Telecom Italia Prioritized Telefonica, BlackRock in Bond Sale

Telecom Italia SpA, responding to a market regulator’s questions, said it prioritized BlackRock Inc, Telefonica SA and Och-Ziff Capital Management Group LLC in its mandatory convertible bond sale last month.

Telecom Italia planned the issuance as an “operation with related parties of greater importance” and followed the appropriate procedures in preparing and carrying out the 1.3 billion-euro ($1.8 billion) sale, it said in a statement.

This is Telecom Italia’s second response to questions from Italy’s financial-markets regulator this week. Consob searched the Milan-based company’s offices last month after Marco Fossati’s Findim Group SA, the carrier’s third-largest shareholder, and minority shareholders claimed they’d been discriminated against in the mandatory convertible bond sale.

“Any operations with related parties may imply a potential conflict of interest,” Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University, said in a phone interview. “This is why it’s crucial in these cases to provide all guarantees of impartiality.”

BlackRock invested 200 million euros for 15.38 percent of the bonds issued and Telefonica -- Telecom Italia’s top shareholder -- bought 103 million euros for 7.92 percent, according to the statement. Och-Ziff bought 40 million euros, or 3.08 percent.

The investigators are also looking into Telecom Italia’s plan to sell its stake in Telecom Argentina. The carrier responded to Consob queries on its assets in South America on Dec. 2, saying its Brazilian assets were of “strategic value” and the sale of its Argentine business was important for its fundraising efforts.

Telecom Italia shares rose less than 1 percent to 67 cents at 10:11 a.m. in Milan.

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