Proposed share capital increase

On March 5, 2009, the board of directors confirmed the resolutions passed in February and approved the operation to strengthen the equity structure of Pirelli Real Estate and to sustain the new business model by proposing a share capital increase against payment, divisible, to be offered as option rights to the shareholders for a maximum amount of Euros 400 million.

It is probable that the share capital increase will be completed by the end of the first half of the current year, under the assumption that it will be approved by the special session of the shareholders’ meeting, called at the same time as the ordinary session of the shareholders’ meeting that among other things will resolve on the approval of the financial statements for the year ended December 31, 2008, and that the necessary authorizations will also be obtained from the relevant authorities.

On February 10, 2009 the Parent, Pirelli & C. S.p.A., gave its full support to the capital increase and made a commitment to subscribe to its share and stated that it will subscribe to any unsubscribed shares that remain at the end of the offer period. Pirelli & C. S.p.A. will fulfill its obligation by converting to equity a part of the financial receivable due from Pirelli Real Estate.