press
|
 |
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR
INTO AUSTRALIA, CANADA OR JAPAN
Possible Offer by Holmar Holdings Limited, a company formed at the
direction of
Fortress Investment Group LLC,for telent plc
London — 25th MAY 2006 —The Boards of Holmar and telent announce
that they have reached agreement in principle on the terms of a possible
recommended cash acquisition by Holmar of telent (the “Possible Offer”).
Prior to announcing a formal offer, telent and Holmar will be seeking confirmations
from a small number of significant customers that existing contractual arrangements
will continue unaffected by the proposed change of control. These confirmations
are expected to take 2 - 3 weeks to obtain and so any offer, if made, is
unlikely to be completed before the end of July 2006. In addition, Holmar
will seek irrevocable undertakings from certain institutional telent Shareholders.
The Possible Offer is expected to be effected by means of a scheme of arrangement
under section 425 of the Companies Act and would be subject to customary
terms and conditions.
Under the terms of the Possible Offer, telent Shareholders would be entitled
to receive 529.5 pence per telent Share in cash. On this basis, the terms
of the Possible Offer value the Diluted Share Capital of telent at approximately
£346 million. The agreement in principle is not binding on either party.
However the indicative offer price of 529.5 pence per telent share in cash
may only be reduced if the telent Board so agrees or if another offeror
announces a firm intention to make an offer at a lower price.
The Possible Offer price of 529.5 pence per telent Share would represent
a premium of:
- approximately 13 per cent. over the closing price of 467.5 pence per
telent Share on 24 May 2006, being the last business day prior to this
announcement; and
- approximately 23 per cent. over the average closing
price of 430.5 pence per telent Share since telent announced the disposal
of its equipment and international services businesses to Ericsson
on 25 October 2005.
The Possible Offer has received clearance from the Pensions Regulator and
the application for such clearance received the support of the Trustee of
the UK Pension Plan.
Background to the Possible Offer
Since the financial restructuring of the Company in 2003, the management
team of the Company, since January 2006 known as telent, has delivered significant
value to the stakeholders of its business.
- Management initially focused on improving the operating performance
of the business, the reduction of the Company’s debt burden and returning
the business to profitability.
- The disposal of its equipment and international
services businesses to Ericsson resulted in:
- £185 million being contributed to the UK Pension Plan and £490 million
being set aside in escrow for the potential benefit of the UK Pension
Plan. These arrangements have significantly improved the funding status
of the UK Pension Plan and protected members’ entitlements; and
- £590 million or £2.75 per share (pre the 2 for 7 share consolidation
of 27 March 2006) being returned to telent Shareholders.
- The proposed Possible Offer, at 529.5 pence per telent Share, values
the Diluted Share Capital of telent at a further £346 million
The Board of telent has, since the disposal of its equipment and international
services businesses to Ericsson, been reviewing the most appropriate corporate
structure for the Company given the relative size of its operations and
the UK Pension Plan. The Company has held discussions with a wide range
of existing participants and potential entrants to the secondary buyout
market for pension fund assets and liabilities. From these discussions,
the Board of telent has concluded that there is no short or medium term
prospect of telent being able to dispose of the UK Pension Plan to the secondary
market on terms that would create value for telent Shareholders.
Discussions with a number of third parties, including Fortress Investment
Group, regarding a potential acquisition of telent started as part of this
review process. The Board of telent believes the Possible Offer represents
the most compelling option available to telent Shareholders today and would
give telent Shareholders the opportunity to realise their investment at
an attractive price. The Board of telent believes the Possible Offer price
of 529.5 pence per telent Share represents fair value to telent Shareholders
taking into account both the future prospects of the operational business
and the position of the UK Pension Plan as described above.
Information on Fortress Investment Group and Holmar
Fortress Investment Group is a global alternative investment and asset
management firm founded in 1998 with approximately $21 billion in discretionary
equity capital under management. Fortress Investment Group is headquartered
in New York City and its affiliates have offices in London, Rome, Frankfurt,
Geneva, Toronto, Dallas, San Diego, Hong Kong and Sydney. Fortress Investment
Group’s private equity business is focused on making long term investments
in cash flowing businesses in the United States and Western Europe and building
them in partnership with management.
Holmar is a private limited company newly incorporated in England and Wales
and is indirectly owned by a private equity fund advised by Fortress Investment
Group.
