19th Sep 2006 07:05
Senior PLC19 September 2006 19 September 2006 FOR PUBLICATION IN THE UNITED KINGDOM ONLY. NOT FOR RELEASE, PUBLICATION ORDISTRIBUTION INTO ANY OTHER JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA,CANADA, JAPAN, NEW ZEALAND OR SOUTH AFRICA, OR IN OR INTO ANY OTHER JURISDICTIONWHERE THE EXTENSION OR AVAILABILITY OF THE RIGHTS ISSUE WOULD BREACH ANYAPPLICABLE LAW. SENIOR PLC PROPOSED ACQUISITION OF AEROSPACE MANUFACTURING TECHNOLOGIES, INC. and FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE £27.3 MILLION Senior plc ("Senior" or the "Company") announces the proposed acquisition ofAerospace Manufacturing Technologies, Inc. ("AMT") for a cash consideration ofUS$110 million (£58.7 million), less the amount of any outstanding indebtednessof AMT upon completion of the Acquisition. The Board intends to fund theAcquisition through a Rights Issue to raise approximately £27.3 million (beforeexpenses) and a New Revolving Credit Facility of up to £80 million. Acquisition highlights • AMT is a US based manufacturer of structural aluminium parts for the commercial aerospace industry, with Boeing as its principal customer. • The Acquisition provides increased exposure to Boeing's two most important existing aircraft, the Boeing 737 and Boeing 777, and also to Boeing's new wide-bodied mid-range aircraft, the Boeing 787. • Senior is acquiring AMT during a period of strong revenue and profit growth for AMT and at a time of strong future growth potential. • The Directors expect the Acquisition to be earnings enhancing in the first full year of ownership, being the financial year ending 31 December 2007(1). Rights Issue highlights • Rights Issue to raise proceeds of approximately £27.3 million (before expenses). • 1 New Ordinary Share for every 5 Existing Ordinary Shares held on the Record Date at 42 pence per New Ordinary Share. • The Rights Issue Price of 42 pence per New Ordinary Share represents a 26.6 per cent. discount to the Closing Price of an Existing Ordinary Share of 57.25 pence on 18 September 2006 (being the latest practicable date prior to the publication of this announcement). • The Rights Issue has been underwritten by Hoare Govett Limited in full. Commenting, Graham Menzies, Chief Executive, Senior plc said: "Senior is very pleased to announce the proposed acquisition of AMT, a growing,profitable, well-managed and well-invested aerospace manufacturing business withBoeing as its principal customer. This acquisition, together with the existinggrowth prospects within Senior, leaves the enlarged group well placed for thefuture." This summary should be read in conjunction with the full text of this announcement. Appendix I sets out the expected timetable of principal events. Appendix II sets out the definitions of terms used in this announcement. Enquiries: Senior plcGraham Menzies, Group Chief Executive Tel: 01923 714702Mark Rollins, Group Finance Director 01923 714738 Hoare Govett Limited (sole sponsor, financial adviser, corporate broker and underwriter) Antonia Rowan Tel: 020 7678 8000 John MacGowanJulian GoodwinSean Wegerhoff Finsbury Group (public relations) Tel: 020 7251 3801James MurgatroydAdrian Howard A conference call with analysts and investors will be held at 9.30 a.m. (Londontime) today, Tuesday 19 September 2006. Information on Senior Senior is an international manufacturing group with 22 operating entities basedin 11 countries. Senior designs, manufactures and markets high technologycomponents and systems for the principal original equipment producers in theworldwide aerospace, diesel engine, exhaust systems and energy markets. As at 30June 2006, the Group employed over 5,200 staff. The Company's address is 59/61High Street, Rickmansworth, Hertfordshire WD3 1RH. General This announcement has been issued by, and is the sole responsibility of, Seniorplc. Hoare Govett Limited, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting as sole sponsor, financial adviser,corporate broker and underwriter to the Company and no one else in connectionwith the Acquisition and the Rights Issue and will not be responsible to anyoneother than the Company for providing the protections afforded to clients ofHoare Govett Limited or for providing advice in relation to the Acquisition, theRights Issue or for any other matters referred to in this announcement. The distribution of this announcement and/or the Provisional Allotment Letterand/or the transfer of Nil Paid Rights, Fully Paid Rights and/or New OrdinaryShares may be restricted by law and therefore persons into whose possession thisannouncement and/or any accompanying announcements comes should informthemselves about and observe any such restrictions. Any failure to comply withany such restrictions may constitute a violation of the securities laws of anysuch jurisdictions. In particular, subject to certain exceptions, thisannouncement, should not be distributed, forwarded to or transmitted in or intothe United States, Australia, Canada, Japan, New Zealand or South Africa, or inor into any other jurisdiction where the extension or availability of the RightsIssue would breach any applicable law. A combined circular to Shareholders relating to the Acquisition and prospectusrelating to the Rights Issue (the "Prospectus") and the Provisional AllotmentLetters are expected to be despatched today. The Prospectus gives furtherdetails of the Acquisition and contains a notice of an Extraordinary GeneralMeeting of the Company to approve the Acquisition and approve The Senior plc2006 Savings-Related Share Option Scheme, expected to be held at 10.00 a.m. on 5October 2006 at the offices of ABN AMRO at 250 Bishopsgate, London EC2M 4AA. TheProspectus gives further details of the New Ordinary Shares, the Nil Paid Rightsand the Fully Paid Rights to be offered pursuant to the Rights Issue, theCompany's business, the industry in which the Company operates and an indicationof the size of the Enlarged Group. No offer, invitation or inducement to acquire shares or other securities in theCompany is being made by or in connection with this announcement. Any offer,invitation or inducement to acquire shares