SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
TELE NORTE CELULAR PARTICIPACOES, S.A.
(Name of subject company (Issuer))
VIVO PARTICIPACOES, S.A.
(Names of Filing Persons (Offerors))
| Preferred Stock |
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87924Y105 |
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| (Title of classes of securities) |
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(CUSIP number of common stock) |
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Carlos Raimar Schoeninger
Financial Planning and Investor Relations Director
Av.
Dr. Chucri Zaidan, 860
1 andar - lado A - Morumbi
04583-110 Sao Paulo
Tel: +5511 7420-1170
(Name, address, and telephone number of person authorized to receive notices and communications on behalf of Filing Persons)
Copies to:
Diane Kerr
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Telephone: (212) 450-4000
CALCULATION OF FILING FEE
| Transaction Valuation* | Amount of Filing Fee* | |
| Not applicable* | Not applicable* |
| * | A filing fee is not required in connection with this filing as it relates solely to preliminary communications made before the commencement of a tender offer. | |||||||
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Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
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Amount Previously Paid: |
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Filing Party: |
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N/A |
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Form of Registration No.: |
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N/A |
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Date Filed: |
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N/A |
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x |
Check the box if the filing relates solely to preliminary communications made before the commencement of the tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
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third party tender offer subject to Rule 14d-1 |
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issuer tender offer subject to Rule 13e-4 |
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going private transaction subject to Rule 13e-3 |
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amendment to Schedule 13D under Rule 13d-2 |
Check the following box if the filing is a final amendment reporting the results of the tender offer: o
Vivo
to
reinforce its leadership with the acquisition of Telemig
Participações
and Tele Norte Participações
|
n
|
Vivo
consolidates its leadership by adding 4.8 million subscribers and
reaching
35 million subscribers
|
|
n
|
Strengthens
its competitive position by expanding its operations to Minas
Gerais
|
August
2,
2007– VIVO Participações S.A. (“Vivo”) announces that
it has signed on this date a stock purchase agreement with Telpart Participações
S.A. (“Telpart”) to acquire control of Telemig Celular Participações S.A.
(“Telemig Participações”) and Tele Norte Celular Participações S.A.
(“Tele Norte Participações”) comprised of 22.72% and 19.34% of total
capital, respectively, for an aggregate amount of R$ 1,2 billion, subject to
certain price adjustments. In addition, Vivo will acquire from Telpart certain
subscription rights for R$ 87 million. The conclusion of the transaction is
subject to Anatel approval and ratification by general shareholders meetings
of
Vivo and Telpart, among other customary closing conditions.
Upon
closing of the
transaction, in accordance to Brazilian Law, Vivo will launch mandatory tender
offers for the acquisition of common shares held by non-controlling shareholders
at 80% of the price paid for the controlling stake. The mandatory tender offers
will be extended to Telemig Participações, Telemig Celular, Tele Norte
Participações and Amazônia Celular.
Additionally,
Vivo
intends to launch voluntary tender offers for up to 1/3 of all classes of
preferred shares held by the non-controlling shareholders in the holding and
operating companies, at a 25% premium to the weighted average price of the
last
30 trading days until August 01, 2007.
Assuming
full
acceptance in all offers, Vivo will have acquired a beneficial interest of
58.2%
in Telemig Celular and 54.6% in Amazônia Celular, for an aggregate consideration
of circa R$ 2,9 billion (including the value of the subscription
rights).
With
this
transaction Vivo adds two attractive assets to its portfolio reaffirming its
leadership in the wireless market with 35 million subscribers and a 33% national
market share:
|
·
|
Telemig
Celular, the leading wireless operator in the Minas Gerais region,
with
3.5 million subscribers and a 31% market share. For the last twelve
months
ending on March, 31st
2007, net
revenues amounted to R$ 1,232 million, with an EBITDA of R$ 383.3
million.
