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“T-Online was not acting as an independent company” Deutsche Telekom must finally grant fair compensation to the shareholders of its former subsidiary
Düsseldorf, 6 April 2009 - The law firm Dreier Riedel today lodged an appeal on behalf of T-Online shareholders against the ruling made by the Frankfurt Regional Court on 13 March 2009. The court decided that Deutsche Telekom has to pay supplementary compensation of EUR 1.15 per share to former T-Online shareholders. This court decision is now the second demand made to Deutsche Telekom to offer additional compensation to T-Online shareholders after the share buyback offer it submitted in 2005. However, the minority shareholders regard the compensation which is now being suggested as completely inadequate and unacceptable. This position is supported by numerous independent experts and investor protection associations.

At the core of the complaint is its contestation of the regional court's assumption that T-Online carried out its company valuations as an independent company at the time. Part of T-Online was sold by Deutsche Telekom on the stock market in the year 2000 and subsequently reintegrated in 2005. The buyback of the shares took place on the basis of unrealistic valuations. The T-Online Management Board and Supervisory Board were not, as the Frankfurt Regional Court mistakenly concluded, independent. Rather, there was a clear dependency between T-Online and its former and current parent company Deutsche Telekom.

This conclusion is supported by:

• a particularly low interest rate of 3.4% which Deutsche Telekom received from T-Online for a loan of 4 billion euros. Deutsche Telekom would have otherwise had to pay the going market interest rate of 8.2%.
• the fact that T-Online hired the same consultancy firm for its merger in 2005 as Deutsche Telekom had hired in the year 2000 for the partial sale of T-Online.
• the fact that T-Online approved a valuation report which attributed greatly exaggerated profit expectations to Deutsche Telekom. As such, Deutsche Telekom subsequently had to issue three profit warnings and was only able to record 7% of the profit promised in the merger report in 2007.
• the fact that at the time of the merger, more than 90% of the T-Online shares belonged to the parent company Deutsche Telekom.

For these reasons, the lawyer Dr. Peter Dreier, as legal advisor to the minority shareholders, expects a complete revaluation by the Higher Regional Court. The Constitutional Court has already ascertained that the share price only represents a lower limit.

“The Frankfurt Regional Court has not only neglected basic facts, it has also overestimated irrelevant aspects to the detriment of the minority shareholders,” said Dr. Peter Dreier. “This ruling puts a question mark over the basic rights of minority shareholders in Germany. The fact that small investors can be squeezed out of a company for an inadequate price must not be tolerated. It is now up to the next level of jurisdiction, in the interests of shareholder protection, to prevent this injustice.”

Dreier Riedel:
Dreier Riedel is a law firm which specialises in stock corporation and capital investment law. The firm, which acts exclusively on the behalf of investors, is representing several shareholders in this complaint procedure.

Contact:
Dreier Riedel Rechtsanwälte
Dr. Peter Dreier
Graf-Adolf-Platz 1-2
40213 Düsseldorf
Germany
Tel: +49 211 - 917 446 0
Email: pd@dreier-riedel.de

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