9th May 2005 08:53
Wireless Group PLC09 May 2005 Part 1 of 2 Not for release, publication or distribution in or into or from the United States, Canada, Australia or Japan Ulster Television plc Recommended cash offer for The Wireless Group Plc to be made by Numis Securities Limited on behalf of Ulster Television plc. Summary • The Offer will be 91 pence in cash for each Wireless Share. On this basis, the Offer values the entire existing issued and to be issued ordinary share capital of Wireless (assuming full exercise of the options granted under the Wireless Share Option Schemes which will become exercisable at or below the Offer Price upon the Offer becoming or being declared unconditional in all respects and full conversion of the Wireless B Shares) at approximately £98.2 million. • Wireless Shareholders will also be offered: • a Partial Share Alternative on the basis of 71.5 pence in cash and 0.03951 New UTV Shares for every Wireless Share; and • an Additional Share Facility whereby Wireless Shareholders who validly accept the Offer and the Partial Share Alternative may elect, subject to availability, to receive further New UTV Shares instead of the cash that they would otherwise be entitled to under the Partial Share Alternative on the basis of 0.0020263 New UTV Shares for every 1 pence in cash they would otherwise be entitled under the Partial Share Alternative. • The Offer represents a premium of (i) approximately 10.3 per cent. over the closing middle market price of 82.5 pence per Wireless Share on 18 April 2005, the last dealing day prior to the date on which UTV announced that it was in discussions with Wireless concerning a potential offer for Wireless and (ii) approximately 1.1 per cent. over the closing middle market price of 90 pence per Wireless Share on 11 February 2005, the last dealing day prior to the announcement by Wireless that it had received a proposal regarding a possible cash offer for Wireless. • The Partial Share Alternative values each Wireless Share at approximately 91 pence and the entire issued and to be issued ordinary share capital of Wireless (assuming full exercise of the options granted under the Wireless Share Option Schemes which will become exercisable at or below the Offer Price upon the Offer becoming or being declared unconditional in all respects and full conversion of the Wireless B Shares) at approximately £98.2 million, based on the closing middle market price of 493.5 pence per UTV Share on the date of this announcement. On this basis, (i) the Partial Share Alternative represents a premium of approximately 10.3 per cent. over the closing middle market price of 82.5 pence per Wireless Share on 18 April 2005, the last dealing date prior to the date on which UTV announced that it was in discussions concerning a potential bid for Wireless and (ii) approximately 1.1 per cent. over the closing middle market price of 90 pence per Wireless Share on 11 February 2005, the last dealing day prior to the announcement by Wireless that it had received a proposal regarding a possible cash offer for Wireless. • The Offer is conditional, inter alia, on the approval of UTV Shareholders at an extraordinary general meeting to be convened shortly. • The Wireless Independent Directors, who have been so advised by Goldman Sachs International, consider the terms of the Offer to be fair and reasonable. In providing advice to the Wireless Independent Directors, Goldman Sachs International has taken account of the Wireless Independent Directors' commercial assessments. • Accordingly, the Wireless Independent Directors are unanimously recommending that Wireless Shareholders accept the Offer and the only Wireless Independent Director who is also a Wireless Shareholder has irrevocably undertaken to accept the Offer in respect of his entire interest in Wireless (comprising, in aggregate, 2,000 Wireless Shares and representing approximately 0.0024 per cent. of the existing issued ordinary share capital of Wireless). • UTV has also received irrevocable undertakings to accept the Offer and not to elect for the Partial Share Alternative from News International and LMC Radio in respect of their entire holdings of, in aggregate, 42,804,987 Wireless Shares, representing approximately 51.2 per cent. of Wireless's existing issued ordinary share capital. The terms of the irrevocable undertakings require acceptance of the Offer even if a competing or higher offer is made by a third party, but cease to be binding if the Offer lapses or is withdrawn. In addition, pursuant to an agreement between UTV and News International, dated the same day as this announcement, News International has (subject to the Offer becoming or being declared unconditional in all respects) agreed to sell its entire holding of Wireless B Shares (comprising 18,410 Wireless B Shares, being all of the issued Wireless B Shares) for £910 per Wireless B Share (being an amount equal to the value, at the Offer Price, of the Wireless Shares into which such Wireless B Shares are convertible). • The formal documentation relating to the Offer is expected to be despatched to Wireless Shareholders (other than certain Overseas Shareholders) shortly. • Commenting on the Offer, Patrick Cox, the Senior Independent Non Executive Director of Wireless said: "The Independent Directors of Wireless are pleased to recommend this offer tothe Wireless shareholders. The offer provides the best available cash value forthose investors that are seeking to monetise their holdings and provides a sharealternative for those investors that would elect to maintain their exposure tothe growing UK radio market. We believe that the combination of Wireless and UTVwill create a strong competitor in the UK media market, with a diversifiedportfolio in TV and radio and a platform for expansion in the new digitalchannel formats." • Commenting on the Offer, John McCann, Chief Executive of UTV said: "UTV looks forward to bringing Wireless's radio assets into the UTV portfolio.We believe that this acquisition will offer exciting opportunities for thecontinued expansion of UTV's business by providing a cornerstone for a broaderradio strategy in Great Britain." This summary should be read in conjunction with the full text of the followingannouncement. Appendix II contains the sources and bases for certain informationset out in this announcement. Appendix III to this announcement containsdefinitions of certain expressions used in this summary and this announcement. Enquiries:Jag Mundi, Head of Corporate FinanceChris Wilkinson, Director, Corporate BrokingNumis Securities Limited Tel: 020 7776 1500(Financial Adviser to UTV) Richard Campbell-Breeden, Managing DirectorRobert Sorrell, Executive DirectorGoldman Sachs International Tel: 020 7774 1000(Financial Adviser to Wireless) Numis, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for UTV and no one else in connectionwith the Offer and will not be responsible to anyone other than UTV forproviding the protections afforded to clients of Numis nor for providing advicein relation to the Offer or in relation