Significant events during the period and subsequent events

On 18 April 2008 the Board of Directors of the Company approved the new Group company organisation which envisages:

  • the merger by incorporation of the two subsidiaries Ansaldo Trasporti - Sistemi Ferroviari SpA (ATSF) and Ansaldo Segnalamento Ferroviario SpA (ASF) in the Parent company, Ansaldo STS SpA (ASTS);
  • the liquidation and dissolution of the Dutch sub-holding company Ansaldo Signal NV (ASNV), transferring to ASTS the equity investments and all the other existing assets and legal relationships.

To that end, it is noted that the Board of Directors of the Company had previously passed important resolutions on the subject of changing the group organisational structure; specifically:

  • on 19 December 2006, the incorporation of ATSF in ASF was authorised. This transaction should have been completed by the end of 2007. However, in order to facilitate the award to ASF of an important tender bid on the German market, the transaction was suspended in December 2007, with the intention to resume it after the contract was awarded;
  • on 19 December 2007, the dissolution of the Dutch sub-holding company ASNV was authorised, with the aim of shortening and streamlining the current chain of control over subsidiaries and reducing the costs associated with the Group's corporate structure;
  • also on 19 December 2007, the following transactions were approved (i) the transfer of Ansaldo STS Australia PTY Ltd. (and, therefore, Ansaldo STS Malaysia SDN BHD, a wholly owned subsidiary of ASTS Australia) from Union Switch & Signal Inc. (in turn controlled by Ansaldo STS USA Inc.) to Ansaldo STS SpA, and (ii) the transfer of Ansaldo STS Transportation System India Private Ltd. (India) from Ansaldo Signal NV to Ansaldo STS Australia PTY Ltd. The reason for these transactions is the opportunity to focus the activities of the Asia Pacific region that are directly controlled by Ansaldo STS SpA and the strong commercial and managerial interaction existing between these two Asia Pacific area companies, under which the Indian company operationally "reports" to the Australian company. These transfers took place on 1 January 2008.

Following these resolutions, the Board of Directors continued the work for the rationalisation of the Group's structure, authorising the two transactions indicated at the beginning of the list above.

With regard to the merger of ATSF and ASF by incorporation into ASTS, this transaction occurred on 1 January 2009 through the cancellation of all shares of Ansaldo Trasporti Sistemi Ferroviari and Ansaldo Segnalamento Ferroviario without any capital increase on the part of the incorporating company, Ansaldo STS, in as much as the incorporated companies were wholly owned subsidiaries. The merger is aimed at the rationalisation of the operating activities performed by the Group in Italy by their concentration in a single company, the simplification of the current chain of control over the subsidiaries and the decrease of the costs associated with the Group's corporate structure. The merger accordingly aims at the realisation of a more efficient shareholding structure within the Group, organised development of activities by focusing on the industrial and financial core businesses within the listed company, Ansaldo STS SpA, consistent with the role and the industrial objectives pursued by the latter. The expected effects of the transaction can be summarised as follows:

  • overall growth in size and earnings, expansion in world markets and entry into new business segments (such as security and telecommunications in the railway sector), complementary to the activities carried out presently;
  • achievement of greater volumes thanks to commercial synergies and the joint development of new products and systems;
  • decrease in overhead costs;
  • simplification of financial flows.

The merger may bring these additional benefits:

  • termination of all the service and supply contracts existing between the three companies, subsequently overcoming issues connected with agreements made between related parties and simplification of the relationships between the business units;
  • simplification of the Group's corporate structure with a view to ever-increasing transparency to the market;
  • strengthening of the business/capital structure of the publicly traded company, increasing shareholders' equity and gearing for extraordinary transactions as well.

The operational integration between the two business units, Signalling and Transport Systems, in ASTS will make it possible to capture more effectively the following strategic opportunities:

  • for Transport Systems, the more direct, immediate and visible access to safety technology; the possession of this technology constitutes the qualifying and decisive factor for operating as a technological integrator, and it increases the integrator's credibility, reputation, skills and, as a result, business opportunities;
  • for Signalling, the increase in commercial effectiveness in those market segments in which signalling technology is increasingly managed through a technological integrator, both for the immediate availability of a powerful promotional and selling tool, and for a better knowledge of the customer and its needs.

The merger plan was approved on 9 May 2008 by the Board of Directors of the companies to be merged and on 12 May 2008 by the Board of Directors of ASTS. Later, on 20 June 2008, the Boards of Directors of ATSF, ASF and ASTS approved the merger by incorporation of ASF and ATSF into ASTS. Since ASTS controls 100% of ATSF and ASF, the merger was approved by the respective Boards of Directors in a simplified manner, as envisaged by Article 2505 of the Italian Civil Code. On 26 September 2008 ASTS, ATSF and ASF executed the merger agreement, providing the transaction would become effective for civillaw, accounting and tax purposes as from 1 January 2009.

The Board of Directors of the company later authorised, on 8 May 2008, the liquidation and dissolution of the Dutch sub-holding company, Ansaldo Signal NV, and the subsequent transfer to ASTS of the equity investments held by ASNV, including the French company, Ansaldo STS France S.A., and the American company, Ansaldo STS USA Inc. The liquidation of ASNV was initiated on 16 June 2008. Mario Orlando, former Sole Managing Director of the company, was appointed as liquidator. Later, on 12 December 2008, the Board of Directors of the Company decided to proceed with the merger by incorporation of the subsidiary, ASNV, into Ansaldo STS SpA, by virtue of the fact that the Dutch lawmakers implemented the Cross-Border Mergers Directive on 27 June 2008 with the issuance of Act n. 260/261. The transaction will be carried out in 2009 on the basis of the two companies' financial statements at 31 December 2008.

On 13 March 2008, the Board of Directors of Ansaldo STS SpA authorised the incorporation of two new companies in South Africa, in order to facilitate new business opportunities in Botswana, South Africa and adjoining countries. The new companies are Botswana company, Ansaldo STS Southern Africa, which will be wholly owned by Ansaldo STS Australia, and an incorporated joint venture in South Africa which will be owned by Ansaldo STS Australia and a local partner, a solution necessary to comply with local regulations.

In April 2008, the corporate name of the Indian subsidiary was changed to Ansaldo STS Transportation Systems India Private Ltd. as part of the previous decision to re-brand the Group companies. The re-branding was completed on 1 January 2009 with the American subsidiary changing its name to Ansaldo STS USA.

On 1 May 2008, Alan E. Calegari was appointed new President and Chief Executive Officer of Ansaldo STS USA Inc. Emmanuel Viollet, who was the previous President and Chief Executive Officer will remain as Chairman of the Board of Directors until a new head of the company is identified.