Telia Lietuva
Notification on material event

Circular of the voluntary takeover bid of TeliaSonera AB and its summary

On 30 May 2012 TEO LT, AB (hereinafter “the Company”) received the information from its shareholder TeliaSonera AB, that on 30 May 2012 the Bank of Lithuania approved the circular of the non-competitive voluntary takeover bid to buy up the remaining ordinary registered voting shares of the Company. 

The summary of the approved circular is provided below.

SUMMARY CIRCULAR FOR THE NON-COMPETETIVE VOLUNTARY TAKEOVER BID TO ACQUIRE ALL REMAINING ORDINARY REGISTERRED SHARES OF TEO LT, AB

Not to be distributed in or into the United States, Canada, Australia Japan or Italy 

The takeover bid is being made in accordance with the laws of the Republic of Lithuania and will not be subject to any filing with, or approval by, any foreign regulatory authority. The takeover bid is not being and will not be made, directly or indirectly, in or into and is not and will not be capable of acceptance in or from United States of America, Canada, Australia, Japan or Italy. The takeover bid is not being made and will not be made directly or indirectly in, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States of America, Canada, Australia, Japan or Italy. This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone and the internet. Accordingly, copies of this document and any related takeover bid documents are not being, and must not be, mailed or otherwise transmitted, distributed or forwarded in or into the United States of America, Canada, Australia, Japan or Italy. Any purported acceptance of the takeover bid resulting directly or indirectly from a violation of these restrictions will be invalid. No securities or other consideration is being solicited and if sent in response by a resident of the United States of America, Canada, Australia, Japan or Italy will not be accepted. 

The release, publication or distribution of this document or any other related documents in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this document or any other related documents is released, published or distributed should inform themselves about and observe such restrictions. Receipt of this document or any other related documents will not constitute a takeover bid in those jurisdictions in which it would be illegal to make the takeover bid and in such circumstances it will be deemed to have been sent for information purposes only. Persons receiving this document or any other related documents (including custodians, nominees and trustees) should observe these restrictions and must not send or distribute this document in or into the United States of America, Canada, Australia, Japan or Italy. Doing so may render invalid any purported acceptance. 

1. The date of the approval of the circular of the takeover bid

On 30 May 2012 the Lithuanian Bank approved circular of the non-competitive voluntary takeover bid being made by TeliaSonera AB (publ) (company code No 556103-4249, address SE-106 63 Stokholm, Sweden) (the Offeror) for the acquisition of the remaining ordinary registered shares of TEO LT, AB (company code 121215434, address Lvovo g. 25, Vilnius, Lithuania) (the Issuer).

2. Commencement and completion of the implementation of the takeover bid

The implementation of the takeover bid shall start on 5 June 2012 and shall end on 29 June 2012.

3. Name, legal form, company code, office address, telephone and fax numbers, email address and the website address of the Issuer 

 4. Data of the Offeror:

5. The period of the execution of the takeover bid (in days)

The execution period of the voluntary takeover bid will last 25 (twenty five) calendar days.

6. Minimum and maximum number of the Issuer’s securities intended to be purchased by type and class, ISIN code; the number of securities intended to be purchased, the failure to deposit which by the owners of the securities of the Issuer will result in the failure of the takeover bid (to be reported in case of a voluntary takeover bid)

The maximum number of the Issuer’s ordinary registered shares intended to be purchased – 128,631,714 (one hundred twenty eight million six hundred thirty one thousand seven hundred fourteen) ordinary registered shares with nominal value of LTL 1 (one Litas) each (ISIN code LT0000123911), which on the signing date of the circular constitute all remaining ordinary registered shares of the Issuer. The takeover bid shall be made regarding all ordinary registered shares of the Issuer, which do not belong to the Offeror on the day of the submission of the application to AB NASDAQ OMX Vilnius requesting to implement the voluntary takeover bid. The minimum number of the Issuer’s ordinary registered shares intended to be purchased – 1 (one) ordinary registered share with nominal value of 1 (one) Litas each (ISIN code LT0000123911). The takeover bid will be completed if at least 1 (one) ordinary registered share will be deposited for sale.

7. Way of payment for the Issuer’s securities being purchased (cash, securities or combination of cash and securities)

The payment for the Issuer’s ordinary registered shares will be made in cash.

8. Price (the exchange rate in case the settlement is effected in securities or a combination of cash and securities, i.e. the whole number of cash and securities offered for exchange per 1 (one) security of the Issuer) at which the Issuer’s securities will be purchased (the takeover bid price). In case of a voluntary takeover bid, where the settlement is effected in securities the price shall be also expressed in cash

The takeover bid price is EUR 0.637 (zero point six three seven Euro) per 1 (one) ordinary registered share of the Issuer with nominal value of LTL 1 (one Litas) each (ISIN code LT0000123911).