in the Company will be made solely bymeans of the Prospectus, as updated by any supplementary prospectuses, and anydecision to keep, buy or sell shares in the Company should be made solely on thebasis of the information contained in such document(s). This announcement contains forward-looking statements, which are based on theBoard's current expectations and assumptions and involve known and unknown risksand uncertainties that could cause actual results, performance or events todiffer materially from those expressed or implied in such statements. It isbelieved that the expectations reflected in these statements are reasonable, butthey may be affected by a number of variables which could cause actual resultsor trends to differ materially. Each forward-looking statement speaks only as ofthe date of the particular statement. Except as required by the Listing Rules,the Disclosure Rules, the Prospectus Rules, the London Stock Exchange orotherwise by law, the Company expressly disclaims any obligation or undertakingto release publicly any updates or revisions to any forward-looking statementscontained herein to reflect any change in the Company's expectations with regardthereto or any change in events, conditions or circumstances on which any suchstatement is based. The New Ordinary Shares, the Nil Paid Rights, the Fully Paid Rights and theProvisional Allotment Letters have not been and will not be registered under theSecurities Act or under any relevant securities laws of any state or otherjurisdiction of the United States and may not be offered, sold, taken up,exercised, resold, renounced, transferred or delivered, directly or indirectly,within the United States absent registration or an applicable exemption from theregistration requirements of the Securities Act and in compliance with statesecurities laws. The New Ordinary Shares,the Nil Paid Rights, the Fully Paid Rights and the Provisional Allotment Letters have not been approved or disapproved by the SEC, any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares, the Nil Paid Rights, the Fully Paid Rights and theProvisional Allotment Letters or the accuracy or adequacy of this document. Anyrepresentation to the contrary is a criminal offence in the United States. Inaddition, none of the New Ordinary Shares, the Nil Paid Rights, the Fully PaidRights or the Provisional Allotment Letters will qualify for distribution underany of the relevant securities laws of Australia, Canada, Japan, New Zealand orSouth Africa. Accordingly, the New Ordinary Shares, the Nil Paid Rights, theFully Paid Rights and the Provisional Allotment Letters may not be offered,sold, taken up, exercised, resold, renounced, transferred or delivered, directlyor indirectly, within Australia, Canada, Japan, New Zealand or South Africa. No statement in this announcement is intended to be a profit forecast or toimply that the earnings of Senior for the current year or future years willnecessarily match or exceed the historical or published earnings of Senior orAMT. 19 September 2006 FOR PUBLICATION IN THE UNITED KINGDOM ONLY. NOT FOR RELEASE, PUBLICATION ORDISTRIBUTION INTO ANY OTHER JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA,CANADA, JAPAN, NEW ZEALAND OR SOUTH AFRICA, OR IN OR INTO ANY OTHER JURISDICTIONWHERE THE EXTENSION OR AVAILABILITY OF THE RIGHTS ISSUE WOULD BREACH ANYAPPLICABLE LAW. SENIOR PLC PROPOSED ACQUISITION OF AEROSPACE MANUFACTURING TECHNOLOGIES, INC. and FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE £27.3 MILLION Introduction The Company announces today that Senior Operations Inc., a wholly-ownedsubsidiary of the Company, has signed a conditional agreement for theacquisition of Aerospace Manufacturing Technologies, Inc. ("AMT"), a NorthAmerican manufacturer of structural aluminium parts for the commercial aerospaceindustry, for a cash consideration of US$110 million (£58.7 million), less theamount of any outstanding indebtedness of AMT upon completion of theAcquisition. The Board intends to fund the Acquisition through a Rights Issue to raiseapproximately £27.3 million (before expenses) and a New Revolving CreditFacility of up to £80 million. The New Revolving Credit Facility replaces anexisting facility of £46 million. The proceeds of the Rights Issue will be used to part fund payment of theconsideration for the Acquisition. The Rights Issue Price of 42 pence per NewOrdinary Share represents a 26.6 per cent. discount to the Closing Price of anExisting Ordinary Share of 57.25 pence on 18 September 2006 (being the latestpracticable date prior to the publication of this announcement). The RightsIssue has been underwritten by Hoare Govett in full. Completion of the Acquisition is subject to the satisfaction of a number ofconditions, including Admission, and shareholder approval of the Acquisition,due to the size of AMT relative to that of Senior. Shareholder approval will besought at an Extraordinary General Meeting to be held on 5 October 2006. TheRights Issue is not subject to shareholder approval at the Extraordinary GeneralMeeting. Information on AMT AMT, a privately owned US corporation located in Washington State in the US, isa manufacturer of structural aluminium parts for the commercial aerospaceindustry. AMT was founded in 1983 and purchased by the AMT Shareholders in 1993.AMT has demonstrated a strong track record of delivering high quality productsand establishing strong relationships with its customer base, particularlyBoeing. AMT's experience and capabilities span multiple segments of an aircraft,including the engine pylon, struts, wing box, wings, wheel well and theinterior. AMT's success is based on utilising proprietary manufacturingtechniques to manufacture high quality, complex parts through cost effectiveproduction. Given its breadth of capabilities and strong customer relationships,AMT has substantial content on the aviation industry's most popular aircraft,such as the Boeing 737 and Boeing 777, as well as positions on future aircraft,such as the Boeing 787. AMT is one of eight members of the Boeing 737 suppliercouncil. Led by Matthew Reinhard, AMT's management team has played an