In the first quarter of 2007, Telemig Celular achieved a 38.2% margin,
being one of the most profitable operators in
Brazil.
|
|
·
|
Amazonia
Celular, the third wireless operator in the Amazonia region with
1.3
million subscribers and a 22% market share. For the last twelve
months ending on March, 31st,
2007 net
revenues amounted to R$ 454 million, with an EBITDA of R$ 46.3 million
and
reaching a 24.3% margin in the first quarter of
2007.
|
These
two companies
will benefit from being part of Vivo through:
|
·
|
Scale
benefits
arising from becoming part of biggest national mobile
network
|
|
·
|
Improved
purchasing power
|
|
·
|
Benefit
from a
strong brand name with advertisement campaigns at national
level
|
|
·
|
Integration
of
Telemig/Amazônia clients into a larger national
community
|
|
·
|
Customer
service at national level
|
1
Additionally,
Vivo
will expand its commercial operations, reaching 84% of Brazil total population
and 93% of the country’s GDP, expanding its activity to the strategic state of
Minas Gerais which represents 9.4% of Brazil´s total GDP. The access to this key
region will strength Vivo´s commercial and competitive position in the
country.
Espírito
Santo
Investment, Goldman, Sachs & Co. and Machado, Meyer, Sendacz e Opice
Advogados are acting as advisors to Vivo in connection with this
transaction.
Vivo
will be hosting
an Investor conference call at 9am (Brasilia time) on August 3rd, 2007, please
see
additional details below.
Further
information about the transaction, the mandatory tender offers and the voluntary
tender offers is available at Vivo’s Investor Relations website (www.vivo.com.br/ir).
Conference
Call
Details
Language:
English
Date:
August 3rd, 2007
Time:
9am (Brasília
time) / 8am (New York time)
Dial-in
number: (+ 1 973 ) 935 8893
Code:
9086422
Webcast
and
Presentation: (www.vivo.com.br/ir),
The
replay of the
conference call will be available during seven days on the following
number (+1 973) 341-3080, code 9086422.
The
Portuguese
translation of this conference call will be available on our website from 1pm
(Brasília time).
2
VIVO
PARTICIPAÇÕES
S.A.
Publicly-held
company
CNPJ/MF
No.
02.558.074/0001-73
NIRE
353001587.9-2
CVM
No. 1771-0
NOTICE
OF
MATERIAL FACT
Vivo
Participações
S.A. (“Vivo Participações”) in accordance with the terms of Instruction
CVM 358 of 01/03/02 announces that it has signed on August 02, 2007, a stock
purchase agreement with Telpart Participações S.A. (“Telpart”) to acquire
(i) 72,581,089,368 (seventy two billion, five hundred and eighty one million,
eighty nine thousand and three hundred and sixty eight) common shares and
9,699,320,342 (nine billion, six hundred and ninety nine million, three hundred
and twenty thousand and three hundred and forty two) preferred shares of Telemig
Celular Participações S.A. (“Telemig Participações”), representing 53.90%
of voting capital, 4.27% of non-voting capital and 22.72% of total capital;
and
(ii) 64,633,961,594 (sixty four billion, six hundred and thirty three million,
nine hundred and sixty one thousand and five hundred and ninety four) common
shares and 185,778,351 (one hundred and eighty five million, seven hundred
and
seventy eight thousand and three hundred and fifty one) preferred shares of
Tele
Norte Celular Participações S.A. (“Tele Norte Participações”),
representing 51.86% of voting capital, 0.09% of non-voting capital and 19.34%
of
total capital (the “Acquisition”). Telemig Participações is the
controlling shareholder of Telemig Celular S.A. (“Telemig Celular”),
which is the SMP provider in Area 4 of Region 1 of the Plano Geral de
Autorizações of the SMP that covers the State of Minas Gerais and Tele Norte
Participações is the controlling shareholder of Amazônia Celular S.A.
(“Amazônia Celular”), which is the SMP provider in Area 8 of Region 1 of
the Plano Geral de Autorizações of the SMP that covers the States of Amazonas,
Roraima, Amapá, Pará and Maranhão. Vivo Participações is the controlling
shareholder of Vivo S.A., which is the mobile service provider in areas 7 and 8 of Regions I and
II, in
area 7 of Region II and in
Region
I (areas 3
and
9),
in
Region
II (area 6)
and
in Region
III (areas 1
and
2).
The
ratification of
the sale and purchase agreement shall be resolved in the shareholders meetings
of Vivo Participações and Telpart. The closing of the Acquisition
(“Closing”) is subject to certain conditions precedent set forth in the
stock purchase agreement, including but not limited to the approval of “Agência
Nacional de Telecomunicações – ANATEL”, the Brazilian Communications regulator.
The Acquisition will also be submitted to “Conselho Administrativo de Direito
Econômico – CADE”, the Brazilian Antitrust Commission.