to the contents of this announcement orany transaction or arrangement referred to herein.Goldman Sachs International, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for Wirelessand no one else in connection with the Offer and will not be responsible toanyone other than Wireless for providing the protections afforded to clients ofGoldman Sachs International nor for providing advice in relation to the Offer orin relation to the contents of this announcement or any transaction orarrangement referred to herein.The Offer will not be made, directly or indirectly, and this announcement shouldnot be sent, in or into or from the United States, Canada, Australia or Japan orby use of the mails or by any means or instrumentality (including, withoutlimitation, telephonically or electronically) of interstate or foreign commerceof, or any facilities of a national securities exchange of, any of thesejurisdictions and doing so may render invalid any purported acceptance of theOffer. Accordingly, copies of this announcement and any other document relatingto the Offer are not being, and must not be, mailed or otherwise distributed orsent in or into the United States, Canada, Australia or Japan. Any person(including, without limitation, custodians, nominees and trustees) who may havecontractual or legal obligations, or may otherwise intend, to forward thisannouncement to any jurisdiction outside the United Kingdom should read therelevant provisions of the Offer Document before taking any action.The availability of the Offer to persons not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions in which they are located.Persons who are not resident in the United Kingdom should inform themselvesabout and observe any applicable requirements.This announcement is not intended to and does not constitute, or form part of,an offer or any solicitation of an offer or an invitation to purchase anysecurities.The Offer will be subject to the City Code. Under the rules of the City Code,there are certain dealing disclosure requirements which apply in respect ofdealings in relevant securities during an offer period. An offer period wasdeemed to have commenced by virtue of the announcement on 14 February 2005 thatWireless had received a proposal regarding a possible cash offer for Wireless.As a result, any person who, alone or acting together with any other person(s)pursuant to an agreement or understanding (whether formal or informal) toacquire or control securities of UTV or Wireless, owns or controls, or becomesthe owner or controller, directly or indirectly of one per cent. or more of anyclass of securities of UTV or Wireless is generally required under theprovisions of Rule 8 of the City Code to notify a Regulatory Information Serviceand the Panel of every dealing in such securities until such time as the offerperiod ends for the purposes of the City Code. If required, any disclosuresshould be made on an appropriate form by no later than 12 noon London time onthe business day following the date of the dealing transaction. Thesedisclosures should be sent to a Regulatory Information Service with a copy sent(by fax or email) to the Panel (fax number +44 (0)20 7236 7013, email:[email protected]).This announcement contains certain statements that are or may beforward-looking. These statements typically contain words such as "intends","expects", "anticipates", "estimates" and words of similar import. By theirnature, forward-looking statements involve risk and uncertainty because theyrelate to events and depend on circumstances that will occur in the future.There are a number of factors that could cause actual results and developmentsto differ materially from those expressed or implied by such forward-lookingstatements. These factors include, but are not limited to, factors identifiedelsewhere in this announcement as well as the following possibilities: futurerevenues are lower than expected; costs of difficulties relating to theintegration of the businesses of UTV and Wireless, or of other futureacquisitions, are greater than expected; expected cost savings from thetransaction or from other future acquisitions are not fully realised or notrealised within the expected time frame; competitive pressures in the industryincrease; general economic conditions or conditions affecting the relevantindustries, whether internationally or in the places where UTV and Wireless dobusiness, are less favourable than expected; and/or conditions in the securitiesmarket are less favourable than expected. Part 2 of 2 Not for release, publication or distribution in or into or from the United States, Canada, Australia or Japan Ulster Television plcRecommended cash offer for The Wireless Group Plc to be made by Numis Securities Limited on behalf of Ulster Television plc. • The Offer will be 91 pence in cash for each Wireless Share. • Wireless Shareholders will also be offered a Partial Share Alternative on the basis of 71.5 pence in cash and 0.03951 New UTV Shares for every Wireless Share. • UTV has received undertakings to accept the Offer in respect of approximately 51.2 per cent., in aggregate, of the existing issued ordinary share capital of Wireless. These undertakings remain binding in the event of a competing or higher offer from a third party. • UTV has agreed to acquire (subject to the Offer becoming unconditional in all respects) News International Limited's entire holding of Wireless B Shares (comprising 18,410 Wireless B Shares, being all of the issued Wireless B Shares). 1. IntroductionThe Board of UTV and the Wireless Independent Directors are pleased to announcea recommended cash offer to be made by Numis on behalf of UTV for the entireissued and to be issued ordinary share capital of Wireless. 2. Terms of the OfferThe Offer, which will be made on the terms and subject to the conditions set outbelow and in Appendix I to this announcement, and subject to the further termsto be set out in the Offer Document and in the Form of Acceptance, will be madeon the following basis: for each Wireless Share 91 pence in cash On this basis, the Offer values the entire existing issued and to be issuedordinary share capital of Wireless (assuming full exercise of the optionsgranted under the Wireless Share Option Schemes which will become exercisable ator below the Offer Price upon the Offer becoming or being declared unconditionalin all respects and full conversion of the Wireless B Shares) at approximately£98.2 million. The Offer represents a premium of (i) approximately 10.3 per cent. over theclosing middle market price of 82.5 pence per Wireless Share on 18 April 2005,the last dealing day prior to the date of the announcement by UTV that it was indiscussions concerning a potential offer for Wireless and (ii) approximately 1.1per cent. over the closing middle market price of 90 pence per Wireless Share on11 February 2005, the last dealing day prior to the announcement by Wirelessthat it had received a proposal regarding a possible cash offer for Wireless.The Wireless Shares are to be acquired, pursuant to the Offer, fully paid