The activist investor-led proposal to remove the Telecom Italia (TI) board has reportedly won the backing on another proxy adviser: Glass Lewis.
The influential San Francisco-based adviser has joined Institutional Shareholder Services (ISS) in…
The activist investor-led proposal to remove the Telecom Italia (TI) board has reportedly won the backing on another proxy adviser: Glass Lewis.
The influential San Francisco-based adviser has joined Institutional Shareholder Services (ISS) in recommending TI shareholders vote for a proposal to remove the telco’s board at a meeting set for 20 December, Reuters reported citing two sources who have seen the documentation.
Businessman Marco Fossati’s family holding company Findim, which owns about 5% of TI shares, and small shareholders group Asati have strongly criticised the telco’s current board and their new strategic plan, arguing it prioritises the interests of larger shareholders.
Holding company Telco, in which Spain’s Telefonica has the largest stake, is TI’s main shareholder with a 22.4% interest.
In its report, Glass Lewis reportedly wrote that, based on available disclosure, Findim has provided a “fairly compelling case” that several recent actions of the TI board suggest favouritism toward Telefonica at the expense of the Italian telco and its unaffiliated investors.
Asati president Franco Lombardi said in a short statement today that the board renewal proposal is “finding a broad consensus among analysts”, referencing the ISS and Glass Lewis recommendations. He expressed confidence that such analyses “will have a significant influence on foreign funds’ votes at the meeting.
Findim has told media it would vote for a slate of directors presented by the Italian Asset Management Association (Assogestioni). ISS is said to have backed this up in its own report, saying Assogestioni’s slated board membership would likely contribute to boosting long-term shareholder value in TI.
Telco has already said it will vote against the proposed board removal.
Last week, Reuters reported that early electronic voting data showed funds owning more than 60 million TI shares (0.5% of the total stock capital), were voting against the board removal, while none voted in favour. Holders of more than 20 million shares abstained.
If the board removal proposal fails, TI will move ahead with the three-year strategic plan outlined in early November by CEO Marco Patuano. Designed to raise €4bn (US$5.3bn), the plan includes multiple asset disposals.
TI admits priority treatment in bond sale
Meanwhile, TI has admitted that it prioritised Blackrock, Telefonica and Och-Ziff Capital Management in its €1.3bn (US$1.8bn) convertible bond sale last month.
In a release responding to questions from market regulator Consob, the telco said the three investors were given priority treatment in the bond allocation process on request.
TI said it considered the issuance an “operation with related parties of greater importance” and approved it only after the board had decided it would be in the company’s best interest.
Blackrock paid €200m for 15.38% of the bonds, Telefonica €103m for 7.92% and Och-Ziff €400m for 3.08%, TI said.
This is TI’s second release responding to Consob requests; the first provided additional detail on the bonds and the company’s decision to sell its 22% stake in Telecom Argentina. It also refuted press reports that it is in talks to sell its majority stake in TIM Brasil. Consob raided the telco’s offices last month after being contacted by Findim and Asati.
