31st Mar 2005 07:02
Industrial Funds Limited31 March 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN. FOR IMMEDIATE RELEASE 31 March 2005 RECOMMENDED CASH OFFER by HSBC on behalf of Industrial Funds Limited for Ashtenne Holdings plc Summary • The boards of Industrial Funds Limited ("IFL") and Ashtenne Holdingsplc ("Ashtenne") announce the terms of a recommended cash offer to be made byHSBC on behalf of IFL for the whole of the issued and to be issued ordinaryshare capital of Ashtenne. IFL is a newly-incorporated company, jointly ownedby Warner Estate Holdings plc ("Warner") and Anglo Irish Bank Corporation plc ("Anglo Irish"), established for the purposes of making the Offer. • In connection with the Transaction, accepting Ashtenne Shareholderswill receive 470 pence in cash in respect of each Ashtenne Share held by themwhich will be comprised as follows: - under the terms of the Offer, each accepting Ashtenne Shareholder willreceive 330 pence in cash for each Ashtenne Share; and - subject to the Offer becoming or being declared wholly unconditional,Ashtenne will pay a special dividend of 140 pence per Ashtenne Share in cash toAshtenne Shareholders on the register at the close of business on the date fourbusiness days after the Offer is declared wholly unconditional. • The Offer values the entire issued and to be issued ordinary sharecapital of Ashtenne at approximately £119.2 million. Including the SpecialDividend of £50.5 million, the Transaction represents an aggregate value forAshtenne Shareholders of approximately £169.7 million. • The Transaction represents a premium of: - 10.1 per cent. to the basic net asset value adjusted for non-equityshareholders' funds and equity minority interests (as stated in the AshtennePreliminary Results released today) of 427 pence per Ashtenne Share as at 31December 2004; - 10.8 per cent. to the Triple Net Asset Value of 424 pence per AshtenneShare as at 31 December 2004; and - 16.2 per cent. to the Closing Price of 404.5 pence per Ashtenne Shareon 30 March 2005, being the last business day prior to this announcement • The Ashtenne Directors, who have been so advised by JPMorgan Cazenove,consider the terms of the Transaction to be fair and reasonable and unanimouslyrecommend Ashtenne Shareholders to accept the Offer. • Irrevocable undertakings to accept the Offer have been received fromthe Ashtenne Directors (and their related trusts and interests) in respect of atotal of 3,986,861 Ashtenne Shares (which includes 1,838,048 Ashtenne Shares thesubject of existing awards under the Ashtenne long term incentive plan andassumes such awards vest and are satisfied in full), plus options over 420,000Ashtenne Shares, representing approximately 11.2 per cent. of the existingissued ordinary share capital of Ashtenne or 12.2 per cent. on a fully dilutedbasis. These irrevocable undertakings will only cease to be binding in theevent that the Offer lapses or is withdrawn. • Warner has had discussions with Morley and AXA in relation to AIF andT3, respectively, and has received their support for the transaction. • HSBC is acting as sole financial adviser and corporate stockbroker toWarner and IFL in relation to the Offer. JPMorgan Cazenove is acting as solefinancial adviser and corporate stockbroker to Ashtenne. Preliminary Results Simultaneously with the issue of this announcement, Ashtenne has released itspreliminary results for the year ended 31 December 2004. Commenting on the Transaction, Philip Warner, Executive Chairman of Warner,said: "The acquisition of Ashtenne provides Warner with the opportunity to accelerateour stated strategy of expanding our property asset management operation addingover £750 million of assets under management. Furthermore, we look forward tobroadening our fund investor base and to working with Morley and AXA. We believeour offer enables Ashtenne shareholders to realise the value of the Ashtenneproperty portfolio and to receive a premium reflecting the value Warner placeson Ashtenne's asset management operations. We are also delighted to extend ourexisting relationship with Anglo Irish Bank through our partnership on thistransaction." James Hambro, Chairman of Ashtenne, said: "Since its flotation in 1997, Ashtenne has generated high returns for itsshareholders. The price of the shares at flotation was 125 pence and, if theoffer from Warner goes unconditional in all respects, Ashtenne shareholders willhave received the equivalent of 489.5 pence per share including all dividendspaid during that period, which equates to an annual rate of return ofapproximately 21.8 per cent. for every year since flotation. The Board of Ashtenne believe that Warner