RNS Number:3263O
Vodafone Group Plc
05 August 2003
Not for release, publication or distribution, in whole or in part, in or into
Canada, Australia or Japan
5 August 2003
Recommended cash offer for
Project Telecom plc
by UBS Investment Bank
on behalf of
Vodafone Group Plc
(and in the United States by Vodafone Group Plc itself)
* The boards of Vodafone Group Plc and Project Telecom plc announce that
they have agreed on the terms of a recommended Offer for the shares of
Project Telecom.
* Vodafone's Offer is 70 pence in cash for each Project Telecom Share,
valuing the whole of the existing issued share capital of Project Telecom at
approximately #155 million. The Offer also contains a Loan Note Alternative.
* The Offer represents a premium of approximately 43 per cent to the
Closing Price of 49 pence per Project Telecom Share on 10 July 2003, the
last business day prior to the announcement by Project Telecom that it was
in discussions that could lead to an offer for Project Telecom.
* Vodafone has received irrevocable undertakings to accept the Offer in
respect of 133,577,319 Project Telecom Shares, representing approximately
60.2 per cent of the existing issued share capital. Project Telecom
Shareholders who have given these undertakings have agreed to accept
Vodafone's Offer even in the event of a higher bid being received for
Project Telecom.
* The unanimous recommendation of Vodafone's Offer for Project Telecom
follows a thorough strategic review by the Project Telecom Board of its
options, designed to achieve the best possible outcome for Project Telecom,
its shareholders, customers and employees.
Commenting on the Offer, Gavin Darby, CEO of Vodafone UK, said:
"We are delighted to welcome Project Telecom into the Vodafone Group, which will
provide additional impetus to our focus on the business customer and subscriber.
Vodafone will be able to access directly Project Telecom's important customers
and enhance the already high levels of customer services and advanced
communications services offered by Project Telecom. We look forward to further
developing the segment."
Commenting on the Offer, Philip Rogerson, Chairman of Project Telecom, said:
"The Board believes the Offer represents fair value for its shareholders and is
delighted that Project Telecom will form a significant part of Vodafone UK's
growth strategy. We have built a very successful business over the past 16 years
and this transaction provides an opportunity for the business to realise its
full potential. Furthermore, the transaction allows our employees to join one of
the world's largest and most exciting companies and will increase the services
and support offered to our customers."
This summary should be read in conjunction with the full text of this
Announcement.
Enquiries
Vodafone Group Project Telecom
Tim Brown (Group Corporate Affairs Director) Tim Radford
Melissa Stimpson (Investor Relations) Richard Cunningham
Darren Jones (Investor Relations) +44 (0) 870 848 7711
Bobby Leach (Media Relations)
Ben Padovan (Media Relations)
+44 (0) 1635 673310
UBS Investment Bank (Financial Rothschild (Joint financial
adviser and broker to Vodafone) advisor to Project Telecom)
Warren Finegold Jeremy Boardman
Andre Sokol Warner Mandel
Markus Pressdee +44 (0) 20 7280 5000
+44 (0) 20 7567 8000 Paul Simpson
+44 (0) 121 600 5252
Cazenove (Joint financial
adviser and sole
broker to Project Telecom)
Ed Byers
Steve Baldwin
+44 (0) 20 7588 2828
Terms used in this summary shall have the same meaning given to them in the full
announcement. The Offer Document and the Form of Acceptance will be posted to
Project Telecom Shareholders as soon as reasonably practicable and in any event
within 28 days of this Announcement, other than to Project Telecom Shareholders
in a Restricted Jurisdiction.
This Announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities. The Offer will be made solely by the Offer
Document and the Form of Acceptance accompanying the Offer Document, which will
contain the full terms and conditions of the Offer, including details of how the
Offer may be accepted.
The Offer will not be made, directly or indirectly, in or into, or by the use of
mails or any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facility of a national, state or other securities exchange of a Restricted
Jurisdiction and the Offer will not be capable of acceptance by any such use,
instrumentality or facility within a Restricted Jurisdiction. Accordingly,
copies of this Announcement and formal documentation relating to the Offer are
not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from a Restricted Jurisdiction.
Doing so may render invalid any purported acceptance of the Offer. Persons
receiving this Announcement (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send it in or into or from a
Restricted Jurisdiction.
The Offer in the United States is made solely by Vodafone and neither UBS nor
any of its affiliates is making the Offer in the United States.
The availability of the Offer to persons who are not resident in the United
Kingdom or the United States may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the United Kingdom or the United
States should inform themselves about and observe any applicable requirements.
Further details in relation to Overseas Shareholders will be contained in the
Offer Document.
The Loan Notes to be issued in connection with the Offer have not been, nor will
they be, registered under the US Securities Act or under the securities laws of
any state, territory, district or other jurisdiction of the United States; the
relevant clearances have not been, nor will they be, obtained from the
securities commission or any similar authority of any province or territory of
Canada; no prospectus has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese Ministry of
Finance; and the Loan Notes have not been, nor will they be, registered under or
offered in compliance with applicable securities laws of any state, province,
territory or jurisdiction of Canada, Australia or Japan. Accordingly, the Loan
Notes are not being, and may not be, if to do so would constitute a violation of
the laws of, or require registration thereof in, the relevant jurisdiction
offered, sold, resold or delivered, directly or indirectly, in or into the
United States, Canada, Australia or Japan or any other jurisdiction or to, or
for the account or benefit of, any US, Canadian, Australian or Japanese person.
UBS, which is regulated in the United Kingdom by the FSA, is acting for Vodafone
in connection with the Offer and no one else and will not be responsible to
anyone other than Vodafone for providing the protections afforded to clients of
UBS or for providing advice in relation to the Offer or in relation to the
contents of this Announcement or any transaction or arrangement referred to
herein.
Rothschild, which is regulated in the United Kingdom by the FSA, is acting for
Project Telecom and no one else in connection with the Offer and will not be
responsible to anyone other than Project Telecom for providing the protections
afforded to clients of Rothschild or for providing advice in relation to the
Offer or in relation to the contents of this Announcement or any transaction or
arrangement referred to herein.
Cazenove, which is regulated in the United Kingdom by the FSA, is acting for
Project Telecom and no one else in connection with the Offer and will not be
responsible to anyone other than Project Telecom for providing the protections
afforded to clients of Cazenove or for providing advice in relation to the Offer
or in relation to the contents of this Announcement or any transaction or
arrangement referred to herein.
In accordance with normal UK market practice, Vodafone or its nominees, or its
brokers (acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, Project Telecom Shares outside the United States,
other than pursuant to the Offer, before or during the period in which the Offer
remains open for acceptance. These purchases may occur either in the open market
at prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the United
Kingdom and communicated in the United States by way of an announcement by or on
behalf of Vodafone.
Not for release, publication or distribution, in whole or in part, in or into
Canada, Australia or Japan
5 August 2003
Recommended cash offer for
Project Telecom plc
by UBS Investment Bank
on behalf of
Vodafone Group Plc
(and in the United States by Vodafone Group Plc itself)
1. Introduction
The boards of Vodafone and Project Telecom are pleased to announce that they
have reached agreement on the terms of a recommended cash offer for the entire
issued and to be issued share capital of Project Telecom to be made outside the
United States by UBS on behalf of Vodafone and in the United States by Vodafone
itself.
2. The Offer
The Offer, which will be subject to the conditions and further terms set out
below and in Appendix I and those to be set out in the Offer Document and Form
of Acceptance, will be made on the following basis:
for each Project Telecom Share 70 pence in cash
The Offer values the whole of the issued share capital of Project Telecom at
approximately #155 million and the issued and to be issued share capital at
approximately #162 million. The Offer represents a premium of approximately 43
per cent to the Closing Price of 49 pence per Project Telecom Share on 10 July
2003, being the last business day prior to the announcement by Project Telecom
that it was in discussions that could lead to an offer for Project Telecom.
