RNS Number:6080N
FirstGroup PLC
16 July 2003
Not for release, distribution or publication in whole or in part in or into the
United States, Canada, Japan or Australia.
For immediate release
16 July 2003
FirstGroup plc
Recommended cash offer for GB Railways Group plc
* The Boards of FirstGroup and GB Railways announce the terms of a
recommended cash offer, to be made by Cazenove on behalf of FirstGroup, for the
entire issued and to be issued ordinary share capital of GB Railways.
* The Offer will be unanimously recommended by the board of GB Railways who
have been advised by Investec Investment Banking.
* The Offer comprises for each GB Railways Share:
Initial Consideration of 250p in cash
and
Deferred Consideration of 200p in cash conditional on the outcome of the tender
process in respect of the Greater Anglia Franchise
and
Deferred Consideration of 50p in cash conditional on the outcome of the tender
process in respect of the Northern Rail Franchise or the Wales & Borders
Franchise.
* The acquisition of GB Railways will enable FirstGroup to develop its
existing passenger rail business and provide opportunities to expand into the
railfreight business. The GB Railways management team will further strengthen
the experienced FirstGroup rail team. The Strategic Rail Authority has given
its consent to the acquisition.
* The Offer, excluding the Deferred Consideration, represents a premium of
approximately 6.4 per cent. on the closing middle market quotation of 235p per
GB Railways Share (as derived from the AIM Appendix to the Daily Official List)
on 14 July, 2003 (being the last dealing day before the announcement by GB
Railways that it was in discussions regarding a possible offer for GB Railways).
* The Offer, assuming the Deferred Consideration is paid in full,
represents a premium of approximately 112.8 per cent. on the closing middle
market quotation of 235p per GB Railways Share (as derived from the AIM Appendix
to the Daily Official List) on 14 July, 2003 (being the last dealing day before
the announcement by GB Railways that it was in discussions regarding a possible
offer for GB Railways).
* FirstGroup has received undertakings to accept the Offer from the
directors of GB Railways, certain of their related trusts and other GB Railways
Shareholders amounting in aggregate to 3,288,686 GB Railways Shares,
representing approximately 37.6 per cent. of GB Railways' existing issued
ordinary share capital.
The above summary is to be read in conjunction with the full text of this
announcement.
Commenting on the Offer, Moir Lockhead, Chief Executive of FirstGroup, said:
"This acquisition will make an excellent fit with our current rail business,
re-opening new opportunities in East Anglia and Wales, giving us access to the
East Coast Main Line and introducing us to the railfreight market. I am
particularly pleased that the management team of GB Railways will be joining
FirstGroup as a separate subsidiary and we look forward to their input to our
enlarged rail operations."
Jeremy Long, Chief Executive of GB Railways, said:
"We are delighted we have concluded an agreement that is beneficial to
shareholders, stakeholders and employees with GB Railways becoming a separate
wholly-owned subsidiary within FirstGroup. This allows the existing teams to
continue to lead our three established operations: Anglia Railways, Hull Trains
and GB Railfreight and to provide further value to our shareholders if bids for
the Greater Anglia, Wales & Borders or Northern franchises are successful.
We look forward to GB Railways creating a larger rail business with FirstGroup
and building on the reputation, culture and expertise which GB Railways and
FirstGroup have established."
Enquiries
FirstGroup plc 01224 650 119
Iain Lanaghan
Cazenove & Co. Ltd 020 7588 2828
Malcolm Moir
GB Railways Group plc 020 7983 5103
Jeremy Long / Max Steinkopf
Investec Investment Banking 020 7597 5970
Lee Aston
The full terms and conditions of the Offer (including details of how the Offer
may be accepted) will be set out in the Offer Document and the Form of
Acceptance accompanying the Offer Document. In deciding whether or not to
accept the Offer in respect of their GB Railways Shares, GB Railways
Shareholders should rely on the terms and conditions of the Offer and the
information contained, and the procedures described, in the Offer Document and
Form of Acceptance.
Cazenove, which is regulated in the United Kingdom by the Financial Services
Authority, is acting for FirstGroup and for no one else in connection with the
Offer and will not be responsible to anyone other than FirstGroup for providing
the protections afforded to clients of Cazenove nor for providing advice in
relation to the Offer or any matter referred to herein or in the Offer Document.
Investec Investment Banking, which is regulated in the United Kingdom by the
Financial Services Authority, is acting for GB Railways and for no one else in
connection with the Offer and will not be responsible to anyone other than GB
Railways for providing the protections afforded to customers of Investec
Investment Banking nor for providing advice in relation to the Offer or any
matter referred to herein or in the Offer Document.
This document does not constitute, or form part of, any offer for, or any
solicitation of any offer for, or an invitation to purchase or subscribe for,
securities.
The Offer is not being, and will not be, made, directly or indirectly, in or
into, or by use of the mails of, or by any means or instrumentality (including,
without limitation, facsimile transmission, telex, telephone or e-mail) of
interstate or foreign commerce of, or by any facilities of a national securities
exchange of, the United States, Canada, Australia or Japan and cannot be
accepted by any such use, means, instrumentality or facility or from within the
United States, Canada, Australia or Japan. Accordingly, copies of this document
are not being and must not be mailed or otherwise distributed or sent in or into
the United States, Canada, Australia or Japan.
Not for release, distribution or publication in whole or in part in or into the
United States, Canada, Japan or Australia.
For immediate release
16 July 2003
FirstGroup plc
Recommended Cash Offer for GB Railways Group plc
Introduction
The Boards of FirstGroup and GB Railways announce the terms of a recommended
cash offer, to be made by Cazenove on behalf of FirstGroup, for the entire
issued and to be issued ordinary share capital of GB Railways. GB Railways
Shareholders who accept the Offer could be entitled to receive up to 500p per GB
Railways Share in cash comprising:
* Initial Consideration of 250p per GB Railways Share
and
* Deferred Consideration of 200p per GB Railways Share conditional on the
outcome of the tender process in respect of the Greater Anglia Franchise
and
* Deferred Consideration of 50p per GB Railways Share conditional on the
outcome of the tender process in respect of the Northern Rail Franchise or the
Wales & Borders Franchise
Further details regarding the Deferred Consideration are set out below and in
Part C of Appendix I.