andfree from all liens, charges, equitable interests, encumbrances, rights ofpre-emption and other third party rights or interests of any nature whatsoeverand together with all rights now or hereafter attaching to them. 3. Partial Share Alternative Wireless Shareholders who validly accept the Offer will be able to elect for thePartial Share Alternative in respect of all or part of their holdings ofWireless Shares, in which case such Wireless Shares shall be acquired on thefollowing basis:for each Wireless Share 71.5 pence in cash and 0.03951 New UTV Sharesand so in proportion for any other number of Wireless Shares which are thesubject of valid elections for the Partial Share Alternative.The Partial Share Alternative values each Wireless Share at 91 pence and theentire issued and to be issued ordinary share capital of Wireless (assuming fullexercise of the options granted under the Wireless Share Option Schemes whichwill become exercisable at or below the Offer Price upon the Offer becoming orbeing declared unconditional in all respects and full conversion of the WirelessB Shares) at approximately £98.2 million, based on the closing middle marketprice of 493.5 pence per UTV Share on the date of this announcement. On thisbasis, the Partial Share Alternative represents a premium of (i) approximately10.3 per cent. over the closing middle market price of 82.5 pence per WirelessShare on 18 April 2005, the last dealing date prior to the date on which UTVannounced that it was in discussions concerning a potential offer for Wirelessand (ii) approximately 1.1 per cent. over the closing middle market price of 90pence per Wireless Share on 11 February 2005, the last dealing day prior to theannouncement by Wireless that it had received a proposal regarding a possiblecash offer for Wireless.Fractions of New UTV Shares will not be allotted and the number of New UTVShares allotted to each Wireless Shareholder who validly accepts the Offer andelects for the Partial Share Alternative will be rounded down to the nearestwhole number. The amount of any entitlement to a fraction of a New UTV Shareshall be paid in full in cash to the accepting Wireless Shareholder.Full election under the Partial Share Alternative in respect of all of theWireless Shares (assuming full exercise of the options granted under theWireless Share Option Schemes which will become exercisable at or below theOffer Price upon the Offer becoming or being declared unconditional in allrespects) would involve the issue of 3,536,231 New UTV Shares representingapproximately 6.1 per cent. of the enlarged issued ordinary share capital of UTV(being less than 10 per cent. of the current issued ordinary share capital ofUTV). Each of News International and LMC Radio have irrevocably undertaken notto elect for the Partial Share Alternative in respect of their entire beneficialholdings of Wireless Shares. The New UTV Shares to which they would otherwise beentitled under the Partial Share Alternative will therefore be available tosatisfy elections under the Additional Share Facility referred to below.Elections for the Partial Share Alternative will only be accepted in respect ofwhole numbers of Wireless Shares.The Partial Share Alternative is conditional on the Offer becoming or beingdeclared unconditional in all respects.The Partial Share Alternative will remain open for acceptance until 3.00 p.m. onthe First Closing Date. If, at that time, the Offer is or is capable of beingdeclared unconditional as to acceptances and it is so declared, or it is not sodeclared and it is extended, the Partial Share Alternative will remain open for14 days thereafter, but may then be closed without prior notice. If the PartialShare Alternative closes or lapses at a time when the Offer remains conditionalas to acceptances, the right is reserved to reintroduce a partial sharealternative so long as the Offer is then unconditional as to acceptances.UTV currently intends to close the Partial Share Alternative 14 days after theFirst Closing Date to avoid any obligation to publish a prospectus under theProspectus Directive to be implemented with effect from 1 July 2005. 4. Additional Share Facility Wireless Shareholders who validly accept the Offer and who validly elect for thePartial Share Alternative in respect of their entire holding of Wireless Sharesmay elect, subject to availability, to receive additional New UTV Shares insteadof all or part of the cash that they would otherwise be entitled to under thePartial Share Alternative. By making an election under the Additional ShareFacility, such Wireless Shareholders will receive New UTV Shares on thefollowing basis:for every 1 pence in cash to which they 0.0020263 New UTV Share(s)would otherwise be entitled under thePartial Share Alternative The aggregate number of New UTV Shares available to satisfy elections under theAdditional Share Facility shall not exceed the aggregate number of New UTVShares available under the Partial Share Alternative and not utilised byelections under it. Any available New UTV Shares after satisfaction in full ofthe elections for the share element under the Partial Share Alternative will beapplied in satisfying as far as possible, on a pro rata basis, Additional ShareElections.The Additional Share Facility is conditional upon the Offer becoming or beingdeclared unconditional in all respects.The Additional Share Facility will remain open for so long as the Partial ShareAlternative remains open. 5. Background to, reasons for and benefits of the Offer The UTV Board believes that the combination of UTV and Wireless has a compellingstrategic, commercial and financial rationale. Strategic Rationale The UTV Board has been considering for some time the possibility of developing aradio strategy in Great Britain. Given the scale and market share of UTV'scurrent business in Northern Ireland and the Republic of Ireland, the Boardconcluded that one way of continuing to build the UTV Group's radio business andleverage its expertise in this area was to explore opportunities for acquiringradio businesses in Great Britain.Wireless' national franchise and diversified portfolio of local stations willprovide a significant contribution to developing UTV's strategy of expansion inthe radio sector and UTV's existing expertise will enable it to assist Wirelessin further developing its leading role in UK radio broadcasting. The acquisitionwill provide additional financial strength to drive both organic growth and thepotential for subsequent acquisition-led growth. The UTV Board believes that itcan be used as the cornerstone of a broader radio strategy in Great Britain.The Enlarged Group will have extensive broadcasting assets and will be wellplaced to pursue opportunities in both analogue and digital broadcasting. Inanalogue radio, the Enlarged Group will hold one of three commercial nationallicences, will own 22 independent local radio stations and will have interestsin three other independent local radio stations. In digital radio, thecombination of digital radio broadcasting and Wireless's interests in localdigital