TIM S.A. Announces Share Restructuring Plan

TIM S.A. (B3: TIMS3 and NYSE: TIMB), a leading Brazilian telecommunications company with a market capitalization of $7.47 billion, announced a share restructuring plan involving a reverse split followed by an immediate split of its common shares. The announcement was made in a recent SEC filing, which detailed the company’s intention to enhance share liquidity and operational efficiency. According to InvestingPro, TIM maintains strong financial health with a "GREAT" overall score and a perfect Piotroski Score of 9, suggesting robust operational efficiency.

During the Annual and Extraordinary General Meeting held on Monday, shareholders approved a reverse split of all common shares at a ratio of 100-to-1, immediately followed by a split where one grouped share will be divided back into 100 shares. This maneuver will not alter the company’s capital stock value or its total number of shares, thereby eliminating the need for amendments to the company’s Bylaws. The company has demonstrated solid financial performance with a 6.77% revenue growth and currently offers a 3.58% dividend yield. InvestingPro analysis indicates the stock is currently trading below its Fair Value, presenting a potential opportunity for investors.

The restructuring will not impact the American Depositary Receipts (ADRs) traded in the U.S. market, with the depositary bank adjusting the quantity of local shares to maintain the ADR balance. Post-restructuring, the ADRs will continue to be traded at the current ratio of five common shares per one ADR. Trading at a P/E ratio of 13.67 and maintaining historically low price volatility, TIM S.A. has positioned itself as a stable investment option. Discover more detailed insights and 12 additional ProTips with InvestingPro.

Objectives of this operation include increasing trading liquidity, reducing administrative expenses, streamlining shareholder base management, enhancing dividend distribution efficiency, and improving share registration and custody systems.

The company has outlined the following procedures for implementing the restructuring:

• The Board of Executive Officers will determine the start date for the restructuring within three months from the announcement date.
• A Position Adjustment Period of at least thirty days will be provided for shareholders to adjust their holdings to multiples of 100 shares.
• Subsequently, fractional shares that have not been adjusted will be grouped and sold at auction on the B3 S.A. – Brasil, Bolsa, Balcão exchange. The proceeds will be distributed proportionally to the holders of the fractional shares.

TIM S.A. will provide further details on the operationalization of the restructuring, including the Position Adjustment Period and auction procedures, in due course.

This strategic move by TIM S.A. is based on a press release statement and aims to improve shareholder value and market efficiency.

In other recent news, TIM S.A. has declared a dividend payment schedule, announcing it will distribute R$2.05 billion in complementary dividends for the fiscal year ending December 31, 2024. The dividends will be paid in three installments, with the first of R$683 million set for April 22, 2025, and subsequent payments in July and October. Additionally, TIM S.A. has concluded its partnership with C6 Bank, resolving all disputes and transferring its shares, which is expected to generate a gross revenue of approximately R$280 million for TIM. The company has also launched a new share buyback program, allowing for the acquisition of up to 67,210,173 common shares, with a maximum allocation of R$1 billion from its profit reserves.

The new buyback program, referred to as Program 8, is designed to optimize capital allocation and enhance shareholder value. This move comes as the company ends its previous buyback program, under which no shares were acquired. In corporate governance developments, TIM S.A. has scheduled its Annual Shareholders’ Meeting for March 27, 2025, as part of its routine corporate practices. The company emphasizes its commitment to transparent communication with investors, with further details on the meeting to be shared once prepared. These developments reflect TIM S.A.’s ongoing efforts to manage its financial resources and reward its investors.

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