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About the Voluntary Public Tender Offer
About the Voluntary Public Tender Offer
1. What is the Voluntary Public Tender Offer for the acquisition of Embratel Participações S.A. shares?
The Voluntary Public Tender Offer for the acquisition of Embratel Participações S.A. (Embrapar or Company) shares was conducted by Telmex Solutions Telecomunicações Ltda. (Telmex Solutions), a company controlled by the Mexican corporation Teléfonos de México, S.A. de C.V. (Telmex).
The Voluntary Public Tender Offer for the acquisition of Embrapar shares was an offer by the controlling shareholder to purchase all the outstanding shares of Embrapar, and all shares held by administrators of Embrapar and by Empresa Brasileira de Telecomunicações S.A. – Embratel.
The outstanding or publicly held shares correspond to all shares issued by Embrapar except those held by the controlling shareholder, by persons related to the controlling shareholder, including Empresa Brasileira de Telecomunicações S.A. - Embratel, by administrators of the Company and in treasury.
Telmex first announced its intention to conduct the offer in May 2006. On July 28, through notices of material fact released to the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) and the press and made available on Embrapar's ( www.embratel.com.br ) and Telmex's ( www.telmex.com ) websites, Telmex announced its decision to conduct a Voluntary Public Tender Offer under different procedures.
2. What is Embrapar?
Embrapar - Embratel Participações S.A. is the holding company that controls Empresa Brasileira de Telecomunicações S.A. – Embratel and its subsidiaries.
3. What is Telmex?
Teléfonos de México , S.A. de C.V. is the leading telecommunications company in Mexico, according to Standard & Poor's rating agency. Telmex and its subsidiaries offer a wide range of telecommunications, data and video transmission and Internet services, as well as integrated telecommunications services for their corporate clients. Telmex also offers telecommunications services through its subsidiaries in Argentina , Brazil , Chile , Peru and Colombia .
As the controlling shareholder of Embrapar, Telmex, through Telmex Solutions, intended to acquire through the offer all of Embrapar's outstanding shares, and all shares held by administrators of Embrapar and by Empresa Brasileira de Telecomunicações S.A. – Embratel.
The outstanding or publicly held shares correspond to all shares issued by Embrapar except those held by Telmex Solutions itself, by the controlling shareholder, by persons related to the controlling shareholder, including Empresa
Brasileira de Telecomunicações S.A. - Embratel, by administrators of the Company and in treasury.
4. What is Telmex Solutions?
Telmex Solutions is a Brazilian limited liability company, wholly owned by the Mexican corporation Telmex.
5. Why does Telmex want to acquire Embrapar’s shares?
This was a strategic decision on the part of Telmex.
For further details, please refer to the Notice of Voluntary Public Tender Offer .
6. What happens if I choose not to sell my shares?
In this case, you will continue to hold your Embrapar shares.
However, should certain conditions be satisfied, the Company's shares may cease trading on stock exchanges and you may face difficulties selling your shares in the future. Should these conditions be met, Telmex will also cause Embrapar to redeem all remaining shares at R$ 6.95 per 1,000 shares, the same purchase price offered in the Voluntary Public Tender Offer, adjusted by the variation in the monthly Taxa Referencial – TR, pro rata temporis , as from May 8, 2006, up to the settlement date. In this case, you will no longer hold any shares in Embrapar. For further information about the possible redemption of remaining shares, see Section 8.1 of the Notice of Voluntary Public Tender Offer.
7. What is the purchase price?
The purchase price is R$ 6.95 per 1,000 common or preferred shares and is within the range determined in the valuation report prepared in accordance with Brazilian law. This purchase price is approximately 31% and 26% higher than the closing price of Embrapar's common and preferred shares, respectively, on May 5, 2006, the trading day prior to the announcement of the offer, and approximately 35% and 30% higher than the weighted average price of the common and preferred shares, respectively, on the Bovespa for the 30 days through May 5, 2006.
The purchase price will be paid in cash, in national currency, three business days after the shares are sold, adjusted by the variation in the monthly Taxa Referencial – TR, pro rata temporis , as from May 8, 2006, the publication date of the notice of material fact announcing Telmex's intention to make the offer, up to the settlement date.
