Telecom Italia in talks with banks to sell 1 bln euro state credit, say sources
MILAN, June 20 (Reuters) - Telecom Italia (TIM) (TLIT.MI), opens new tab is in advanced talks with banks to sell a 1 billion euro ($1.2 billion) state credit the phone group expects to be able to cash in from the government after a prolonged legal dispute, two sources told Reuters.
TIM and Rome have been locked in a legal battle over a license fee TIM was obligated to pay to the state in 1998, the year after the telecoms sector was deregulated.
TIM scored a victory last year when a Rome appeals court ordered the Italian government to give TIM back the original licence fee, worth just over 500 million euros, a figure that has since doubled due to accrued interests.
The government has appealed the decision in front of Italy's top court.
Pending the top court's ruling, TIM is in talks with UniCredit (CRDI.MI), opens new tab and Santander (SAN.MC), opens new tab to get financing against the expected 1 billion euro refund from the government, the people said.
Such a form of financing, whereby a company raises cash from banks by selling them a claim, typically invoices, at a discount to the claim's nominal value, is called factoring.
In a similar case to TIM's, the top court has ruled in favour of Vodafone (VOD.L), opens new tab.
In any case, were the final court decision to be against TIM, the company would just return the banks the cash they have lent it plus any interest that has matured, the people said.
That would be no different than repaying ordinary bank debt.
TIM, UniCredit and Santander all declined to comment.
Italy's top court last month delayed its final decision over the case, saying further checks were needed to establish whether TIM's initial claim was filed with the correct court. A hearing on the matter is expected next week.
($1 = 0.8632 euros)
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