integral role inthe long-term success of the business. Its senior management has an average of17 years of aerospace experience and an average of 11 years of employment withAMT. It is the intention of Senior that the entire senior management team andall of the current employees of AMT, will remain with the Enlarged Groupfollowing completion of the Acquisition. Matthew Reinhard will remain as AMT'sPresident and Chief Executive Officer. AMT has a non-unionised workforce ofapproximately 300 employees. AMT has an established reputation with its customer base and has maintained adiverse aircraft presence, while simultaneously expanding its business with itslargest customers. AMT possesses long-standing customer relationships with theindustry's leading original equipment manufacturers ("OEMs") in the large,business and regional jet markets. Its principal customer is Boeing, but itscustomer base also includes Bombardier Inc. and Raytheon Company in the businessjet market, and Bombardier Inc. in the regional jet market. Furthermore, AMT hasestablished relationships with commercial aerospace Tier I and Tier II supplierssuch as Hexcel Corporation, Avcorp Industries, Inc., Fuji Heavy Industries andSpirit Aerosystems, Inc., among others. Direct and indirect sales to Boeingrepresented approximately 81 per cent. of AMT's sales for the year ended 31December 2005. Summary financial information on AMT The selected financial information set out below, as at and for the three yearsended 31 December 2003, 2004 and 2005 and as at and for the six months ended 30June 2006, is presented in accordance with IFRS. Six months Year ended Year ended Year ended ended 31 December 31 December 31 December 30 June 2003 2004 2005 2006 US$ million US$ million US$ million US$ million Revenue 21.8 25.6 33.6 26.5 Operating profit before shareholder payments and transaction costs(1) 2.7 2.8 3.8 6.1Finance costs (0.2) (0.2) (0.4) (0.4) --------- --------- --------- ---------Profit before shareholder payments, transaction costs(1) and taxation 2.5 2.6 3.4 5.7 ========= ========= ========= =========Profit before taxation 2.0 2.2 2.2 3.9 ========= ========= ========= ========= Current assets 7.6 11.1 13.1 21.0Non-current assets 7.5 9.5 15.7 15.8 --------- --------- --------- ---------Gross assets 15.1 20.6 28.8 36.8Current liabilities (2.7) (3.4) (7.5) (10.3)Non-current liabilities (2.8) (6.2) (8.6) (10.6) --------- --------- --------- ---------Net assets 9.6 11.0 12.7 15.9 ========= ========= ========= ========= (1) Transaction costs are those associated with the sale of AMT. AMT's results, in particular those for the six months to 30 June 2006, highlightthe growth that AMT is currently experiencing. AMT derives the vast majority ofits revenue from acting as a key supplier of certain components on Boeingaircraft. Having grown steadily during 2003 and 2004, AMT's revenue increased more rapidlyin 2005 as new Boeing 777 programmes went into production. The first six monthsof 2006 benefited from the continued increase in Boeing 777 related sales aswell as the start, in May 2006, of the US$16 million per annum five year Boeing737 wing-rib kit contract. Historical financial information on AMT The accountant's report on AMT to be contained in the Prospectus has beenqualified due to a limitation in scope relating to inventory in respect of thefinancial years ended 31 December 2003, 2004 and 2005. The accountant's reportalso covers the six month period to 30 June 2006, which has not been qualified.The Directors believe that the qualification is not significant due to itshistoric nature. The uncertainty over the historic inventory responsible for thequalification has been rectified by the adoption of new inventory systems andprocedures in October 2005, and stock reconciliations as at 31 December 2005 and30 June 2006 have been formally audited. Accordingly, the effectiveness of thenew systems and procedures has been verified by the unqualified accountant'sreport for the period to 30 June 2006. The Directors believe that, notwithstanding the qualification of theaccountant's report for the financial years ended 31 December 2003, 2004 and2005, the Acquisition is in the best interests of the Company and itsShareholders as a whole. Background to, reasons for and benefits of the Acquisition The large commercial aircraft manufacturers and engine suppliers have strongorder books and the aerospace market is forecast to continue to grow. Againstthis positive background and in line with Senior's strategic objective tomaintain a significant part of its overall business focused on the worldwideaerospace markets, the Directors believe that the Acquisition will strengthenSenior's position in the aerospace market. The Directors believe that the Acquisition offers significant benefits andopportunities, including: • acquisition of a well established, standalone and profitable business enjoying a high level of customer loyalty; • increased exposure to Boeing's two most important existing aircraft, the Boeing 737 and Boeing 777; • access to significant involvement on Boeing's new wide-bodied mid-range aircraft, the Boeing 787, which Boeing is forecasting to commence delivery to its customers in late 2008; • acquisition of a business manufacturing products complementary to those of Senior's existing aerospace operations and whose nature falls within the skill base of Senior's Group and divisional management; • acquisition of AMT during a period of strong revenue and profit growth for AMT and at a time of strong future growth potential; • acquisition of a well-equipped modern facility (where more than US$15 million is expected to have been invested in the three years ending 31 December 2006) capable of machining highly complex and value-added structural aluminium parts; • acquisition of a business run by a stable, focused and proven management team; and • additional Group sales with a minimal increase in central and divisional costs. Financial effects of the Acquisition on Senior AMT is a profitable, well-managed company operating from a single site inWashington State in the US, close to the manufacturing facilities of itsprincipal