9. Compensation offered for all losses of the right holders arising from the implementation of the requirements under section 1-5 of the article 36 of the Law on Securities (the method of the establishment of the compensation, and the method of payment) - not applicable.

10. Circumstances which do not directly depend on the Offeror but which cause the execution of the takeover bid

Circumstances effecting the completion of the takeover bid which directly do no depend on the Offeror are not known on the day of signing the circular. 

11. The Offeror’s plans and intentions with regard to the Issuer or its controlled enterprises if the takeover bid is successful:

11.1. continuity of the Issuer’s business activities – it is intended to continue current business activities of the Issuer.

11.2. restructuring, reorganization or liquidation of the Issuer’s business – it is not planned to restructure, reorganize or liquidate the Issuer. If after the voluntary takeover bid the Offeror owns more than 95% of all votes at the general meeting, then the Offeror shall consider a possibility to implement the procedure of the squeeze-out.

11.3. personnel policy – from 25 April 2007 a Collective Bargaining Agreement between the Issuer, as the employer, and employees of the Issuer, represented by the joint agency of the Trade Unions, came into effect (with later supplements and amendments). The Collective Bargaining Agreement grants employees of the Issuer with additional social guarantees. It is not intended to change personnel policy of the Issuer in the nearest future.

11.4. management policy – it is not intended to change management policy of the Issuer in the nearest future. 

11.5. capital attraction policy – the Offeror plans that the Issuer will continue to rely on internally generated cash.

11.6. dividend policy – it is not intended to change the dividend policy of the Issuer in the nearest future. 

11.7. intended amendments to the articles of association of the Issuer – it is not intended to make amendments to the Articles of Association of the Issuer in the nearest future. 

11.8. special bonuses, incentive schemes, etc provided in the respect of the managers of the Issuer – members of the Issuer’s Board are elected for the two-year term by the shareholders of the Issuer and employment contracts are not concluded with them. The annual general meeting of shareholders adopting a decision on profit allocation is entitled to take a decision on granting annual payments (tantiemes) to the members of the Board. The members of the Board are not entitled to compensation or pay-outs in case the member of the Board resigns prior to the termination of the term of the Board. Conditions of employment contracts of the top managers of the Issuer are considered at the Remuneration Committee of the Board and then approved by the Board. The Remuneration Committee has a right to propose to the Board to include into employment agreements of the top managers additional conditions that provide compensations in case of resignation and similar cases. According to the employment agreement of the General Manager of the Issuer, which is approved by the Board, upon fulfilment of certain conditions the General Manager in case of his resignation or dismissal could be entitled to the compensation amounting from 6 (six) up to 12 (twelve) monthly salaries. It is not intended to change the management incentive scheme in the nearest future.

12. Written agreements with other persons regarding voting in concert at the general meetings of shareholders of the Issuer

The Offeror has not entered into written agreements with other persons regarding voting in concert at the general meetings of the Issuer.

13. Information about currently pending law proceedings and arbitration proceedings that have or may have a substantial effect on the Offeror’s activities and financial status 

In its normal course of business, the Offeror is involved in a number of legal proceedings. These proceedings primarily involve claims arising out of commercial law issues and matters relating to telecommunications regulations and competition law. In particular, the Offeror is involved in numerous proceedings related to interconnect fees, which affects future revenues. Except for the proceedings described below, the Offeror or its subsidiaries are not and have not been involved in any legal, arbitration or regulatory proceedings which management believes could have a material adverse effect on the Offeror’s business, financial condition or results of operations.

Regulatory proceedings. During the second half of 2001, a number of operators filed complaints against the Offeror with the Swedish Competition Authority and the Authority initiated an investigation regarding the Offeror’s pricing of ADSL services. The complaints suggest that the difference between the Offeror’s wholesale prices and retail prices is too low to effectively enable competition in the retail market. In December 2004, the Competition Authority sued the Offeror at the Stockholm District Court claiming that the Offeror had abused its dominant position. The Authority demands a fee of SEK 144 million. In December 2011, the Stockholm District Court decided in accordance with the Competition Authority’s demands. The Offeror’s position is that it has not engaged in any prohibited pricing activities and has appealed the District Court’s decision. Following the Competition Authority’s lawsuit, Tele2 has in April 2005 and Spray Network in June 2006, respectively, claimed substantial damages from the Offeror due to the alleged abuse of dominant market position. The Offeror will vigorously contest Tele2’s and Spray Network’s claims. The actions for damages have been stayed pending the case between the Offeror and the Competition Authority.

ENCL. Circular of the voluntary takeover bid of TeliaSonera AB (publ) approved by the Bank of Lithuania.

         Eglė Gudelytė-Harvey,
         Director of Corporate Administration and Legal Affairs Unit,
         tel. +370 5 236 7292