The proposed consideration payable by Holmar to telent Shareholders under
the Possible Offer would be financed out of cash resources to be made available
to Holmar pursuant to equity investments by funds advised by Fortress Investment
Group.
If the Possible Offer is completed, it is Holmar’s expectation that the
directors of telent will resign at that time and that the current management
team led by Mark Plato will remain to drive the telecoms services business
forward. Assuming the successful completion of the Possible Offer, Holmar
will work with telent’s management team to grow the telecoms services business
and develop its customer relationships.
If the Possible Offer is completed, telent and its subsidiaries would continue
to observe the existing employment rights, including pension rights, of
all their respective employees as required by applicable law and the relevant
employment contracts.
At the close of business on 24 May 2006, there were 61,399,788 telent shares
in issue, the ISIN for which is GB00B0S5CP58. In addition, as at that date,
there were 49,609,047 Warrants in issue, the ISIN for which is GB0032800707.
This announcement does not constitute an offer or invitation to purchase
any securities or a firm intention to make an offer pursuant to Rule 2.5
of the Code. There can be no certainty that Holmar will announce a firm
intention to make an offer. Holmar may, in its sole discretion, proceed
or not proceed with the Possible Offer whether the customer confirmations
and irrevocable undertakings referred to above are forthcoming or not.
telent is announcing its preliminary financial results for the fiscal year
ended 31 March 2006 today.
Enquiries
MJ2 Business Communications(Public relations adviser to Fortress Investment
Group and Holmar)
Tim McCall +44 (0) 20 7491 7784
Goldman Sachs
(Financial adviser to Fortress Investment Group and Holmar)
Basil Geoghegan +44 (0) 20 7774 1000
Mateusz Szeszkowski
Bell Pottinger
(Public relations adviser to telent)
Charles Cook +44 (0) 20 7861 3928
Zoe Sanders +44 (0) 20 7861 3887
Morgan Stanley
(Rule 3 financial adviser to telent)
Adrian Doyle +44 (0) 20 7425 5000
Lazard
(Rule 3 financial adviser to telent)
Nicholas Jones +44 (0) 20 7187 2000
Peter Warner
JPMorgan Cazenove
(Financial adviser and broker to telent)
Edmund Byers +44 (0) 20 7588 2828
Andrew Hodgkin
Goldman Sachs, which is regulated in the United Kingdom by the Financial
Services Authority, is acting as financial adviser to Fortress Investment
Group and Holmar and no one else in connection with the Possible Offer and
will not be responsible to anyone other than Fortress Investment Group and
Holmar for providing the protections afforded to customers of Goldman Sachs
nor for providing advice in relation to the Possible Offer.
Morgan Stanley, Lazard and JPMorgan Cazenove are acting for telent and
no one else in connection with the Possible Offer and will not be responsible
to anyone other than telent for providing the protections afforded to the
respective clients of Morgan Stanley, Lazard or JPMorgan Cazenove nor for
providing advice in relation to the Possible Offer.
If the Possible Offer is implemented by way of a takeover offer, such offer
will not be made, directly or indirectly, in or into, or by the use of the
mails or any other means or instrumentality (including, without limitation,
telephonic or electronic) of interstate or foreign commerce of, or any facility
of a national, state or other securities exchange of, Australia, Canada,
Japan or the United States, and such offer will not be capable of acceptance
by any such use, means, instrumentality or facility or from within Canada,
Australia, Japan or the United States. Accordingly, copies of this announcement
and any documentation relating to any such offer will not be, and must not
be, directly or indirectly, mailed or otherwise forwarded, distributed or
sent in or into or from, Australia, Canada, Japan or (in the case of any
documentation relating to such offer) the United States. Persons receiving
such documents (including, without limitation, custodians, nominees and
trustees) should observe these restrictions and must not distribute or send
such documents into or from Australia, Canada, Japan or (in the case of
any documentation relating to such offer) the United States. Doing so may
render invalid any related purported acceptance of any such offer. In the
event that Holmar decides to extend any such offer into the United States,
it will do so in satisfaction of the procedural and filing requirements
of the United States securities laws at that time to the extent applicable
thereto.