Recommendation
The Board of GB Railways, which has been so advised by Investec Investment
Banking, its financial adviser, considers the terms of the Offer to be fair and
reasonable and accordingly will unanimously recommend that GB Railways
Shareholders accept the Offer. In providing advice to the Board of GB Railways,
Investec Investment Banking has taken account of the commercial assessments of
the Directors of GB Railways.
Irrevocable undertakings
Each of the directors of GB Railways, one other member of its senior management
and his spouse, and the trustees of relevant trusts in which certain directors
of GB Railways have an interest have entered into agreements with FirstGroup
pursuant to which they have irrevocably undertaken to accept the Offer in
respect of their holdings amounting in aggregate to 2,434,237 GB Railways
Shares, representing approximately 27.8 per cent. of the current issued ordinary
share capital of GB Railways.
In addition, Merrill Lynch Investment Managers ("MLIM") has undertaken to accept
the Offer in respect of its holding of 854,449 GB Railways Shares, representing
approximately 9.8 per cent. of the current issued ordinary share capital of GB
Railways. The terms of this undertaking require acceptance of the Offer except
in the event of a competing offer for GB Railways being made by a third party at
a price per GB Railways Share of 275p or more in cash prior to the day
immediately preceding the first closing date of the Offer. Under the terms of
its undertaking, MLIM has the right, prior to the day immediately preceding the
first closing date of the Offer, to sell any of its holding of GB Railways
Shares at a price per GB Railways Share of not less than 275p.
Together with the irrevocable undertakings referred to above, this represents
approximately 37.6 per cent. of the current issued ordinary share capital of GB
Railways.
The Offer is final and will not be increased. However, FirstGroup reserves the
right to increase and / or otherwise revise (on terms no less favourable than
the Offer) the Offer in the event of a competitive situation arising or
otherwise with the consent of the Panel.
The Offer
On behalf of FirstGroup, Cazenove will offer to acquire, on the terms and
subject to the conditions and further terms set out below and in Appendix I to
this announcement, and the further terms and conditions to be set out in the
Offer Document and the accompanying Form of Acceptance, the entire issued and to
be issued ordinary share capital of GB Railways not already owned by FirstGroup,
on the following basis:
for every GB Railways Share 250p in cash
And
Deferred Consideration of 200p in cash
conditional on the outcome of the tender process in respect of the
Greater Anglia Franchise
And
Deferred Consideration of 50p in cash
conditional on the outcome of the tender process in respect of the
Northern Rail Franchise or the Wales & Borders Franchise
Full details regarding the Deferred Consideration are set out in Part C of
Appendix I below. If either part of the Deferred Consideration falls to be
paid, such payment will be made to each GB Railways Shareholder who accepts, or
is deemed to accept, the Offer within 14 days of entering into the relevant rail
franchise agreement by each of the parties thereto.
The Offer, excluding the Deferred Consideration, represents a premium of
approximately 6.4 per cent on the closing middle market quotation of 235p per GB
Railways Share (as derived from the AIM Appendix to the Daily Official List) on
14 July 2003 (being the last dealing day prior to the date of the announcement
by GB Railways that it was in discussions regarding a possible offer for GB
Railways).
The Offer, assuming the Deferred Consideration is paid in full, represents a
premium of approximately 112.8 per cent. on the closing middle market quotation
of 235p per GB Railways Share (as derived from the AIM Appendix to the Daily
Official List) on 14 July 2003 (being the last dealing day prior to the date of
the announcement by GB Railways that it was in discussions regarding a possible
offer for GB Railways).
Background to and reasons for the Offer
FirstGroup's strategy continues to be to create shareholder value by developing
the Group's business in markets which offer the best opportunities for
profitable growth and in areas where core skills can be utilised. The
acquisition of GB Railways is wholly consistent with this strategy as it
significantly enhances the opportunities for growing the Group's existing
passenger rail business, as well as giving access to a new but related area of
operation, namely railfreight.
The opportunities to grow the existing passenger rail business will derive from
both participation in the ongoing tender processes for the Greater Anglia and
Wales & Borders franchises, as well as GB Railways' 80 per cent. interest in
Hull Trains. Furthermore, the established and experienced management team
within FirstGroup will be strengthened by the addition of the GB Railways
management team. The SRA has given its consent to the acquisition.
If the Offer becomes or is declared unconditional in all respects, FirstGroup
intends for GB Railways to operate as a wholly-owned subsidiary of FirstGroup,
reporting directly to FirstGroup's Chief Executive, with Lord Sheppard remaining
as Chairman of the company.
The Directors of FirstGroup believe that the acquisition of GB Railways will be
earnings enhancing in the first full year after acquisition on a pre-goodwill
basis. This statement should not be interpreted to mean that FirstGroup's
future earnings per share would necessarily be greater than its historic
earnings per share.
Information relating to FirstGroup
FirstGroup is a UK based international transport company with a turnover of more
than #2 billion per annum and 57,000 employees throughout the UK and North
America. For the year ended 31 March 2003, FirstGroup reported underlying
profit before tax, goodwill amortisation and exceptional items of #159.8 million
on turnover of #2,291.0 million. As stated in FirstGroup's AGM statement on 3
July 2003, trading in the first three months has started well and is in line
with management's expectations.
UK Rail Operations
FirstGroup operates approximately 14 per cent. of the UK's passenger rail
network with three franchises: First Great Western operates intercity services
from London Paddington to Bristol, Wales and the West of England; First Great
Eastern operates commuter services from London Liverpool Street to Essex and
East Anglia; and First North Western, which is operated under a management
contract on behalf of the SRA, operates regional services around Greater
Manchester and the North West of England.
FirstGroup holds the operating contract for the Croydon Tramlink network which
it operates on behalf of Transport for London carrying approximately 18 million
passengers a year.
