12th Nov 2009 07:00
Brit Insurance Holdings PLC - Corporate reorganisation
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR, OR PURCHASE, ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION CONTAINED IN THE SCHEME CIRCULAR TO BE PUBLISHED BY BRIT INSURANCE HOLDINGS PLC IN CONNECTION WITH THE PROPOSED SCHEME REFERRED TO BELOW. THE SCHEME CIRCULAR WILL BE AVAILABLE ON BRIT INSURANCE HOLDINGS PLC'S WEBSITE AND WILL BE AVAILABLE FOR INSPECTION AT THE UK LISTING AUTHORITY'S DOCUMENT VIEWING FACILITY.
12 November 2009
On 9 March 2009, Brit Insurance Holdings PLC ("Brit") announced its intention to reorganise its corporate structure by putting in place a new holding company for the Group. Brit today announces that Brit Insurance Holdings N.V. ("New Brit"), a company, incorporated in the Netherlands, tax resident in the Netherlands and which will be listed in the UK, will (subject to Brit Shareholder approval) become the new holding company of the Group (the "Proposals"). A circular (the "Scheme Circular") setting out full details of the Proposals will today be sent to Brit Shareholders and a prospectus in relation to New Brit will today be published and filed with the Financial Services Authority (the "Prospectus"). Both the Prospectus and the Scheme Circular will be available on the Group's website (www.britinsurance.com).
Key features of the Proposals
New Brit will become the new holding company of the Group by way of a court sanctioned scheme of arrangement under the Companies Act 2006 (the "Scheme")
Under the Scheme, Brit Shareholders will receive one New Brit Share for each Brit Share that they hold (Brit Shareholders will not be required to pay any amount for the New Brit shares issued under the Scheme)
The listing of the existing Brit Shares will be cancelled and an application will be made for New Brit Shares to be listed on the London Stock Exchange. New Brit is expected to replace Brit as a member of the FTSE 250 Index
New Brit Shares will be tradeable in CREST through Depositary Interests
New Brit will continue to report results under IFRS in sterling
The Proposals will not make any substantial changes to corporate governance, to existing shareholder protection measures nor to the existing distribution policy of Brit (albeit that initially New Brit intends to make distributions to shareholders by way of reductions of the par value of the New Brit Shares)
The implementation of the Proposals is not expected to have any adverse tax implications for Brit Shareholders
Introduction
Following an extensive review, the Board has concluded that the redomicile of the Group's holding company to the Netherlands, combined with other changes to the Group structure, should deliver a number of significant benefits to the Group. In particular it should provide a favourable operating environment from which to further the Group's international development, maintain its competitiveness as an international insurer and reinsurer, and enhance access to additional sources of capital. In addition, the Group should be able better to align its corporate tax rate with those of its global peer group.
The Board considers the Proposals to be in the best interests of Brit and its shareholders as a whole. The Board is unanimously recommending that Brit Shareholders vote in favour of the Proposals, as the Directors all intend to do in respect of their entire holding of Brit Shares.
Rationale for the Proposals
The Proposals are an integral part of the Group's continuing strategy of targeting superior returns for shareholders through its specialist underwriting activities and optimal capital management. The Board continues to consider its Lloyd's syndicate and its UK FSA authorised insurance company, Brit Insurance Limited, to be attractive underwriting platforms which will remain an important part of the Group's insurance operations for the foreseeable future.
The Board believes that the Proposals will:
Provide a favourable operating environment from which to further the Group's international development
As the Group seeks to develop a broader international general insurance and reinsurance business, the establishment of the Group's holding company in the Netherlands should provide the Group with a stable commercial, legal, regulatory and fiscal environment from which to operate. Over time the Group intends to expand its international footprint that currently includes Brit Insurance Services USA, Inc., a fully owned managing general agent based in the US, and a representative office in Japan. In addition, the Board considers that the Netherlands retains for the Group the operational and reputational benefits of an established EU jurisdiction.
Enhance access to additional sources of capital
The Board believes that the management of multiple sources of capital is a core skill of the Group and that establishing a presence in continental Europe will enhance the Group's ability to attract a broader spread of capital in support of its specialist underwriting operations.
Better align the Group's corporate tax rate with those of its global peer group
Many of the Group's principal competitors already enjoy substantial tax benefits arising from their domicile; benefits not currently available to Brit. The Board believes that the restructuring of the Group under a new Dutch holding company should provide the opportunity to realise a reduction in the Group's effective tax rate over time aligning it with its global peer group. Dutch companies pay no additional tax on the majority of overseas earnings and enjoy a pragmatic regime dealing with income arising overseas. New Brit should continue to benefit from access to a strong network of tax treaties and the fiscal benefits of EU membership. A reduction in the Group's effective tax rate over time should enhance the return on New Brit shareholders' equity and the prospects for New Brit's shareholders.
