By Elvira Pollina and Valentina Za
MILAN (Reuters) – The proposal by US investment company KKR to buy Telecom Italia included a letter of commitment from JPMorgan to support the 45 billion-euro financing needed for the deal, published the Italian daily newspaper Il Messaggero.
JPMorgan said in the letter that it was ready to raise the commitment to more than 45 billion euros, if necessary, the newspaper added.
Two sources familiar with the matter confirmed JPMorgan’s letter on funding. Sources had previously said that JPMorgan was advising KKR along with Citi and Morgan Stanley.
In the non-binding proposal presented to the Telecom Italia board, KKR set an indicative price of 0.505 euros per share, valuing Italy’s largest telephony group at 10.78 billion euros or 33 billion euros if considering net debt of 22 .5 billion.
Il Messaggero reported that 34 billion euros in the financing package would be used to refinance Telecom Italia’s debt under a “change of control” clause, with an additional 11 billion euros representing a cash confirmation demanded by market regulators to cover the equity value of the offer.
Representatives for JPMorgan and KKR declined to comment.
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