customer, Boeing. Senior's intention is to maintain the business atits current location and for it to continue to be managed by its existing strongmanagement team. Consequently, other than the transaction costs associated withthe Acquisition and the Rights Issue, the costs associated with the integrationof AMT into the Group are expected to be minimal. The Directors believe that if the Acquisition had occurred at the beginning ofthe year ended 31 December 2005, the Group's earnings per share would havedeclined. However, the growth achieved by AMT during 2005 and in the first sixmonths of 2006, and AMT's future prospects, mean the Directors expect theAcquisition to be earnings enhancing in the first full year of ownership, beingthe financial year ending 31 December 2007(2). Principal terms of the Acquisition Under the terms of the Acquisition Agreement, Senior Operations Inc. has agreedto acquire AMT by purchasing all of the issued and outstanding capital stock ofAMT. The total consideration payable to the AMT Shareholders is US$110 million (£58.7million), less the amount of any outstanding indebtedness of AMT as at Closing.This amount will be paid at Closing, at which time an appropriate adjustmentwill also be made to the consideration in the event that the actual amount ofadjusted net assets of AMT at Closing differs from the actual adjusted netassets of AMT at 30 June 2006, based on a formula contained in the AcquisitionAgreement. Of the consideration payable to the AMT Shareholders, US$4 million(£2.1 million) is to be deposited in an escrow fund for up to 18 months to bereleased under certain circumstances. The escrow fund is to provide the primary,but not only, source for the payment of any liabilities of the AMT Shareholdersunder the Acquisition Agreement, such as under the representations, warrantiesand indemnities. The Acquisition Agreement is conditional upon, inter alia: (i) the approval ofthe Acquisition by the Shareholders at the EGM; (ii) Admission; and (iii) anywaiting period (and any extension thereof) applicable to the consummation of theAcquisition under the HSR Act having expired or been terminated. The Board isconfident that the regulatory condition referred to in (iii) above will besatisfied. Either the Company or the AMT Shareholders may, prior to Closing, terminate theAcquisition Agreement if: (i) there exist certain material breaches ofrepresentations or material breaches of covenants; (ii) the Acquisition has notbeen completed by 30 November 2006; or (iii) there is mutual agreement toterminate between Senior Operations Inc. and the AMT Shareholders'representative. The Board currently expects that completion of the Acquisition will take placeby late October 2006. Current trading and prospects (a) The Group Overall, Senior's current trading and prospects remain as stated in theannouncement of its interim results for the six months ended 30 June 2006published on 3 August 2006. The large commercial aircraft manufacturers and engine suppliers have strongorder books and the aerospace market is forecast to continue to grow. Boeing andAirbus are forecast to continue to increase build rates over the coming years(source: Teal), with the availability and prices of metals, such as aluminiumand titanium, potentially dictating the rate of increase. Following its recentacquisition, prospects for Sterling Machine Co., Inc. are encouraging as itsmain customer, Sikorsky, is in the process of substantially increasing the buildrate of its helicopters. The development of new aircraft, such as the Boeing787, Airbus 350XWB and Airbus 400M, also offers significant opportunities forSenior. Sales of the new heavy duty diesel engine products, which go into productionshortly, are expected to provide a significant improvement to Senior Flexonics'turnover, albeit the recent cancellation of one contract will affect the rate ofgrowth. It is anticipated that the plant and equipment associated with thiscontract will be sold or utilised elsewhere within the Group. Prospects forbeing awarded additional programmes for these heavy duty diesel engine productsremain positive. Elsewhere, the Group's automotive markets are expected toremain stable, but competitive, and the power generation and energy markets areanticipated to remain healthy, aided by tightening emission standards and thehigh price of oil. Overall, the Directors believe the Group is well placed to deliver futurehealthy growth. (b) AMT AMT derives the vast majority of its revenues from Boeing aircraft, with the 737and 777 being the key aircraft. A major new five-year programme (US$16 millionper annum) for the supply of wing-rib kits for the Boeing 737 commenced in May2006. AMT's other major customers are Bombardier Inc., and Raytheon Company.Boeing is currently increasing the build rate of both its 737 and 777 aircraftand this, combined with the Boeing 737 wing-rib contract and three recently wonprogrammes on Boeing's new wide-bodied mid-range aircraft, the 787, allows theDirectors to be confident of future growth. (c) The Enlarged Group The Directors believe that, following completion of the Acquisition, theEnlarged Group should be well placed to deliver healthy future growth. TheDirectors are confident of the underlying financial and trading prospects of theEnlarged Group for the current financial year. The Directors expect theAcquisition to be earnings enhancing in the first full year of ownership bySenior, being the financial year ending 31 December 2007(3). Summary of the principal terms of the Rights Issue The New Ordinary Shares will be offered by way of rights to all QualifyingShareholders (other than, subject to certain exceptions, Qualifying Shareholderswith a registered address in the United States or other Excluded Territories) onthe following basis: 1 New Ordinary Share at 42 pence per New Ordinary Share for every 5 Existing Ordinary Shares held and registered in their name at the close of business on the Record Date.Fractions of New Ordinary Shares will not be allotted to any QualifyingShareholders, but will be aggregated and sold in the market ultimately for thebenefit of the Company. New Ordinary Shares