This Unofficial English Language Translation Of
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THIS UNOFFICIAL ENGLISH LANGUAGE TRANSLATION OF THE ORIGINAL ITALIAN PROSPECTUS PREPARED IN ACCORDANCE WITH APPLICABLE ITALIAN LAW IN THE ITALIAN LANGUAGE FOR PURPOSES OF THE OFFERING BY PIRELLI & C. REAL ESTATE S.P.A. (THE “COMPANY”) OF ITS NEW ORDINARY SHARES, PURSUANT TO TRANSFERABLE PRE-EMPTIVE SUBSCRIPTION RIGHTS GRANTED TO EXISTING SHAREHOLDERS, IS FOR INFORMATION PURPOSES ONLY AND FOR EASE OF REFERENCE AND SHOULD NOT BE RELIED UPON. THE ITALIAN PROSPECTUS CONTAINS INFORMATION ABOUT THE COMPANY AND THE OFFERING. IN THE EVENT OF ANY AMBIGUITY ABOUT THE MEANING OF CERTAIN TRANSLATED TERMS OR OF ANY DISCREPANCIES BETWEEN THE ITALIAN PROSPECTUS AND THIS TRANSLATION, THE ITALIAN PROSPECTUS (A COPY OF WHICH ACCOMPANIES THIS DOCUMENT OR, IF A COPY DOES NOT ACCOMPANY THIS DOCUMENT, WHICH YOU ARE REQUIRED TO OBTAIN FROM THE COMPANY) SHALL PREVAIL. THIS TRANSLATION HAS NOT BEEN AND WILL NOT BE SUBMITTED TO THE CLEARANCE PROCEDURES OF THE COMMISSIONE NAZIONALE PER LE SOCIETÀ E LA BORSA, CONSOB, THE ITALIAN SECURITIES EXCHANGE COMMISSION AND ACCORDINGLY MAY NOT BE DISTRIBUTED TO THE PUBLIC IN ITALY OR USED IN CONNECTION WITH ANY OFFER TO PURCHASE OR SELL ANY RIGHTS OR SHARES OF THE COMPANY TO THE PUBLIC IN ITALY. ANY PURCHASE OR INVESTMENT DECISION SHOULD BE BASED SOLELY ON THE ITALIAN PROSPECTUS. THIS DOCUMENT IS STRICTLY PRIVATE AND CONFIDENTIAL AND SHOULD NOT BE COPIED OR PASSED TO ANY THIRD PARTY. THE COMPANY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE FAIRNESS, ACCURACY, COMPLETENESS OR CORRECTNESS OF THE TRANSLATION, AND NONE OF THE COMPANY OR NOR ANY OF ITS DIRECTORS, MEMBERS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES ACCEPTS ANY RESPONSIBILITY WHATSOEVER (IN NEGLIGENCE OR OTHERWISE) FOR ANY LOSS HOWEVER ARISING FROM ANY USE OF THE TRANSLATION OR ITS CONTENTS OTHER THAN FOR WILLFUL DEFAULT. THIS DOCUMENT, THE ITALIAN PROSPECTUS AND ANY OTHER SUCH MATERIAL IS NOT AN OFFER OR INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES OF THE COMPANY IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE DISTRIBUTION OF THIS DOCUMENT, THE ITALIAN PROSPECTUS AND ANY OTHER SUCH MATERIAL AND THE OFFERING OR SALE OF THE SHARES IN CERTAIN JURISDICTIONS IS RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THIS DOCUMENT, THE ITALIAN PROSPECTUS OR ANY OTHER SUCH MATERIAL, MAY COME ARE REQUIRED BY THE COMPANY TO INFORM THEMSELVES OF AND TO OBSERVE ANY SUCH RESTRICTIONS. THIS DOCUMENT, THE ITALIAN PROSPECTUS AND ANY OTHER SUCH MATERIAL MAY NOT BE USED FOR, OR IN CONNECTION WITH, ANY OFFER TO, OR SOLICITATION BY, ANYONE IN ANY JURISDICTION OR IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IS UNLAWFUL. THIS TRANSLATION IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA. THIS TRANSLATION IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE CORRESPONDING REGULATIONS IN FORCE IN CANADA, JAPAN, AUSTRALIA OR OTHER COUNTRIES AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA. THESE MATERIALS MAY NOT BE PUBLISHED, DISTRIBUTED OR TRANSMITTED IN THE UNITED STATES. THESE MATERIALS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES DISCUSSED HEREIN. THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. Pirelli & C. Real Estate S.p.A. Registered Office in Milan (Italy), Via Gaetano Negri, No. 10 Share capital Euro 21,298,616.00 fully-paid up Register of Enterprises of Milan No. 02473170153 Tax and VAT No. 02473170153 Pirelli & C. Group - Control and Coordination of Pirelli & C. SpA PROSPECTUS FOR RIGHTS OFFERING TO EXISTING SHAREHOLDERS AND LISTING OF THE ORDINARY SHARES OF PIRELLI & C. REAL ESTATE S.P.A. ON THE ITALIAN AUTOMATED SCREEN-BASED TRADING SYSTEM MANAGED BY BORSA ITALIANA S.P.A. Prospectus filed with Consob on 12 June 2009, following notification of the approval by Consob of its publication on 10 June 2009, protocol No. 9054579. The publication of the Prospectus does not represent an opinion by Consob on the opportunity of the proposed investment and the merit of the data and information relating thereto. The Prospectus is available at the Issuer’s registered office (Via Gaetano Negri, No. 10, Milan), at Borsa Italiana S.p.A. (Piazza degli Affari, No. 6, Milan), and on the Issuer’s website (www.pirellire.com). TABLE OF CONTENTS DEFINITIONS.............................................................................................................................................. 