UK Bus Operations
The Group is Britain's largest bus operator running more than one in five of all
local bus services (approximately 23 per cent. market share). A fleet of some
9,500 buses carries 2.7 million passengers a day in more than 40 towns and
cities such as Aberdeen, Bristol, Glasgow, Leeds and Manchester. In London
FirstGroup operates approximately 16 per cent. of bus services in the capital on
behalf of Transport for London.
North America
In North America FirstGroup has three operating divisions: First Student (yellow
school buses), First Transit (transit contracting and management services) and
First Services (vehicle maintenance and ancillary services). Headquartered in
Cincinnati, Ohio the business operates across the US and Canada.
First Student is the second largest provider of yellow school buses in the
United States and the third largest in Canada. With a fleet of some 15,500
school buses it transports nearly one million students every day.
First Transit is one of the largest private sector providers of urban bus
services in the US, managing public transport systems and call centre scheduling
on behalf of cities such as New York, Houston and Denver.
First Services is the largest private sector provider of fleet maintenance
services for public fleets and utility companies in the US. It maintains fleets
and installs equipment for primarily public sector customers such as cities,
counties and fire and police departments.
Information relating to the GB Railways Group
GB Railways owns and operates passenger rail and railfreight businesses in the
United Kingdom. Its shares are admitted to trading on AIM. GB Railways has three
primary revenue generating subsidiaries: Anglia Railways, GB Railfreight and
Hull Trains.
Anglia Railways
Anglia Railways holds a franchise to operate passenger train services in Eastern
England, including the mainline service from London to Ipswich and Norwich and
connecting local services in East Anglia. The Anglia Railways franchise
currently expires on 1 April 2004. In the year ended 31 March 2003, Anglia
Railways passenger revenue increased by 6.7 per cent. to #68.2m.
GB Railfreight
GB Railfreight commenced trading in 2001 in order to provide railfreight
services in the United Kingdom. It carries materials for Network Rail and
British Gypsum, and containers for Medite Shipping Company Limited, pursuant to
long term agreements and provides short-term services on an ad-hoc basis for a
variety of customers.
In its second full year of operation (to 31 March 2003), GB Railfreight recorded
an operating profit of #1 million (2002 - #0.7 million).
Hull Trains
GB Railways holds an 80 per cent. interest in Hull Trains, which is a
non-franchised, open access train operating company, operating services between
London Kings Cross and Kingston-upon-Hull and Humberside. It has recently
received approval from Network Rail to extend its track access rights to 2010.
Having commenced operations in September 2000, Hull Trains moved into operating
profit in the 2003 financial year, recording operating profit of #0.7 million
(2002 - operating loss of #0.6 million), including net insurance proceeds of
#0.5 million, relating to the Hatfield disruption, on passenger revenue of #6.7
million.
Hull Trains has agreed to acquire four 125 mph four car Class 222-type units
which are expected in mid-2005 and has signed a letter of intent to acquire four
new 100mph three car Class 170 units which are expected in early 2004.
Current trading and prospects
As indicated in GB Railways' preliminary results statement for the year ending
31 March 2003, the Directors of GB Railways remain optimistic for the future and
believe that the Group's return to overall profitability gives a sound base for
continued growth.
Financing of the Offer
The Offer is being financed through a new letter of credit facility entered into
by FirstGroup with The Royal Bank of Scotland Plc on 14 July 2003. FirstGroup
does not intend that the payment of any interest or other charges in respect of
such facility will depend on the business of any member of the GB Railways
Group.
Cazenove is satisfied that the necessary financial resources are available to
FirstGroup to satisfy acceptance of the Offer (including the payment of the
Deferred Consideration) in full.
Management and employees
The Board of FirstGroup has given assurances to the GB Railways Directors that,
following the Offer becoming or being declared unconditional in all respects,
the existing employment rights, including pension rights, of all employees of
the GB Railways Group will be fully safeguarded.
GB Railways Share Option Schemes
The Offer will extend to any GB Railways Shares unconditionally allotted or
issued whilst the Offer remains open for acceptance (or by such earlier date as
FirstGroup may, subject to the Code, determine) including any such shares
allotted or issued pursuant to the exercise of options under the GB Railways
Share Option Schemes. Following the Offer becoming or being declared
unconditional in all respects, FirstGroup intends to make appropriate proposals
to holders of options under the GB Railways Share Option Schemes to the extent
that such options have not been exercised or lapsed.
Compulsory acquisition, cancellation of trading and re-registration
If FirstGroup receives acceptances under the Offer in respect of, and/or
otherwise acquires, 90 per cent. or more of the GB Railways Shares to which the
Offer relates and assuming that all of the other conditions of the Offer have
been satisfied or waived (if capable of being waived), FirstGroup intends to
exercise its rights pursuant to the provisions of sections 428 to 430F
(inclusive) of the Companies Act to acquire compulsorily the remaining GB
Railways Shares on the same terms as the Offer.
Assuming the Offer becomes or is declared unconditional in all respects,
FirstGroup intends to procure the making of an application by GB Railways to the
London Stock Exchange for cancellation of the admission to trading of GB
Railways Shares on AIM. It is anticipated that cancellation of GB Railways'
admission to trading will take effect no earlier than the later of (i) the
expiry of any period during which holders of options under the GB Railways Share
Option Schemes may elect to accept proposals made by FirstGroup in respect of
the options granted under the GB Railways Share Option Schemes, and (ii) the
expiry of 20 business days after the Offer becomes or is declared unconditional
in all respects. Cancellation of the admission to trading on AIM will
significantly reduce the liquidity and marketability of any GB Railways Shares
which are not the subject of a valid acceptance under the Offer.
It is also proposed that, following the Offer becoming or being declared
unconditional in all respects and after trading in GB Railways Shares on AIM is
cancelled, GB Railways will be re-registered as a private company under the
relevant provisions of the Companies Act.
Further Information
As at 15 July 2003 (being the last dealing day prior to the date of this
announcement) FirstGroup owned or controlled 10 GB Railways Shares.
Save as disclosed above, neither FirstGroup, nor any of its directors, nor, so
far as FirstGroup is aware, any person deemed to be acting in concert with it,
owns or controls any GB Railways Shares or has any option to acquire any GB
Railways Shares, or has entered into any derivative referenced to securities of
GB Railways which remains outstanding.
