 18 months from the effective date of the Company’s partial and proportional spin-off, if such spin-off is approved by the extraordinary shareholders’ meeting called for 1 August 2016.
The purpose of the programme is to provide Snam with a tool ensuring strategic and financial flexibility with the aim of increasing value for shareholders, including through the improvement of the Company’s financial structure.
Revoke of the “judicial control” against Italgas
On 9 July 2015 the Court of Palermo has revoked the measure of the judicial administration against Italgas, as a result of the investigations and the active cooperation carried out by Snam Group.
Italgas has been asked to provide the competent authorities with the information flows requested under art. 34 of Legislative Decree no. 159/2011 (judicial control) on the relevant operations.
Italgas has filed an appeal to the Court of Appeal of Palermo.
On 25 July 2016 the Court of Appeal has revoked the “judicial control” against Italgas, by so declaring ceased the execution of any prescriptions.
The main events relating directly to the operating segments are described in the “Business segment operating performance” section.
6 The shareholders’ meetings called to approve the Spin-off Plan may approve a change in the name and registered offices of the beneficiary company.