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Alitalia to increase company capital

21 June 2002

The Alitalia Board of Directors met Wednesday, 19 June, and voted to increase the Company capital to 1,431,686,058.60 euros, acting on the mandate from the extraordinary meeting of the Shareholders' held on May 28, 2002, by issuing 3,869,421,780 ordinary shares at the nominal value of 0.37 euros each, on a par basis, with full rights. 

Half of this capital increase will be used to underwrite ordinary shares at a nominal value of 0.37 euros each, and the other half will be used to issue convertible bonds which can be exchanged for ordinary shares on a one-for-one basis, with the following main features: 

duration: five years;

nominal value: 0.37 euros; 

conversion period: the bonds will be convertible from September 22, 2002, to July 7, 2007, excluding the usual periods of suspension; 

rate of interest: between 2.5% and 2.9%. 

Shareholders are entitled to underwrite jointly one share and one convertible bond for every share currently held in their portfolio. 

The operation is expected to begin in July 2002. 

Official quotation on the stock exchange has been sought for the convertible bonds. 

The Ministry of Economy and Finance will take up its full entitlement. 

As already announced, through an agreement with three leading financial institutions (Banca IMI Sanpaolo, Credit Suisse First Boston and Merrill Lynch), the management of this re-capitalisation has been arranged in the name of a consortium made up of important intermediaries in Italy and abroad, as a guarantee for the successful outcome of the operation. 

From the structural point of view, the operation will make it possible to acquire sufficient resources to support the 2002-2003 Two-Year Plan, in particular the investment programme contained in it, and to set up a financial structure that will enable Alitalia to gradually align itself with the other major airlines, now rated more solid and therefore more appealing to investors. 

The Board also approved the purchase of 15 regional-type aircraft (with 50 and 70 seats). 

This investment is wholly in keeping with the guidelines of the new strategic positioning of the Alitalia Group which aim for closer attention to the domestic and international markets (focusing especially on point-to-point traffic) by means of raising the quality of services and of the product offered (for instance, increased frequency of flights), as well as overall renewal of the fleet by replacing obsolete aircraft. 

The inclusion of new aircraft in the fleet will improve all-round efficiency on Alitalia's short- and medium-range networks, and will allow the Company to go ahead with its plans for restructuring in order to recover profitability in the air transport sector. 

In the light of this, the Board made the following appointments: Silvano Barberini to the Company's executive committee; Michele Cicia to the strategies committee; and Mario Franchi and Emilio Acerna to the committee for internal control and corporate governance.

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