representing fractional entitlementswill not be allotted to Qualifying Shareholders and, where necessary,entitlements to New Ordinary Shares will be rounded down to the nearest wholenumber. Qualifying Shareholders with fewer than five Existing Ordinary Shareswill not be entitled to any New Ordinary Shares. The New Ordinary Shares willrank pari passu with the Existing Ordinary Shares in all respects (save thatthey will not carry the right to receive the 2006 Interim Dividend). The NewOrdinary Shares will trade 'ex' the 2006 Interim Dividend under a separate ISINfrom the Existing Ordinary Shares until the record date for the 2006 InterimDividend. The Nil Paid Rights or Fully Paid Rights represented by a Provisional AllotmentLetter may be converted into uncertificated form, that is, deposited into CREST(whether such conversion arises as a result of a renunciation of those rights orotherwise). Similarly, Nil Paid Rights or Fully Paid Rights held in CREST may beconverted into certificated form, that is, withdrawn from CREST. The Rights Issue Price of 42 pence per New Ordinary Share represents a 26.6 percent. discount to the Closing Price of an Existing Ordinary Share of 57.25 penceon 18 September 2006 (being the latest practicable date prior to the publicationof this announcement). If a Qualifying Shareholder does not take up the offer ofNew Ordinary Shares in full, his/her proportionate shareholding will be dilutedby 16.7 per cent. The Company has arranged for the Rights Issue to be fully underwritten by HoareGovett in order to provide certainty as to the amount of capital to be raised. The Rights Issue is conditional, amongst other things, upon: (i) theUnderwriting Agreement having become unconditional in all respects (save for thecondition relating to Admission) and not having been terminated (and notermination rights existing under it having arisen) before Admission; and (ii)Admission taking place not later than 8.00 a.m. on 20 September 2006 (or suchlater time and/or date as Hoare Govett and the Company may agree being not laterthan 8.00 a.m. on 26 September 2006). Prior to Admission, Hoare Govett mayterminate the Underwriting Agreement in certain circumstances, the likelihood ofwhich the Directors consider to be remote. After Admission, however, theUnderwriting Agreement will not be subject to any right of termination(including in respect of any statutory withdrawal rights). The Rights Issue is not conditional on the Acquisition. After Admission, theRights Issue will proceed even if the Acquisition does not. In the unlikelyevent that completion of the Acquisition does not take place, the Directors'current intention is that the net proceeds of the Rights Issue will be investedin short term securities while the Directors' consider how best to returnsurplus capital to Shareholders. Any such return of capital may have adverse taxconsequences for Shareholders. In considering how any such proceeds might bereturned to Shareholders, the Directors will take into account, amongst otherthings, the tax implications for Shareholders. Prior to completion of theAcquisition, the proceeds of the Rights Issue will be held by the Company andplaced in an interest-bearing deposit account. Application has been made to the UK Listing Authority for the New OrdinaryShares (nil and fully paid) to be admitted to the Official List and to theLondon Stock Exchange for the New Ordinary Shares (nil and fully paid) to beadmitted to trading on the London Stock Exchange's main market for listedsecurities. It is expected that Admission will become effective and thatdealings in the New Ordinary Shares will commence on the London Stock Exchange,nil paid, at 8.00 a.m. on 20 September 2006. It is expected that dealings in theNew Ordinary Shares, fully paid, will commence on the London Stock Exchange at8.00 a.m. on 11 October 2006. The Rights Issue will result in the issue of 64,960,962 New Ordinary Shares(representing approximately 16.7 per cent. of the Enlarged Share Capital). TheNew Ordinary Shares will, when issued and fully paid, rank pari passu in allrespects with, and will carry the same voting and dividend rights as, theExisting Ordinary Shares, save that the New Ordinary Shares will not have theright to receive the 2006 Interim Dividend. Application has been made for theNew Ordinary Shares to be admitted to CREST and held in uncertificated form. TheNew Ordinary Shares are also capable of being held in certificated form. Structure of the Rights Issue In addition to funding the Acquisition, the Rights Issue has been structured ina way that is expected to create additional distributable reserves approximatelyequal to the net proceeds of the Rights Issue less the nominal value of the NewOrdinary Shares. In the future, it should be possible for the Company to declaredividends from these reserves, provided that they have not otherwise beenreduced, the Company has sufficient cash resources to fund such dividends andthe Directors consider it appropriate to declare such dividends. Dividend policy Following the events of 11 September 2001 and the subsequent downturn in theaerospace industry, the Board took action to protect the long-term prospects ofthe Group. This included restricting capital expenditure and discretionary costsand reducing the level of dividend payable by the Group in order to restoredividend cover to more appropriate levels for the business. Since this time, theBoard has focused on reducing debt and has maintained the annual level ofdividend per share paid as dividend cover has been restored. As at 31 December2005, Senior's net debt was £62.4 million and dividend cover was 2.0 times basedon the total dividend per share paid for 2005 of 2.00 pence and adjustedearnings per share of 4.01 pence (excluding the effect of the disposal ofbusinesses and fixed assets). As at 30 June 2006, Senior's net debt was £75.6million following the Board's decision to increase levels of capital expenditureto support development of the Group's heavy duty diesel engine parts, which arescheduled to go into production in the final quarter of 2006. In light of the Board's confidence in the future prospects