The
price agreed in the stock purchase
agreement is R$ 1,213,100,000.00
(the “Purchase Price”),
corresponding to (i) R$ 1,093,090,107.00
for the shares held by Telpart in
Telemig Participações,
represented
by R$14.21
per lot of 1000 common
shares of
Telemig Participações and R$6.39
per lot of 1000 of preferred
shares
of Telemig Participações, and (ii)
R$ 120,009,893.00
for the shares held by Telpart in Tele
Norte Participações,
represented
by R$1.85
per lot of 1000 of common
shares
of Tele Norte Participações and R$0.66
per lot of 1000 of preferred
shares
of Tele Norte Participações. The
Purchase Price to be paid by Vivo
Participações implies
R$2,488.29
per common share of Telemig Celular
and R$56.72
per lot of 1000 of common
shares
of Amazônia Celular.
The references to
the Purchase Price regarding each type
of
share relate to
the prices per lot of 1000 shares,
in
order to be consistent with the
form such
shares are currently traded in
the market (except
with respect to Telemig Celular
shares, which are traded on a per share basis).
1
From
the
execution of the stock purchase
agreement until the date of
Closing, the Purchase Price will accrue by the Brazilian average daily CDI
rate
and
will be subject to certain
adjustments as
contemplated in the stock purchase agreement. Moreover, the prices per share
mentioned above shall be further adjusted to reflect the result of the ongoing
reverse split processes approved at the shareholders’
meetings of
Telemig Participações, Tele Norte Participações
and Amazônia Celular, all held
in July 12,
2007 which are
still not concluded.
In
addition, Vivo
Participações will acquire from Telpart the right to subscribe shares to be
issued by Telemig Participações and by Tele Norte Participações as a result of
the right provided in Instruction CVM no. 319, of December 3, 1999, for the
amounts of R$ 65,800,000.00 and R$ 21,100,000.00, respectively.
In
accordance with
article 254-A of the Brazilian Corporations Law, upon Closing, Vivo will launch
mandatory tender offers (i) for the acquisition of common shares held
by non-controlling shareholders of Telemig Participações and Tele Norte
Participações at 80% of the price paid to Telpart per common share
of Telemig Participações and Tele Norte Participações, respectively
and (ii) for the acquisition of common shares held by non-controlling
shareholders of Telemig Celular and Amazônia Celular at 80% of the implied price
paid per common share of Telemig Celular and Amazônia Celular, respectively, as
mentioned above (“Mandatory Tender Offers”). The Mandatory Tender Offers
will be launched as soon as registered with the Comissão de Valores Mobiliários,
the Brazilian Securities and Exchange Commission. The final prices per share
of
the Mandatory Tender Offers will be defined at Closing and properly disclosed
thereafter.
Moreover,
upon
Closing, Vivo intends to launch voluntary tender offers for the acquisition
of
up to 1/3 of each class of the circulating preferred shares held by the
non-controlling shareholders of Telemig Participações, Tele Norte Participações,
Telemig Celular and Amazônia Celular at the following prices per share, and in
accordance with Instruction CVM 361 of 03/05/2002 (“Voluntary Tender
Offers”):
|
Target
Company
|
Offer
Price
per PN Share of any class (1)
|
%
Premia Over
Weighted Avg Price for the Last 30 Days until 08/01/07 (²)
|
%
Premia Over
Weighted Avg Price for the Last 90 Days until 08/01/07 (²)
|
|
Telemig
Participações
|
6.39
|
25%
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35.7%
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|
Tele
Norte
Participações
|
0.66
|
25%
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52.8%
|
|
Telemig
Celular
|
654.72
|
25%
|
28.7%
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|
Amazônia
Celular
|
10.22
|
25%
|
26.7%
|
(¹) Price
per
thousand shares, except for Telemig Celular, which is on a per share
basis.
(²) In
the
case of Telemig Celular, premium was calculated based on Class C (TMGC7)
preferred share (most liquid PN share); in the case of Amazonia Celular, the
premium was calculated based on Class A (TMAC5) preferred share (most liquid
PN
share).
The
Voluntary Tender
Offers will be extended to the holders of preferred shares underlying American
Depositary Shares of Telemig Participações and Tele Norte Participações. The
launch of such Voluntary Tender Offers, both in Brazil and in the United States,
is subject to the non-occurrence of any material adverse change.