Unless otherwise stated, the financial information relating to FirstGroup and
its Group in this announcement is extracted from the published audited
consolidated accounts of FirstGroup for the year ended 31 March 2003. Unless
otherwise stated, the financial information relating to GB Railways and the GB
Railways Group in this announcement is extracted from the published audited
consolidated accounts of GB Railways for the year ended 31 March 2002 or the
preliminary statement of results of the GB Railways Group for the year ended 31
March 2003 (as announced by GB Railways on 10 June 2003).
Appendix III contains the definitions of certain expressions used in this
announcement.
The full terms and conditions of the Offer (including details of how the Offer
may be accepted) will be set out in the Offer Document and the Form of
Acceptance accompanying the Offer Document. In deciding whether or not to
accept the Offer in respect of their GB Railways Shares, GB Railways
Shareholders should rely on the terms and conditions of the Offer and the
information contained, and the procedures described, in the Offer Document and
Form of Acceptance.
It is intended that the Offer Document (including a letter of recommendation
from the Chairman of GB Railways) and Forms of Acceptance will be despatched
shortly to GB Railways Shareholders and, for information only, to holders of
options under the GB Railways Share Option Schemes. The Offer and acceptances
thereof will be governed by English Law.
Cazenove, which is regulated in the United Kingdom by the Financial Services
Authority, is acting for FirstGroup and for no one else in connection with the
Offer and will not be responsible to anyone other than FirstGroup for providing
the protections afforded to clients of Cazenove nor for providing advice in
relation to the Offer or any matter referred to herein or in the Offer Document.
Investec Investment Banking, which is regulated in the United Kingdom by the
Financial Services Authority, is acting for GB Railways and for no one else in
connection with the Offer and will not be responsible to anyone other than GB
Railways for providing the protections afforded to customers of Investec
Investment Banking nor for providing advice in relation to the Offer or any
matter referred to herein or in the Offer Document.
This document does not constitute, or form part of, any offer for, or any
solicitation of any offer for, or an invitation to purchase or subscribe for,
securities.
The Offer is not being, and will not be, made, directly or indirectly, in or
into, or by use of the mails of, or by any means or instrumentality (including,
without limitation, facsimile transmission, telex, telephone or e-mail) of
interstate or foreign commerce of, or by any facilities of a national securities
exchange of, the United States, Canada, Australia or Japan and will not be
capable of acceptance by any such use, means, instrumentality or facility or
from within the United States, Canada, Australia or Japan. Accordingly, copies
of this document are not being and must not be mailed or otherwise distributed
or sent in or into the United States, Canada, Australia or Japan.
APPENDIX I
Conditions and certain further terms of the Offer and Form of Acceptance
The Offer, which will be made by Cazenove on behalf of FirstGroup, will comply
with the rules and regulations of the Financial Services Authority, the London
Stock Exchange and the Code.
Part A: Conditions of the Offer
The Offer will be made subject to the following conditions:
(a) valid acceptances being received (and not, where permitted,
withdrawn) by not later than 3.00 p.m. on the first closing date of the Offer
(or such later time(s) and/or date(s) as FirstGroup may, with the consent of the
Panel or in accordance with the Code, decide) in respect of not less than 90 per
cent. (or such lower percentage as FirstGroup may decide) in nominal value of
the GB Railways Shares to which the Offer relates, provided that this condition
shall not be satisfied unless FirstGroup and/or any of its wholly-owned
subsidiaries shall have acquired or agreed to acquire, whether pursuant to the
Offer or otherwise, shares in GB Railways carrying in aggregate more than 50 per
cent. of the voting rights then normally exercisable at general meetings of GB
Railways. For the purposes of this condition:
(i) shares which have been unconditionally allotted but not issued
before the Offer becomes or is declared unconditional as to acceptances, whether
pursuant to the exercise of any outstanding subscription or conversion rights or
otherwise, shall be deemed to carry the voting rights they will carry on being
entered into the Register of Members of GB Railways; and
(ii) the expression "GB Railways Shares to which the Offer relates" shall
be construed in accordance with sections 428 to 430F of the Companies Act;
(b) save in respect of any requirement or decision of, or regulation or
order issued by, the SRA or the Rail Regulator appointed under the Railways Act
1993 (the "Rail Regulator") in consequence of the Offer, there being no
provision of any agreement, arrangement, licence, permit or other instrument to
which any member of the wider GB Railways Group is a party or by or to which any
such member or any of its assets may be bound, entitled or subject, which in
consequence of the Offer or the proposed acquisition of any shares or other
securities in GB Railways or because of a change in the control or management of
GB Railways or otherwise, could or might result in, to an extent which is
material in the context of the wider GB Railways Group as a whole:
(i) any moneys borrowed by, or any other indebtedness (actual or
contingent) of, or grant available to, any such member, being or becoming
repayable or capable of being declared repayable immediately or earlier than
their or its stated maturity date or repayment date or the ability of any such
member to borrow moneys or incur any indebtedness being withdrawn or inhibited
or being capable of becoming or being withdrawn or inhibited;
(ii) any such agreement, arrangement, licence, permit or instrument or
the rights, liabilities, obligations or interests of any such member thereunder
being terminated or modified or affected or any obligation or liability arising
or any action being taken thereunder;
(iii) any assets or interests of any such member being or falling to be
disposed of or charged or any right arising under which any such asset or
interest could be required to be disposed of or charged;
(iv) the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of any
such member;
(v) the rights, liabilities, obligations or interests of any such member
in, or the business of any such member with, any person, firm or body (or any
arrangement or arrangements relating to any such interest or business) being
terminated or adversely modified or affected;
(vi) the value of any such member or its financial or trading position or
prospects being prejudiced or adversely affected;
(vii) any such member ceasing to be able to carry on business under any
name under which it presently does so; or
(viii) the creation of any liability, actual or contingent, by any such
member,
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
wider GB Railways Group is a party or by or to which any such member or any of
its assets may be bound, entitled or subject, could result in any of the events
or circumstances as are referred to in sub-paragraphs (i) to (viii) of this
paragraph (b);
(c) save in respect of any requirement or decision of, or regulation
or order issued by, the Office of Fair Trading in the United Kingdom, the SRA or