will continue to expand the successfulAshtenne Industrial Fund and that the Offer of 330 pence per share, togetherwith the proposed Special Dividend of 140 pence per share, provides ordinaryshareholders with an attractive exit price." This summary should be read in conjunction with the full text of the followingannouncement. Warner will be holding an analysts' presentation today at 11.00 am at theoffices of City Profile located at 7-9 Copthall Avenue, London, EC2R 7NJ. ENQUIRIES: Warner Estate Holdings plc +44 20 7907 5100 Philip Warner Peter Collins HSBC - Financial Adviser to Warner +44 20 7991 8888 Maxwell James Oliver Smith HSBC - Corporate Broker to Warner +44 20 7991 8888 Heraclis Economides James A Taylor City Profile - PR Adviser to Warner +44 20 7448 3244 Simon Courtenay Oliver Winters Ashtenne Holdings plc +44 20 7930 9425 Morgan Jones Ian Watson JPMorgan Cazenove - Financial Adviser +44 20 7588 2828and Corporate Broker to Ashtenne Richard Cotton Roger Clarke Tavistock Communications - PR adviser to Ashtenne +44 20 7920 3150 Jeremy Carey HSBC, which is regulated in the United Kingdom by The Financial ServicesAuthority, is acting for Warner and IFL and no one else in relation to the Offerand the matters referred to in this announcement and will not be responsible toany person other than Warner or IFL for providing the protections afforded tocustomers of HSBC nor for providing advice in relation to the Offer or any othermatters referred to in this announcement. JPMorgan Cazenove Limited, which is regulated in the United Kingdom by TheFinancial Services Authority, is acting for Ashtenne and no one else inconnection with the Offer and the matters referred to herein and will not beresponsible to any other person for providing the protections offered to clientsof JPMorgan Cazenove Limited or for providing advice in relation to the Offer orany other matters referred to herein. The Offer will not be made, directly or indirectly, in or into the UnitedStates, Canada, Australia or Japan and, subject to certain exceptions, the Offerwill not be capable of acceptance in or from the United States, Canada,Australia or Japan. In addition, the Offer will not be made, directly orindirectly, in or into or by use of the mails or by any means or instrumentality(including without limitation, by means of telephone, facsimile, telex, internetor other forms of electronic transmission) of interstate or foreign commerce of,or any facilities of a national securities exchange of, the United States,Canada, Australia or Japan and, subject to certain exceptions, the Offer willnot be capable of acceptance by any such use, means, instrumentality orfacilities or from within the United States, Canada, Australia or Japan.Accordingly, copies of this announcement are not being, and must not be, mailedor otherwise forwarded, distributed or sent in, into or from the United States,Canada, Australia or Japan. Custodians, nominees and trustees should observethese restrictions and must not send or distribute this announcement in, into orfrom the United States, Canada, Australia, or Japan. The availability of the Offer to persons not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions. Such persons shouldinform themselves about and observe any applicable requirements of thosejurisdictions. Any person who, alone or acting together with any other person(s) pursuant to anagreement or understanding (whether formal or informal) to acquire or controlsecurities of Ashtenne, owns or controls, or becomes the owner or controller,directly or indirectly, of one per cent. or more of any class of securities ofAshtenne is generally required under the provisions of Rule 8 of the City Codeto notify a Regulatory Information Service and the Panel by not later than 12.00noon (London time) on the business day following the date of the transaction ofevery dealing in such securities during the period from the date of thisannouncement to the date on which the Offer becomes or is declared unconditionalas to acceptances or lapses or is withdrawn. Dealings by IFL or its "associates" (within the definition set out in the City Code) in any class of securities ofAshtenne until the end of such period must also be disclosed. Please consultyour independent financial adviser authorised under the Financial Services andMarkets Act 2000 immediately if you believe this Rule may be applicable to youor consult the Panel's website at www.thetakeoverpanel.org.uk or contact thePanel on +44 (0)20 7638 0129. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN. FOR IMMEDIATE RELEASE 31 March 2005 RECOMMENDED CASH OFFER by HSBC on behalf of Industrial Funds Limited for Ashtenne Holdings plc 1. Introduction The boards of Industrial Funds Limited and Ashtenne Holdings plc announce theterms of a recommended cash offer to be made by HSBC on behalf of IFL for thewhole of the issued and to be issued ordinary share capital of Ashtenne. IFL is a newly-incorporated company, jointly-owned by Warner Estate Holdings plcand Anglo Irish Bank Corporation plc, established for the purposes of making theOffer. 2. The Offer and the Special Dividend The Offer, which will be subject to the conditions and further terms set out inAppendix I to this announcement and to the further terms to be set out in theOffer Document and the Form of Acceptance, will be made on the following basis: For each Ashtenne Share 330 pence in cash Subject to the Offer becoming or being declared wholly unconditional, Ashtennehas agreed to pay a Special Dividend on the following basis: In respect of each Ashtenne Share 140 pence in cash The Special Dividend will be payable to Ashtenne Shareholders on the register atthe close of business on the date four business days after the Offer is declaredwholly unconditional. In aggregate, accepting Ashtenne Shareholders will be entitled to receive: For each Ashtenne Share 470 pence in cash made up of the Offer and the Special Dividend. The Offer values the entire issued and to be issued ordinary share capital ofAshtenne at approximately £119.2 million. Including the Special Dividend of£50.5 million, the Transaction represents an aggregate value for AshtenneShareholders of approximately £169.7 million. The Transaction represents a premium of: • 10.1 per cent. to the basic net asset value adjusted for non-equityshareholders funds and equity minority interests (as stated in the AshtennePreliminary Results released today) of 427 pence per Ashtenne Share as at 31December 2004; • 10.8 per cent. to the Triple Net Asset Value of 424 pence per AshtenneShare as at 31 December 2004; and • 16.2 per cent. to the Closing Price of 404.5 pence per Ashtenne Shareon 30 March 2005, being the last business day prior to this announcement. The Ashtenne Shares will be acquired pursuant to the Offer fully paid and freefrom all liens, charges, equities, encumbrances, rights of pre-emption and anyother interests of any nature whatsoever and together with all rights now orhereafter attaching thereto, including voting rights and the right to receiveand retain in full all dividends and other distributions (if any) declared, madeor paid in respect of Ashtenne Shares on or after the date of this announcement,other than the Special Dividend. Further terms and conditions of the Offer are set out in Appendix I. Definitions of certain expressions used in this announcement are contained inAppendix II. 3. Recommendation and irrevocable undertakings The Ashtenne Directors, who have been so advised by JPMorgan Cazenove, considerthe terms of the Transaction to be fair and reasonable. In providing advice tothe Ashtenne Directors, JPMorgan Cazenove has taken account of the AshtenneDirectors' commercial assessments. Accordingly, the directors of Ashtenne unanimously recommend that all AshtenneShareholders accept the Offer, as they (and their related trusts and interests)have undertaken to do in respect of a total of 3,986,861 Ashtenne Shares, plusoptions over 420,000 Ashtenne Shares (which includes 1,838,048 Ashtenne Sharesthe subject of existing awards under the Ashtenne long term incentive plan andassumes such awards vest and are satisfied in full), representing, approximately11.2 per cent. of the existing issued ordinary share capital of Ashtenne, or12.2 per cent. on a fully diluted basis. These irrevocable undertakings willonly cease to be binding in the event that the Offer lapses or is withdrawn. 4. Background to and reasons for the Offer Warner believes that the acquisition of Ashtenne by IFL offers an attractiveopportunity to accelerate Warner's stated strategy of expanding its propertyasset management operation by adding over £750 million of assets undermanagement. The Offer is anticipated to deliver a significant increase in income, includingsustainable fund management fees, and to provide attractive returns. The addition of the AIF and T3 funds will also broaden the investor base ofassets under management. Furthermore, the transaction delivers the opportunity for IFL to realise valuefrom Ashtenne's direct property portfolio in the near to medium term, applyingthe proceeds to reduce the acquisition debt raised in IFL. Warner plans to keep Ashtenne's fund management business intact, headed byAshtenne's existing staff. However, Warner intends to reduce overheads throughclosure of Ashtenne's head office. In addition, the transaction provides Warner with the opportunity to develop itsrelationship with Morley and AXA, two of the leading institutional property fundmanagers in the UK. Warner has had discussions with Morley and AXA in relationto AIF and T3, respectively, and has received their support for the transaction. The transaction also extends Warner's existing relationship with Anglo Irish. 