2
Further
information
about the Acquisition, the Mandatory Tender Offers and the Voluntary Tender
Offers is available at Vivo’s Investor Relations website (www.vivo.com.br/ir).
São
Paulo, August
02, 2007.
Vivo
Participações
S.A.
Ernesto
Gardelliano
Investor
Relations
Director
IMPORTANT
INFORMATION FOR ADS’ HOLDERS: THIS ANNOUNCEMENT RELATING TO THE
TRANSACTION MENTIONING THE VOLUNTARY TENDER OFFERS IS FOR INFORMATIONAL PURPOSES
ONLY AND IS NOT AN OFFER TO PURCHASE OR THE SOLICITATION OF AN OFFER TO SELL
ANY
SHARES OF TELEMIG PARTICIPAÇÕES, TELE NORTE PARTICIPAÇÕES, TELEMIG CELULAR OR
AMAZÔNIA CELULAR. ANY SUCH OFFER OR SOLICITATION WILL BE MADE ONLY
PURSUANT TO AN OFFER TO PURCHASE OR THE RELEVANT EDITAL
THAT VIVO PARTICIPAÇÕES INTENDS TO LAUNCH AND, TO THE EXTENT REQUIRED, TO FILE
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON OR BEFORE THE RESPECTIVE
LAUNCH DATES. SHAREHOLDERS WHO ARE ELIGIBLE TO PARTICIPATE IN ANY
SUCH OFFERS SHOULD READ CAREFULLY THE OFFERS TO PURCHASE AND THE
EDITAIS RELATING TO SUCH OFFERS WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SUCH
OFFERS. SHAREHOLDERS WILL BE ABLE TO OBTAIN COPIES OF ALL DOCUMENTS
RELATING TO SUCH OFFERS THAT ARE FILED WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION FREE OF CHARGE FROM THE COMMISSION’S WEBSITE AT
www.sec.gov. COPIES OF THE DOCUMENTS RELATING TO SUCH VOLUNTARY
TENDER OFFERS AS THE RESPECTIVE EDITAIS AND LAUDOS WILL BE MADE AVAILABLE IN
THE
COMPANY`S HEAD OFFICE WHEN THE OFFERS ARE LAUNCHED AND AS PER THE ANNOUNCEMENT
TO BE MADE AT THE TIME THE OFFERS ARE LAUCHED.
3
Reinforcing leadership with
the acquisition of
August 2nd, 2007
|
 |
Disclaimer
The closing of the acquisition ("Closing") is subject to certain conditions
precedent set forth in the stock purchase agreement, including but not limited
to the approval of "Agencia Nacional de Telecomunicacoes - ANATEL", the
Brazilian Communications regulator. After Closing, the acquisition will also be
submitted to "Conselho Administrativo de Direito Economico - CADE", the
Brazilian Antitrust Commission.
This presentation may contain statements that constitute forward-looking
statements within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. Such forward looking statements are not guarantees of future
performance and involve risks and uncertainties and actual results may differ
materially from those in the forward looking statements as a result of various
factors. The words "anticipates," "believes," "estimates," "expects,"
"forecasts," "intends," "plans," "predicts," "projects" and "targets" and
similar words are intended to identify these statements, which necessarily
involve known and unknown risks and uncertainties. Accordingly, analysts and
investors should not place undue reliance on these forward-looking statements.
Forward-looking statements speak only as of the date they are made, and the
company does not undertake any obligation to update them in light of new
information or future developments.
This presentation has been made public by Vivo Participacoes, S.A. ("Vivo" or
the "Company"). Analysts and investors are strongly advised to read the notice
of material fact and other relevant documents regarding the acquisition because
they contain important information. Further information about the acquisition,
the mandatory tender offers and the voluntary tender offers is available at
Vivo's Investor Relations website (www.vivo.com.br/ir). The release,
publication or distribution of this presentation in certain jurisdictions may
be restricted by law and therefore persons in any such jurisdictions into which
this presentation is released, published or distributed should inform
themselves about and observe such restrictions.