The availability of the Possible Offer or the distribution of this announcement
to persons who are not resident in the United Kingdom may be affected by
the laws of the relevant jurisdictions in which they are located. Persons
who are not so resident should inform themselves of, and observe, any applicable
requirements. This announcement has been prepared for the purposes of complying
with English law and the Code and information disclosed may not be the same
as that which would have been disclosed if this announcement had been prepared
in accordance with the laws of jurisdictions outside of England.
This announcement does not constitute an offer to sell or an invitation
to purchase or subscribe for any securities or the solicitation of an offer
to buy or subscribe for any securities.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
“interested” (directly or indirectly) in one per cent. or more of any class
of “relevant securities” of telent, all “dealings” in any “relevant securities”
of telent (including by means of an option in respect of, or a derivative
referenced to, any such “relevant securities”) must be publicly disclosed
by no later than 3.30 pm (London time) on the London business day following
the date of the relevant transaction. This requirement will continue until
the date on which, if the Possible Offer is implemented by way of a scheme
of arrangement, such scheme becomes effective or lapses or is otherwise
withdrawn or on which the “offer period” otherwise ends. If two or more
persons act together pursuant to an agreement or understanding, whether
formal or informal, to acquire an “interest” in “relevant securities” of
telent, they will be deemed to be a single person for the purposes of Rule
8.3 of the Code.
Under the provisions of Rule 8.1 of the Code, all “dealings” in “relevant
securities” of telent by Holmar or telent, or by any of their respective
“associates”, must be disclosed by no later than 12.00 noon (London time)
on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose “relevant
securities” “dealings” should be disclosed, and the number of such securities
in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
“Interests in securities” arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of securities.
In particular, a person will be treated as having an “interest” by virtue
of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found
on the Panel’s website. If you are in any doubt as to whether or not you
are required to disclose a “dealing” under Rule 8 of the Code, you should
consult the Panel.
This announcement contains “forward-looking statements” about telent, Holmar
and the Possible Offer. These statements include the possibility of a transaction,
the possible timetable and likely form of any such transaction, statements
regarding plan, objectives and expectations with respect to future operations,
and statements regarding future performance, events or trends. Words such
as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “assume”,
“positioned”, “will”, “may”, “risk” and other similar expressions that are
predictions of or indicate future events and future trends which do not
relate to historical matters identify forward-looking statements. Reliance
should not be placed on such statements because they involve known and unknown
risks, uncertainties and other factors which are in some cases beyond the
control of telent or Holmar, and may cause the actual results performance
or achievements of the telent Group to differ materially from anticipated
future results, performance or achievements expressed or implied by such
forward-looking statements (and from past results, performance or achievement).
Certain factors that may cause such differences include but are not limited
to the following: (i) delays in obtaining, or failure to obtain, the confirmations
to be sought from certain significant customers; (ii) whether Holmar determines
to make a formal offer for telent; (iii) delays in obtaining, or adverse
conditions contained in, any regulatory or third-party approvals in connection
with thePossible Offer; (iv) the ability to manage regulatory, tax and legal
matters and changes in the regulatory environment; and (v) adverse changes
in the markets for telent’s services. Important risks, uncertainties and
considerations are also discussed in the telent Circular and telent’s annual
report to the SEC on Form 20-F for the year ended 31 March 2005 and in telent’s
other filings with the SEC. telent Shareholders and prospective investors
are cautioned not to place undue reliance on these forward-looking statements
which speak only as to telent’s and Holmar’s judgement as of the date on
which they are made. Any such forward-looking statements are not intended
to give any assurance as to future results. Neither telent nor Holmar undertakes
to publicly update or revise any of these forward-looking statements, whether
to reflect new information or future events or circumstances or otherwise.
Appendix I contains sources of information and bases of calculation, and
Appendix II contains the definitions of certain terms used in this announcement.
END
APPENDIX I
SOURCES AND BASES
In this announcement:
- The value of the Diluted Share Capital of telent is based upon 61,399,788
telent Shares in issue on 24 May 2006 and 3,974,228 telent Shares underlying
options issued under the telent Share Option Schemes which have an
exercise price of 529.5 pence or less and excludes telent Shares which
could fall to be issued on exercise of subscription rights under the Warrants
or under unvested options which are expected to have lapsed prior to the
completion of the Possible Offer, if made.
- The closing price of a telent Share is the middle market price extracted
from the Daily Official List for the relevant day.