Summary of the Proposals
New Brit will become the new holding company of the Group by way of a court sanctioned scheme of arrangement under the Companies Act 2006.
Under the terms of the Scheme, Brit Shareholders will receive one New Brit Share for each Brit Share that they hold. Brit Shareholders will not be required to make any payment for the New Brit Shares issued under the Scheme.
The effect of the Scheme will be that (i) holders of Brit Shares will become holders of the same number of New Brit Shares as the number of Brit Shares which they held immediately prior to the Scheme becoming effective; and (ii) Brit will become a wholly-owned subsidiary of New Brit.
Accordingly, immediately upon the Scheme becoming effective, a New Brit Shareholder will effectively have the same proportionate interest in the profits, net assets and distributions of the Group as it had as a Brit Shareholder immediately before the Scheme became effective.
Application will be made for the New Brit Shares to be admitted to the Official List of the UK Listing Authority and to be traded on the London Stock Exchange's main market for listed securities. New Brit is expected to replace Brit as a member of the FTSE 250 Index.
The Group will have substantially the same business and operations immediately after the Scheme Effective Date as the Group has before the Scheme Effective Date. The assets and liabilities of the Group immediately after the Scheme Effective Date will not differ substantially from the assets and liabilities which it had before the Scheme Effective Date.
New Brit will have the same Board and management team as Brit on the Scheme Effective Date. At least two Dutch resident persons will be appointed to the Board of New Brit as non-executive directors either by, or within 12 months of, the Scheme Effective Date.
There will be no substantive changes to corporate governance and investor protection measures. In particular, upon implementation of the Scheme, the majority of the continuing obligations under the UK Listing Rules will apply to New Brit; the Dutch AFM and the UK Takeover Panel will have shared jurisdiction in relation to takeovers and New Brit intends to comply with the UK Combined Code to the same extent that Brit does currently.
The Scheme requires the approval of Brit Shareholders at the Court Meeting and the General Meeting. If the Scheme is approved by the requisite majority at the Court Meeting and the General Meeting, an application will be made to the Court to sanction the Scheme at the Court Hearing. If the Scheme is sanctioned at the Court Hearing and the other conditions of the Scheme have been satisfied, the Scheme is expected to become effective, and dealings in New Brit Shares are expected to commence, at 8.00am (London time) on 21 December 2009.
The last day of dealings in Brit Shares is expected to be 18 December 2009. The last time for registration of transfers of Brit Shares is expected to be 6.00 p.m. on 18 December 2009, the Scheme Record Time.
If the Scheme has not become effective by 31 March 2010 (or such other later date the High Court may allow), it will lapse, in which event the Scheme will not proceed, Brit Shareholders will remain holders of Brit Shares and the Brit Shares will continue to be listed on the Official List.
Distribution policy
The Board of New Brit intends that its distribution policy, once the Scheme becomes effective, will follow Brit's current policy. This is to pursue a policy which seeks to grow distributions per share in line with the longer term prospects of the Group. For the purposes of this policy it is proposed that Brit's 2008 dividend per share of 15 pence will be used as the base.
It is anticipated that, for an initial period, New Brit is unlikely to pay dividends but instead will make distributions to shareholders by way of reductions of the par value of the New Brit Shares (i.e. in the form of a capital distribution). Under current law and practice, any payments to New Brit Shareholders on such a reduction of capital should be free from Dutch dividend withholding tax whilst they are made out of the Recognised Capital of New Brit. To facilitate its intended distribution policy, the Board of New Brit expects to propose that the New Brit Shares are consolidated prior to its first distribution.
New Brit Shareholders will be able to elect to receive distributions in either US dollars, pounds sterling or Euros. In the absence of an election, distributions will be made in pounds sterling. In the ordinary course it is anticipated that New Brit would make any such distributions in or around June and October of each year.
Employee Share Schemes
Options and awards under the Existing Share Schemes will not vest or become exercisable as a consequence of the Scheme. Most Option and Award Holders will instead be offered the opportunity, or in some cases required, to exchange their options and awards for equivalent options and awards over New Brit Shares. It is intended that full details about the effects of the Scheme and the new proposals will be provided to Option and Award holders in writing soon after the Scheme Circular is posted.
In order that employees may still be offered share based incentives, it is proposed that New Share Schemes will be adopted by New Brit, which are in replacement of and essentially similar to the Existing Share Schemes. The proposed New Share Schemes are the subject of separate resolutions at the General Meeting in order to enable Brit Shareholders to vote on, and approve, each of the New Share Schemes.
