AEM Sells Metroweb

MILAN -- Today, Aem SpA and the Stirling Square Capital Partners private equity fund signed a framework agreement for the transfer by AEM of its controlling stake in Metroweb SpA, a company which owns an important broad band telecommunications infrastructure network in Milan, the Milan suburbs and other areas in Northern Italy.

This agreement provides for the 100% acquisition of Metroweb’s capital by an Italian special purpose entity (Newco), to be indirectly owned by Stirling Square Capital Partners, for a controlling stake of 76.47%, with AEM retaining a stake of 23.53% (AEM investments for a total of Euro 8 million). Moreover, AEM will subscribe to convertible exit bonds issued by Metroweb for a total of Euro 24 million. The exit bonds can be converted into new issue Metroweb shares at a variable rate depending on the results achieved by Metroweb over the next few years. This performance will also determine the extent AEM’s additional stake allocation, which can vary between a minimum of 8.13% and a maximum of 20.98% of Metroweb’s capital. In the event of conversion, considering its initial stake of 23.53% and the dilutive effect of the conversion, AEM will therefore retain between a minimum of 29.75% and maximum of 39.57% of Metroweb’s capital.

The transfer will take place on the basis of the un enterprise value attributed to Metroweb, in other words, Euro 232 million (including Metroweb’s net financial debt, which stood at approximately Euro 200 million at 31 December 2005). Considering AEM’s reinvestment of shares and convertible exit bonds, the transaction will have a positive impact on the AEM’s group’s net financial position, for roughly Euro 200 million. The definitive price for the transfer of shares will depend on Metroweb’s net financial debt at the closing date, which at that date will result in a gain for AEM of Euro 5-10 million in terms of consolidated balance.

Shareholders’ agreements will be signed relating to the corporate governance of Newco and Metroweb, as well as the stakes held in the respective companies. Moreover, AEM will have the right to appoint two board members on the Newco and Metroweb board, amongst others, the President, and will have a power of veto in relation to certain extraordinary operations. Furthermore, the stakes will be subject to lock-up until 31 December 2008 and reciprocal co-sales rights/obligations. In any case, AEM shall have the right of prior approval in the event the transfer of the stakes held directly and/or indirectly by Stirling Square Capital Partners in Metroweb.

AEM SpA