Vivo is listed on the Bovespa and New York Stock Exchanges. Information may be
accessed on the stock symbol VIV (ADS), VIVO3, VIVO4
Slide 02
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Table of Contents
1 Transaction Overview
2 Estimated Timetable
3 Strategic Rationale
4 Transaction Structure
5 Vivo Pro Forma
6 Conclusions
Slide 3
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1. Transaction Overview
o Acquisition of controlling stake in Telemig Part. (53.9% of ONs +
4.3% of PNs) and Tele Norte Part. (51.9% of ONs + 0.1% of PNs) from
Telpart Part. for an aggregate value of R$ 1.2 bn (the "Purchase
Price")
- Telemig Part: R$ 14.21 per ON share(1) and R$ 6.39 per PN share(1)
- Tele Norte Part: R$ 1.85 per ON share(1) and R$ 0.66 per PN share(1)
o Mandatory Tag Along Offers ("MTO") for ON minorities for an aggregate
value of R$ 1.0 bn(2)
- Telemig Part: R$ 11.36 per ON share(1), Telemig Celular: R$ 1,990.63
per ON Share(1)
- Tele Norte Part: R$ 1.48 per ON share(1), Amazonia Celular:
R$ 45.37 per ON share(1)
o Following the MTO, Vivo intends to launch a Voluntary Offer ("VTO")
for up to 1/3 of the free float of PN shares of Telemig Part.,
Telemig Celular, Tele Norte Part. and Amazonia Celular, for an
aggregate value of R$ 0.6 bn(2):
- 25% premium to market price for PN shares(3)
o Total Consideration: R$ 2.8 bn(2), resulting in a beneficial interest
of 58.2% in Telemig Celular and 54.6% in Amazonia Celular
o In addition, Vivo will also acquire from Telpart the rights to subscribe
shares to be issued by Telemig Part. and by Tele Norte Part. for R$ 87 million (4)
o Transaction will be funded with cash on-hand and available lines of financing
o Sale and Purchase agreement, approved by Vivo and Telpart's boards,
signed on August, 2nd 2007
o To be ratified at the respective shareholders meeting on August 21st, 2007
o Closing subject to Anatel approval among other customary conditions
(1) Price per 1,000 shares, except for Telemig Celular which is per 1 share.
Does not reflect reverse share split announced on May 31, 2007.
(2) Assuming full acceptance in mandatory tag along and voluntary offers (3)
Based on weighted average prices of the last 30 trading days prior to
announcement, considering the most liquid PN share per company (4) Rights
to subscribe shares to be issued by Telemig Holding and Amazonia
Holding in accordance with CVM Instruction no. 319
Slide 4
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2. Estimated Timetable
Next Steps
----------
1. Submission of Requests for Anatel Approvals - within 7 days
2. Shareholders Meeting to Approve Transaction - August 21st, 2007
3. Anatel Approval
4. Close of Acquisition of Control - anticipated prior to year-end
5. Filling of MTO with CVM and Launch of VTOs in Brazil and in the US - upon closing
6. Launch MTO - upon registration with CVM
7. Close VTO - up to 45 days from launch
8. Close MTO - up to 45 days from launch
Slide 5
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3. Strategic Rationale
Adding two attractive, high margin assets...
Telemig Part. Key Figures Tele Norte Part. Key Figures
--------------------------------------------- ----------------------------------------------
o 3.5 million subscribers (June 2007) o 1.3 million subscribers (June 2007)
o 31% market share, leader in its area o 22% market share
o 1Q07 Revenues: R$ 317 million o 1Q07 Revenues: R$ 115 million
o 1Q07 EBITDA: R$ 121 million / 38.2% margin o 1Q07 EBITDA: R$ 28 million / 24.3% margin
o Net Debt / EBITDA(1): (1.0)x o Net Debt / EBITDA(1): 4.3x
...that will benefit from the acquisition by Vivo
o Scale benefits arising from becoming part of biggest national mobile network
o Improved purchasing power
o Benefit from a strong brand name with advertisement campaigns at national level
o Integration of Telemig/Amazonia clients into a larger national community
o Customer service at national level
(1) Consolidated Net Debt as reported by Telemig Part (net cash of R$ 371.1)
and Tele Norte Part (R$ 199.2 million) as of March 31, 2007, consolidated
LTM EBITDA of Telemig Part. of R$ 383 million and consolidated LTM EBITDA
of Tele Norte of R$ 46 million
Slide 6
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3. Strategic Rationale
How will the proposed operation benefit Vivo's shareholders?
