WHAT IS THE "IBERDROLA RETRIBUCIÓN FLEXIBLE" SYSTEM?

The new optional dividend system "Iberdrola Retribución Flexible" offers the shareholders the ability to decide whether they prefer to receive all or a portion of their in new free shares of the company or in cash.

This new system is carried out through a capital increase charged to reserves and the payment of a cash dividend. Thus, all shareholders will receive a free allocation right per share held as of the record date. The shareholders who wish to receive the cash dividend will have to expressly waiving to these rights.

As a consequence, the shareholders will be able to choose between the following remuneration options on July 2018:

a) Receive free new shares;

b) Receive cash by selling all of a portion of the free allocation rights in the market;

c) Receive cash by means of the payment of the Supplementary Dividend for 2017.

The value of the remuneration that the shareholders will receive from the Company under the options referred to in options (a) and (c) above will be equivalent (in terms of market value and notwithstanding the different tax treatment applicable to each of them). Iberdrola estimates that the amount of the Supplementary Dividend per share will be at least 0.183 gross euros.

As a new feature, in this new system, the shareholders will not be offered the ability to transfer all or part of their free allocation rights to Iberdrola at a guaranteed fixed price unlike what occurred under the previuous remuneration system called "Iberdrola Dividendo Flexible").

 Practical example of the "Iberdrola Retribución Flexible" system [PDF]

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PRACTICAL EXAMPLE OF THE "IBERDROLA RETRIBUCIÓN FLEXIBLE" SYSTEM

Practical example:

  • Free capital increase charged to reserves
  • 1 share on the record date 1 free allocation right

Hypothesis:

  • Shareholder with 1,000 shares on the record date > will receive 1,000 rights
  • Number of rights needed to get a new share: 40 rights(1)
  • Amount of the Supplementary Dividend: 0.183 euros(2)

The shareholder has three options:

  • Receive Newly Issued Iberdrola Shares > WITHOUT WITHHOLDING TAX > The shareholder receives 25 newly issued Iberdrola shares(3)
  • Sell the free allocation rights in the market > SUBJECT WITHHOLDING TAX > The shareholder receives 148.23 net euros(4)
  • Receive the Supplementary Dividend > SUBJECT WITHHOLDING TAX > The shareholder receives 148.23 net euros(5)

In addition, shareholders do not need to choose one of the options, as they can combine them according to their requirements.

 

(1) Number of rights used as an example. The final number was announced on 5 July by means of a significant event.

(2) Amount of the Supplementary Dividend used as an example. The final amount of the Supplementary Dividend was announced on 5 July by means of a significant event.

(3) The new shares will be delivered to shareholders free of charge and without fees. In accordance with the applicable law, the custodian of your shares will be entitled to charge the management fees and expenses it deems appropriate, including fees for handling sale and purchase orders of freely assignable rights.

(4) On the assumption of the sale of the rights in the market at 0.183 gross euros. The total amount of the sale will be subject to IRPF withholding tax.

(5) On the assumption of the Supplementary Dividend fixed at 0.183 gross euros. The total amount will be subject to 19% withholding tax.

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