Project Telecom Shares will be acquired under the Offer fully paid, ranking
pari-passu and free from all liens, charges, equities, encumbrances, rights of
pre-emption and other interests and together with all rights attaching thereto
including, without limitation, the right to receive and retain any dividend or
other distribution, announced, declared, made or payable on or after the date of
this Announcement.
3. Recommendation
The Project Telecom Board, which has been so advised by Rothschild and Cazenove,
considers the terms of the Offer to be fair and reasonable. In providing
financial advice to the Project Telecom Board, Rothschild and Cazenove have
taken into account the commercial assessments of the Project Telecom directors.
Accordingly, the Project Telecom directors unanimously recommend Project Telecom
Shareholders to accept the Offer.
4. Irrevocable undertakings
The Project Telecom directors have signed irrevocable undertakings to accept the
Offer in respect of their beneficial holdings of Project Telecom Shares
totalling in aggregate 74,717,576 Project Telecom Shares and representing
approximately 33.7 per cent of Project Telecom's existing issued share capital.
These undertakings remain binding even in the event of a higher competing offer
being made for Project Telecom, unless the Offer is withdrawn or lapses.
In addition, Vodafone has received irrevocable undertakings from certain other
shareholders to accept the Offer in respect of 58,859,743 Project Telecom
Shares, representing approximately 26.5 per cent of the existing issued share
capital of Project Telecom, on the same terms in the event of a higher competing
offer as the irrevocable undertakings from the directors of Project Telecom.
Accordingly, Vodafone has received irrevocable undertakings to accept the Offer
in respect of a total of 133,577,319 Project Telecom Shares representing in
aggregate approximately 60.2 per cent of Project Telecom's existing issued share
capital.
5. Loan Note Alternative
As an alternative to some or all of the cash consideration, which would
otherwise be receivable under the Offer, Project Telecom Shareholders who
validly accept the Offer (other than Project Telecom Shareholders in the United
States or any Restricted Jurisdiction) will be able to elect to receive Loan
Notes to be issued by Vodafone on the following basis:
for every #1 of cash consideration #1 nominal of Loan Notes
The Loan Notes, which will be governed by English law, will be unsecured
obligations of Vodafone. The Loan Notes will bear interest (from the date of
issue to the relevant holder of Loan Notes) payable every six months in arrears
on 30 June and 31 December at a rate of 1 per cent below LIBOR for six month
sterling deposits determined on the first business day of each interest period.
The first interest payment date will be 30 June 2004 in respect of the period up
to and including that date. The Loan Notes will be redeemable at par at the
option of the holders, in part or in whole, on interest payment dates,
commencing on 31 December 2004. The Loan Notes will be redeemable at par at the
option of Vodafone, in part or in whole, on interest payment dates, commencing
on 30 June 2007. Any Loan Notes outstanding on 30 June 2014 will be redeemed at
par (together with any accrued interest) on that date. The Loan Notes will not
be transferable, and no application will be made for them to be listed on, or
dealt on, any stock exchange or other trading facility.
The Loan Note Alternative will be conditional on the Offer becoming or being
declared unconditional in all respects. The Loan Note Alternative will remain
open until the Offer closes. The Loan Note Alternative is not being made
available to Project Telecom Shareholders in the United States or any Restricted
Jurisdiction. Further details of the Loan Note Alternative are included in Part
B of Appendix I of this Announcement and full details will be contained in the
Offer Document.
6. Finance
The cash elements of the Offer will be financed from Vodafone's existing
resources.
7. Background to and reasons for the Offer
At the time of the flotation of Project Telecom on the London Stock Exchange in
September 2000, Project Telecom identified a number of opportunities for the
continued growth of its business, in particular the continued growth of the
mobile telecommunications market and the development of the mobile market from a
predominantly voice market to one offering fully integrated voice and data
services.
Since that time the company has grown strongly. However, at the beginning of
2003 trading conditions became increasingly challenging and the company
experienced slower growth than the Project Telecom Board had expected, as was
detailed in Project Telecom's trading statement dated 24 April 2003.
After a thorough strategic review, the Project Telecom Board decided to explore
other options for generating shareholder value including entering into a
dialogue with a number of parties who might be interested in making an offer for
Project Telecom. Following these discussions, the Project Telecom Board has
decided to recommend Vodafone's Offer, as it believes that Vodafone's Offer best
reflects the strength of Project Telecom's market position and its prospects.
8. Benefits of the transaction
The Project Telecom Board believes that Vodafone's Offer attributes a fair value
to Project Telecom. In addition, the cash consideration provides certainty of
proceeds to Project Telecom Shareholders. The acquisition of Project Telecom by
Vodafone will give Project Telecom's customer base access to a wider portfolio
of value added telecommunications services, thereby positioning the business for
sustained growth.
Vodafone believes that the acquisition of Project Telecom will allow the
company's operations to develop and reach their potential due, inter alia, to
improved (a) access to customers; (b) ability to develop usage of both voice and
data services; (c) access to enhanced services; and (d) access to new products
and services with a focus on design and implementation.
The acquisition of Project Telecom will give Vodafone additional focus on the
business sector and enable Vodafone to have direct access to Project Telecom's
important business customers. It is Vodafone's intention to develop Project
Telecom's operations at Newark and build on and enhance the levels of support
and service, as well as the product offerings, provided by Project Telecom. This
will enable the Newark operations to develop as a centre of excellence for
Vodafone's UK operations in the business sector.
9. Information relating to Project Telecom
The Project Telecom Group was formed in 1987 as an independent provider of
telecommunications services serving the business community. The business has
grown strongly and the company is now a UK listed company with a turnover from
continuing operations for the year ended 31 December 2002 of #130.2 million.
Project Telecom's strategy is to deliver the UK's widest range of mobile and
fixed line, voice and data services, to business customers, from a single
source. The company enjoys strong relationships with mobile and fixed line
telecommunications network operators Vodafone Limited, O2, BT and Energis.
At close of business on 4 August 2003, being the last business day prior to this
Announcement, Project Telecom had a market capitalisation of #145 million.
From continuing operations, for the year ended 31 December 2002, Project Telecom
had turnover of #130.2 million (2001: #89.0 million), profit before interest and
taxation (before exceptional items and goodwill amortisation) of #14.1 million
(2001: #8.5 million) and operating profit (after goodwill amortisation and
before exceptional items) of #10.3 million (2001: #5.6 million). Net assets of
Project Telecom were #34.2 million as at 31 December 2002.
10. Current trading and prospects of Project Telecom
On 24 April 2003, Project Telecom updated its shareholders as to the difficult
trading conditions being experienced in its markets and the fact that it had
experienced slower growth than expected during the first quarter of 2003. That
update contained the following statement: "In the light of current market
conditions, the Board has lowered growth expectations for the current year and
now believes that profits from continuing operations will be broadly in line
with those in 2002".
The Project Telecom Board has since updated its views on the likely outcome for
the 2003 financial year and now forecasts that, in the absence of unforeseen
circumstances and on the bases and assumptions set out in Appendix III to this
Announcement, current year operating profits from continuing operations (after
goodwill amortisation and before exceptional items) will be not less than last
year's figure of #10.3 million. This statement constitutes a profit forecast
under the City Code and a full text of the statement and the reports required
under the City Code from Project Telecom's financial advisers, Rothschild and
Cazenove, and Project Telecom's auditors, Deloitte & Touche, are reproduced in
full in Appendix III to this Announcement.
