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Telecom Italia takes debt to €44 billion

Telecom Italia has become the latest corporate to enter the loan market, following a busy year in 2004 that saw companies like Celanese, Vaillant and Wynn Resorts take advantage of falling fees and margins. The Italian telecoms operator is set to increase its debt to ?44 billion ($59.3 billion) in order to acquire the 44% it does not already own of Telecom Italia Mobile (TIM), its mobile phone arm. The offer, announced in December, is worth ?5.60 per share and is being funded by ?12 billion of loans in three repayment tranches, at 12, 36 and 60 months.

A range of banks are getting a slice of the action on the deal. JP Morgan, Mediobanca and MCC are acting as lead advisors to Telecom Italia, with Banca Intesa and Unicreditbanca also advising. In addition, Goldman Sachs is providing the company's independent directors with a fairness opinion. Meanwhile, TIM is being advised by Lazard ? the sole leading advisor ? and CSFB.

In its recent loan market survey, published in the December/January issue, CF discovered that the corporate lending market may be on the turn, with pressures on margins and bank fees beginning to wane.

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