for the Group, theDirectors intend to return to a progressive dividend policy in the future, whichwill take into account the bonus element of the Rights Issue. Using the finaldividend of 1.35 pence per Ordinary Share for the financial year ended 31December 2005 as an example, the bonus adjustment would have resulted in thefinal dividend being 1.29 pence per Ordinary Share. However, as any dividendswill be dependent upon the performance of the underlying businesses of theEnlarged Group, this should not be construed as either a dividend forecast or asa guarantee that any dividends will be paid in the future. Holders of New Ordinary Shares issued as part of the Rights Issue will not beentitled to receive the 2006 Interim Dividend in respect of the New OrdinaryShares. The Senior Group Share Schemes In accordance with the rules of the Senior Group Share Schemes, outstandingoptions and awards may be adjusted to take account of the Rights Issue in suchmanner as the Remuneration Committee may consider appropriate under thecircumstances. This is subject to the prior approval (where required) of HMRevenue & Customs. Participants will be notified of any adjustments in duecourse. SAYE Scheme 2006 The Directors believe that employee share schemes are an important tool inencouraging employees to align their interests with those of Shareholders and,to that end, the Company has operated employee share schemes for a number ofyears, including the current savings related share option scheme which wasestablished in 1996 and expired this year. The Directors therefore propose to seek the approval of Shareholders at theExtraordinary General Meeting to establish The Senior plc 2006 Savings-RelatedShare Option Scheme (the "SAYE Scheme 2006") to replace the current scheme. TheSAYE Scheme 2006 will give all eligible employees the opportunity to acquireshares in the Company using the proceeds of their own savings under a three orfive year save-as-you-earn contract with a nominated savings authority. Subjectto the SAYE Scheme 2006 being approved by HM Revenue & Customs, employees whotake advantage of this opportunity will not normally be subject to income tax onthe gains realised upon the exercise of options. Instead, they may be liable tocapital gains tax when they dispose of their shares. The rules of the SAYE Scheme 2006 allow the Directors to make such amendments asmay be necessary or desirable to obtain or maintain favourable tax, exchangecontrol or regulatory treatment for participants or for any company in theGroup. In certain circumstances, it may be desirable, or more appropriate, toset up separate schemes for employees working overseas and the SAYE Scheme 2006accordingly includes an international section. Restricted Shareholders New Ordinary Shares will be provisionally allotted to all QualifyingShareholders, including all Qualifying Shareholders with a registered address inthe United States, Australia, Canada, Japan, New Zealand or South Africa.However, due to securities law restrictions in the United States, Australia,Canada, Japan, New Zealand and South Africa, subject to certain exceptions,Qualifying Shareholders with a registered address in any such jurisdiction willnot be sent a Provisional Allotment Letter nor will they have their stockaccounts in CREST credited with entitlements to Nil Paid Rights, as applicable.Notwithstanding the above, if Qualifying Shareholders provide to the Companyproof satisfactory to the Company that they are able properly and lawfully toreceive a Provisional Allotment Letter or have their stock account in CRESTcredited with their entitlements to Nil Paid Rights, as applicable, without thecontravention of any registration or other legal requirement in anyjurisdiction, the Company may (at its sole and absolute discretion) elect tosend them a Provisional Allotment Letter or have their stock account in CRESTcredited with their entitlements to Nil Paid Rights, as applicable. AnyShareholder who believes that he or she may be able to take advantage of theexception outlined above should contact the Company Secretary (Andrew Bodenham)either in writing at the address on the front of this announcement or bytelephone on +44 (0) 1923 775547. Prospectus, Provisional Allotment Letters and Extraordinary General Meeting A combined circular to Shareholders relating to the Acquisition and prospectusrelating to the Rights Issue (the "Prospectus") and Provisional AllotmentLetters are expected to be despatched today. The Prospectus gives furtherdetails of the Acquisition and contains a notice of an Extraordinary GeneralMeeting of the Company to approve the Acquisition and approve the SAYE Scheme2006, expected to be held at 10.00 a.m. on 5 October 2006 at the offices of ABNAMRO at 250 Bishopsgate, London EC2M 4AA. The Rights Issue is not subject toShareholder approval at the Extraordinary General Meeting. The Prospectus givesfurther details of the New Ordinary Shares, the Nil Paid Rights and the FullyPaid Rights to be offered pursuant to the Rights Issue, the Company's business,the industry in which the Company operates and an indication of the size of theEnlarged Group. Appendix I Expected timetable of principal events in respect of the rights issue and theacquisition 2006Record Date for the Rights Issue the close of business on Friday 15 September Announcement of the Acquisition and the Rights Issue and publication of the Prospectus Tuesday 19 September Despatch of Provisional Allotment Letters (to Qualifying non-CREST Shareholders, excluding Restricted Shareholders, only) Tuesday 19 September Dealings in New Ordinary Shares, nil paid, commence on the London Stock Exchange 8.00 a.m. on Wednesday 20 September Existing Ordinary Shares marked "ex-rights" by the London Stock Exchange 8.00 a.m. on Wednesday 20 September Nil Paid Rights credited to stock accounts in CREST (Qualifying CREST Shareholders, excluding Restricted Shareholders, only) as soon as practicable after 8.00 a.m. on Wednesday 20 September Nil Paid Rights and Fully Paid Rights enabled in CREST as soon as practicable after 8.00 a.m. on Wednesday 20 September Latest time and date for receipt of Forms