The Project Telecom Board undertakes that no further dividends or distributions
will be announced, declared or paid by Project Telecom whilst the Offer is open.
11. Information relating to Vodafone
Vodafone provides an extensive range of mobile telecommunications services,
including voice and data communications, and is the world's largest mobile
telecommunications company, with a significant presence in Continental Europe,
the United Kingdom, the United States and the Far East through the company's
subsidiary undertakings, associated undertakings and investments.
For the year ended 31 March 2003, the group turnover of Vodafone was #30.4
billion and the profit before interest, tax, amortisation of goodwill and
exceptional items was #9.2 billion. Net assets of the business were #131.5
billion at 31 March 2003. During the year ended 31 March 2003 the Vodafone Group
had an average of 66,667 full time employees. Vodafone Shares are listed on the
London Stock Exchange and the Frankfurt Stock Exchange and its American
Depositary Shares are listed on the New York Stock Exchange. The market
capitalisation of Vodafone was #78.4 billion based on the closing price on 4
August 2003, being the last business day prior to the announcement of the Offer.
12. Management and employees
Vodafone intends that Project Telecom's Chief Executive, Timothy Radford and the
existing management team will assist in the management of the transition of
Project Telecom's business into Vodafone and believes that Project Telecom's
employees will benefit from the broad range of opportunities afforded by a
global company.
The Vodafone Board has given assurances to the Project Telecom Board that, if
the Offer becomes or is declared wholly unconditional, the existing employment
rights, including pension rights, of all employees of Project Telecom will be
fully safeguarded.
13. Project Telecom Share Option Schemes
Appropriate proposals will be made to holders of options under the Project
Telecom Share Option Schemes in due course.
The Offer will extend to Project Telecom Shares which are unconditionally
allotted or issued and fully paid or credited as fully paid pursuant to the
exercise of options under the Project Telecom Share Option Schemes whilst the
Offer remains open for acceptance (or until such earlier date as Vodafone may,
subject to the City Code, decide).
14. Inducement fee
Vodafone and Project Telecom have entered into an agreement under which Project
Telecom has agreed to pay Vodafone approximately #1.6 million in the event that
either (i) a third party publicly announces an intention to make a competing
offer for Project Telecom at a higher price per share than the Offer; or (ii)
the Project Telecom Board recommends an alternative offer made by another party
(which is not Vodafone or an associate or a person acting in concert with it),
and in each case such offer subsequently becomes or is declared unconditional.
15. Interests in Project Telecom Shares
Neither Vodafone, nor any of the directors of Vodafone, nor, so far as Vodafone
is aware, any party presumed to be acting in concert with either of them, owns
or controls any Project Telecom Shares or holds any options to purchase Project
Telecom Shares or has entered into any derivative referenced to securities of
Project Telecom which is still outstanding. In view of the requirement for
confidentiality, Vodafone has not made any enquiries in this respect of certain
parties who may be deemed by the Panel to be acting in concert with either of
them for the purposes of the Offer.
16. Compulsory acquisition, delisting and cancellation of trading
It is intended that, following the Offer becoming or being declared
unconditional in all respects and subject to any applicable requirements of the
UK Listing Authority, Vodafone will procure that Project Telecom applies to the
UK Listing Authority for the listing of the Project Telecom Shares on the
Official List to be cancelled and to the London Stock Exchange for the admission
to trading of the Project Telecom Shares to be cancelled. It is anticipated that
such cancellations will take effect no earlier than 20 business days after the
Offer becomes or is declared unconditional in all respects. Delisting would
significantly reduce the liquidity and marketability of any Project Telecom
Shares in respect of which acceptances of the Offer have not been submitted.
17. General
(a) Appendix I to this Announcement contains the conditions and a summary of
certain further terms of the Offer.
(b) Appendix II to this Announcement contains further details of the bases
and sources of the financial and other information set out in this
Announcement.
(c) Appendix III to this Announcement contains information on the profit
forecast contained in section 10 of this Announcement and the reports
required under the City Code from Project Telecom's financial advisers
Rothschild and Cazenove, and Project Telecom's auditors, Deloitte & Touche
in relation to the revised profit forecast referred to herein.
(d) Appendix IV contains definitions of certain expressions used in this
Announcement.
(e) The Offer will be subject to the applicable requirements of the City
Code and the Panel and the US Securities Exchange Act.
(f) The Offer Document and the Form of Acceptance will be posted to Project
Telecom Shareholders as soon as reasonably practicable, other than to
Project Telecom Shareholders in a Restricted Jurisdiction.
(g) Vodafone intends, assuming it becomes entitled to do so, to use the
procedures set out in sections 428 to 430F (inclusive) of the Companies
Act to acquire compulsorily any outstanding Project Telecom Shares, on the
same terms as the Offer.
(h) Rothschild, Cazenove and Deloitte & Touche have given (and not
withdrawn) their consent to the publication of their reports and names
in the form and context in which they appear in this Announcement.
The Offer Document and the Form of Acceptance will be posted to Project Telecom
Shareholders as soon as reasonably practicable and in any event within 28 days
of this Announcement, other than to Project Telecom Shareholders in a Restricted
Jurisdiction.
This Announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities. The Offer will be made solely by the Offer
Document and the Form of Acceptance accompanying the Offer Document, which will
contain the full terms and conditions of the Offer, including details of how the
Offer may be accepted.
The Offer will not be made, directly or indirectly, in or into, or by the use of
mails or any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facility of a national, state or other securities exchange of a Restricted
Jurisdiction and the Offer will not be capable of acceptance by any such use,
instrumentality or facility within a Restricted Jurisdiction. Accordingly,
copies of this Announcement and formal documentation relating to the Offer are
not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from a Restricted Jurisdiction.
Doing so may render invalid any purported acceptance of the Offer. Persons
receiving this Announcement (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send it in or into or from a
Restricted Jurisdiction.
The availability of the Offer to persons who are not resident in the United
Kingdom or the United States may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the United Kingdom or the United
State should inform themselves about and observe any applicable requirements.
Further details in relation to Overseas Shareholders will be contained in the
Offer Document.
The Loan Notes to be issued in connection with the Offer have not been, nor will
they be, registered under the US Securities Act or under the securities laws of
any state, territory, district or other jurisdiction of the United States; the
relevant clearances have not been, nor will they be, obtained from the
securities commission or any similar authority of any province or territory of
Canada; no prospectus has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese Ministry of
Finance; and the Loan Notes have not been, nor will they be, registered under or
offered in compliance with applicable securities laws of any state, province,
territory or jurisdiction of Canada, Australia or Japan. Accordingly, the Loan
Notes are not being, and may not be, if to do so would constitute a violation of
the laws of, or require registration thereof in, relevant jurisdiction offered,
sold, resold or delivered, directly or indirectly, in or into the United States,
Canada, Australia or Japan or any other jurisdiction or to, or for the account
or benefit of, any US, Canadian, Australian or Japanese person.
UBS, which is regulated in the United Kingdom by the FSA, is acting for Vodafone
in connection with the Offer and no one else and will not be responsible to
anyone other than Vodafone for providing the protections afforded to clients of
UBS or for providing advice in relation to the Offer or in relation to the
contents of this Announcement or any transaction or arrangement referred to
herein.
Rothschild, which is regulated in the United Kingdom by the FSA, is acting
exclusively for Project Telecom and no one else in connection with the Offer and
will not be responsible to anyone other than Project Telecom for providing the
protections afforded to clients of Rothschild for providing advice in relation
to the Offer or in relation to the contents of this Announcement or any
transaction or arrangement referred to herein.
