Major corporate events

General meetings and Board changes

TDC's Annual General Meeting 2010 was held on 4 March 2010. Vagn Sørensen, Pierre Danon, Kurt Björklund, Lawrence Guffey, Oliver Haarmann, Gustavo Schwed and Andrew Sillitoe were re-elected as board members. Furthermore, two new independent board members, Søren Thorup Sørensen and Lars Rasmussen, were elected.

Pursuant to proposals from the Board of Directors, the Company's Articles of Association were amended. The amendments included changing the number of board members from "three to eight" to "three to ten" , the number of alternatives for board members from "three to eight" to "three to ten" and the number of members of the Executive Committee from "two to seven" to "two to eight". Furthermore, it was decided that the share nominal value as of 10 May 2010 is changed from DKK 5 to DKK 1.

On 25 June 2010, TDC announced that Henrik Kraft, the board alternate of Oliver Haarmann since March 2008, became an ordinary member of the Board of Directors, replacing Oliver Haarmann. Oliver Haarmann wished to resign from his position as a member of the Board of Directors.

An Extraordinary General Meeting was held on 22 November 2010.

The proposed resolutions passed included that:

  • The Board of Directors was authorised to acquire treasury shares up to a total amount of DKK 9bn.
  • The authorisation in the Company's Articles of Association to issue warrants was amended with respect to certain matters of a technical nature.
  • The Articles of Association were amended with regard to the denomination of the shares as a consequence of the Company's shares with effect from 10 May 2010 having changed denomination from a nominal value of DKK 5 to a nominal value of DKK 1.
  • The Articles of Association were amended in accordance with the new Danish Companies Act.
  • Jakob Kjellberg was elected as new alternate for board member Henrik Kraft.

Arbitration proceedings against Telekomunikacja Polska S.A.

On 3 September 2010, TDC announced that the Arbitration Tribunal in Vienna, Austria had issued a ruling in the arbitration case against Telekomunikacja Polska S.A. (TPSA), of which TDC is part through its 25% ownership in Danish Polish Telecommunications Group I/S (DPTG). The dispute concerned the determination of traffic volumes carried via the NSL fibre optical telecommunications system in Poland.

The ruling awarded DPTG DKK 2.9bn for the period from February 1994 through June 2004, of which TDC A/S will receive DKK 0.7bn. The amount corresponds to DKK 0.5bn after tax.

TPSA has not yet paid the amount awarded and DPTG therefore applied to the District Court in Warsaw for a declaration of acknowledgement of the arbitration award on 15 November 2010. Furthermore, DPTG has started enforcement in other countries. On 2 December 2010, TPSA filed an action in Austria to set aside the Partial Award. On 31 December 2010, DPTG filed its reply to TPSA's action to set aside the Partial Award.

In addition to the claim for unaccounted traffic volumes from February 1994 through June 2004, DPTG has on 14 January 2011 filed a claim against TPSA for unaccounted traffic volumes in the period from July 2004 to January 2009. The claim including interest amounts to DKK 2.4bn, of which TDC's share amounts to DKK 0.6bn. TDC expects that it could take several years before the dispute over the unaccounted traffic revenue in the period from July 2004 to January 2009 is settled.

TDC has not yet recognised the potential income as of 31 December 2010, as the realisation of the income is currently not considered virtually certain.

Sunrise

On 9 April 2010, TDC and France Telecom announced that, following the completion of a confirmatory due diligence, they had signed a final agreement to combine their respective subsidiaries in Switzerland, Sunrise Communications S.A. and Orange Communication S.A.

However, on 22 April 2010, TDC announced that, as a consequence of the Swiss Competition Commission's rejection of the transaction, TDC and France Telecom would assess their available options regarding potential next steps.

On 3 June 2010, TDC issued a press release stating that France Telecom and TDC had concluded a detailed analysis of their available options. As a consequence of the prohibition of the business merger, the companies had decided to terminate their agreement and withdraw the appeal submitted to the authorities.

On 17 September 2010, TDC announced that it had entered into a share purchase agreement to divest its wholly-owned Swiss subsidiary Sunrise Communications AG to funds advised by the private equity firm CVC Capital Partners for a total consideration of CHF 3.3bn on a cash- and debt-free basis.

On 28 October 2010, TDC announced that the divestment had been completed. TDC also announced that the consideration could be applied for purposes such as repaying debt and buying back shares in the Company. A buy-back programme would require a mandate from the shareholders at an ekstraordinary general meeting, which was held on 22 November 2010.

The divestment resulted in a gain of DKK 786m after tax, which was recognised under Special items related to discontinued operations in Q4 2010.

Credit rating

On 14 June 2010, TDC announced that Standard & Poor's had upgraded TDC's corporate credit rating to BB with a positive outlook from BB- with a positive outlook. Furthermore, the credit rating of TDC's senior secured facility was upgraded to BBB- from BB+ and TDC's Euro Medium Term Notes were upgraded to BB from BB-.

On 14 December 2010, TDC announced that Fitch Ratings had upgraded TDC's Long-Term Issuer Default Rating (IDR) to BBB from BB and its Short-Term IDR to F3 from B, with a stable outlook. The credit rating of TDC's senior secured debt facilities was upgraded to BBB+ from BB+. At the same time, the credit rating of TDC's EMTN notes was upgraded to BBB from BB.

