31st Oct 2005 07:00
31 October 2005Joint Announcement by Royal Dutch Shell plc ('Royal Dutch Shell') and N.V.Koninklijke Nederlandsche Petroleum Maatschappij ('Royal Dutch')Definitive terms of the restructuring of certain subsidiaries and intendedmethod of obtaining 100% of Royal Dutch sharesSummaryRoyal Dutch Shell and Royal Dutch today announce the definitive terms of, andthe timetable for, the proposed restructuring that was previously announced on20 September 2005. This restructuring and merger of certain subsidiaries willachieve governance, management and fiscal efficiencies for the Shell group.As part of the proposed restructuring, Royal Dutch will be merged into asubsidiary, Shell Petroleum N.V. (`SPNV'), following which the remainingminority holders of Royal Dutch will be paid ¢â€š¬52.21 per Royal Dutch ordinaryshare held. Alternatively, eligible UK resident shareholders who so elect willbe entitled to receive loan notes exchangeable into Royal Dutch Shell `A'shares.A Royal Dutch Extraordinary General Meeting (`EGM') is required to implementthe proposed restructuring and resolve upon the merger. The EGM will be held on16 December 2005 in The Hague and it is expected that the restructuring will becompleted on or about 21 December 2005. Royal Dutch Shell intends to vote its98.5% shareholding in Royal Dutch in favour of the restructuring and the mergerat the EGM. The transaction is also subject to other customary closingconditions, which are expected to be satisfied prior to 21 December 2005.Merger termsIn the proposed merger of Royal Dutch into SPNV, the remaining minorityshareholders in Royal Dutch will be paid ¢â€š¬52.21 per Royal Dutch share held.This will be paid to Hague registered or bearer shareholders in euro. Paymentsto holders of New York Registered Shares will be made in U.S. dollars based onthe exchange rate on the business day prior to the effective date of themerger. Eligible UK resident shareholders may elect instead to receive loannotes that are exchangeable into not more than two Royal Dutch Shell `A' sharesfor each Royal Dutch ordinary share held.Payment will be made as soon as possible after the merger is completed (whichis expected to be 21 December 2005).If all remaining minority shareholders receive cash for their Royal Dutchshares, total consideration of approximately ¢â€š¬1.6 billion (approximately $2.0billion at current exchange rates) is expected to be paid in the fourth quarterof 2005. This amount will be additional to the previously announced buy backprogram of $5 billion for 2005.The ¢â€š¬52.21 per share represents two times the average of the closing prices ofthe Royal Dutch Shell `A' shares over the period 20 July 2005 to 28 October2005 and has been calculated based on the two for one share exchange of theoriginal tender offer which formed part of the unification transaction.All Royal Dutch shareholders who hold their shares at the applicable recorddate will also receive the Royal Dutch interim dividend for the 3rd quarter of2005 of ¢â€š¬0.46 per share (or US$0.5556 per share for holders of New YorkRegistered Shares) which will be payable on 15 December 2005. As would be thecase in Dutch statutory squeeze-out proceedings, the merger terms provide (1)for interest to accrue on the ¢â€š¬52.21 per share amount at the statutory rate of4% from 31 October 2005 until the effective date of the merger, as part of theconsideration under the merger, and (2) for any gross dividends payable in thatperiod to be deducted from that interest amount. As the third quarter 2005interim dividend will exceed the amount of interest accrued as of 21 December2005, it is not expected that interest will be payable.As previously announced, if the proposed merger does not become effective forany reason, the Board of Royal Dutch Shell intends to commence Dutch statutorysqueeze-out proceedings in order to acquire the remaining shares held by RoyalDutch minority shareholders. Each of Royal Dutch Shell and Royal Dutch has theright to abandon the restructuring if it is not completed before 1 January2006.The Board of Royal Dutch believes that the proposed merger is in the bestinterests of Royal Dutch and the enterprise associated with it and is fair toits minority shareholders.In connection with the transaction, ABN AMRO Bank N.V., as financial adviser tothe Royal Dutch Board, has delivered two written opinions to the Royal DutchBoard to the effect that based upon and subject to the matters considered,assumptions used and qualifications set forth in the opinion i) as at 31October 2005, the exchange ratio in the merger and the cash considerationpursuant thereto were fair, from a financial point of view, to minorityshareholders who will receive the cash consideration in the merger and ii) thevalue of the loan note consideration to be offered to eligible UK residentshareholders, when issued, will not be greater than the value of the cashconsideration under