Cazenove, which is regulated in the United Kingdom by the FSA, is acting
exclusively for Project Telecom and no one else in connection with the Offer and
will not be responsible to anyone other than Project Telecom for providing the
protections afforded to clients of Cazenove or for providing advice in relation
to the Offer or in relation to the contents of this Announcement or any
transaction or arrangement referred to herein.
In accordance with normal UK market practice, Vodafone or its nominees, or its
brokers (acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, Project Telecom Shares outside the United States,
other than pursuant to the Offer, before or during the period in which the Offer
remains open for acceptance. These purchases may occur either in the open market
at prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the United
Kingdom and communicated in the United States by way of an announcement by or on
behalf of Vodafone.
If you are in any doubt about the action you should take, you are recommended to
seek your own personal financial advice immediately from your stockbroker, bank
manager, solicitor, accountant or independent financial adviser authorised under
the Financial Services and Market Act 2000 if you are resident in the United
Kingdom or, if not, from another appropriately authorised independent financial
adviser.
This Announcement contains "forward-looking statements" which involve risk and
uncertainties. Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as "anticipates",
"aims", "could", "may", "should", "expects", "believes", "intends", "plans" or
"targets". By their nature, forward-looking statements are inherently
predictive, speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. There are a
number of factors that could cause the actual results and developments relating
to the Offer, Vodafone or Project Telecom discussed in this announcement to
differ materially from those expressed or implied by these forward-looking
statements.
This Announcement includes "forward-looking statements" with respect to the
Offer and Vodafone, including (but not limited to) those contained in Paragraph
8, "Benefits of the transaction", Paragraph 12, "Management and employees" and
Paragraph 16, "Compulsory acquisition, delisting and cancellation of trading".
With respect to the Offer and Vodafone, the factors that could cause actual
results and developments to differ materially from those discussed in this
Announcement include, but are not limited to, the inability to obtain necessary
regulatory approvals or to obtain them on acceptable terms; the inability to
develop successfully Project Telecom within the Vodafone Group or to realise
synergies from the transaction; costs related to the acquisition of Project
Telecom; and the economic environment of the industry in which Vodafone and
Project Telecom operate.
Furthermore, a review of the reasons why actual results and developments of
Vodafone may differ materially from the expectations disclosed or implied within
forward-looking statements may be found in Vodafone's UK annual report and SEC
submissions and filings including, but not limited to, the discussion included
in the "Information on the Company", "Cautionary Statement Regarding
Forward-Looking Statements", "Risk Factors" and "Operating and Financial Review
and Prospects" sections of Vodafone's annual report on Form 20-F for the
financial year ended 31 March 2003.
This Announcement also includes "forward-looking statements" with respect to
Project Telecom, including (but not limited to) those contained in Paragraph 8,
"Benefits of the transaction", Paragraph 10, "Current trading and prospects of
Project Telecom" and Appendix III attached hereto. With respect to Project
Telecom, the factors that could cause Project Telecom's actual results and
developments to differ materially from those discussed in this Announcement
include, but are not limited to, those contained in Appendix III attached
hereto; general economic conditions; price competition; reduction of termination
charges by mobile network operators following a recent decision by the UK
Competition Commission; slower customer growth or reduced customer retention;
the possibility that telecommunications technologies and services will not
perform according to expectations; changes in the projected growth rates of the
mobile telecommunications industry; and Project Telecom's ability to integrate
acquisitions into its business.
All subsequent written or oral forward-looking statements attributable to either
Vodafone or Project Telecom, or any person acting on behalf of either of them,
are expressly qualified in their entirety by the factors referred to above.
Forward-looking statements only speak as of the date on which they are made, and
the events discussed herein may not occur. Except as required by the UK Listing
Authority or the London Stock Exchange, neither Vodafone nor Project Telecom,
nor any person acting on behalf of either of them, undertakes any obligation to
update publicly or revise forward-looking statements, whether as a result of new
information, future events or otherwise.
APPENDIX I
Conditions and further terms of the Offer
Part A: Conditions of the Offer
The Offer, which will be made outside the United States by UBS on behalf of
Vodafone and inside the United States by Vodafone itself, will comply with the
applicable rules and regulations of the Financial Services Authority, the Code
and the US Securities Exchange Act.
The Offer will be subject to the following conditions:
(a) valid acceptances of the Offer being received (and not,
where permitted, withdrawn) by no later than 3.00 p.m. (London time) on the
first closing date of the Offer or such later time(s) and/or date(s) as
Vodafone may, subject to the rules of the Code, decide in respect of not
less than 90 per cent (or such lesser percentage as Vodafone may decide)
in nominal value of the Project Telecom Shares to which the Offer relates,
provided that this condition will not be satisfied unless Vodafone, together
with any member of Vodafone's Group, shall have acquired or agreed to
acquire (whether pursuant to the Offer or otherwise) Project Telecom Shares
carrying, in aggregate, more than 50 per cent of the voting rights normally
exercisable at a general meeting of Project Telecom. For the purposes of
this condition:
(i) Project Telecom Shares which have been unconditionally allotted shall
be deemed to carry the voting rights which they will carry upon issue;
(ii) the expression "Project Telecom Shares to which the Offer relates"
shall be construed in accordance with sections 428 to 430F of the
Companies Act 1985; and
(iii) valid acceptances also shall be treated as having been received in
respect of any Project Telecom Shares which Vodafone shall, pursuant
to section 429(8) of the Companies Act, be treated as having acquired
or contracted to acquire by virtue of acceptance of the Offer;
(b) subject to condition (c) below,
(i) the Office of Fair Trading (the "OFT") indicating in terms
satisfactory to Vodafone that it does not believe that the Offer or
any part of it creates a relevant merger situation within the meaning
of section 23 of the Enterprise Act 2002 (the "Enterprise Act"); or
(ii) the OFT indicating in terms satisfactory to Vodafone that it has
decided not to refer the Offer or any part of it to the Competition
Commission; or
(iii) the period for considering any merger notice given to the OFT under
section 96 of the Enterprise Act by Vodafone having expired without
any such reference being made, provided that section 100 of the
Enterprise Act does not apply in relation to such merger notice,
PROVIDED THAT if the Secretary of State for Trade and Industry has given an
intervention notice under sub-section 42(2) of the Enterprise Act in relation to
the Offer or any part of it, the words "the Secretary of State for Trade and
Industry or" shall be deemed to be included at the beginning of sub-paragraph
(ii) above;
(c) if a request to the European Commission is made by the
competent authorities of one or more Member States under Article 22(3) of
Council Regulation (EEC) 4064/89 (as amended by Council Regulation (EC)
1310/97) (the "Regulation") in relation to the Offer or any part of it and
is accepted by the European Commission:
(i) the European Commission issuing a decision pursuant to
Article 6(1)(b) of the Regulation in terms satisfactory to Vodafone,
declaring that the Offer or, if applicable, that part of the Offer is
compatible with the common market; and
(ii) to the extent that the OFT retains jurisdiction over any part
of the Offer, one of conditions (b)(i) to (iii) above being satisfied
in relation to each such part of the Offer;
(d) no central bank, government or governmental,quasi-governmental,
supranational, statutory, regulatory or investigative body,
institution, trade agency, court, professional association, or any other
body or person in any jurisdiction (each a "Third Party") having decided to
take, institute or threaten any action, proceeding, suit, investigation,
enquiry or reference, or having required any action to be taken or
otherwise having done anything or having enacted, made or proposed any
statute, regulation, decision or order and there not continuing to be
outstanding any statute, regulation, decision or order which would or
might reasonably be expected to:
(i) make the Offer, its implementation or the acquisition or proposed
acquisition by Vodafone or any of its subsidiaries of any Project
Telecom Shares or control of Project Telecom, void, unenforceable or
