UPDATE 2-Telecom Italia defends KKR deal as top investor threatens legal challenge
(Adds details, quotes from conference call)
By Elvira Pollina
ROME, Nov 9 (Reuters) - Telecom Italia's (TIM) decision to sell its prized fixed-line grid to KKR is a "milestone" move for the former phone monopoly and falls within the exclusive competence of the board, the head of the telecoms group said on Thursday.
CEO Pietro Labriola's comments follow criticism from top shareholder Vivendi, which has threatened a legal challenge to the plan to sell the grid, saying it considered the decision to proceed without a shareholder vote as "unlawful".
In a post-results call with analysts, Labriola said the decision to accept KKR's 19 billion euro ($20.3 billion) offer for its fixed-line asset without a shareholder vote "was based on several independent legal opinions indicating that the matter clearly falls within the exclusive competence of the board".
"It is not possible under Italian law to transfer such competence to the shareholders," the CEO added.
Backed by the administration of Prime Minister Giorgia Meloni, which authorised the Treasury to spend 2.2 billion euros to take a 20% stake in the network, the grid sale would enable TIM to slash its 26.4 billion euro debt pile and focus on its service business.
Labriola said the transaction, which he expects to finalise between May and July, "will structurally solve the leverage issue the company has been dragging for more than 20 years".
According to Vivendi, which owns 24% stake in TIM, the deal required an extraordinary shareholder vote because it would change TIM's corporate purpose and therefore required a change to the company bylaws.
Vivendi has been seeking a higher price for the asset, and has questioned the sustainability of the business left behind.
Sources told Reuters that the French media giant is now expected to file a complaint with a Milan court to challenge the board decisions and possibly freeze the sale.
TIM General Counsel Agostino Nuzzolo, speaking in the call with analysts, said the company had not so far received any notification of a legal complaint filed with the court aimed at suspending the deal.
He added that the deal could only be blocked by a precautionary court order indicating the approval process could be wrong, pending a final decision on the case.
"There is nothing in our bylaws asking for the ownership of the network. And so frankly, we are quite confident that our vision of the transaction will be confirmed even in court", he added.
($1 = 0.9360 euros) (Reporting by Elvira Pollina; Editing by Giulia Segreti and Jan Harvey)