of Proxy 10.00 a.m. on Tuesday 3 October Recommended latest time for requesting withdrawal of Nil Paid Rights or Fully Paid Rights from CREST (i.e. if your Nil Paid Rights or Fully Paid Rights are in CREST and you wish to convert them into certificated form) 4.30 p.m. on Wednesday 4 October Extraordinary General Meeting 10.00 a.m. on Thursday 5 October Recommended latest time and date for depositing renounced Provisional Allotment Letters, nil paid or fully paid, into CREST or for dematerialising Nil Paid Rights or Fully Paid Rights into a CREST stock account 3.00 p.m. on Thursday 5 October Latest time and date for splitting Provisional Allotment Letters, nil paid or fully paid 3.00 p.m. on Friday 6 October Latest time and date for acceptance and payment in full and registration of renounced Provisional Allotment Letters 11.00 a.m. on Tuesday 10 October Dealings in New Ordinary Shares, fully paid, commence on the London Stock Exchange and New Ordinary Shares credited to CREST stock accounts (uncertificated holders only) 8.00 a.m. on Wednesday 11 October Expected date of despatch of definitive share certificates for New Ordinary Shares in certificated form by Wednesday 18 October Completion of the Acquisition by the end of October Notes: (i) Each of the times and dates set out in the above timetable and mentioned in this announcement and the Provisional Allotment Letter is subject to change by the Company (with the agreement of Hoare Govett), in which event details of the new times and dates will be notified to the Financial Services Authority and, where appropriate, to Shareholders. (ii) References to times in this announcement are to London time. (iii)If you have any queries on the procedure for acceptance and payment or on the procedure for splitting Provisional Allotment Letters you should contact Lloyds TSB Registrars, 3rd Floor, Princess House, 1 Suffolk Lane, London EC4R 0AX, on 0870 609 2158 if calling from the UK or on +44 1903 276 342 if calling from outside the UK between 8.30 a.m. and 5.30 p.m. Monday to Friday. For legal reasons the shareholder helpline will not be able to provide advice on the merits of the Rights Issue or to provide financial, tax or investment advice. Appendix II The definitions set out below apply throughout this announcement, unless thecontext requires otherwise. "2006 Interim Dividend" the declared interim dividend of 0.65 pence per Existing Ordinary Share announced on 3 August 2006 and payable on 30 November 2006 to those Shareholders on the register of members of the Company as at 3 November 2006 (but not in respect of the New Ordinary Shares); "Acquisition" the proposed acquisition of all of the issued and outstanding capital stock of AMT; "Acquisition Agreement" the stock purchase agreement between AMT, the AMT Shareholders and Senior Operations Inc. dated 18 September 2006, in relation to the Acquisition; "Admission" admission of the New Ordinary Shares, nil paid, to the Official List and to trading on the main market for listed securities of the London Stock Exchange; "AMT" Aerospace Manufacturing Technologies, Inc. and/or its respective subsidiaries and subsidiary undertakings (or, as the context requires, any one or more of such companies); "AMT Shareholders" all the existing shareholders of AMT as at 18 September 2006, who are to sell all of their issued and outstanding capital stock pursuant to the Acquisition Agreement (including, amongst others, Matthew Reinhard, John Tennant, Ralph Miller, Kenneth Singer, Ned Buhler, Richard Bass and Norman Webb); "Board" the board of directors of the Company from time to time; "Business Day" any day on which banks are generally open in London for the transaction of business other than a Saturday or Sunday or public holiday; "certificated" a share or other security which is not in uncertificated formor "in (that is, not in CREST);certificated form" "Closing" the completion of the Acquisition; "Closing Price" the closing middle market quotation of an Existing Ordinary Share, as published in the Daily Official List; "Companies Act" the Companies Act 1985, as amended; "CREST" the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CRESTCo Regulations operated by CRESTCo; "CRESTCo" CRESTCo Limited; "CREST member" a person who has been admitted by CRESTCo as a system-member (as defined in the CRESTCo Regulations); "CRESTCo the Uncertificated Securities Regulations 2001 (SI 2001 No.Regulations" 3755), as amended from time to time; "CREST Shareholders" Shareholders holding Ordinary Shares in uncertificated form; "CREST sponsor" a CREST participant admitted to CREST as a CREST sponsor; "Daily Official List" the Daily Official List of the London Stock Exchange; "Director" a director of the Company; "Disclosure the disclosure rules made under Part VI of FSMA (as set out inRules" the FSA Handbook), as amended; "Enlarged Group" the Company together with its subsidiaries and subsidiary undertakings, as enlarged by the Acquisition; "Enlarged Share the issued ordinary share capital of the Company following theCapital" issue of the New Ordinary Shares pursuant to the Rights Issue; "EU" the European Union first established by treaty made at Maastricht on 7 February 1992; "euro" or "•" the single currency of the member states of the European Communities that adopt or have adopted the euro as their lawful currency under the legislation of the EU or European Monetary Union; "Excluded the United States, Australia, Canada, Japan, New Zealand, SouthTerritories" Africa and any other jurisdiction where the extension or availability of the Rights Issue (and any other transaction contemplated thereby) would breach any applicable law; "Existing the ordinary shares of 10 pence each in the capital of theOrdinary Shares" Company at the date of this announcement; "Extraordinary the extraordinary general meeting of the Company to be convenedGeneral Meeting"or "EGM" pursuant to the notice set out at the end of the Prospectus; "ex-rights date" 20 September 2006; "FSMA" the Financial Services and Markets Act 2000, as amended; "Fully Paid Rights" rights to acquire New Ordinary Shares, fully paid; "Hoare