multiplexes will enable exploitation of the strong anticipated growth intake-up in this sector - 13 million homes in the UK are forecast to have digitalradio in 2008 (up from approximately 1 million in 2004). Commercial Rationale The UTV Board believes that the Enlarged Group will provide a very attractivemarketing proposition to both local and national advertisers and will thereforeseek to exploit the forecasted growth in radio advertising expenditure, whichincreased by 3.4 per cent. to £604 million in 2004 and is expected to rise atthe same rate in 2005. The Enlarged Group will aim to increase advertisingrevenue by promoting its wider geographic coverage and offering of channels.Financial RationaleAttractive cost savings: The UTV Board believes that the annualised pre-taxoperating cost savings resulting from the Offer will amount to at least £1.5million in the first full financial year of ownership of Wireless (the year to31 December 2006) *. These savings will be realised through operationalefficiencies as well as the rationalisation of stock exchange listing andheadquarters' costs and other overhead areas.Earnings accretion: The UTV Board believes that the Offer, if successful, willhave an accretive effect on earnings per UTV Share in the first full financialyear of ownership of Wireless.*(*Note: This statement does not constitute a profit forecast nor should it beinterpreted to mean that future earnings per UTV Share following the Offerbecoming or being declared unconditional in all respects will necessarily matchor exceed historical earnings per UTV Share.) 6. Further terms of the Offer The Offer will be conditional, inter alia, on the passing of the Resolutions byUTV Shareholders at the EGM, which, if passed, will approve the Offer as a Class1 transaction, enable the UTV Directors to offer the New UTV Shares under thePartial Share Alternative and the Additional Share Facility and amend thearticles of association of UTV to increase its borrowing powers.The New UTV Shares will be issued credited as fully paid and free from allliens, equities, charges, encumbrances and other interests. The New UTV Shareswill be identical to and rank pari passu in all respects with the existingissued UTV Shares, including the right to receive and retain all dividends andother distributions declared, made or paid thereafter, save that the New UTVShares will not carry the right to receive the final UTV dividend in respect ofthe year ended 31 December 2004 of 7p (net) per UTV Share.The Offer will also be subject to the conditions and further terms set out inAppendix I to this announcement and the further terms and conditions to be setout in the Offer Document and Form of Acceptance. 7. Irrevocable Undertakings and Wireless B Shares UTV has received an irrevocable undertaking to accept the Offer from KeithSadler, being the only Wireless Independent Director who is also a WirelessShareholder, in respect of his entire beneficial holdings of Wireless Shares,amounting to 2,000 Wireless Shares, representing approximately 0.0024 per cent.,in aggregate, of the existing issued ordinary share capital of Wireless.In addition, Wireless has received irrevocable undertakings to accept the Offerand not to elect for the Partial Share Alternative from News International andLMC Radio in respect of their entire beneficial holdings of Wireless Shares,amounting to 42,804,987 Wireless Shares, representing approximately 51.2 percent, in aggregate, of the existing issued ordinary share capital of Wireless.Accordingly, Wireless has received irrevocable undertakings to accept the Offerin respect of 42,806,987 Wireless Shares, representing approximately 51.2 percent of the existing issued ordinary share capital of Wireless.The terms of the irrevocable undertakings require acceptance of the Offer evenif a competing or higher offer is made by a third party. Such undertakings willcease to be binding only if the Offer lapses or is withdrawn.In addition, pursuant to an agreement between UTV and News International, datedthe same day as this announcement, News International has (subject to the Offerbecoming unconditional in all respects) agreed to sell its entire holding ofWireless B Shares (comprising 18,410 Wireless B Shares, being all of the issuedWireless B Shares) for £910 per Wireless B Share (being an amount equal to thevalue, at the Offer Price, of the Wireless Shares into which such Wireless BShares are convertible). 8. Financing of the Offer The cash consideration payable under the Offer is being financed by a committeddebt facility agreement with The Governor and Company of The Bank of Ireland.Further details of the facility agreement will be set out in the Offer Document. 9. Information on UTV UTV is the Northern Ireland ITV broadcaster and is also received byapproximately two thirds of households in the Republic of Ireland. It is listedon the Official List with a market capitalisation of approximately £268 millionas at the date of this announcement.UTV has five independent local radio stations in the Republic of Ireland,broadcasting to Cork, Limerick, Dublin, Drogheda and Dundalk, and also has a33.3 per cent. interest in Juice FM, an independent local radio stationoperating in Liverpool. UTV was recently awarded the radio broadcasting licencecovering Belfast and the surrounding area. This new licence will come on airearly next year, broadcasting to approximately 55 per cent. of the adultpopulation in Northern Ireland and adding to the 51 per cent. of the adultpopulation in the Republic of Ireland to which UTV's stations already broadcast.A further 16 per cent. of the adult population in the Republic of Ireland isserved by independently owned radio stations whose airtime is sold by UTV'sradio sales house.Detailed financial information on UTV for the three years ended 31 December 2004will be set out in the Offer Document which will be despatched to WirelessShareholders shortly. The summarised historical results of UTV set out belowhave been extracted from the audited consolidated accounts of UTV: Year ended 31 December 2004 2003 2002 £'000 £'000 £'000Turnover 63,503 53,961 47,294Profit before taxation and goodwillamortisation 17,497 13,625 13,947Profit before taxation 13,868 9,536 11,281Net assets 34,275 29,783 25,862Net debt (18,456) (29,051) (27,425) 10. Information on Wireless Wireless is the UK's fifth largest radio broadcaster as measured by ownershippoints. Its principal operations comprise talkSPORT, a national, speech based,sports station, and 17 independent local radio stations, predominantly in theNorthwest of England, Scotland and Wales.In addition, Wireless has expanded into digital radio and currently owns stakesin consortia that hold local digital multiplex licences covering Greater London,Scotland, Stoke, South Wales and Bradford and Huddersfield.Detailed financial information on Wireless for the three years ended 31 December2004 will be set out in the Offer Document which will be despatched to WirelessShareholders shortly. The summarised historical results of Wireless set outbelow have been extracted