8. Why is the purchase price so close to the current market price?
The market has adjusted the price of Embrapar shares since May 8, 2006, the day the offer was announced. The purchase price of R$ 6.95 is 31% higher than the closing price of the common shares and 26% higher than that of the preferred shares on May 5, 2006, the trading day prior to the announcement of the offer; and 35% and 30% higher than the weighted average price of the common and preferred shares, respectively, on the Bovespa for the 30 days through May 5, 2006.
9. How will payment be effected?
Payment will be effected in cash, in national currency, to those shareholders who accept the offer, three business days after the shares are sold, adjusted by the variation in the monthly Taxa Referencial – TR, pro rata temporis , as from May 8, 2006, the publication date of the notice of material fact announcing Telmex's intention to make the offer, up to the settlement date.
In the event that the Taxa Referencial - TR is terminated or is not published for more than 30 days, the index replacing it shall be adopted. In the absence of such an index, the average value of the Taxa Referencial - TR published over the last 12 months shall be applied.
10. What is the value of the Taxa Referencial – TR?
The value of the TR can be obtained from the website of the Brazilian Central Bank - www.bcb.gov.br . The TR for the month of July 2006, for instance, was 0.23%.
11. If I have shares in Embratel Participações, how should I go about selling them at the offer price (R$6.95 per 1,000 shares)?
You can sell your shares to Telmex at the offer price until February 7, 2007. The transaction will take place on the Bovespa.
Sale of all shares through an accredited bank
Shareholders who hold up to 100,000 (one hundred thousand) shares through Banco Itaú S.A. and wish to sell all their shares, including ordinary and preferred shares, can do so through one of the following accredited banks: Unibanco, Banco Itaú, Banco do Brasil, Bradesco, Banco Real.
In order to sell all their shares, shareholders must present the following documents to any branch of the aforementioned banks:
- Individuals:
Original or certified copies of the Identity Card (RG), Individual Taxpayer's Registry Card (CPF) and proof of residence.
- Legal entities:
Original or certified copies of the documents granting powers of representation, including corporate documentation, the National Registry of Legal Entities' card (CNPJ) and the personal documents listed above for individuals who are authorized to act on behalf of the entity, as the case may be.
Note: Shareholders can sell all their shares, in an amount up to 100,000 (one hundred thousand), including ordinary and preferred shares. Please note that the accredited banks do not buy the shares from shareholders, but rather act as intermediaries. When shareholders request the sale of their shares, they are hiring the bank's brokerage service to sell their shares on the Bovespa. Shareholders will have to pay a brokerage fee and the applicable stock exchange fees. These fees must be itemized on the transaction receipt.
Sale of shares through a brokerage firm
Shareholders who wish to sell their shares through Unibanco Investshop or any other brokerage firm authorized to conduct transactions on the Bovespa need only inform said firm of their decision to sell.
The following documents are usually requested when opening an account with a brokerage firm:
(a) Identity Card (RG);
(b) Individual Taxpayer's Registry Card (CPF); and
(c) proof of residence.
Representatives of legal entities, estates and other universalities of law, of minors, of persons civilly disabled and proxies must further submit original or certified copies of the documents granting powers of representation, including corporate documentation, the National Registry of Legal Entities' card (CNPJ) and the personal documents listed above for individuals who are authorized to act on behalf of the entity, as the case may be.
12. How can I open an account with the brokerage firm, Unibanco Investshop, in order to sell my shares?
Contact Unibanco Investshop at the address listed below and they will tell you how to proceed.
UNIBANCO INVESTSHOP CVMC S.A. - 228 (Head Office)
Avenida Eusébio Matoso, 891 - 18° Andar
São Paulo/SP 05423901
Phone.: (55 11) 4004-3005
Fax: (55 11) 3097-4922
Site: www.investshop.com.br
E-mail: investshop@unibanco.com.br
For more information on Unibanco Investshop click here.
13. To whom should I speak at the custodian bank to update my contact information?
Embrapar has hired Banco Itaú to supply shareholder care service. The shares of Embrapar are registered in the electronic file of Banco Itaú's Registered Shares System. The bank maintains customized registrations and assists Embrapar's shareholders through its specialized branches.
The following services are provided at any Banco Itaú branch, free of charge for shareholders:
Updating of registration data: Change of address, change of marital status, bank account data, etc.