illegal, or restrict, prohibit, delay or otherwise interfere with the
implementation of, or impose additional conditions or obligations
with respect to, or otherwise impede, challenge or interfere with, or
require amendment to, the terms of the Offer or the acquisition or
proposed acquisition of any Project Telecom Shares by Vodafone;
(ii) result in a delay in the ability of Vodafone or render Vodafone
unable to acquire some or all of the Project Telecom Shares or
require a divestiture by Vodafone of any shares in Project Telecom;
(iii) require, prevent or materially delay the divestiture or alter the
terms of any proposed divestiture by Vodafone or any member of the
Wider Vodafone Group or by any member of the Wider Project Telecom
Group of all or any part of their respective businesses, assets or
properties, or impose any limitation on their ability to conduct
their respective businesses (or any part of them) or to own
their respective assets or properties or any part of them which is
material in the context of the Wider Project Telecom Group or the
Wider Vodafone Group (each taken as a whole);
(iv) impose any limitation on, or result in a material delay in, the
ability of any member of the Wider Vodafone Group or any member of
the Wider Project Telecom Group to acquire or to hold or to exercise
effectively, directly or indirectly, all or any rights of ownership
in respect of shares or other securities (or the equivalent) in any
member of the Wider Project Telecom Group or any member of the Wider
Vodafone Group held or owned by it or exercise any rights of
ownership in respect of shares or other securities in, or to exercise
management control over, any member of the Wider Project Telecom
Group or any business carried on by such member in each case to an
extent which is material in the context of the Offer;
(v) save as pursuant to the Offer, require any member of the Wider
Vodafone Group or of the Wider Project Telecom Group to acquire or
offer to acquire any shares or other securities (or the equivalent)
in, or any asset owned by, any member of the Wider Project Telecom
Group (to an extent which is material in the context of the Offer);
(vi) result in any member of the Wider Project Telecom Group ceasing to
be able to carry on business under any name which it presently does
so;
(vii) impose any material limitation on the ability of any member of the
Wider Vodafone Group or the Wider Project Telecom Group to integrate
or co-ordinate its business, or any part of it, with any other
members of the Wider Vodafone Group and/or Wider Project Telecom
Group; or
(viii)otherwise materially and adversely affect the business, assets,
liabilities, profits or prospects of any member of the Wider Vodafone
Group or of the Wider Project Telecom Group,
and all applicable waiting and other time periods during which any such
Third Party could decide to take, institute, implement or threaten any
action, proceeding, suit, investigation, enquiry or reference or otherwise
intervene having expired, lapsed or been terminated;
(e) all necessary notifications and filings having been made in connection with
the Offer by Vodafone and all applicable waiting periods and other time
periods (including any extensions thereof) under any applicable
legislation or regulation of any jurisdiction having expired, lapsed or
having been terminated (as appropriate) in respect of the Offer and all
statutory and regulatory obligations in any jurisdiction having been
complied with and all authorisations, orders, recognitions, grants,
consents, clearances, confirmations, certificates, licences, permissions
and approvals ("Authorisations") necessary or appropriate in any
jurisdiction for, or in respect of, the Offer and the acquisition or the
proposed acquisition of any shares or other securities in, or of control of,
Project Telecom by Vodafone or any of its subsidiaries and to carry on the
business of any member of the Wider Vodafone Group or of the Wider Project
Telecom Group in any jurisdiction having been obtained in terms and in a
form satisfactory to Vodafone and the Vodafone Group from all appropriate
Third Parties and all such Authorisations remaining in full force and effect
at the time at which the Offer becomes otherwise unconditional and there
being no notice of any intention to revoke, suspend, restrict, amend
or not to renew any such Authorisations;
(f) save as fairly disclosed in writing to Vodafone or its professional advisers
prior to the date of the Announcement, there being no provision of any
arrangement, agreement, lease, licence, permit or other
instrument to which any member of the Wider Project Telecom Group is a
party or by or to which any such member or any of its assets is or may be
bound or be subject and which as a consequence of the Offer or the
acquisition or the proposed acquisition by Vodafone or any of its
subsidiaries of any shares or other securities (or the equivalent) in
Project Telecom or because of a change in the control or management of any
member of the Wider Project Telecom Group or otherwise, could or might
result in, to an extent which is material in the context of the Wider
Project Telecom Group taken as a whole:
(i) any monies borrowed by, or any other indebtedness (actual or
contingent) of, or any grant available to, any member of the Wider
Project Telecom Group being or becoming repayable, or being capable
of being declared repayable immediately or prior to their or its
stated maturity, or the ability of any such member to borrow monies
or incur any indebtedness being withdrawn or inhibited or becoming
capable of being withdrawn;
(ii) the creation or enforcement of any mortgage, charge or other security
interest, over the whole or any part of the business, property,
assets or interests of any member of the Wider Project Telecom Group
or any such mortgage, charge or other security interest (whenever
arising or having arisen) becoming enforceable;
(iii) the rights, liabilities, obligations, interests or business of any
member of the Wider Project Telecom Group or any member of the Wider
Vodafone Group under any such arrangement, agreement, licence, permit,
lease or instrument or the interests or business of any member of the
Wider Project Telecom Group or any member of the Wider Vodafone
Group in or with any other firm or company or body or person (or any
agreement or arrangement relating to any such business or interests)
being terminated or adversely modified or affected or any onerous
obligation or liability arising or any adverse action being taken
thereunder;
(iv) any material assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider Project Telecom Group being or
falling to be disposed of or charged, or ceasing to be available to
any such member or any right arising under which any such asset or
interest could be required to be disposed of or charged or could
cease to be available to any member of the Wider Project Telecom
Group otherwise than in the ordinary course of business;
(v) any member of the Wider Project Telecom Group ceasing to be able to
carry on business under any name under which it presently does so;
(vi) the value or financial or trading position, profits or prospects of
Project Telecom or any member of the Wider Project Telecom Group
being prejudiced or adversely affected; or
(vii) the creation of any liability (actual or contingent) by any member of
the Wider Project Telecom Group;
(g) no member of the Wider Project Telecom Group having since 31 December 2002,
being the date to which the last published audited report and accounts of
Project Telecom were made up, save as disclosed in such audited report and
accounts or publicly announced by Project Telecom through a Regulatory
Information Service or as otherwise disclosed to Vodafone or its
professional advisers in the course of the negotiations leading up to the
Announcement, prior to the date of the Announcement:
(i) issued or agreed to issue or authorised or proposed or announced its
intention to authorise or propose the issue of additional shares
of any class, or securities convertible into, or exchangeable for, or
rights, warrants or options to subscribe for or acquire, any such
shares or convertible securities (save as between Project Telecom and
wholly-owned subsidiaries of Project Telecom and save for the issue of
Project Telecom shares to employees on the exercise of options
granted under, or the grant of options under, the Project Telecom
Share Option Schemes before the date of the Announcement in the
ordinary course);
(ii) recommended, declared, paid or made or proposed to recommend, declare,
pay or make any bonus issue, dividend or other distribution whether
payable in cash or otherwise other than dividends (or other
distributions whether payable in cash or otherwise) lawfully paid to
another member of the Project Telecom Group;
(iii) (save for intra-Project Telecom Group transactions and other than in
the ordinary course of business) authorised, proposed or announced
its intention to authorise or propose any merger, demerger,
reconstruction, amalgamation, scheme, commitment or acquisition or
disposal of assets or shares (or the equivalent thereof) in any
undertaking or undertakings or any change in its share or loan
capital;
(iv) (save for intra-Project Telecom Group transactions and other than in
the ordinary course of business) disposed of, or transferred,
mortgaged or created any security interest over any asset or any
right, title or interest in any asset or authorised, proposed or
announced any intention to do so;