from the audited consolidated accounts of Wireless: Year ended 31 December 2004 As reported Restated 2002 £'000 2003 2003 £'000 £'000 £'000 Turnover 39,722 32,547 32,547 28,470Profit/(Loss) before taxationand 2,134 1,091 1,091 (5,056)goodwill amortisationProfit/(Loss) before taxation (9,697) (11,175) (11,175) (20,260)Net assets 16,361 20,029 19,745 31,172Net debt (5,740) (3,345) (3,345) (5,088) 11. Current Trading of UTV and Wireless and Prospects for the Enlarged Group UTV On 21 February 2005, UTV completed the acquisition of the local independentradio station LMFM, covering Drogheda and Dundalk, for £6.7 million. On 7 March2005, UTV announced that it had been awarded the new Belfast radio licence bythe communications regulator, Ofcom. The new station will broadcast on 105.1 FMto Belfast and the surrounding area.As stated in UTV's announcement of its preliminary results on 7 March 2005,television and radio advertising revenues were expected to be 5 per cent. up and20 per cent. up respectively in the first quarter of 2005. The UTV Boardconsiders the financial and trading prospects for UTV for the current financialyear to be satisfactory.WirelessAs stated in Wireless's announcement of its preliminary results on 30 March 2005, the first quarter of 2005 has started well with cash revenues for the WirelessGroup up 9.9 per cent. against the same quarter in 2004, although the WirelessBoard expects that revenues will be affected in April by the General Election,with some advertisers not spending until after the General Election in May. TheWireless Board considers the financial and trading prospects for Wireless forthe current financial year to be satisfactory. Prospects for the Enlarged Group The UTV Directors believe that the acquisition of Wireless will strengthen UTV'sposition as a TV and radio broadcaster in the Republic of Ireland and the UK.The Enlarged Group is expected to benefit from having an increased presence,with a wider offering of broadcasting assets with which to develop cross-sellingopportunities. The benefits of the acquisition are likely to be reflected in the EnlargedGroup's financial year ending 31 December 2006. * If the Offer becomes whollyunconditional, the increased size of the Enlarged Group will enable the UTVBoard to explore further strategic opportunities in the broadcasting sector. The Uncle Board considers the financial and trading prospects for the EnlargedGroup for the current financial year to be satisfactory. (*Note: This statement does not constitute a profit forecast nor should it beinterpreted to mean that future earnings per UTV Share following the Offerbecoming or being declared unconditional in all respects will necessarily matchor exceed historical earnings per UTV Share.) 12. Inducement Fee On the date of this announcement Wireless has entered into an inducement feeagreement with UTV pursuant to which it has undertaken to pay UTV a sum of£940,000 (inclusive of VAT) if:(a) prior to the Offer lapsing or being withdrawn, an offer for Wireless (or forall or substantially all of Wireless's business) from a third party is announcedwhich becomes or is declared unconditional in all respects before the expiry ofsix months after the Offer lapses or is withdrawn; or(b) the Wireless Independent Directors withdraw or modify their recommendationof the Offer in a manner adverse to the Offer and the Offer subsequently lapsesor is withdrawn,provided that the sum is not payable if the Offer lapses or is withdrawn becauseof the failure of UTV Shareholders to approve the Offer or because of a failureto obtain certain regulatory approvals. 13. Directors, management and employees UTV has given assurances to the Wireless Independent Directors that, followingthe Offer becoming or being declared unconditional in all respects, the existingemployment rights, including pension rights, of all employees of the WirelessGroup will be fully safeguarded. 14. Wireless Share Option Schemes The Offer will extend to any Wireless Shares which are unconditionally allottedor issued fully paid (or credited as fully paid) including pursuant to theexercise of options granted under the Wireless Share Option Schemes prior to thedate on which the Offer closes (or such earlier date as UTV may, subject to theCode, determine, not (without the consent of the Panel) being earlier than thedate on which the Offer becomes unconditional as to acceptances or, if later,the First Closing Date of the Offer). All options granted under the WirelessShare Option Schemes that are not already exercisable become exercisable if theOffer becomes or is declared unconditional in all respects.To the extent that such options remain unexercised, UTV will make appropriateproposals to Wireless Option Holders once the Offer becomes or is declaredunconditional in all respects. 15. Compulsory acquisition and de-listing If the Offer becomes or is declared unconditional in all respects, UTV intendsto procure the making of applications by Wireless to the UK Listing Authorityfor the cancellation of the listing of the Wireless Shares on the Official Listand to the London Stock Exchange for the cessation of trading of Wireless Shareson its market for listed securities. It is anticipated that de-listing andcancellation of trading will take effect no earlier than 20 business days afterthe Offer becomes or is declared unconditional in all respects. De-listing wouldsignificantly reduce the liquidity and marketability of any Wireless Shares notassented to the Offer.If UTV receives acceptances under the Offer in respect of, and/or otherwiseacquires an aggregate of 90 per cent. or more of the Wireless Shares to whichthe Offer relates, UTV intends to exercise its rights pursuant to the provisionsof sections 428 to 430F (inclusive) of the Act to acquire compulsorily theremaining Wireless Shares.UTV does not intend to publish a prospectus in connection with the Partial ShareAlternative or the Additional Share Facility. Accordingly, as a consequence ofthe proposed implementation of the Prospectus Directive in the UK on 1 July 2005and in the absence of such a prospectus, no further New UTV Shares are permittedto be offered as consideration to Wireless Shareholders under the Partial ShareAlternative or Additional Share Facility after such date. For this reason, asset out above, UTV currently intends to close both the Partial Share Alternativeand Additional Share Facility 14 days after the First Closing Date, which willbe prior to 1 July 2005. As regards any Wireless Shares to be acquired by UTVunder the compulsory acquisition provisions in the Act, no election for New UTVShares received after 30 June will be valid. However, as required under the Act,Wireless Shareholders receiving notices under section 429 of the Act will beentitled to elect, after 30 June 2005, to receive the cash equivalent of the NewUTV Shares to which they would otherwise have been entitled if they had beenable to elect for the Partial Share Alternative and/or the Additional ShareFacility. The cash equivalent will be calculated by reference to the marketvalue of the UTV Shares on the date the relevant section 429 notice is issued. 