the terms of the merger.The proposed merger will complete the unification of Royal Dutch and ShellTransport under Royal Dutch Shell and follows the successful exchange offer inwhich holders of 98.5% of Royal Dutch shares participated and received RoyalDutch Shell shares. The proposed merger will allow the remaining minorityshareholders to receive their consideration more quickly than if Royal DutchShell had implemented Dutch statutory squeeze-out proceedings.Election for loan notes by UK resident shareholdersEligible UK resident shareholders who give appropriate representations mayelect to receive loan notes in lieu of the cash payment. The loan notes issuedto a shareholder will have a total face amount equal to the sterling equivalentof the cash payment that the shareholder would otherwise be due under the termsof the proposed merger. The loan notes are, at the option of the holder orRoyal Dutch Shell, exchangeable into Royal Dutch Shell `A' shares on fixedexchange dates. The number of `A' shares that a loan note holder will receivewill be the aggregate principal amount of their loan notes divided by theaverage closing market price of the `A' shares on the London Stock Exchange onthe three trading days prior to the relevant exchange date, provided that noloan note holder will be entitled to more than two `A' shares for every RoyalDutch share held prior to completion of the merger. Royal Dutch Shell intends(but is not obliged) to exchange the loan notes for newly issued `A' shares inRoyal Dutch Shell on the first exchange date, which is 6 January 2006.Eligible UK resident individual shareholders who receive a loan note instead ofcash should be able to achieve a rollover into `A' shares in Royal Dutch Shellfor UK capital gains tax purposes. UK resident shareholders should note that asa result of the two share limit, the market value of the shares received onexchange will be less than the face amount of the loan notes if the `A' sharesare trading below the sterling equivalent of ¢â€š¬26.1050 (being one-half of themerger consideration of ¢â€š¬52.21) at the time of exchange. The sterlingequivalent value of the loan note will be set using the euro/sterling exchangerate on the day prior to the date of the merger.To the extent possible, Royal Dutch has endeavoured to make arrangements withthe various institutions which administer its share registers or through whichits shareholders hold their shares, so that UK resident shareholders shouldreceive a document explaining the terms of the loan notes and the election formthey need to complete to elect for these. Eligible UK resident shareholders mayalso go to www.shell.com/royaldutchmerger or call +44 20 7614 2950 to obtain acopy of the loan note document and the election form.InformationRoyal Dutch expects to publish the formal notice of the Royal Dutch EGM andmake available proxy material in mid November 2005.Documents relating to the merger will be filed at the Trade Register in TheHague today. These documents and other information about the restructuring andthe merger will be made available at www.shell.com/royaldutchmerger.Enquiries:MediaUK/USA/International:+44 20 7934 6238+44 20 7934 5963+44 20 7934 3505Netherlands:+31 70 377 8750Institutional InvestorsUK:David Lawrence +44 20 7934 3855Gerard Paulides +44 20 7934 6287Ingrid Turley +44 20 7934 2224Europe:Bart van der Steenstraten +31 70 377 3996USA:Harold Hatchett +1 212 218 3112The exchangeable loan notes, and the Royal Dutch Shell shares for which theymay be exchanged, will only be available to eligible UK resident shareholderswho elect and provide appropriate representations. The loan notes and the RoyalDutch Shell Class A ordinary shares into which they are exchangeable will notbe offered to US persons and have not been and will not be registered under theU.S. Securities Act of 1933, as amended (the "Securities Act"), and may not bereoffered, resold or otherwise transferred in the United States or to U.S.persons unless an exemption from the registration requirements of theSecurities Act is available.The loan notes, and the Royal Dutch Shell shares for which they may beexchanged, will not be offered to persons who are established, domiciled orresident in the Netherlands. Shell Petroleum N.V. as issuer of the loan noteshas submitted a statement to the Netherlands Authority for the FinancialMarkets that the laws and regulations of the jurisdictions in which the loannotes are offered have been and will be complied with.ABN AMRO Bank N.V. ("ABN AMRO") is acting for Royal Dutch (and is acting asDutch exchange agent for Shell Petroleum N.V.) and no one else in connectionwith the transaction and will not be responsible to anyone other than RoyalDutch and Shell Petroleum N.V. for providing the protections afforded toclients of ABN AMRO or for providing advice in relation to the matters referredto in this announcement.ENDROYAL DUTCH SHELL PLCRelated Shares:
RDSA.LRDSB.L