o Expand operations to reach 84% of pops and 93% of GDP
o Reinforce Vivo's leadership by adding 4.8(1) million subscribers resulting
in a 32.9% national market-share, with 35 million subscribers
o Strengthen Vivo's commercial and competitive position
o Addition of two attractive assets that will benefit from being part of Vivo
Reinforce Vivo's leadership
Source: Anatel figures as of June 2007
Slide 7
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3. Strategic Rationale
Vivo's operations to reach 84% of Brazil total population and 93% of GDP
Growth
------
Population (million) 139.1 37.6 158.7 14.1%
% of total population 73.6% 19.9% 83.9%
Subs('000s - June 30, 2007) 30,241 4,837 35,078 16.0%
National Market Share 28.4% 4.5% 32.9%
Minas Gerais is a key State
o 3rd largest GDP in Brazil: R$ 167 billion (9.4% of Brazil)
o Second largest mobile subscriber base in Brazil
o Bordering State to SP and Rio with significant corporate activity
Source: Anatel
Slide 8
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3. Strategic Rationale
Acquisition further increases Vivo's market leadership ...
... adding 4.8 million subscribers and 4.5 p.p of market share
(1) Source: Anatel, June 2007 figures
Slide 9
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3. Strategic Rationale
Strengthen Vivo's commercial and competitive position
o Churn Reduction: applicable to Vivo's roaming customers, given improved
coverage
o Current Corporate Clients: increase market share within current corporate
customers that have significant presence in Minas Gerais
o Increase in Gross Additions: presence in Minas Gerais enables additional
gross adds in the high end and corporate segments throughout Brazil
o Roaming: usage of Vivo's network by Telemig and Amazonia subscribers while
roaming in Vivo's coverage area
o 850 Mhz spectrum bandwidth: compatible with Vivo's current spectrum
----------
|
Scope to create substantial net operating synergies at Vivo: NPV of c. R$ 575 million(1)
+
Fiscal Synergies: NPV of c. R$ 345 million(2)
=
Total Synergies at Vivo: NPV of c. R$ 920 million
(1) NPV of the estimated net operating synergies at Vivo level
(2) Approximate NPV of the tax benefit of the goodwill (agio) generated in the
acquisition of Telpart shares and future MTO in the underlying assets
assuming 5 year fully tax deductible amortization and 100% acceptance in
the MTO
Slide 10
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4. Transaction Structure
o R$ 1,093 million for controlling stake
- 53.9% ONs, 4.3% PNs
- 22.7% total capital
o R$ 14.21 per ON share1
o R$ 6.39 per PN share1
o R$ 66 million for subscription rights
Telemig Participacoes Tele Norte Participacoes
Acquisition of Control
o R$ 120 million for controlling stake
- 51.9% ONs, 0.1% PNs
- 19.3% total capital
o R$ 1.85 per ON share1
o R$ 0.66 per PN share1
o R$ 21 million for subscription rights
o Total Purchase Price for the controlling stakes amounts to R$ 1.2 bn (excl.
subscription rights)
o This Purchase Price will be adjusted by the Brazilian CDI Rate and will be
subject to certain other adjustments as contemplated in the Stock Purchase
Agreement
1 Price per 1,000 shares, except for Telemig Celular which is per 1 share. Does
not reflect reverse share split announced on May 31, 2007.
11
public copyright(C)vivo2007
|
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4. Transaction Structure
Mandatory Tender Offers ("MTOs")
Telemig Participacoes and Telemig Celular
o MTO price per share at 80% of ON control price:
- R$ 1.48 per Tele Norte Part ON share1
- R$ 45.37 per Amazonia Celular ON share1
o Total investment of R$ 115 million
Tele Norte Participacoes and Amazonia Celular
o MTO price per share at 80% of ON control price:
- R$ 11.36 per Telmig Part ON share1
- R$ 1,990.63 per Telemig Celular ON share1
o Total investment of R$ 898 million
1 Price per 1,000 shares, except for Telemig Celular which is per 1 share. Does
not reflect reverse share split announced on May 31, 2007.