16. Recommendation The Wireless Independent Directors, who have been so advised by Goldman SachsInternational, consider the terms of the Offer to be fair and reasonable. Inproviding their advice to the Wireless Independent Directors, Goldman SachsInternational has taken into account the Wireless Independent Directors'commercial assessments. Accordingly, the Wireless Independent Directorsunanimously recommend that Wireless Shareholders accept the Offer and the onlyWireless Independent Director who is also a Wireless Shareholder has irrevocablyundertaken to accept the Offer in respect of his own beneficial holdings ofWireless Shares of, in aggregate, 2,000 Wireless Shares, representingapproximately 0.0024 per cent. of the existing ordinary issued share capital ofWireless.As described in the announcement issued by Wireless on 14 February 2005, itreceived a proposal regarding a possible offer for Wireless that would haveinvolved the participation of Kelvin MacKenzie. Accordingly, Kelvin MacKenziehas played no part in the deliberations of the Wireless Directors regarding theOffer. Graham Hollis and Dick Linford have participated in the deliberations ofthe Wireless Directors regarding the Offer but, because of their relationshipwith major shareholders of Wireless, have not played any part in the decision ofthe Wireless Independent Directors to recommend that Wireless Shareholdersaccept the Offer. 17. Disclosure of interests in Wireless Other than pursuant to the undertakings referred to in paragraph 7 of thisannouncement, neither UTV nor, so far as UTV is aware, any party acting inconcert with UTV for the purposes of the City Code, owns or controls, or holdsany options over or has entered into any derivative referenced to, securities ofWireless which remain outstanding on 5 May 2005, being the last dealing dayprior to the announcement of the Offer. 18. General The Offer will be open for at least 21 days from the date of the Offer Document.It is expected that the Offer Document will be despatched to WirelessShareholders shortly.This announcement is not intended to and does not constitute an offer or aninvitation to purchase any securities. The conditions and principal furtherterms of the Offer are set out in Appendix I to this announcement. The Offerwill be subject to the further terms and conditions set out in the OfferDocument and the Form of Acceptance.The definitions of terms used in this announcement are contained in Appendix IIIto this announcement. Jag Mundi, Head of Corporate FinanceChris Wilkinson, Director, Corporate BrokingNumis Securities Limited Tel: 020 7776 1500(Financial Adviser to UTV) Richard Campbell-Breeden, Managing DirectorRobert Sorrell, Executive DirectorGoldman Sachs International Tel: 020 7774 1000(Financial Adviser to Wireless) David Rydell / Dan de BelderBell Pottinger Corporate & Financial Tel: 020 7861 3232(PR Adviser to Wireless) The Offer will be subject to the City Code. Under the rules of the City Code,there are certain dealing disclosure requirements which apply in respect ofdealings in relevant securities during an offer period. An offer period wasdeemed to have commenced upon the announcement on 14 February 2005 that Wirelesshad received a proposal regarding a possible cash offer for Wireless. As aresult, any person who, alone or acting together with any other person(s)pursuant to an agreement or understanding (whether formal or informal) toacquire or control securities of UTV or Wireless, owns or controls, or becomesthe owner or controller, directly or indirectly of one per cent. or more of anyclass of securities of UTV or Wireless is generally required under theprovisions of Rule 8 of the City Code to notify a Regulatory Information Serviceand the Panel of every dealing in such securities until such time as the offerperiod ends for the purposes of the City Code. If required, any disclosuresshould be made on an appropriate form by no later than 12 noon London time onthe business day following the date of the dealing transaction. Thesedisclosures should be sent to a Regulatory Information Service with a copy sent(by fax or email) to the Panel (fax number +44 (0)20 7236 7013, email:[email protected]).Numis, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for UTV and no one else in connectionwith the Offer and will not be responsible to anyone other than UTV forproviding the protections afforded to clients of Numis nor for providing advicein relation to the Offer or in relation to the contents of this announcement orany transaction or arrangement referred to herein.Goldman Sachs International, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for Wirelessand no one else in connection with the Offer and will not be responsible toanyone other than Wireless for providing the protections afforded to clients ofGoldman Sachs International nor for providing advice in relation to the Offer orin relation to the contents of this announcement or any transaction orarrangement referred to herein.The Offer will not be made, directly or indirectly, and this announcement shouldnot be sent, in or into or from the United States, Canada, Australia or Japan orby use of the mails or by any means or instrumentality (including, withoutlimitation, telephonically or electronically) of interstate or foreign commerceof, or any facilities of a national securities exchange of, any of thesejurisdictions and doing so may render invalid any purported acceptance of theOffer. Accordingly, copies of this announcement and any other document relatingto the Offer are not being, and must not be, marked or otherwise distributed orsent in or into the United States, Canada, Australia or Japan. Any person(including, without limitation, custodians, nominees and trustees) who may havecontractual or legal obligations, or may otherwise intend, to forward thisannouncement to any jurisdiction outside the United Kingdom should read therelevant provisions of the Offer Document before taking any action.The availability of the Offer to persons not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions in which they are located.Persons who are not resident in the United Kingdom should inform themselvesabout and observe any applicable requirements.The financial information set out in this document relating to UTV does notconstitute statutory accounts within the meaning of section 262 of the Order.Ernst & Young LLP, Chartered Accountants, have given unqualified audit reportson the statutory accounts of UTV for each of the three financial years ended 31December 2002, 2003 and 2004. Statutory accounts of the UTV Group for each ofthe two financial years ended 31 December 2002, and 2003 have been delivered tothe Registrar of Companies in Northern Ireland pursuant to section 262 of theOrder. Statutory accounts of the UTV Group for the financial year ended 31December 2004 will be delivered to the Registrar of Companies in NorthernIreland pursuant to section 262 of the Order in due course.The financial information set out in this document