(v) (save for intra-Project Telecom Group transactions) made, authorised,
proposed or announced an intention to propose any change in its loan
capital;
(vi) (save for intra-Project Telecom Group transactions) issued, authorised
or proposed or announced an intention to authorise or propose, the
issue of any debentures or incurred any indebtedness or contingent
liability which is material in the context of the Wider Project
Telecom Group taken as a whole;
(vii) entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, arrangement, agreement,
transaction or commitment (whether in respect of capital expenditure
or otherwise) which is of a long term, unusual or onerous nature or
magnitude or which involves or could involve an obligation of such a
nature or magnitude, which is or is likely to be restrictive on the
business of any member of the Wider Project Telecom Group or the
Wider Vodafone Group, which is, in any such case, material in the
context of the wider Project Telecom Group;
(viii)entered into or varied or authorised, proposed or announced its
intention to enter into or vary the terms of, or make any offer
(which remains open for acceptance) to enter into or vary the terms
of, any service agreement with any director or senior executive of
Project Telecom;
(ix) purchased, redeemed or repaid or announced a proposal to purchase,
redeem or repay any of its own shares or other securities (or the
equivalent) or reduced or made any other change to or proposed the
reduction or other change to any part of its share capital, save for
any shares allotted upon the exercise of options granted under the
Project Telecom Share Option Schemes or as between Project Telecom
and wholly-owned subsidiaries of Project Telecom;
(x) implemented, effected, authorised, proposed or announced its intention
to implement, effect, authorise or propose any reconstruction,
amalgamation, scheme, or other similar out of the ordinary course
commitment, transaction or arrangement;
(xi) waived, compromised or settled any claim which is material in the
context of Project Telecom Group as a whole otherwise than in the
ordinary course of business;
(xii) terminated or varied the terms of any agreement or arrangement
between any member of the Project Telecom Group and any other person
in a manner which would or might reasonably be expected to have a
material adverse effect on the financial position or prospects of the
Project Telecom Group;
(xiii)made any alteration to its memorandum or articles of association or
other incorporation documents;
(xiv) made or agreed or consented to any significant change to the terms
of the trust deeds constituting the pension schemes established for
its directors and/or employees and/or their dependants or to the
benefits which accrue, or to the pensions which are payable,
thereunder, or to the basis on which qualification for or accrual or
entitlement to such benefits or pensions are calculated or determined
or to the basis upon which the liabilities (including pensions) of
such pension schemes are funded or made, or agreed or consented to
any change to the trustees involving the appointment of a trust
corporation;
(xv) been unable, or admitted in writing that it is unable, to pay its
debts or having stopped or suspended (or threatened to stop or
suspend) payment of its debts generally or ceased or threatened to
cease carrying on all or a substantial part of any business;
(xvi) (other than in respect of a member which is dormant and was solvent
at the relevant time) taken or proposed any corporate action or had
any action or proceedings or other steps instituted or threatened
against it for its winding-up (voluntary or otherwise), dissolution
or reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any or
any material part of its assets or revenues or any analogous
proceedings in any jurisdiction or appointed any analogous person
in any jurisdiction; or
(xvii)entered into any agreement, arrangement or commitment or passed any
resolution or made any proposal or announcement with respect to, or
to effect, any of the transactions, matters or events referred to in
this condition (g);
(h) since 31 December 2002, save as disclosed in the annual report and accounts
of Project Telecom for the year ended 31 December 2002, save as fairly
disclosed to any member of the Vodafone Group or its advisers by or on
behalf of Project Telecom and except as publicly announced through a
Regulatory Information Service prior to the date of the Announcement,
there having been:
(i) no material adverse change in the business, assets, financial
or trading position or profits or prospects of the Wider Project
Telecom Group;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings having been threatened, announced, intimated or instituted
by or against or remaining outstanding against or in respect of any
member of the Wider Project Telecom Group and no enquiry or
investigation by or complaint or reference to any Third Party against
or in respect of any member of the Wider Project Telecom Group having
been threatened, announced or instituted or remaining outstanding,
against or in respect of any member of the Wider Project Telecom Group
which in each case is material in the context of the Wider Project
Telecom Group; and
(iii) no contingent or other liability having arisen or been incurred which
might reasonably be expected to adversely affect any member of the
Project Telecom Group and which is material in the context of the
Wider Project Telecom Group;
(i) save as fairly disclosed to any member of the Vodafone Group or its advisers
by or on behalf of Project Telecom and except as publicly announced through
a Regulatory Information Service, Vodafone not having discovered:
(i) that the financial, business or other information concerning the Wider
Project Telecom Group publicly announced or publicly disclosed at any
time by or on behalf of any member of the Wider Project Telecom Group
is misleading, contains a misrepresentation of fact or omits to state
a fact necessary to make the information contained therein not
misleading; and
(ii) that any member of the Wider Project Telecom Group is subject to any
material liability, contingent or otherwise, which is not disclosed
in the Annual Report;
(j) save as fairly disclosed to any member of the Vodafone Group or its
advisers by or on behalf of Project Telecom prior to the date of the
Announcement, in relation to any release, emission, discharge, disposal or
other fact or circumstance which causes or might cause pollution of the
environment or harm to human health, no past or present member of the Wider
Project Telecom Group having, in any manner or to an extent which is
material in the context of the Offer (i) committed any violation of any
laws, statutes, ordinances, regulations or other requirements of any Third
Party and/or (ii) incurred any liability (whether actual or contingent)
with respect thereto.
Subject to the requirements of the Panel, Vodafone reserves the right to waive
all or any of the above conditions in whole or in part, except condition (a).
Vodafone also reserves the right, subject to consent of the Panel, to extend the
time allowed under the Code for the satisfaction of condition (a) until such
time as conditions (b) to (j) have been satisfied, fulfilled or, to the extent
permitted, waived.
If Vodafone is required by the Panel to make an offer for Project Telecom Shares
under the provisions of Rule 9 of the City Code, Vodafone may make such
alterations to any of the above conditions including condition (a) above, as are
necessary to comply with the provisions of that Rule.
The Offer will lapse unless all of the conditions set out above have been
fulfilled or, to the extent permitted, waived or, where appropriate, have been
determined by Vodafone in its reasonable opinion to be or remain satisfied or
(if capable of waiver) be waived, by 3.00 p.m. (London time) on the 21st day
after the later of (i) the first closing date of the Offer and (ii) the date on
which condition (a) is fulfilled (or such later date as Vodafone, with the
consent of the Panel may decide). Vodafone shall be under no obligation to waive
(if capable of waiver) or treat as satisfied any of conditions (b) to (j) by a
date earlier than the latest date specified above for the fulfilment of that
condition, 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 the condition may not be capable of
fulfilment.
The Offer will lapse if, before 3.00 p.m. (London time) 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 later), (i) the Offer or any part
of it is referred to the Competition Commission; or (ii) following a request to
the European Commission under Article 22(3) of the Regulation in relation to the
Offer or any part of it, which request is accepted by the European Commission,
the European Commission initiates proceedings under Article 6(1)(c) of the
Regulation. If the Offer so lapses it will cease to be capable of further
acceptance and accepting Project Telecom Shareholders and Vodafone will cease to
be bound by acceptances received before the time when the Offer lapses.
The Offer and any acceptances thereunder will be governed by English law, will
be subject to the jurisdiction of the English courts and will be subject to the
terms and conditions set out in Appendix I of this Announcement, the Form of
Acceptance and those terms which will be set out in the Offer Document and such
further terms as may be required to comply with the Listing Rules of the UK
Listing Authority and the provisions of the City Code.