the Rail Regulator in consequence of the Offer, no government or governmental,
quasi-governmental, supranational, statutory, regulatory, environmental or
investigative body, court, trade agency, association, institution or any other
body or person whatsoever in any jurisdiction (each a "Third Party") having
decided to take, institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference, or enacted, made or proposed any statute,
regulation, decision or order, or having taken any other steps which would or
might reasonably be expected to:
(i) require, prevent or delay the divestiture, or alter the terms
envisaged for any proposed divestiture, by any member of the wider FirstGroup
Group or any member of the wider GB Railways Group of all or any portion of
their respective businesses, assets or property or impose any limitation on the
ability of any of them to conduct their respective businesses (or any of them)
or to own any of their respective assets or properties or any part thereof
which, in any such case, is material in the context of the wider FirstGroup
Group or the wider GB Railways Group in either case taken as a whole;
(ii) require, prevent or delay the divestiture by any member of the wider
FirstGroup Group of any shares or other securities in GB Railways;
(iii) impose any limitation on, or result in a delay in, the ability of
any member of the wider FirstGroup Group directly or indirectly to acquire or to
hold or to exercise effectively any rights of ownership in respect of shares or
loans or securities convertible into shares or any other securities (or the
equivalent) in any member of the wider GB Railways Group or the wider FirstGroup
Group or to exercise management control over any such member;
(iv) otherwise affect the business, assets, profits or prospects of any
member of the wider FirstGroup Group or of any member of the wider GB Railways
Group in a manner which is adverse to and material in the context of the wider
FirstGroup Group or the wider GB Railways Group in either case taken as a whole;
(v) make the Offer or its implementation or the acquisition or proposed
acquisition by FirstGroup or any member of the wider FirstGroup Group of any
shares or other securities in, or control of, GB Railways, void, illegal and/or
unenforceable under the laws of any jurisdiction, or otherwise, directly or
indirectly, restrain, restrict, prohibit, delay or otherwise materially
interfere with the same, or impose additional conditions or obligations with
respect thereto, or otherwise challenge or interfere therewith;
(vi) require any member of the wider FirstGroup Group or the wider GB
Railways Group to offer to acquire any shares or other securities (or the
equivalent) or interest in any member of the wider GB Railways Group (other than
GB Railways) or the wider FirstGroup Group owned by any third party;
(vii) impose any limitation on the ability of any member of the wider GB
Railways Group or the wider FirstGroup Group to co-ordinate its business, or any
part of it, with the businesses of any other members which is adverse to and
material in the context of the wider GB Railways Group or the wider FirstGroup
Group taken as a whole; or
(viii) result in any member of the wider GB Railways Group ceasing to be
able to carry on business under any name under which it presently does so where
such cessation would be adverse to, and material in the context of, the wider GB
Railways Group taken as a whole;
and all applicable waiting and other time periods during which any such Third
Party could institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference or any other step under the laws of any
jurisdiction in respect of the Offer or the acquisition or proposed acquisition
of any GB Railways Shares having expired, lapsed or been terminated;
(d) save in respect of any requirement or decision of, or regulation or
order issued by, the Office of Fair Trading in the United Kingdom, the SRA or
the Rail Regulator in consequence of the offer, all necessary filings or
applications having been made in connection with the Offer and all statutory or
regulatory obligations in any jurisdiction having been complied with in
connection with the Offer or the acquisition by any member of the wider
FirstGroup Group of any shares or other securities in, or control of, GB
Railways and all authorisations, orders, recognitions, grants, consents,
licences, confirmations, clearances, permissions and approvals reasonably deemed
necessary or appropriate by FirstGroup for or in respect of the Offer or the
proposed acquisition of any shares or other securities in, or control of, GB
Railways by any member of the wider FirstGroup Group having been obtained in
terms and in a form reasonably satisfactory to FirstGroup from all appropriate
Third Parties or persons with whom any member of the wider GB Railways Group has
entered into contractual arrangements, and all such authorisations, orders,
recognitions, grants, consents, licences, confirmations, clearances, permissions
and approvals, together with all material authorisations, orders, recognitions,
grants, licences, confirmations, clearances, permissions and approvals necessary
or appropriate to carry on the business of any member of the wider FirstGroup
Group or the wider GB Railways Group which is material in the context of the
wider FirstGroup Group or the wider GB Railways Group in either case taken as a
whole, remaining in full force and effect and all filings necessary for such
purpose having been made and there being no notice or intimation of any
intention to revoke or not to renew any of the same at the time at which the
Offer becomes otherwise unconditional and all necessary statutory or regulatory
obligations in any jurisdiction having been complied with;
(e) since 31 March 2003, and save as disclosed in GB Railways' report
and accounts for the year then ended as provided to FirstGroup prior to 15 July
2003 or publicly announced in accordance with the AIM Rules by GB Railways prior
to 15 July 2003 and delivered to a Regulatory Information Service (as defined
in the AIM Rules), no member of the wider GB Railways Group having:
(i) save as between GB Railways and wholly-owned subsidiaries of GB
Railways, or for GB Railways Shares issued pursuant to the exercise of options
granted under the GB Railways Share Option Schemes, issued, authorised or
proposed the issue of additional shares of any class;
(ii) save as between GB Railways and wholly-owned subsidiaries of GB
Railways, or for the grant of options under the GB Railways Share Option
Schemes, issued or agreed to issue, authorised or proposed the issue of
securities convertible into shares of any class or rights, warrants or options
to subscribe for, or acquire, any such shares or convertible securities;
(iii) other than to another member of the GB Railways Group, recommended,
declared, paid or made or proposed to recommend, declare, pay or make any bonus,
dividend or other distribution, whether payable in cash or otherwise;
(iv) save for intra-GB Railways Group transactions, merged or demerged
with any body corporate or acquired or disposed of or transferred, mortgaged or
charged or created any security interest over any assets or any right, title or
interest in any asset (including shares and trade investments) or authorised or
proposed or announced any intention to propose any merger, demerger, acquisition
or disposal, transfer, mortgage, charge or security interest, in each case,
other than in the ordinary course of business;
(v) save for intra-GB Railways Group transactions, made or authorised or