relating to Wireless does notconstitute statutory accounts within the meaning of section 240 of the Act.PricewaterhouseCoopers LLP, Chartered Accountants, have given unqualified auditreports on the statutory accounts of Wireless for each of the three financialyears ended 31 December 2002, 2003 and 2004. Statutory accounts of the WirelessGroup for each of the two financial years ended 31 December 2002 and 2003 havebeen delivered to the Registrar of Companies in England and Wales. Statutoryaccounts of the Wireless Group for the financial year ended 31 December 2004will be delivered to the Registrar of Companies in England and Wales in duecourse. Appendix 1 1. Conditions and certain terms of the Offer The Offer will be subject to the following conditions and to the further termsand conditions set out in the Offer Document and the Form of Acceptance:(a) valid acceptances of the Offer being received (and not, where permitted,withdrawn) by 3.00 p.m. on the First Closing Date (or such later time(s) and/ordate(s) as UTV may, subject to the rules of the Code, decide) in respect of notless than 90 per cent. (or such lesser percentage as UTV may decide) in nominalvalue of the Wireless Shares to which the Offer relates, provided that thiscondition will not be satisfied unless UTV and/or any of its associates shallhave acquired or agreed to acquire, whether pursuant to the Offer or otherwise,Wireless Shares carrying in aggregate more than 50 per cent. of the votingrights then exercisable at a general meeting of Wireless including, to theextent (if any) required by the Panel, any voting rights attaching to anyWireless Shares which are unconditionally allotted before the Offer becomes oris declared unconditional as to acceptances pursuant to the exercise of anyoutstanding conversion or subscription rights or otherwise. For the purposes ofthis condition: (i) Wireless Shares which have been unconditionally allotted shall be deemed tocarry the voting rights which they will carry upon issue; and (ii) the expressions "Wireless Shares to which the Offer relates" and"associates" shall be construed in accordance with sections 428 to 430F of theAct; (iii) valid acceptances shall be deemed to have been received in respect ofWireless Shares which are treated for the purposes of section 429(8) of the Actas having been acquired or contracted to be acquired by UTV and/or itswholly-owned subsidiaries by virtue of acceptances of the Offer; (b) the UK Listing Authority announcing its decision to admit the New UTV Sharesto the Official List and such admission becoming effective in accordance withparagraph 7.1 of the Listing Rules of the UK Listing Authority and the LondonStock Exchange agreeing to admit the New UTV Shares to trading and (unless thePanel agrees otherwise) such admission becoming effective in accordance with theLondon Stock Exchange Admission and Disclosure Standards; (c) the passing at an extraordinary general meeting of UTV (or at anyadjournment of such a meeting) of such resolution or resolutions as may benecessary to approve, effect and implement or authorise the implementation ofthe Offer, the acquisition of Wireless Shares pursuant to the Offer orotherwise, the issue of the New UTV Shares, the increase in the borrowing powersof UTV under its articles of association and the making of any necessary offer,proposal or other arrangement to holders of options under the Wireless ShareOption Schemes; (d) to the extent that the Irish Competition Act, 2002 ("the Competition Act")is applicable to the Offer and in the event that the Competition Authoritynotifies UTV that it considers the Offer to be a media merger within the meaningof section 23(10) of the Competition Act, the first of one of the followingevents having occurred in Ireland: (i) the Competition Authority having informed UTV that it has determined,pursuant to section 21(2)(a) of the Competition Act, that the Offer may be putinto effect and the Minister for Enterprise, Trade and Employment ("theMinister") not having directed the Competition Authority pursuant to section 23(2) of the Competition Act within the period specified in section 23(2) of theCompetition Act to carry out an investigation of the Offer under section 22 ofthe Competition Act; (ii) the period specified in section 21(2) of the Competition Act (as may beextended under section 21(4) of the Competition Act) having elapsed without theCompetition Authority having informed UTV of the determination (if any) it hasmade under section 21(2)(a) or 21(2)(b) of the Competition Act; (iii) the Competition Authority having carried out an investigation undersection 22 of the Competition Act and having made a determination under section22(3)(a) or under section 22(3)(c) of the Competition Act on terms reasonablyacceptable to UTV, and the Minister not having made an order within the periodspecified in section 23(4) of the Competition Act; (iv) the Competition Authority having carried out an investigation under section22 of the Competition Act and having made a determination under section 22(3)(a)or 22(3)(c) of the Competition Act and one of the following events havingoccurred: (A) the Minister having made an order under section 23(4)(a) of the CompetitionAct; or (B) the Minister having made an order under section 23(4)(b) of the CompetitionAct on terms reasonably acceptable to UTV; (v) the period specified in section 19(1)(d) of the Competition Act havingelapsed without the Competition Authority having made a determination undersection 22 of the Competition Act; or (vi) the Competition Authority having carried out aninvestigation under section 22 of the Competition Act and having made adetermination under section 22(3)(a) or under section 22(3)(c) of theCompetition Act on terms reasonably acceptable to UTV and either House of theOireachtas having passed a resolution annulling an order made by the Ministerunder Section 23(4) of the Competition Act; (e) if the Secretary of State for Trade and Industry gives aspecial intervention notice under section 59 of the Enterprise Act 2003 or anintervention notice under section 42 of the Enterprise Act 2002, the Offer notbeing referred to the UK Competition Commission; (f) the Office of Communications not notifying UTV that the Offer will lead tothe revocation of any licences granted to any member of the Wireless group underthe Broadcasting Act 1990 or the Broadcasting Act 1996 (each as amended); (g) no government or governmental, quasi-governmental, supranational, statutory,regulatory or investigative body, authority, court, trade agency, association orinstitution or professional or environmental body or any other similar person orbody whatsoever in any relevant jurisdiction (each a "Third Party") havingdecided to take, instituted, implemented or threatened any action, proceedings,suit, investigation, enquiry or reference or having required any action to betaken or information to be provided or otherwise having done anything or havingmade, proposed or enacted any statute, regulation, order or decision or havingdone anything which would or might reasonably