The availability of the Offer to persons not resident in the United Kingdom or
the United States may be affected by the laws of the relevant jurisdictions.
Persons who are not resident in the United Kingdom or the United States should
inform themselves about and observe any applicable requirements.
The Offer, including the Loan Note Alternative, will not be made, directly or
indirectly, in or into, or by use of the mails or any means or instrumentality
(including, without limitation, telephonically or electronically) of interstate
or foreign commerce of, or any facility of a national securities exchange of, a
Restricted Jurisdiction and the Offer, including the Loan Note Alternative, will
not be capable of acceptance by any such use, means, instrumentality or facility
within a Restricted Jurisdiction.
Part B: Particulars of the Loan Note Alternative
The Loan Note Alternative will be conditional upon the Offer becoming
unconditional in all respects.
Save as stated below and subject to the terms which will be set out in the Offer
Document, Project Telecom Shareholders who validly accept the Offer may elect to
receive, in exchange for those Project Telecom Shares in respect of which they
make a valid election, Loan Notes instead of the cash to which they would
otherwise have been entitled under the Offer on the basis of #1 in nominal
amount of Loan Notes for every #1 which they would otherwise have received.
The Loan Notes will be issued in integral multiplies of #1 and the balance of
any entitlement that is not a whole multiple of #1 will be disregarded and not
issued.
Unless Vodafone decides otherwise, no Loan Notes will be issued by Vodafone
unless the aggregate nominal value of all Loan Notes to be issued as a result of
valid elections for the Loan Note Alternative exceeds #5 million. If such
aggregate is less than #5 million, any such election shall, unless Vodafone
decides otherwise, be void and, provided the acceptance of the Offer is
otherwise valid, the relevant Project Telecom Shareholders will be deemed to
have accepted the Offer.
The Loan Notes and the Loan Note instrument will be governed by and construed in
accordance with English law.
The Loan Notes to be issued in connection with the Offer have not been, nor will
they be, registered under the US Securities Act or under the securities laws of
any state, territory, district or other jurisdiction of the United States; the
relevant clearances have not been, nor will they be, obtained from the
securities commission or any similar authority of any province or territory of
Canada; no prospectus has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese Ministry of
Finance; and the Loan Notes have not been, nor will they be, registered under or
offered in compliance with applicable securities laws of any state, province,
territory or jurisdiction of Canada, Australia or Japan. Accordingly, the Loan
Notes are not being, and may not be offered, sold, resold or delivered, directly
or indirectly, in or into the United States, Canada, Australia or Japan or any
other jurisdiction if to do so would constitute a violation of the relevant laws
of, or require registration thereof in, the relevant jurisdiction or to, or for
the account or benefit of, any US, Canadian, Australian or Japanese person.
APPENDIX II
SOURCES AND BASES
In this Announcement:
(i) unless otherwise stated in this Announcement, financial information
relating to Project Telecom has been extracted from the annual report and
accounts of Project Telecom for the year ended 31 December 2002;
(ii) unless otherwise stated, financial and other information relating to
Vodafone has been extracted from the annual report and accounts of
Vodafone for the year ended 31 March 2003;
(iii) the value of the existing issued share capital of Project Telecom is
based upon 221,786,679 Project Telecom Shares in issue on 4 August 2003
(according to the records of Project Telecom) and the Closing Price of
Project Telecom Shares on 4 August 2003 of 65.5 pence and the value of the
issued and to be issued share capital of Project Telecom is based upon the
number of shares in issue referred to above together with options over
9,495,333 shares in Project Telecom exercisable at a price of less than
70 pence on 4 August 2003;
(iv) the market capitalisation of Vodafone is based on a total of
68,196,200,047 Vodafone Shares in issue on 4 August 2003, (according to
the records of Vodafone) and the Closing Price for Vodafone Shares on 4
August 2003 of 115 pence;
APPENDIX III
Profit forecast for the Project Telecom Group for the year ending 31 December
2003
The Project Telecom directors forecast that, in the absence of unforeseen
circumstances and on the bases of preparation and principal assumptions set out
below, current year operating profits from continuing operations (after goodwill
amortisation and before exceptional items) will be not less than last year's
figure of #10.3 million.
Bases of preparation and principal assumptions
Bases of preparation
The profit forecast for the year ending 31 December 2003 has been prepared using
the accounting policies adopted by the Project Telecom Group. The forecast is
based on the unaudited management accounts of the Project Telecom Group for the
six months ended 30 June 2003 and the directors' forecast of results for the six
months ending 31 December 2003.
Principal assumptions
The profit forecast is based on the following principal assumptions.
Those principal assumptions which are outside the control of the directors are
as follows:
* There will be no fundamental change in the political and economic
environment that materially affects the Project Telecom Group.
* There will be no industrial disputes or business interruptions that
materially affect the Project Telecom Group or its principal suppliers
or customers.
* There will be no change in exchange rates, interest rates, accounting
regulations, bases of taxation or legislation that have a material
impact on the Project Telecom Group.
* There will be no change in the ownership of the Project Telecom Group
and no adverse impact on the Project Telecom Group's operations should
the recommended offer not be completed.
* There will be no material change in the basis of trading with customers
or suppliers as a consequence of regulatory changes or material changes
in pricing policies by network operators.
In addition, the profit forecast is based on the following principal assumptions
which the Project Telecom directors can influence:
* There will be no acquisitions or disposals made by the Project Telecom
Group.
* Full integration of the recently acquired IMS business by 31 December
2003.
* There will be no changes in the existing senior management, or
accounting policies.
No account has been taken of the expenses incurred or to be incurred in relation
to the Offer. These costs will be recognised as an exceptional item in the
published accounts for the financial year ending 31 December 2003.
Letters relating to the profit forecast
The following are the texts of letters received from Deloitte & Touche,
Rothschild and Cazenove relating to the profit forecast of Project Telecom set
out in this Appendix III.
(i) Letter from Deloitte & Touche
Report on the profit forecast
Deloitte & Touche LLP
1 Woodborough Road
Nottingham
NG1 3FG
The Directors
Project Telecom plc
Brunel Park
Brunel Drive
Newark
Notts
NG24 2EG
N M Rothschild & Sons Limited
New Court
St Swithins Lane
London
EC4P 4DU
Cazenove & Co. Ltd
20 Moorgate
London
EC2R 6DA
Our Ref: GMT/PGC 5 August 2003
Project Telecom plc (the "Company")
Dear Sirs
We have reviewed the accounting policies and calculations used in preparing the
profit forecast for the Company and its subsidiaries (the "Group") for the year
ending 31 December 2003, for which the directors of the Company are solely
responsible (the "Profit Forecast"), set out in Appendix III of the announcement
of an offer for the Company dated 5 August 2003 (the "Announcement"). The Profit
Forecast takes account of the results shown by the unaudited management accounts
for the six months ended 30 June 2003 and the Directors' forecast of results for
the six months ending 31 December 2003.
We conducted our work in accordance with the Statements of Investment Circular
Reporting Standards issued by the Auditing Practices Board in the United
Kingdom.
Our work has not been carried out in accordance with auditing or other standards
and practices generally accepted in the United States or other jurisdictions and
accordingly should not be relied upon as if it had been carried out in
accordance with those standards and practices.
The work we have carried out on the Profit Forecast is solely for the purpose of
reporting to the Directors of the Company, and hence to the existing
shareholders of the Company, and to the directors of N M Rothschild & Sons
Limited and Cazenove & Co. Ltd. As a result, we assume no responsibility to any
offeror or any other person other than the directors of the Company and N M
Rothschild & Sons Limited and Cazenove & Co. Ltd in respect of or arising out of
or in connection with our work on the Profit Forecast.