proposed or announced an intention to propose any change in its loan capital;
(vi) issued, authorised or proposed the issue of any debentures or (save
for intra-GB Railways Group transactions), save in the ordinary course of
business, incurred or increased any indebtedness or become subject to any
contingent liability;
(vii) purchased, redeemed or repaid or announced any proposal to purchase,
redeem or repay any of its own shares or other securities or reduced or, save in
respect to the matters mentioned in sub-paragraph (i) above, made any other
change to any part of its share capital;
(viii) implemented, or authorised, proposed or announced its intention to
implement, any reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of business or
entered into or changed the terms of any contract with any director or senior
executive;
(ix) entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, transaction or commitment (whether
in respect of capital expenditure or otherwise) which is of a long term, onerous
or unusual nature or magnitude or which is or could be materially restrictive on
the businesses of any member of the GB Railways Group or Hull Trains, or the
wider FirstGroup Group, or which involves or could involve an obligation of such
a nature or magnitude or which is other than in the ordinary course of business;
(x) (other than in respect of a member which is dormant and was solvent
at the relevant time) taken any corporate action or had any legal proceedings
started or threatened against it for its winding-up, dissolution or
reorganisation or for the appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of all or any of its assets or
revenues or any analogous proceedings in any jurisdiction or had any such person
appointed;
(xi) entered into any contract, transaction or arrangement which would be
materially restrictive on the business of any member of the GB Railways Group or
Hull Trains, or the wider FirstGroup Group, other than to a nature and extent
which is normal in the context of the business concerned;
(xii) waived or compromised any claim otherwise than in the ordinary course
of business where such waiver or compromise would be adverse to, and material in
the context of, the wider GB Railways Group taken as a whole; or
(xiii) entered into any contract, commitment, arrangement or agreement
otherwise than in the ordinary course of business or passed any resolution or
made any offer (which remains open for acceptance) with respect to, or announced
any intention to, or to propose to, effect any of the transactions, matters or
events referred to in this condition,
and, for the purposes of paragraphs (iii),(iv), (v) and (vi) of this condition,
the term "GB Railways Group" shall mean GB Railways and its wholly-owned
subsidiaries;
(f) since 31 March 2003, and save as disclosed in GB Railways' report
and accounts for the year then ended as provided to FirstGroup prior to 15 July
2003 or publicly announced in accordance with the AIM Rules by GB Railways prior
to 15 July 2003 and delivered to a Regulatory Information Service (as defined in
the AIM Rules):
(i) no adverse change or deterioration having occurred in the business,
assets, financial or trading position or profits or prospects of any member of
the wider GB Railways Group;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the wider GB Railways Group is or may become
a party (whether as a plaintiff, defendant or otherwise) and no investigation by
any Third Party against or in respect of any member of the wider GB Railways
Group having been instituted, announced or threatened by or against, or
remaining outstanding in respect of, any member of the wider GB Railways Group
which in any such case might reasonably be expected adversely to affect any
member of the wider GB Railways Group;
(iii) no contingent or other liability having arisen or become apparent to
FirstGroup which would be likely adversely to affect any member of the wider GB
Railways Group; and
(iv) no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence held by any
member of the wider GB Railways Group which is necessary for the proper carrying
on of its business,
which, in each such case, is material in the context of the wider GB
Railways Group taken as a whole;
(g) save as publicly announced in accordance with the AIM Rules by GB
Railways prior to 15 July 2003 and delivered to a Regulatory Information Service
(as defined in the AIM Rules), FirstGroup not having discovered prior to the
Offer becoming or being declared unconditional in all respects:
(i) that any financial, business or other information concerning the
wider GB Railways Group as contained in the information publicly disclosed at
any time by, or on behalf of, any member of the wider GB Railways Group omits to
state a fact necessary to make that information not misleading to an extent
which is material in the context of the wider GB Railways Group taken as a
whole, is materially misleading or contains a material misrepresentation of
fact;
(ii) that any member of the wider GB Railways Group, or any partnership,
company or other entity in which any member of the wider GB Railways Group has a
significant economic interest and which is not a subsidiary undertaking of GB
Railways, is subject to any liability (contingent or otherwise) which is not
disclosed in the annual report and accounts of GB Railways for the year ended 31
March 2003 as provided to FirstGroup prior to 15 July 2003 and which is material
in the context of the wider GB Railways Group taken as a whole; or
(iii) any information which affects the import of any information
disclosed at any time by or on behalf of any member of the wider GB Railways
Group and which is material in the context of the wider GB Railways Group taken
as a whole;
(h) FirstGroup not having discovered prior to the Offer becoming or
being declared unconditional in all respects that:
(i) any past or present member of the wider GB Railways Group has failed
to comply with any and/or all applicable legislation or regulation of any
jurisdiction with regard to the disposal, spillage, release, discharge, leak or
emission of any waste or hazardous substance or any substance likely to impair
the environment or harm human health or animal health or otherwise relating to
environmental matters, or that there has otherwise been any such disposal,
spillage, release, discharge, leak or emission (whether or not the same
constituted a non-compliance by any person with any such legislation or
regulations, and wherever the same may have taken place) any of which disposal,
spillage, release, discharge, leak or emission would be likely to give rise to
any liability (actual or contingent) on the part of any member of the wider GB
Railways Group and which is material in the context of the wider GB Railways
Group taken as a whole; or
(ii) there is, or is likely to be, for that or any other reason
whatsoever, any liability (actual or contingent) of any past or present member
of the wider GB Railways Group to make good, repair, reinstate or clean up any
property or any controlled waters now or previously owned, occupied, operated or
made use of or controlled by any such past or present member of the wider GB
Railways Group, under any environmental legislation, regulation, notice,
circular or order of any government, governmental, quasi-governmental, state or
local government, supranational, statutory or other regulatory body, agency,
court, association or any other person or body in any jurisdiction and which is
material in the context of the wider GB Railways Group taken as a whole.