Taxation
The implementation of the Proposals is not expected to have any adverse tax implications for Brit Shareholders. Further details of the tax consequences of holding New Brit Shares will be set out in the Scheme Circular and the Prospectus.
CREST and Depositary Interest arrangements
New Brit Shares will be tradeable in CREST through Depositary Interests. CREST is a paperless settlement system allowing securities to be transferred from one person's CREST account to another without the need to use share certificates or written instruments of transfer. Securities issued by non-UK companies, such as New Brit, cannot be held or transferred in the CREST system. However, to enable investors to settle such securities through CREST, a depositary can hold such securities and issue to investors dematerialised Depositary Interests representing the underlying securities. The underlying securities are held on trust for the holders of the DIs.
Accordingly, it will be possible for CREST members to hold and transfer interests in New Brit Shares within CREST pursuant to a DI arrangement established by New Brit.
The DIs will be created pursuant to, and issued on the terms of, the Deed Poll, executed by the Depositary in favour of the holders of the DIs from time to time. New Brit Shares will be transferred to the Depositary or its nominated custodian and the Depositary has agreed to issue DIs to New Brit Shareholders. The Depositary has also agreed to pass on to the holders of DIs any cash or other benefits received by it as holder of New Brit Shares.
The DIs will be independent securities constituted under English law which may be held and transferred through CREST. However, the DIs will have the same security code (ISIN) as the underlying New Brit Shares and will not require a separate application for Admission. Application will be made by the Registrar for the DIs representing the New Brit Shares to be admitted to CREST on Admission.
Overseas Shareholders
The attention of any Brit Shareholder who is a citizen, resident or national of a jurisdiction outside the United Kingdom is drawn to the Scheme Circular which will contain further details relating to the treatment of Overseas Shareholders under the Proposals. In particular, any Brit Shareholder who is a Restricted Certificated Shareholder at the Scheme Record Time will not receive New Brit Shares under the Scheme. Instead, the New Brit Shares (represented by DIs) that such a Brit Shareholder would otherwise be entitled to under the Scheme will be sold in the market and the proceeds delivered to the Brit Shareholder concerned. It is possible for any Brit Shareholder who could be a Restricted Certificated Shareholder to avoid such a sale by taking the necessary steps to ensure that, prior to the Scheme Record Time, their holdings of Brit Shares are dematerialised and held through CREST, in which case they will not be a Restricted Certificated Shareholder at the Scheme Effective Date and will receive DIs in CREST on Admission in respect of their entitlement to New Brit Shares under the Scheme.
Banking facilities
On 9 November 2009 the Group entered into a new secured revolving credit facility of £175 million which will replace the Group's existing £150 million facility. The new facility has a term of three years and will be available subject to the Scheme becoming effective.
Current trading and prospects
On 30 July 2009, Brit issued its (unaudited) Half Year Financial Report for the six months ended 30 June 2009. There has not been any significant change in the financial or trading position of the Group since 30 June 2009. Additionally, on 23 October 2009, Brit published its interim management statement for the 42 week period from 1 January 2009 to 22 October 2009.
Expected timetable of principal events
The expected timetable of principal events is set out below. This timetable is based on the Board's expectations and may be subject to change. Any material changes to the timetable will be the subject of a further announcement.
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12 November 2009 |
Scheme Circular posted to Brit Shareholders and Prospectus filed with the Dutch AFM and the Financial Services Authority and published on the Company's website |
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10.00 a.m. on 29 November 2009 |
Latest time for receipt by Registrars of white forms of proxy from Brit Shareholders for the Court Meeting |
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10.15 a.m. on 29 November 2009 |
Latest time for receipt by Registrars of green forms of proxy from Brit Shareholders for the General Meeting |
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6.00 p.m. on 29 November 2009 |
Voting record time for the Court Meeting and the General Meeting |
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10.00 a.m. on 1 December 2009 |
Court Meeting |
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10.15 a.m. on 1 December 2009 |
General Meeting |
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18 December 2009 |
Court Hearing to sanction the Scheme |
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18 December 2009 |
Last day of dealings in Brit Shares |
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6.00 p.m. on 18 December 2009 |
Scheme Record Time |
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21 December 2009 |
Scheme Effective Date |
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8.00 a.m. on 21 December 2009 |
Delisting of Brit Shares, admission and listing of New Brit Shares and commencement of dealings in New Brit Shares on the London Stock Exchange's main market for listed securities |
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21 December 2009 |
Credit of New Brit Depositary Interests in uncertificated form to CREST accounts |
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By 31 December 2009 |
Despatch by the Registrar of statements of entitlements to New Brit Depositary Interests held by the corporate sponsored nominee |
These times and dates are indicative only and will depend, among other things, on the date on which the Court sanctions the Scheme and whether the conditions to the Scheme are satisfied or waived.