o Total cash outlay for the MTOs is approximately R$ 1.0 bn assuming 100%
acceptances
12
public copyright(C)vivo2007
|
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Voluntary Tender Offers ("VTOs")
4. Transaction Structure
o Upon Closing, Vivo intends to launch voluntary tender offers for up to 1/3 of
all the free float, of the PN shares of Telemig Part., Tele Norte Part., Telemig
Celular and Amazonia Celular at the following prices:
o VTOs to be extended to ADRs
o Launch is subject to the non-occurrence of material adverse changes
o Total estimated cash outlay for the VTOs of R$ 587 million assuming 100%
acceptances
Target Company
Offer Price per PN Share 1
% Premia Over Weighted
Avg Price for the Last 30
Days 2 as of August, 1st 2007
% Premia Over Weighted
Avg Price for the Last 90
Days 2 as of August, 1st 2007
Telemig Participacoes 6.39 25.00% 35.7%
Tele Norte Participacoes 0.66 25.00% 52.8%
Telemig Celular 3 654.72 25.00% 28.7%
Amazonia Celular 4 10.22 25.00% 26.7%
1 Price per 1,000 shares, except for Telemig Celular which is per 1 share. Does
not reflect reverse share split announced on May 31, 2007.
2 The premium over PN shares of Telemig Celular is based on the price of the
preferred class C shares (most liquid PN share), the premium over PN shares of
Amazonia Celular is based on the price of the preferred class A shares (most
liquid PN share)
3 PNB, PNC, PND, PNE,PNF, PNG
4 PNA, PNB, PNC, PND, PNE
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1,093
898
530
120
115
1,213
1,013
587 2,813
2,521
292
57
Controlling Stake MTO (1) 1/3 PNs VTO (2) Total Consideration
16.7 % 4.2 % 4.1 %
4. Transaction Structure
Total Consideration
R$ million
o Additionally Vivo will acquire subscription rights amounting to R$ 87 million
Voting
100.0 % 0.0 % 48.1 % 51.9 %
100.0 % 0.0 % 46.1 % 53.9 %
58.2 % 20.9 % 17.9 % 19.3 %
59.9 % 20.0 % 17.1 % 22.7 %
54.6 % 22.7 % 17.4 % 14.5 %
58.2 % 20.9 % 14.2 % 18.9 %
Economic @
Celulares
Ownership
Economic @
Holdings
Telemig Part
Tele Norte Part
Telemig Part
Tele Norte Part
Telemig
Indirect
Amazonia
Direct Total
18.3 %
13.4 % 3.9 %
Indirect Direct Total
7.0 % 15.7 %
Indirect Direct Total
49.9 % 8.3 %
10.9 % 43.7 %
Indirect
1 Based on a 80% tag-along for ON minorities both in the holding and in the
operating companies, assuming 100% acceptance
2 Assumes 25% premium based on the weighted average price of the last 30 trading
days as of August 1st, 2007 taking into consideration the most liquid PN share
per company. Assumes 100% acceptance
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4. Transaction Structure
Summary Valuation and Implied Multiples
R$ million
EV/EBITDA4
EV/Subscriber4
Implied Multiples
2007E
2008E
2007E
2008E
9.1x
8.4x
US$ 516
7.3x
6.7x
US$ 414
Telemig Celular
Amazonia Celular
3,955
735
4,690 346 577
3,767
Acquisition Firm Value (1) Fiscal Benefits (2) NPV of Synergies at Vivo (3)
Implied Business Value
1 Implied 100% Firm Value at the operating level and excluding the value
attributed to the subscription rights
2 NPV of the tax benefit of the agio generated in the acquisition of Telpart
shares and MTO (assuming 100% acceptance) in the underlying assets, over a 5
year fully tax deductible amortization and NOL's from the existing goodwill
amortization
3 NPV of the estimated net operating synergies at Vivo level over a period of 10
years. No terminal value assumed for the synergies
4 Implied EV/EBITDA multiple calculated based on median of IBES Consensus
(research analysts consensus) for 2007E and 2008E EBITDA and net debt as
reported by Telemig and Amazonas as of March 31, 2007
5 Based on the number of 4,837 subscribers as of June 30, 2007. Translated into
US$ assuming a 1.881 R$/US$ exchange rate Firm Value Breakdown assuming 100%
acceptance in MTO and VTO
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(R$ million) Vivo Telemig Amazonia Combined % change post transaction
Net Revenues 2,851 317 115 3,283 15.1%
EBITDA 757 121 28 906 19.7%
% EBITDA 26.6% 38.2% 24.3% 27.6% + 1.0 p.p.