For the purposes of these conditions the "wider GB Railways Group" means GB
Railways and its subsidiary undertakings, associated undertakings and any other
undertaking in which GB Railways and/or such undertakings (aggregating their
interests) have a significant interest and the "wider FirstGroup Group" means
FirstGroup and its subsidiary undertakings, associated undertakings and any
other undertaking in which FirstGroup and/or such undertakings (aggregating
their interests) have a significant interest, and for these purposes "subsidiary
undertaking", "associated undertaking" and "undertaking" have the meanings given
by the Companies Act, other than paragraph 20(1)(b) of Schedule 4A to that Act
which shall be excluded for this purpose, and "significant interest" means a
direct or indirect interest in ten per cent. or more of the equity share capital
(as defined in that Act).
FirstGroup reserves the right to waive, in whole or in part, all or any of the
above conditions, except condition (a).
FirstGroup reserves the right to waive all or any of conditions (b) to (h)
(inclusive) above, in whole or in part. Conditions (b) to (h) (inclusive) must
be fulfilled or waived by midnight on the 21st day after the later of the first
closing date of the Offer and the date on which condition (a) is fulfilled (or
in each such case such later date as FirstGroup may, with the consent of the
Panel, decide). FirstGroup shall be under no obligation to waive or treat as
satisfied any of conditions (b) to (h) (inclusive) by a date earlier than the
latest date specified above for the satisfaction thereof, notwithstanding that
the other conditions of the offer may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances indicating
that any of such conditions may not be capable of fulfilment.
If FirstGroup is required by the Panel to make an offer for GB Railways Shares
under the provisions of Rule 9 of the Code, FirstGroup may make such alterations
to any of the above conditions as are necessary to comply with the provisions of
that Rule.
The Offer will lapse if it is referred to the Competition Commission before 3.00
p.m. on the first closing date of the Offer or the date on which the Offer
becomes or is declared unconditional as to acceptances, whichever is the later.
This Offer will be governed by English law and be subject to the jurisdiction of
the English courts and also to the conditions and further terms set out below
and in the Offer Document and related Form of Acceptance.
Part B: Certain further terms of the Offer
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails of, or any other means or instrumentality (including, without limitation,
facsimile transmission, telex, telephone or e-mail) of interstate or foreign
commerce of, or any facilities of a national securities exchange of, the United
States, Canada, Australia or Japan and the Offer will not be capable of
acceptance by any such use, means, instrumentality or facility or from within
the United States, Canada, Australia or Japan. Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed or
sent in or into or from the United States, Canada, Australia or Japan.
The availability of the Offer to GB Railways Shareholders not resident in the UK
may be affected by the laws of the relevant jurisdiction. GB Railways
Shareholders who are not resident in the UK should inform themselves about, and
observe, any applicable requirements.
GB Railways Shares will be acquired under the Offer free from all liens,
equities, charges, encumbrances and other third party rights of any kind
whatsoever and together with all rights attaching thereto, including voting
rights and the right to receive all dividends and other distributions declared,
made or paid hereafter.
The full terms and conditions of the Offer (including details of how the Offer
may be accepted) will be set out in the Offer Document and the Form of
Acceptance accompanying the Offer Document. In deciding whether or not to
accept the Offer in respect of their GB Railways Shares, GB Railways
Shareholders should rely on the terms and conditions of the Offer and the
information contained, and procedures described, in the Offer Document and Form
of Acceptance.
Part C: Further details regarding the Deferred Consideration
GB Railways is currently one of the three shortlisted bidders for the Greater
Anglia Franchise and one of five shortlisted bidders for the Northern Rail
Franchise. Bids for both of these rail franchises are due to be submitted later
this year.
GB Railways is also currently awaiting a decision on the Wales & Borders
Franchise, having recently submitted a joint 'best and final offer' with its
partner, Connex Transport UK.
In view of GB Railways' involvement in these ongoing tender processes, the
payment of the Consideration has been structured so that 50% of the
Consideration is deferred and contingent on the outcome of the Rail Franchise
Tenders.
If the Offer becomes unconditional in all respects, then, subject to the
satisfaction of the relevant conditions set out below, FirstGroup will pay to GB
Railways Shareholders who accept, or are deemed to accept, the Offer the
following amounts:
* 200p per GB Railways Share in cash upon GB Railways, a wholly-owned
subsidiary of GB Railways, or a member of the FirstGroup Group entering into a
rail franchise agreement with the SRA in respect of the Greater Anglia Franchise
(the "GA Deferred Consideration"),
and, whether or not the GA Deferred Consideration falls to be paid,
* 50p per GB Railways Share in cash upon the earlier, if either, to occur
of:
(1) GB Railways, a wholly-owned subsidiary of GB Railways or a member of the
FirstGroup Group entering into a rail franchise agreement with the SRA in
respect of the Northern Rail Franchise; and
(2) GB Railways (or a wholly-owned subsidiary of GB Railways or GB Railways
through its interest in a special purpose joint venture company, Rail Wales
Limited) entering into a rail franchise agreement with the SRA in respect of the
Wales & Borders Franchise.
If either part of the Deferred Consideration falls to be paid in accordance with
the provisions of this Part C of Appendix I, such payment of Deferred
Consideration will be made to each GB Railways Shareholder who accepts, or is
deemed to accept, the Offer within 14 days of entering into the relevant rail
franchise agreement by each of the parties thereto.
FirstGroup has given undertakings to the SRA to retain Anglia Railways as a
separate wholly-owned subsidiary of FirstGroup until the conclusion of the
tender process for the Greater Anglia Franchise (or, if earlier, upon Anglia
Railways not being selected as a preferred bidder for the Greater Anglia
Franchise) and to ensure that Anglia Railways does not have access to any
information relating to FirstGroup's existing Great Eastern Rail franchise or
Great Eastern's operational management other than with the SRA's consent or
through the SRA's existing bidding process for the Greater Anglia Franchise.