be expected to: (i) make the Offer or its implementation, or the acquisition or the proposedacquisition by UTV of any shares or other securities in, or control of, Wirelessor any of its subsidiaries or subsidiary undertakings or associated undertakings(including any joint venture, partnership, firm or company in which any memberof the Wireless Group is substantially interested) (the "wider Wireless Group"(and "member of the wider Wireless Group" shall be construed accordingly)) void,illegal or unenforceable in any jurisdiction, or otherwise materially restrain,prohibit, restrict, prevent or delay the same or impose additional materialconditions or material financial or other obligations with respect thereto, orotherwise challenge or interfere therewith; (ii) require, prevent or materially delay the divestiture or materially alterthe terms envisaged for any proposed divestiture by UTV or any of itssubsidiaries or subsidiary undertakings or associated undertakings (includingany joint venture, partnership, firm or company in which any member of the UTVGroup is substantially interested) (the "wider UTV Group" (and "member of thewider UTV Group" shall be construed accordingly)) of any Wireless Shares or ofany shares in a member of the wider UTV Group; (iii) require, prevent or materially delay the divestiture or materially alterthe terms envisaged for any proposed divestiture by any member of the wider UTVGroup or by any member of the wider Wireless Group of all or any materialportion of their respective businesses, assets or property, or (to an extentwhich is material in the context of the Offer or the wider Wireless Groupconcerned taken as a whole) impose any limit on the ability of any of them toconduct their respective businesses (or any of them) or to own or control any oftheir respective assets or properties or any part thereof; (iv) impose any material limitation on, or result in any material delay in, theability of any member of the wider UTV Group or any member of the wider WirelessGroup to acquire, hold or exercise effectively, directly or indirectly, all orany rights of ownership of Wireless Shares or any shares or securitiesconvertible into Wireless Shares or to exercise voting or management controlover any member of the wider Wireless Group or any member of the wider UTV Groupin any such case which is material in the context of the wider Wireless Grouptaken as a whole; (v) save as disclosed to UTV prior to the date of this announcement, require anymember of the wider UTV Group and/or of the wider Wireless Group to acquire oroffer to acquire or repay any shares or other securities in and/or indebtednessof any member of the wider Wireless Group owned by or owed to any Third Party incircumstances which would impose on UTV or any member of the Wireless Group aliability which is material in the context of the wider UTV Group taken as awhole or the wider Wireless Group taken as a whole as the case may be; (vi) impose any limitation on the ability of any member of the wider UTV Groupand/or of the wider Wireless Group to integrate or co-ordinate its business, orany part of it, with the business of any member of the wider Wireless Group orof the wider UTV Group respectively, in each case in a manner which would bematerial in the context of the wider UTV Group taken as a whole or the widerWireless Group taken as a whole; or (vii) otherwise adversely affect any or all of the businesses, assets,prospects, profits or financial or trading position of any member of the widerWireless Group or any member of the wider UTV Group to an extent which ismaterial in the context of the Offer or any such group taken as a whole, and all applicable waiting and other time periods during which any Third Partycould institute, implement or threaten any such action, proceedings, suit,investigation, enquiry or reference under the laws of any relevant jurisdiction,having expired, lapsed or been terminated; (h) all necessary filings and applications having been made and all necessarywaiting and other time periods (including any extensions thereof) under anyapplicable legislation or regulations of any relevant jurisdiction havingexpired, lapsed or been terminated and all statutory or regulatory obligationsin any relevant jurisdiction having been complied with in each case as may benecessary in connection with the Offer and its implementation or the acquisitionor proposed acquisition by UTV or any member of the wider UTV Group of anyshares or other securities in, or control of, Wireless or any member of thewider Wireless Group and all authorisations, orders, recognitions, grants,consents, clearances, confirmations, licences, certificates, permissions andapprovals ("Authorisations") which are material and necessary or appropriate foror in respect of the Offer or the acquisition or proposed acquisition by UTV ofany shares or other securities in, or control of, Wireless or the carrying on byany member of the wider Wireless Group of its business or in relation to theaffairs of any member of the wider Wireless Group (where such business ismaterial in the context of the wider Wireless Group taken as a whole) havingbeen obtained in terms and in a form reasonably satisfactory to UTV from allappropriate Third Parties or persons with whom any member of the wider WirelessGroup has entered into contractual arrangements and all such Authorisationsremaining in full force and effect and there being no notice or intimation ofany intention to revoke, suspend, restrict or amend or not renew the same at thetime at which the Offer becomes or is declared wholly unconditional in each casewhere the absence of such Authorisation would have a material adverse effect onthe wider Wireless Group or on the wider UTV Group taken as a whole; (i) since 31 December 2004 and except as expressly disclosed in Wireless'sannual report and accounts for the year ended 31 December 2004 or as disclosedby or on behalf of Wireless to UTV or its advisers prior to the Disclosure Dateor as otherwise publicly announced by Wireless on or prior to the DisclosureDate through a RIS, there being no provision of any arrangement, agreement,licence or other instrument to which any member of the wider Wireless Group is aparty or by or to which any such member or any of its assets is or are or may bebound, entitled or subject which, in consequence of the making or implementationof the Offer or the proposed acquisition of any shares or other securities in,or control of, Wireless by UTV or because of a change in the control ormanagement of Wireless or otherwise, could reasonably be expected to result in(to an extent which is material in the context of the wider Wireless Group takenas a whole): (i) any material indebtedness or liabilities actual or contingent of, or anygrant available to, any member of the wider Wireless Group being or becomingrepayable or capable of being declared repayable immediately or prior to itsstated maturity or the ability of any such member to borrow monies or incur anyRelated Shares:
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