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To: Art Baeckel who wrote (21160)	7/25/2000 2:31:54 PM
From: Art Baeckel	Read Replies (1) \| Respond to of 22640

Report: Telefonica Leader To Resign MADRID, Spain (AP) -- Telefonica president Juan Villalonga, under investigation for possible insider trading violations, reportedly has reached an agreement in principle with key shareholders to resign. The Spanish telecommunications giant declined to comment on the report Tuesday in El Mundo. The paper said Villalonga could announce his resignation in a Telefonica board meeting scheduled for Wednesday. The meeting could be delayed a few days, however, because Villalonga's mother died on Monday. El Mundo rocked Spain's business and financial community a month ago by reporting that the government had reopened a probe it conducted two years ago into allegations that in January 1998 Villalonga bought options on Telefonica shares while negotiating alliances with the U.S. firm MCI-WorldCom (NasdaqNM:WCOM - news), which has since changed its name to WorldCom. At the time, stock market regulators said they found no evidence of irregularities. Villalonga denies any wrongdoing, saying he bought the options a full two months before the alliance with WorldCom was announced. But the renewed investigation has put tremendous pressure on Villalonga, 47, at a time when Telefonica is engaged in major deals such as its takeover of the U.S. Internet portal Lycos by Telefonica's Internet subsidiary Terra Networks. El Mundo said Tuesday that Villalonga and two banks that are core shareholders in Telefonica -- Banco Bilbao Vizcaya Argentaria and La Caixa -- have reached an agreement in principle for Villalonga to resign. Markets have taken into account the possibility that Villalonga will in fact leave and if he does ``it shouldn't cause a big shock,'' said London-based Internet analyst Gerard van Hamil Platerink of Salomon Smith Barney. ``If he stays, that would be a big surprise from many people's point of view,'' he added. Shares of Telefonica fell 2 percent, or 50 cents a share to $22.10. Van Hamil Platerink said Villalonga's departure would probably not disrupt the Terra-Lycos deal, due to be completed in September. Although Villalonga was a key architect of the takeover ``he was not the absolute, driving force and there are enough capable people in place to take it forward.'' El Mundo said the two main outstanding issues in Villalonga's departure are compensation and the naming of a successor. Villalonga may receive a severance package of as much as $25 million, El Mundo said. The top candidate to replace him is Cesar Alierta, chairman of the tobacco company Altadis, the newspaper said. Email this story - View most popular stories emailed