If the Offer becomes or is declared unconditional in all respects GB Railways'
submissions in respect of the Rail Franchise Tenders, and the negotiation of all
franchise and related agreements in connection therewith, will be subject to
approval by FirstGroup's normal internal review and approval processes, which
includes review by FirstGroup's UK rail and group teams and approval by the
board of FirstGroup.
APPENDIX II
Responsibility
1. Responsibility
The Directors of FirstGroup, whose names are set out in paragraph 2 below,
accept responsibility for the information contained in this announcement (other
than that relating to the GB Railways Group, the Directors of GB Railways and
their immediate families, related trusts and controlled companies). To the best
of the knowledge and belief of the Directors of FirstGroup (who have taken all
reasonable care to ensure that such is the case), the information contained in
this announcement for which they are responsible is in accordance with the facts
and does not omit anything likely to affect the import of such information.
The Directors of GB Railways, whose names are set out in paragraph 3 below,
accept responsibility for the information contained in this announcement
relating to the GB Railways Group, the Directors of GB Railways and their
immediate families, related trusts and controlled companies. To the best of the
knowledge and belief of the Directors of GB Railways (who have taken all
reasonable care to ensure that such is the case), the information for which they
accept responsibility is in accordance with the facts and does not omit anything
likely to affect the import of such information.
2. Directors of FirstGroup
Martin Gilbert
Moir Lockhead
Mike Mitchell
Iain Lanaghan
David Dunn
Jim Forbes
John Sievwright
Martyn Williams
3. Directors of GB Railways
Lord Sheppard of Didgemere
Jeremy Long
Richard Drake
Max Steinkopf
Michael Schabas
APPENDIX III
Definitions
The following definitions apply throughout this announcement unless the context
otherwise requires:
"AIM" the Alternative Investment Market of the London Stock Exchange
"AIM Rules" the rules of AIM
"Anglia Railways" Anglia Railways Train Services Limited, a wholly-owned subsidiary of
GB Railways
"Australia" the Commonwealth of Australia, its states, territories and
possessions;
"Board" or "Directors" as the context requires, the board of directors of FirstGroup or the
board of directors of GB Railways
"business days" any day, other than a Saturday, Sunday or public or bank holiday, on
which banks are generally open for businesses in the City of London
"Canada" Canada, its provinces, territories and all areas subject to its
jurisdiction and any political sub-division thereof
"Cazenove" Cazenove & Co. Ltd
"Code" the City Code on Takeovers and Mergers
"Companies Act" the Companies Act 1985 (as amended)
"Consideration" the Initial Consideration and the Deferred Consideration
"Daily Official List" the Daily Official List published by the London Stock Exchange
"Deferred Consideration" the parts of the Consideration payable under the Offer which are
conditional on the outcome of the Rail Franchise Tenders, full
details of which are set out in Part C of Appendix I
"FirstGroup" FirstGroup plc
"FirstGroup Group" FirstGroup and its subsidiary and associated undertakings
"Financial Services Authority" the Financial Services Authority Limited
"Form of Acceptance" the form of acceptance and authority relating to the Offer
accompanying the Offer Document
"GB Railways" GB Railways Group plc
"GB Railways Group" GB Railways and its subsidiary and associated undertakings
"GB Railways Shareholders" the holders of GB Railways Shares
"GB Railways Share Option Schemes" the GB Railways plc Unapproved Share Option Scheme 1998, the GB
Railways plc Share Option Scheme 2002 Enterprise Management
Incentive Scheme and, where the context so requires, the GB Railways
plc Shadow Share Scheme 1997
"GB Railways Shares" the existing unconditionally allotted or issued and fully paid (or
credited as fully paid) ordinary shares of 0.75 pence each in the
capital of GB Railways and any further such shares which are
unconditionally allotted or issued on or prior to the date on which
the Offer closes or, subject to the provisions of the Code, such
earlier date or dates as FirstGroup may decide
"GB Railfreight" GB Railfreight Limited, a wholly-owned subsidiary of GB Railways
"Greater Anglia Franchise" the tender process for the first award of the Greater Anglia
passenger rail franchise, combining the current Anglia Railways
franchise, the Great Eastern franchise and the West Anglia routes of
the West Anglian Great Northern franchise, following the expiry of
those franchises
"Group" as the context requires, the FirstGroup Group or the GB Railways
Group
"Hull Trains" Hull Trains Company Limited, a non-franchised, open access train
operating company, operating services between London Kings Cross and
Kingston-upon-Hull and Humberside
"Initial Consideration" 250 pence per GB Railways Share
"Investec Investment Banking" a division of Investec Bank (UK) Limited
"Japan" Japan, its cities, prefectures, territories and possessions;
"London Stock Exchange" London Stock Exchange plc
"Northern Rail Franchise" the tender process for the first award of the Northern Rail
passenger rail franchise, combining substantial parts of the current
First North Western franchise and the Arriva Trains North franchise,
following the expiry of those franchises
"Offer" the recommended cash offer to be made by Cazenove on behalf of
FirstGroup to acquire all of the GB Railways Shares not already
owned by FirstGroup and, where the context so requires, any
subsequent revision, variation, extension or renewal thereof
"Offer Document" the document to be despatched to GB Railways Shareholders containing
and setting out the terms and conditions of the Offer and any
revision thereof
"Panel" the Panel on Takeovers and Mergers
"pounds", "#" or "pence" the lawful currency of the United Kingdom
"Rail Franchise Tenders" the Greater Anglia Franchise, the Northern Rail Franchise and the
Wales & Borders Franchise
"Securities Act" the United States Securities Act of 1933, as amended
"SRA" the Strategic Rail Authority
"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland
"United States" or "US" the United States of America, its possessions and territories, all
areas subject to its jurisdiction and any sub-division thereof, any
state of the United States and the District of Columbia
"Wales & Borders Franchise" the tender process for the first award of the Wales & Borders
passenger rail franchise, combining the current Wales and West
franchise, the Cardiff Railways (Valley Lines) franchise, portions
of the Central Trains franchise and portions of the First North
Western franchise, following the expiry of those franchises
All times referred to are to London times unless otherwise stated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
OFFUNSRROVRBAAR