A statement of shareholder's status will be sent to your address when you are duly registered with Banco Itaú as a shareholder of Embrapar.
Banco Itaú's Contact Phone Number:
(55 11) 5029-7780
Addresses and Contacts at the specialized branches
BRASÍLIA
Contact: Constancia Maria S de Oliveira
SCS Quadra 3 – Edifício D'Angela, 30, Bloco A, Sobreloja
CEP 70300-500
Centro - Brasília/DF
61 3316 4850
BELO HORIZONTE
Contact: Jussara Maria Miranda de Souza
Avenida João Pinheiro, 195, Subsolo
Centro - Belo Horizonte/MG
CEP 30130-180
31 3249 3524
CURITIBA
Contact: Márcia Regina de N. Machado
Rua João Negrão, 65, Sobreloja
Centro - Curitiba/PR
CEP 80010-200
41 3320 4128
PORTO ALEGRE
Contact: Sandra Ferreira da Silva
Rua Sete de Setembro, 746, Térreo
Centro - Porto Alegre/RS
CEP 90010-190
51 3210 9150
RIO JANEIRO
Contact: Mônica Lopes Carvalho Rodrigues
Rua Sete de Setembro, 99, Subsolo
Centro - Rio de Janeiro/RJ
CEP 20050-005
21 2508 8086
SÃO PAULO
Rua Boa Vista, 176, 1º Subsolo
Centro - São Paulo/SP
CEP 01092-900
11 5029 7780
SALVADOR
Contact: Watson Carlos Passos Barreto
Avenida Estados Unidos 50, 2º Andar - (Edifício Sesquicentenário)
Comércio - Salvador/BA
CEP 40020-010
71 3319 8010
14. How do I transfer title to the shares?
First, obtain the “Transfer of Book Entry Shares” form from a specialized Banco Itaú branch. This form must then be filled out without any crossing out, signed and notarized. You should then return the form to the branch with the following documents (originals and copies):
Individuals:
Identity Card (RG); (b) Individual Taxpayer's Registry Card (CPF); and (c) proof of residence.
Legal Entities:
National Registry of Legal Entities' card (CNPJ), Articles of Incorporation and the last amendment to same (accompanied by a certificate from the Registry of Commerce, if altered more than 12 months before), plus the corresponding minute(s), or other equivalent documents.
Legal Representatives of Legal Entities:
Original or certified copies of the documents granting powers of representation.
A certified copy of the current bank account to which future dividend payments will be credited. Transfer of title is a service contracted by the shareholder and provided by the depositary institution, which may charge for the service.
15. What does cancellation of registration as a public company mean?
The cancellation of registration as a public company means, generally, that the shares or other securities issued by the company are no longer traded publicly in Brazil (on a stock exchange, for example).
The CVM will proceed with the cancellation of the registration of Embratel Participações S.A. (Embrapar or Company) if the following conditions are satisfied:
(i) Telmex Solutions has acquired, through the offer, more than 2/3 of the publicly held shares, regardless of their class. The publicly held shares correspond to all shares issued by Embrapar except those held by Telmex Solutions itself, by the controlling shareholder, by persons related to the controlling shareholder, including Empresa Brasileira de Telecomunicações S.A. – Embratel, by administrators of the Company and in treasury. This condition was satisfied following the auction on the Bovespa held on November 7, 2006;
(ii) the CVM has received a statement from Anatel favorable to the cancellation of the registration;
(iii) for a period of three months following the date on which Telmex Solutions publishes a material fact announcing Anatel's issuance of a statement favorable to the cancellation of the Company's registration, Telmex Solutions acquires all the remaining shares from those shareholders who wish to sell them; and
(iv) the registration of Embrapar's American Depositary Receipt (ADR) program with the CVM has been terminated.
At the auction on the Bovespa, which took place on November 7, 2006, Telmex acquired more than 2/3 of the publicly held shares, as set forth in item (i) above. Therefore, the first condition for the cancellation of the registration of Embrapar as a publicly held company, as set forth in item 3.1 of the Notice of Voluntary Tender Offer, has been satisfied.
Telmex Solutions shall announce to the market, through a notice of material fact, the terms of Anatel's statement, regardless of Anatel's position with respect to the cancellation of the registration, as soon as Telmex Solutions has been informed of said statement. Telmex Solutions cannot guarantee that Anatel will issue a statement favorable to the cancellation of the registration.