Govett" Hoare Govett Limited; "HSR Act" the Hart Scott Rodino Anti-Trust Improvements Act of 1976, as amended; "IFRS" International Financial Reporting Standards; "Listing Rules" the listing rules made under Part VI of FSMA (as set out in the FSA Handbook), as amended; "London Stock Exchange" London Stock Exchange plc or its successor(s); "New Ordinary the ordinary shares of 10 pence each in the capital of theShares" Company to be issued by the Company pursuant to the Rights Issue; "New Revolving the revolving credit facility agreement entered into on 12Credit Facility" September 2006 between Lloyds TSB Bank plc, the Company and Senior Investments AG; "Nil Paid Rights" rights to acquire New Ordinary Shares, nil paid; "Official List" the Official List of the UK Listing Authority; "Ordinary Existing Ordinary Shares and/or New Ordinary Shares, as theShares" context requires; "Pounds" or "£" the lawful currency of the United Kingdom;or "PoundsSterling" "Prospectus" the combined circular to Shareholders relating to the Acquisition and prospectus relating to the Rights Issue expected to be despatched today 19 September 2006; "Prospectus the prospectus rules made under Part VI of FSMA (as set out inRules" the FSA Handbook), as amended; "Provisional the provisional allotment letter to be issued to QualifyingAllotment Letter" or "PAL" non-CREST Shareholders; "Qualifying Qualifying Shareholders holding Ordinary Shares inCREST Shareholders" uncertificated form; "Qualifying Qualifying Shareholders holding Ordinary Shares in certificatednon-CREST form;Shareholders" "Qualifying holders of Existing Ordinary Shares on the register of membersShareholders" of the Company on the Record Date; "Record Date" the close of business in London on 15 September 2006;"Registrar" Lloyds TSB Registrars; "Remuneration the remuneration committee of the Company;Committee" "Resolutions" the Acquisition Resolution and the Share Option Scheme Resolution; "Restricted Shareholders with registered addresses in, or who are citizens,Shareholders" residents or nationals of, jurisdictions outside the United Kingdom; "Rights Issue" the offer by way of rights to Qualifying Shareholders to acquire New Ordinary Shares, on the terms and conditions set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders only, the Provisional Allotment Letter; "Rights Issue 42 pence per New Ordinary Share;Price" "SEC" United States Securities and Exchange Commission; "Securities Act" the US Securities Act of 1933, as amended and the regulations thereunder; "Senior the Senior aerospace division;Aerospace" "Senior" or "the Senior plc, a company incorporated in England and Wales withCompany" registered number 00282772, whose registered office is at 59/61 High Street, Rickmansworth, Hertfordshire WD3 1RH, United Kingdom; "Senior the Group's automotive operations, now part of SeniorAutomotive" Flexonics; "Senior the Senior Flexonics division;Flexonics" "Senior the Group's industrial operations, now part of SeniorIndustrial" Flexonics; "Senior Group" Senior plc, as applicable, together with its subsidiaries andor "the Group" subsidiary undertakings;or "the Company" "Senior Group The 1996 Savings Related Share Option Scheme, the 1999Share Schemes" Executive Share Option Plan, and the Senior plc 2005 Long Term Incentive Plan operated by the Company; "Shareholders" holders of Ordinary Shares; "stock account" an account within a member account in CREST to which a holding of a particular share or other security in CREST is credited; "subsidiary" a subsidiary as that term is defined in section 736 of the Companies Act; "subsidiary a subsidiary undertaking as that term is defined in section 258undertaking" of the Companies Act; "uncertificated" a share or other security recorded on the relevant register ofor "in the share or security concerned as being held in uncertificateduncertificated form in CREST and title to which, by virtue of the CRESTCoform" Regulations, may be transferred by means of CREST; "Underwriting the conditional underwriting agreement described in Part XI ofAgreement" the Prospectus; "UK Listing the Financial Services Authority acting in its capacity as theAuthority" competent authority for the purposes of FSMA; "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;or "UK" "United States" the United States of America, its territories and possessions,or "US" any state of the United States and the District of Columbia; and "US$", "US the lawful currency of the United States.dollars" or "$" -------------------------- (1) This statement is not intended to constitute a profit forecast for thefinancial year ending 31 December 2007 or any other period, nor should thisstatement be interpreted to mean that earnings or earnings per share willnecessarily be greater or less than those for the relevant preceding financialperiod for either Senior or Senior and AMT combined. Rather this statementshould be construed as a reference to potential enhancements to the earningsthat might otherwise have been earned during the relevant financial period. (2) This statement is not intended to constitute a profit forecast for thefinancial year ending 31 December 2007 or any other period, nor should thisstatement be interpreted to mean that earnings or earnings per share willnecessarily be greater or less than those for the relevant preceding financialperiod for either Senior or Senior and AMT combined. Rather this statementshould be construed as a reference to potential enhancements to the earningsthat might otherwise have been earned during the relevant financial period. (3) This statement is not intended to constitute a profit forecast for thefinancial year ending 31 December 2007 or any other period, nor should thisstatement be interpreted to mean that earnings or earnings per share willnecessarily be greater or less than those for the relevant preceding financialperiod for either Senior or Senior and AMT combined. Rather this statementshould be construed as a reference to potential enhancements to the earningsthat might otherwise have been earned during the relevant financial period. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Senior