- The average closing price for a telent Share for the period from 25
October 2005 (being the date on which telent announced the disposal of
its equipment and international services business to Ericsson) to 24 May
2006, the last business day prior to this announcement, and the premium
of 23 per cent. over the average closing price of 430.5 pence per telent Share for the period from 25 October 2005 to 24 May 2006 referred to in
this announcement, are based upon information sourced from the Daily Official
List (adjusted for the 275 pence per telent share special dividend payment
and the 2 for 7 share consolidation associated with the Ericsson transaction).
APPENDIX II
DEFINITIONS
- "Affiliate"
- in relation to a party, any person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the party, and for these purposes a party shall be deemed
to control a person if such party owns, directly or indirectly, 50 per
cent or more of the voting rights of such person
"Australia"- the Commonwealth of Australia, its states, territories and possessions
and all areas subject to its jurisdiction or any subdivision thereof
"Board"- the board of directors of Holmar or telent, as the context may require
"business day"- any day, other than a Saturday, Sunday or public or bank holiday, on
which banks are generally open for business in the City of London
"Canada" - Canada, its provinces, territories and all areas subject to its jurisdiction
and any political sub-division thereof
"Code"- the City Code on Takeovers and Mergers
"Companies Act"- the Companies Act 1985, as amended
"Daily Official List" - the Daily Official List of the London Stock Exchange
“Diluted Share Capital” - he total number of issued telent Shares plus the number of telent Shares
underlying options issued under the telent Share Option Schemes which
have an exercise price of 529.5 pence or less
"Ericsson"- Telefonaktiebolaget LM Ericsson (publ)
"Fortress Investment Group" - Fortress Investment Group LLC, a Delaware Limited Liability Company
whose principal place of business is at 1345 Avenue of the Americas, New
York, NY 10105, US and its Affiliates
"Goldman Sachs"- Goldman Sachs International
"Holmar" - Holmar Holdings Limited, a private company limited by shares incorporated
in England and Wales with registered number 5806195 whose registered office
is at 40 Bank Street, Canary Wharf, London E14 5DS
"Japan" - Japan, its cities, prefectures, territories and possessions and all
areas subject to its jurisdiction or any subdivision thereof
"JPMorgan Cazenove"- JPMorgan Cazenove Limited
"Lazard"- Lazard & Co. Limited
"London Stock Exchange"- London Stock Exchange plc
"Morgan Stanley" - Morgan Stanley & Co. Limited
"Official List"- the Official List of the UK Listing Authority
"Panel"- the Panel on Takeovers and Mergers
“Possible Offer”- the possible recommended cash acquisition by Holmar of telent
"SEC" - US Securities and Exchange Commission
"subsidiary"- shall be construed in accordance with the Companies Act
"telent" or "Company"- telent plc (formerly known as Marconi Corporation plc), a public limited
company incorporated in England and Wales under registered number 00067307
whose registered office is at New Century Park, PO Box 53, Coventry CV3
1HJ
"telent Circular"- the circular to telent Shareholders dated 25 November 2005 in connection
with, amongst other things, the sale by telent of its telecommunication
and international services businesses to Ericsson
"telent Directors"- the Board of telent from time to time
"telent Group"- telent and its subsidiaries
"telent Shareholders" - holders of telent Shares
"telent Share Option Schemes"- the Marconi Corporation plc Senior Management Share Option Plan, the
Marconi Corporation plc Employee Share Option Plan and the Marconi Corporation
plc Sharesave Plan
"telent Shares"- the issued and to be issued ordinary shares of 87.5 pence each in the
capital of telent
"UK" or "United Kingdom"- the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority"- the Financial Services Authority acting in its capacity as the competent
authority for listing under Part VI of the Financial Services and Markets
Act 2000
“UK Pension Plan” - the G.E.C. 1972 Pension Plan
"US" or "United States"- the United States of America, its possessions and territories, all
areas subject to its jurisdiction or any subdivision thereof, any State
of the United States and the District of Columbia
“Warrants”- rights created by a deed poll executed by the Company on 16 May 2003
entitling the holders to subscribe for telent Shares on the terms and
conditions set out in the deed poll
"£", "sterling" and "pence"- means the lawful currency of the UK
-
"$" or "US$"
- United States dollars
-
-
- All references to times are to London time unless otherwise stated.
|
|
|
