Milan - 23 Dec 2002 0:00 UTC

Pirelli sells its activities in enamelled wires

Milan, 23rd December 2002 – Pirelli SpA, through
Pirelli Cavi e Sistemi Energia SpA, and the private equity fund
Investitori Associati III (Alfieri Associated Investors) today
signed an agreement which envisages the acquisition by Investitori
Associati of the production and commercial activities managed by
Pirelli in the enamelled and transposed wires sector in Europe and
China through the subsidiaries Invex and Icew Insulated Conductors,
as well as the option for acquiring Brazilian activities valued
using the shareholders’ equity method within September 2004.

The operation is a management buy-out and is part of the
rationalization plan announced last November for the Energy Cables
and Systems sector, which envisages the focus on higher added value
business segments.

According to the agreement, Pirelli sells its Invex plants in
Quattordio (Alessandria – Italy) and Baoying (China) which, with
about 350 employees and 2001 revenues of about 110 million euros,
are specialized in the production of enamelled and transposed
copper and aluminum wires for power generation applications.

Thanks to this operation, the net financial position of the
Pirelli Group will improve by 28 million euros, compared with the
Book Value of 32 million euros. The agreement also envisages the
acquisition, within one year, of Pirelli Esmar commercial
activities in Spain, for an amount of approximately 4 million
euros.

The new Chairman of the company will be Angelo Venezia, member
of the family who established Invex more than 50 years ago, while
Ubaldo Brignone will be appointed Chief Executive Officer: both
executives are former Pirelli manager and, consequently, they will
guarantee no interruption in operations.

This transaction is the fourth investment performed in 2002 by
the 400-million euros private equity fund Investitori Associati
III, after those in Lottomatica, Galbani and PharmaLogistics, the
eight since its inception in Autumn 2000.

The operation will be completed once approved by Antitrust
Authorities.

The facilities were arranged by BNP Paribas Leveraged Finance
and BNL and will be provided by BNP Paribas, BNL and Cassa di
Risparmio di Alessandria