On 16 December 2010, TDC announced that Standard & Poor's had upgraded TDC's long-term corporate credit ratings to BBB from BB and its short-term rating to A-2 from B, with a stable outlook. The credit rating of TDC's senior secured debt facilities was upgraded to BBB from BBB-. At the same time, the credit rating of TDC's EMTN notes was upgraded to BBB- from BB.

On 20 January 2011, TDC announced that Moody's had upgraded TDC's long-term issuer rating to Baa2 from a corporate family rating of Ba1 and its short-term rating to Prime-2 from Not Prime. The Outlook is stable. The credit rating of TDC's senior secured debt facilities was upgraded to Baa2 from Ba1. At the same time, the credit rating of TDC's EMTN notes was upgraded to Baa2 from Ba3.

The upgrades to investment grade followed the completion of the Sunrise divestment and the subsequent repayment of debt and the adoption of a new financial policy of a net debt to EBITDA at or below 2.1x announced in connection with the recently completed reduction of the stake of private equity firm NTC in TDC.

Debt repayment

On 3 November 2010, TDC announced that it would prepay approx. DKK 8.2bn of the outstanding debt under the Senior Facilities Agreement on 12 November 2010. The prepayment of debt was to be made with proceeds from the divestment of Sunrise Communications AG.

After the payment, the remaining debt under the Senior Facilities Agreement amounts to approx. DKK 17.8bn.

TDC's majority shareholder

On 12 October 2010, TDC announced that it had been informed by its majority shareholder, NTC S.A. (formerly Angel Lux Common S.A.), that a consortium of international and Nordic banks had been appointed to advise the majority shareholder on its continued strategic review of its ownership in TDC.

On 12 November 2010, TDC announced the intention of its majority shareholder to undertake a marketed offering of secondary shares to Danish investors and international institutional investors. The shares would be offered by NTC S.A. and NTC Holding G.P. & Cie S.C.A. (together, the 'Selling Shareholders' or 'NTC').

In addition, TDC issued a document with further information about TDC. The document was intended to give shareholders and other investors detailed information about TDC. The document stated that the Board of Directors intended to announce a pro rata share buy-back offer for an aggregate amount of up to DKK 9bn. The tender offer price in the share buy-back corresponded to the offer price in the possible marketed offering announced the same day by TDC's majority shareholder, NTC. The terms and conditions of any such share buy-back were to be determined by the Board of Directors at a later stage.

On 25 November 2010, TDC announced NTC's decision to undertake a marketed offering of 210 million existing shares (before the exercise, if any, of an overallotment option of up to an additional 31.5 million existing shares) in TDC A/S of nominally DKK 1 each to Danish investors and international institutional investors.

On 6 December 2010, TDC announced that it had been informed by NTC that the offering of TDC shares by NTC to retail investors in Denmark for individual orders up to and including DKK 3 million each would close at 4 pm CET on Monday 6 December 2010.

On 9 December 2010, TDC announced that the offer period had closed. The final offer price and other offering statistics were as follows:

  • Offer Price per Offer Share DKK 51.00
  • Total number of Offer Shares offered in the Offering (assuming the Overallotment Option would not be exercised) 210,000,000
  • Total number of Overallotment Shares 31,500,000
  • Market capitalisation of TDC at the Offer Price of DKK 41,513m
  • Approximate gross proceeds receivable by TDC DKK 0
  • Approximate gross proceeds receivable by the Selling Shareholders (assuming the Overallotment Option was not exercised) DKK 10,710m
  • Approximate gross proceeds receivable by the Selling Shareholders (assuming the Overallotment Option was exercised in full) DKK 12,317m
  • Percentage of outstanding share capital collectively owned by the Selling Shareholders following the Offering and the Share Buy-back (assuming the Overallotment Option was not exercised) 59.1%
  • Percentage of outstanding share capital collectively owned by the Selling Shareholders following the Offering and the Share Buy-back (assuming the Overallotment Option was exercised in full) 55.4%

NTC currently owns 59.1% of TDC.

On 13 December 2010, TDC announced that NTC had completed their Offering of Offer Shares of TDC as described in the offering memorandum published on 25 November 2010. Payment and settlement had taken place on 13 December 2010.

On 14 January 2011, TDC announced that the stabilization period following NTC's offering of shares in TDC had expired. Morgan Stanley & Co. International plc., who had acted as stabilizing agent on behalf of the managers in connection with the offering and had carried out a number of stabilization transactions in the period starting 9 December 2010 and ending 7 Januar 2011, also informed TDC that it would not exercise its over-allotment option and 31,500,000 shares in TDC previously delivered to Morgan Stanley & Co. International plc pursuant to a stock lending agreement would therefore be returned to NTC.

Dividend Policy

The board of directors does not expect to recommend a dividend for the year ended 31 December 2010 following the share buy-back in December 2010

For the financial year 2011, the board of directors expects to recommend a dividend of DKK 4.35 per outstanding share, of which DKK 2.18 is expected to be distributed in August 2011 and the remainder in the first quarter of 2012.

The board of directors has adopted a dividend payout policy for subsequent years of 80% to 85% of Equity Free Cash Flow in a given year with 40% to 50% of the full year amount to be distributed in the third quarter of the year and the remainder to be distributed following approval of the annual report in the first quarter the year after. Dividends may be distributed in the form of ordinary or extraordinary dividends or share buy-back or a combination of those.

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