In our opinion, the Profit Forecast, so far as the accounting policies and
calculations are concerned, has been properly compiled on the bases and
assumptions stated by the Directors of the Company in Appendix III of the
Announcement and the basis of accounting is consistent with the accounting
policies of the Group.
Yours faithfully
Deloitte & Touche LLP
(ii) Joint Letter from Rothschild and Cazenove
N M Rothschild & Sons Limited
New Court, St Swithin's Lane
London, EC4P 4DU
Cazenove & Co. Ltd
20 Moorgate
London, EC2R 6DA
The Directors
Project Telecom plc
Brunel Park
Brunel Drive
Newark
Nottinghamshire
NG24 2EG
5 August 2003
Dear Sirs
Project Telecom plc ("Project Telecom")
Profit Forecast
We have discussed with you and Deloitte & Touche the profit forecast, together
with the bases and assumptions on which it has been made, of Project Telecom for
the year ending 31 December 2003 (the "Project Telecom Profit Forecast"). We
have also considered the letter dated 5 August 2003 addressed to you and us from
Deloitte & Touche regarding the accounting policies and calculations underlying
the profit forecast.
As a result of these discussions, and having regard to that letter, we consider
that the Project Telecom Profit Forecast (for which the directors of Project
Telecom are solely responsible) has been made with due care and consideration by
Project Telecom.
This letter is provided to you solely in connection with Rule 28.3 (b) of the
City Code on Takeovers and Mergers and for no other purpose. We accept no
responsibility in respect of this letter other than to you, in your capacity as
directors of Project Telecom.
Yours truly
Jeremy Boardman David Anderson
For and on behalf of N M Rothschild & For and on behalf of Cazenove & Co.
Sons Limited Ltd
Registered office as above Registered office as above
Registered number 925279, regulated by Registered number 4153386, regulated
the FSA by the FSA
APPENDIX IV
DEFINITIONS
# means UK pounds sterling (and references to
"pence" shall be construed accordingly);
Announcement means this announcement;
Annual Report means the annual report and accounts of
Project Telecom for the year ended 31 December
2002;
Authorisations has the meaning given to it in paragraph (e)
of Part A of Appendix I of this document;
Cazenove means Cazenove & Co. Ltd;
City Code or Code means The City Code on Takeovers and Mergers;
Closing Price means the middle market price of the relevant
share at the close of business on the day to
which such price relates, derived from the
Daily Official List of the London Stock
Exchange for that day;
Companies Act means the Companies Act 1985 (as amended);
Form of Acceptance means the form of acceptance and election
relating to the Offer accompanying the Offer
Document;
FSA means the UK Financial Services Authority;
LIBOR means the London Inter-bank Offered Rate
expressed as a rate per annum for six month
sterling deposits of #1 million commencing on
the first business day of the relevant interest
period which appears on the Telerate Page 3750
or Telerate page 3740 (as appropriate) at or
about 11.00 a.m. on such date;
Loan Note Alternative means the alternative whereby Project Telecom
Shareholders (except for certain Overseas
Shareholders and US persons) who validly accept
the Offer may elect to receive Loan Notes in
lieu of all or part of the cash consideration
to which they would otherwise by entitled under
the Offer;
Loan Notes means the unsecured loan notes to be issued by
Vodafone pursuant to the Loan Note Alternative;
London Stock Exchange means London Stock Exchange plc;
Offer or Vodafone's Offer means the recommended cash offer to be made by
UBS on behalf of Vodafone, and in the United
States by Vodafone itself, to acquire the
Project Telecom Shares on the terms and subject
to the conditions set out in this Announcement
and the terms to be set out in the Offer
Document and the Form of Acceptance (including
the Loan Note Alternative), and (where the
context so requires) any subsequent revision,
variation, extension or renewal of such offer;
Offer Document means the document containing the terms and
conditions of the Offer to be sent to Project
Telecom Shareholders;
Official List means the Official List of the UK Listing
Authority;
Overseas Shareholders means Project Telecom Shareholders resident in,
or nationals or citizens of, jurisdictions
outside the UK or the US or who are nominees of,
or custodians, trustees or guardians for,
citizens or nationals of such other
jurisdictions;
Panel means The Panel on Takeovers and Mergers;
Project Telecom means Project Telecom plc, a public limited
company incorporated in England and Wales
(registered number 2758652) whose registered
address is Brunel Park, Brunel Drive, Newark,
Nottinghamshire, NG24 2EG;
Project Telecom Board means the board of directors of Project Telecom;
Project Telecom Group means Project Telecom and its subsidiaries and
subsidiary undertakings;
Project Telecom Share or means the existing unconditionally allotted or
Project Telecom Shares issued and fully paid ordinary shares of 0.25p
each in the capital of Project Telecom and any
further ordinary shares of 0.25p which are
unconditionally allotted or issued and fully
paid before the Offer closes or before such
earlier date as Vodafone (subject to the City
Code) may determine, not being earlier than the
date on which the Offer becomes or is declared
unconditional as to acceptances;
Project Telecom means the holders of Project Telecom Shares;
Shareholders
Project Telecom Share Option means the Project Telecom plc Approved Share
Schemes Option Scheme, the Project Telecom plc
Unapproved Share Option Scheme and options over
shares in Project Telecom granted in replacement
for options over shares in Project Telecom
Limited to employees of that company and its
subsidiaries;
Regulation has the definition given to it in condition
(c) of Part A of Appendix I;
Regulatory Information any of the services set out in Schedule 12 to
Service the listing rules of the UK Listing
Authority;
Restricted Jurisdiction means Canada, Australia or Japan or any
jurisdiction where extension or acceptance of
the Offer would violate the law of that
jurisdiction;
Rothschild means N M Rothschild & Sons Limited;
SEC means the United States Securities and
Exchange Commission;
'subsidiary', 'subsidiary have the meanings given to them by the
undertaking', 'associated Companies Act (but for these purposes
undertaking' and ignoring paragraph 20(1)(b) of Schedule 4A to
'undertaking' the Companies Act) and 'substantial interest'
means a direct or indirect interest in 20 per
cent or more of the equity capital of an
undertaking;
Third Party has the meaning given to it in condition (d) of
Part A of Appendix I;
UBS or UBS Investment Bank means UBS Limited;
UK or United Kingdom means the United Kingdom of Great Britain and
Northern Ireland;
UK Listing Authority means the FSA acting in its capacity as the
competent authority for the purposes of Part VI
of the Financial Services and Markets Act 2000;
United States or US means the United States of America, its
territories and possessions, any state of the
United States of America and the District of
Colombia;
US person has the meaning as set forth in Regulation S
under the US Securities Act;
US Securities Act means the United States Securities Act of 1933
(as amended);
US Securities Exchange Act means the United States Securities Exchange Act
of 1934 (as amended);
Vodafone means Vodafone Group Plc, a public limited
company incorporated in England and Wales
(registered number 1833679) whose registered
address is Vodafone House, The Connection,
Newbury, Berkshire, RG14 2FN;
Vodafone Board means the board of directors of Vodafone at the
date of this Announcement;
Vodafone Group means Vodafone and its subsidiaries and
subsidiary undertakings;
Vodafone Shares means Ordinary Shares of US$0.10 each in the
capital of Vodafone;
Wider Project Telecom Group means Project Telecom and its subsidiary
undertakings, associated undertakings and any
company in which Project Telecom and/or such
undertakings (aggregating their interests) have a
substantial interest; and
Wider Vodafone Group means Vodafone and its subsidiary undertakings,
associated undertakings and any undertakings in
which Vodafone and/or such undertakings
(aggregating their interests) have a substantial
interest.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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