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Argentina's regulator denies telecom Italia's deal to sell Sofora

Staff writer |
Telecom Italia's deal to sell its Sofora Telecomunicaciones business under Telecom Argentina to Fintech Telecom was blocked by Argentia's telecom regulator saying that Fintech lacks experience and expertise.

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The deal was originally signed in November 2013 for $960 million, with an expected closing in April 2017. Fintech, an investment vehicle financed by David Martinez, a Mexican businessman, was planning to acquire 68 percent of Sofora.

The regulatory board noted that Fintech was incorporated in the Delaware on October 18, 2013, less than a month before Telecom Italia accepted the offer. In its decision, the board said if the deal is approved the control of licenses of Telecom Argentina will be in the hands of investment companies.

"Telecom Italia acknowledges the decision taken by the Argentinean telecommunications regulator AFTIC (Autoridad Federal de Tecnologías de la Información y las Comunicaciones) to deny authorization of the sale of Telecom Italia’s controlling interest in Telecom Argentina. The purchaser, Fintech, has indicated to Telecom Italia that it plans to appeal such decision," the company said in a press release.

"Telecom Italia notes that, as previously communicated to the market on 25 October 2014, if the sale to Fintech of the 51% controlling interest in Sofora is not completed within two and a half years (i.e., by April 2017), Telecom Italia will be entitled at such time to withdraw from the agreement with Fintech and exercise a six-month call option to purchase (either directly or through another Group company) the 17% minority stake in Sofora previously sold to Fintech pursuant to a previously agreed formulation, or to pursue the sale (subject to receipt of applicable regulatory approval) of its 51% controlling interest in Sofora to a third-party buyer, with a guarantee from Fintech of total proceeds to Telecom Italia of at least 630.6 million dollars.

"If the proceeds of such a sale exceeds the minimum guaranteed by Fintech, the difference will be allocated between Telecom Italia and Fintech according to an agreed formula

"If Telecom Italia is unable to complete the sale to a third party within a further period of two and a half years, the agreement with Fintech will be terminated, Fintech will pay Telecom Italia 175 million dollars and Telecom Italia will benefit from a six-month call option to purchase (either directly or through another Group company) the 17% minority stake in Sofora previously sold to Fintech pursuant to a previously agreed formulation.

"Telecom Italia has previously received certain guarantees of performance under the 2014 agreements with Fintech, which are secured by the pledge of collateral by Fintech with a value of 600.6 million dollars."


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