All references to time in this announcement are to London time unless otherwise stated.
Further information on New Brit and the Proposals are contained in the Prospectus and the Scheme Circular. Copies of the Prospectus and the Scheme Circular will be available to Brit Shareholders free of charge upon request during normal business hours on Monday to Friday each week (public holidays excepted) from Brit's registered office at 55 Bishopsgate, London EC2N 3AS, or by calling Brit's registrars on 0871 384 2865 (prior to 14 December 2009) or 0871 495 0102 (from 14 December 2009). The Prospectus and the Scheme Circular will also be available for download to eligible persons from the Group's website www.britinsurance.com.
In addition, the Prospectus and the Scheme Circular will be available for inspection at the UK Listing Authority's Document Viewing Facility at the Financial Services Authority, 25 The North Colonnade, London E14 5HS.
Definitions
The following definitions apply throughout this announcement (unless the context requires otherwise:
"Admission" or "Listing" admission of New Brit Shares to the Official List in accordance with the Listing Rules and the admission of the New Brit Shares to trading by the London Stock Exchange on its main market for listed securities in accordance with the Standards;
"Board" the board of Directors of Brit, except where the context makes it clear that it is a reference to the board of Directors of New Brit;
"Brit" or "Company" Brit Insurance Holdings PLC, a public limited company incorporated in England and Wales with registered number 3121594;
"Brit Shareholder" a holder for the time being of Brit Shares;
"Brit Shares" (i) prior to the Scheme Effective Date the ordinary shares with a nominal value of 75 pence each in the share capital of Brit; and (ii) after the Scheme Effective Date the ordinary shares with a nominal value of 8 pence each in the share capital of Brit;
"Business Day" any day on which banks are generally open in England and Wales for
the transaction of business, other than a Saturday or Sunday or a public holiday;
"Companies Act 2006" the UK Companies Act 2006;
"Court" or "High Court" the High Court of Justice of England and Wales;
"Court Hearing" the hearing of the claim form to sanction the Scheme;
"Court Meeting" the meeting of holders of Brit Shares convened by order of the Court pursuant to sections 895 to 899 of the Companies Act 2006, to consider and, if thought fit, approve the Scheme and any adjournment of that meeting
"CREST" the system for paperless settlement of trades in listed securities, of which Euroclear is the operator;
"Deed Poll" the deed poll executed by the Depositary in favour of, and which sets out the rights of, the holders of Depositary Interests from time to time;
"Depositary" the entity which will issue DIs representing entitlements to the New Brit Shares;
"Depositary Interest" or "DI" a depositary interest representing an underlying New Brit Share;
"Directors" the directors of Brit or the directors of New Brit, from time to time, as the context requires;
"Dutch AFM" the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten);
"Equiniti" Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA;
"Euroclear" Euroclear UK & Ireland Limited, the operator of CREST;
"Existing Share Schemes" the existing share schemes of Brit, being the 1998 Approved Executive Share Option Scheme, the 1998 Unapproved Executive Share Option Scheme, the Brit Bonus Share Matching Plan 2007, the Brit Employee Share Ownership Plan 2001, the Brit Executive Share Option Scheme 2003 and the Brit Performance Share Plan 2003;
"FSA" or "UK FSA" the United Kingdom Financial Services Authority;
"General Meeting" the general meeting of shareholders in connection with the Proposals to be held at 55 Bishopsgate, London EC2N 3AS at 10.15 a.m. on 1 December 2009, and any adjournment thereof;
"Group" (i) prior to the Scheme Effective Time, Brit and its subsidiaries; and (ii) after the Scheme Effective Time, New Brit and its subsidiaries;
"London Stock Exchange" the London Stock Exchange PLC;
"New Brit" Brit Insurance Holdings N.V. a company incorporated in the Netherlands, with registered number 24464323;
"New Brit Shares" ordinary shares of €1.00 each in the share capital of New Brit;
"New Share Schemes" the New Brit Bonus Share Matching Plan 2009, the New Brit Performance Share Plan 2009, the New Brit Employee Share Ownership Plan 2009, the New Brit Executive Share Option Scheme 2009, the New Brit Approved Executive Share Option Scheme 2009, the New Brit Unapproved Executive Share Option Scheme 2009 and the New Brit Sharesave Scheme 2009;
"Official List" the Official List of the UK Listing Authority;
"Option and Award Holders" holders of options and awards under the Existing Share Schemes;
"Proposals" the proposals relating to the implementation of the Scheme, and the adoption by New Brit of the New Share Schemes;
"Prospectus" the prospectus relating to New Brit and the New Brit Shares;
"Recognised Capital" capital recognised as paid in for Dutch dividend withholding tax purposes;
"Registrars" prior to 14 December 2009 Equiniti Limited of, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA and from 14 December 2009, Computershare Investor Services PLC of The Pavilions, Bridgwater Road, Bristol BS99 6ZZ;