12 GLOSSARY ..................................................................................................................................................... 16 SUMMARY ..................................................................................................................................................... 20 NOTICE ......................................................................................................................................................... 20 A. RISK FACTORS .................................................................................................................................. 20 B. THE ISSUER AND THE GROUP, ITS BUSINESS AND PRODUCTS ......................................... 22 C. SELECTED FINANCIAL DATA ....................................................................................................... 29 D. INFORMATION CONCERNING THE RIGHTS OFFERING .................................................... 36 E. DOCUMENTS AVAILABLE TO THE PUBLIC .............................................................................. 41 SECTION ONE ............................................................................................................................................. 42 REGISTRATION DOCUMENT .................................................................................................................. 42 1. PERSONS RESPONSIBLE ............................................................................................................... 43 1.1 INDIVIDUALS RESPONSIBLE FOR THE PROSPECTUS................................................................................................. 43 1.2 DECLARATION OF RESPONSIBILITY ........................................................................................................................... 43 2. INDEPENDENT AUDITORS OF THE ACCOUNTS.................................................................... 44 2.1 ISSUERS’S INDEPENDENT AUDITORS OF THE ACCOUNTS ....................................................................................... 44 2.2 INFORMATION ON RELATIONSHIP WITH THE INDEPENDENT AUDITORS ............................................................ 45 3. SELECTED FINANCIAL INFORMATION ................................................................................... 46 3.1 PIRELLI RE GROUP SELECTED ECONOMIC INFORMATION .................................................................................... 47 3.2 PIRELLI RE GROUP SELECTED BALANCE SHEET INFORMATION .......................................................................... 48 3.3 PIRELLI RE GROUP SELECTED FINANCIAL INFORMATION .................................................................................... 50 3.4 PIRELLI RE GROUP PER-SHARE INFORMATION ....................................................................................................... 51 4. RISK FACTORS .................................................................................................................................. 52 4.1 RISK FACTORS RELATING TO THE BUSINESS OF THE ISSUER AND THE GROUP ................................................... 52 4.1.1 Risks relating to financial indebtedness .................................................................................................................... 52 4.1.2 Risks relating to failure to comply with financial covenants.................................................................................. 53 4.1.3 Risks relating to change of control clauses .............................................................................................................. 53 4.1.4 Risks relating to fluctuations of interest rates ......................................................................................................... 54 4.1.5 Risks relating to the negative trend in Pirelli RE Group’s results for the year ended 31 December 2008 and the period ended 31 March 2009.............................................................................................................. 54 4.1.6 Risks relating to the failure to implement the 2009 – 2011 Business Plan, to profit projections and estimates and to priority declarations and forecast information concerning developments in the reference market .......................................................................................................................................................... 55 4.1.7 Risks relating to litigation proceedings involving Pirelli RE and its controlled companies .............................. 56 4.1.8 Risks