Telmex Solutions may, at any time, decide to forego the receipt of Anatel's statement, communicating this decision to the market immediately, through the announcement of a notice of material fact, in which case the offer will not result in the cancellation of Embrapar's registration.
The CVM will not proceed with the cancellation of the registration if Anatel fails to issue a statement favorable to the cancellation of Embrapar's registration or if Telmex Solutions decides to forego the receipt of Anatel's statement.
Prior to the cancellation of Embrapar's registration, Telmex Solutions will cause Embrapar to request The Bank of New York (BONY), as depositary under the Deposit Agreement governing Embrapar's ADRs, to issue a notice of termination of the Deposit Agreement to the holders of ADRs. The termination of the Deposit Agreement will become effective 30 days after BONY issues the notice of termination. The New York Stock Exchange will then suspend trading of the ADRs.
Once the issuance of the notice of termination of the Deposit Agreement to the holders of ADRs has been confirmed, Telmex will cause Embrapar to request the termination of the registration of the Company's ADR program from the CVM, following the expiration of the 30-day notice term required for the termination of the Deposit Agreement to become effective.
Once the registration of the Company's ADR program with the CVM has been terminated, the CVM shall communicate such fact to the Bovespa and Embrapar. We recommend reading sections 1 and 3 of the Notice of Voluntary Public Tender Offer.
About Embratel Participações S.A. (Embrapar)
16. How many shares were issued by Embratel Participações?
17. How can I keep track of Embrapar’s share performance?
Embrapar's common and preferred shares are traded on the São Paulo Stock Exchange (Bovespa), under the following tickers:
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| Class of Share |
Ticker |
Stock Exchange |
| Common (ON) |
EBTP3 |
São Paulo (BOVESPA) |
| Preferred (PN) |
EBTP4 |
São Paulo (BOVESPA) |
Substantially all of Embrapar's shares are book-entry shares and Banco Itaú is responsible for their custody.
The price of Embrapar's shares can be obtained from the websites of the Bovespa and the main newspapers, especially the financial newspapers. On-line share price sites may also be consulted.
The company also has American Depositary Receipts (ADRs) traded on the New York Stock Exchange (NYSE). Each ADR represents 5,000 preferred shares of Embrapar. The ADRs are traded under the following ticker:
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| Class of Share |
Ticker |
Stock Exchange |
| ADR (Preferred) |
EMT |
New York (NYSE) |
The bank in the United States that issues the certificates, that is, the depositary bank, is The Bank of New York and the bank responsible for the custody of the underlying preferred shares in Brazil is Banco Itaú.
The price of Embrapar’s ADRs can be obtained from the NYSE website. On-line share price sites may also be consulted.
About the Telebrás System
18. What happened to the Telebrás System?
Telebrás was a holding company controlled by the federal government with interests in various telecommunications companies in Brazil . In May 1998 Telebrás was broken up into 12 holding companies, each responsible for some of Telebrás' ownership interest. Embratel Participações S.A. (Embrapar) is one of these 12 holding companies, with a controlling interest in Empresa Brasileira de Telecomunicações S.A - Embratel. The government sold its controlling stake in Embrapar at a privatization auction in July 1998.
19. What happened to the shareholders of Telebrás?
The former Telebrás shareholders became shareholders of each of the 12 holding companies with precisely the same number of shares as the number of Telebrás shares they previously held. For instance, a holder of 1,000 Telebrás shares became a holder of 1,000 shares in Embratel Participações and 1,000 shares in each of the remaining holding companies.
Subscribers who bought a telephone line through a local telecoms operator as part of the 1975-1995 Expansion Plan may have been entitled to shares in the former Telebrás.
20. Which are the 12 holding companies created as a result of the Telebrás split?
21. How do I find out if I own shares pursuant to the Expansion Plan?
Contact Banco Itaú, which is responsible for the custody and registration of Embrapar's shares. If your name is not registered there, the bank will inform you about the documentation required for your shareholder identification.
If you are not listed in the electronic shareholder register of the depositary bank and if you have the documentation proving that you are entitled to shares in the former Telebrás, go to the local telecoms company where your Expansion Plan was acquired and request your shareholder identification.
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Frequently Asked Questions