"Restricted Certificated Shareholder" means a Brit Shareholder who holds Brit Shares in certificated form and who is a citizen, resident or national of a Restricted Jurisdiction;
"Restricted Jurisdiction" a jurisdiction in which for the corporate sponsored nominee to hold on behalf of a Brit Shareholder, Depositary Interests on terms that would permit the corporate sponsored nominee to deal in such Depositary Interests on behalf of such Brit Shareholder would or might infringe the laws of any jurisdiction outside the United Kingdom or the Netherlands or would or might require New Brit to obtain any governmental or other consent or effect any registration, filing or other formality;
"Scheme" the scheme of arrangement pursuant to sections 895 to 899 of the Companies Act 2006 set out in the Scheme Circular or with or subject to any modification, addition or condition approved or imposed by the Court;
"Scheme Circular" the circular to be sent to holders of Brit Shares containing details of the Proposals;
"Scheme Effective Date" the date on which the Scheme becomes effective in accordance with its terms, expected to be 21 December 2009;
"Scheme Effective Time" the time at which the Scheme becomes effective;
"Scheme Record Time" 6.00 p.m. London time on the Business Day immediately preceding the Scheme Effective Date;
"Standards" the current edition of the Admission and Disclosure Standards produced by the London Stock Exchange;
"UK Combined Code" the UK Combined Code on Corporate Governance published by the Financial Reporting Council in June 2008;
"UKLA" or "UK Listing Authority" the Financial Services Authority, acting in its capacity as the competent authority for the purposes of Part VI of UK Financial Services and Markets Act 2000;
"UK Listing Rules" the listing rules and regulations made by the UKLA;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;
"US" or "United States" the United States of America, its territories and possessions, any state of the United States and the District of Columbia.
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Enquiries: |
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Brit Insurance Holdings PLC |
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Dane Douetil, Chief Executive Officer
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020 7984 8500 |
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Neil Manser, Head of Investor Relations
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020 7098 6980 |
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Numis Securities Limited |
020 7260 1000 |
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Oliver Hemsley |
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Stuart Skinner |
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Lexicon Partners Limited |
020 7653 6000 |
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Angus Winther |
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Haggie Financial |
020 7417 8989 |
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David Haggie |
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Peter Rigby |
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Juliet Tilley |
This announcement does not constitute an invitation or offer to sell or the solicitation of an invitation or offer to buy any security. None of the securities referred to in this announcement shall be sold, issued, exchanged or transferred in any jurisdiction in contravention of applicable laws.
Numis Securities Limited is acting as sponsor for New Brit's listing and as joint financial adviser to Brit and no one else in connection with the Proposals and will not be responsible to anyone other than Brit for providing the protections afforded to its clients or for providing advice in relation to the Proposals or the contents of this announcement.
Lexicon Partners Limited is acting as joint financial adviser to Brit and no one else in connection with the Proposals and will not be responsible to anyone other than Brit for providing the protections afforded to its clients or for providing advice in relation to the Proposals or the contents of this announcement.
Notice to United States residents
This announcement is not an offer of securities in the United States.
The New Brit shares to be issued in connection with the Proposals will not be, and are not required to be, registered with the US Securities and Exchange Commission under the US Securities Act of 1933, as amended, in reliance on the exception from registration provided by Section 3(a)(10) thereof.
Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks and uncertainties materialise, New Brit's results of operations could be materially affected.
Notes to Editors
Brit Insurance's operations comprise three strategic business units: Brit Global Markets, Brit Reinsurance and Brit UK. All three have access to the two regulatory vehicles through which Brit Insurance underwrites: Brit Insurance Limited which is a UK FSA regulated insurance company and Lloyd's syndicate 2987 which is managed by Brit Syndicates Limited. Brit Insurance has UK underwriting offices in London, Reading, Birmingham, Bristol, Glasgow, Leeds, Darlington, Belfast and Manchester.
For more information please go to: www.britinsurance.com
Related Shares:
BRE.L