Capex 235 11.5 3.3 250 6.3%
EBITDA - Capex 522 110 25 656 25.7%
Net Debt 1 2 3,305 -371 199 6,033 82.5%
Net Debt/ EBITDA 3 1.3x -1.0x 4.3x 2.0x + 0.7x
Source: Vivo, Telemig and Amazonia ITRs
1 Net Debt reported figures of 1Q07
2 In the pro-forma combined figures the Net Debt includes 100% of Vivo, 100% of
Telemig, 100% of Amazonia as well as 100% of Total Consideration as the
acquisition will be fully debt funded (total consideration figure is shown on
page 14 + the subscription rights value of R$ 87 million)
3 LTM EBITDA as of 1Q07 (Vivo: R$ 2,636.5 M, Telemig: R$ 383.3 M and Amazonia R$
4 6.3 M)
5. Vivo Pro Forma (1Q 07)
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6. Conclusions
Conclusions
o High quality assets with attractive operating margins
o Strong strategic fit reinforcing Vivo's competitive positioning and commercial
offering
o Market friendly transaction structure
o Increases shareholders value through significant synergies Reinforcing Vivo's
leadership
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Appendix
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Appendix
Number of Shares
ON % ONs PN % PNs Total % Total
Telpart Participacoes S.A.
72,581,089,368 53.90% 9,699,320,342 4.27% 82,280,409,710 22.72%
Free Float 62,079,503,811 46.10% 217,710,701,817 95.73% 279,790,205,628 77.28%
Total 134,660,593,179 100.00% 227,410,022,159 100.00% 362,070,615,338 100.00%
ON % ONs PNB % PNBs PNC % PNCs PND % PNDs
Telemig Holding 794,764 89.17% 0 0.00% 0 0.00% 0 0.00%
Free Float 96,477 10.83% 196.000 100.00% 20,769.000 100.00% 1.000 100.00%
Total 891,241 100.00% 196.000 100.00% 20,769.000 100.00% 1.000 100.00%
PNE % PNEs PNF % PNFs PNG % PNGs Total % Total
Telemig Holding 0 0.00% 0 0.00% 1,180,078 81.76% 1,974,842 83.25%
Free Float 3,830 100.00% 12,783 100.00% 263,278 18.24% 397,334 16.75%
Total 3,830 100.00% 12,783 100.00% 1,443,356 100.00% 2,372,176 100.00%
ON % ONs PN % PNs Total % Total
Telpart Participacoes S.A.
64,633,961,594 51.86% 185,778,351 0.09% 64,819,739,945 19.34%
Free Float 59,989,880,312 48.14% 210,274,535,100 99.91% 270,264,415,412 80.66%
Total 124,623,841,906 100.00% 210,460,313,451 100.00% 335,084,155,357 100.00%
ON % ONs PNA % PNAs PNB % PNBs
Amazonia Holding 5,098,286,969 89.79% 0 0.00% 0 0.00%
Free Float 580,025,992 10.21% 199,959,301 100.00% 576,153,096 100.00%
Total 5,678,312,961 100.00% 199,959,301 100.00% 576,153,096 100.00%
PNC % PNCs PND % PNDs PNE % PNEs Total % Total
Amazonia Holding 0 0.00% 0 0.00% 5,935,414,562 79.68% 11,033,701,531 74.96%
Free Float 42,882,395 100.00% 773,921,617 100.00% 1,513,601,270 20.32%
3,686,543,671 25.04%
Total 42,882,395 100.00% 773,921,617 100.00% 7,449,015,832 100.00%
14,720,245,202 100.00%
Telemig Part
Tele Norte Part
Amazonia Operadora
Telemig Operadora
Notes:
- Figures do not reflect reverse shares split announced on May 31, 2007
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Appendix
Shareholder Structure
Telpart
Telemig Part. Tele Norte Part.
Telemig Celular Amazonia Celular
Free Float
Free Float
Free Float
Free Float
ON: 46.10%
PN: 95.73%
Total: 77.28%
ON: 89.79%
PN: 65.64%
Total: 74.96%
ON: 51.86%
PN: 0.09%
Total: 19.34%
ON: 89.17%
PN: 79.68%
Total: 83.25%
ON: 10.83%
PN: 20.32%
Total: 16.75%
ON: 48.14%
PN: 99.91%
Total: 80.66%
ON: 53.90%
PN: 4.27%
Total: 22.72%
ON: 10.21%
PN: 34.36%
Total: 25.04%
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