5. Background to and reasons for the recommendation Ashtenne was founded in 1989 by Morgan Jones and Ian Watson and was floated in1997. Its strategy since formation has been to create high and realised returnsfor shareholders through the intensive management of its assets, predominantlysecondary industrial property. This has produced strong and consistent growth inprofits, generated largely from realisation of investments as the Company hasbought and sold a large number of properties, often through corporatetransactions. Ashtenne launched its fund management business in 2001 in response to theincreasing demand from institutional investors for access to the sectors inwhich Ashtenne has specialist knowledge and management skills. In 2001, atradepark fund ("T3") was set up and this now has investment properties of £71million, with Ashtenne retaining a 17 per cent. stake. This was accompanied inthe same year by the formation with Morley of Ashtenne Industrial Fund ("AIF")into which Ashtenne injected a portfolio of £249 million. AIF has now grown to£686 million of investment properties and Ashtenne has reduced its interestthrough sales from 33 per cent. to 5 per cent. As the funds that Ashtenne manages have grown, the directly owned portfolio hasreduced significantly in size over the past 18 months to £52 million, followinga number of disposals. This included a major sale to AIF totalling £133 millionin July last year. The proceeds from this were used to fund a £142 millionreturn of capital to shareholders (equivalent to £2 per share) in September lastyear. Ashtenne's wholly owned property interests have now reduced to £79 millionof which £27 million represents the value of the Company's holding in AIF andT3. Looking forward, revenues from fund management activities are likely to be thelargest contributor to the Company's earnings, owing to the significantlyreduced size of its directly owned portfolio. It is in this context that theAshtenne Board believes that there are advantages from combining Ashtenne's fundmanagement activities with Warner's own fund management operations. Moreover, asthe nature of Ashtenne's business is now substantially different from itsoriginal transactional focus, the Board of Ashtenne believes that the Offergives ordinary shareholders the opportunity to exit their investment for cash atan attractive price. The Ashtenne Board believes that the terms of the Offer reflect a fair value forthe remaining property assets owned by Ashtenne and, in addition, a premium inrespect of the value of the asset management business. 6. Information on Warner and IFL Founded in 1891, Warner is a UK property investment group whose primaryobjective is to maximise total return for shareholders, both by increasing netasset value per share and by dividend growth from an improving earnings stream.Warner has delivered 33 years of continuous dividend growth to its shareholders.Warner specialises in the management of property across the retail, office andindustrial sectors and had £1.12 billion of property assets under management asat 30 September 2004. In line with its strategy, Warner formed three major funds during 2003: the£223 million Agora Fund, with Bank of Scotland, focused on Northwest shoppingcentres; a £109 million regional office fund with the Royal Bank of Scotland;and a £113 million industrial distribution fund with Bank of Scotland. Warner generated profit before tax of £15.7 million for the year ending 31 March2004 (£16.6 million in 2003) from turnover of £44.4 million (£45.1m in 2003).Net assets were £273.2 million at 30 September 2004 (£228.1 million at 30September 2003) and net asset value per share was 542 pence at 30 September 2004(452 pence at 30 September 2003). Industrial Funds Limited, which is a limited company registered in England andWales, is a joint venture company formed by Warner and Anglo Irish. IFL wasincorporated for the purpose of making the Offer. IFL has not traded prior tothe Offer. 7. Information on Anglo Irish Anglo Irish is a client focused business bank, headquartered in Dublin,providing business banking, treasury and wealth management services. AngloIrish has banking operations situated in Ireland, the United Kingdom, Isle ofMan, the United States of America, Switzerland and Austria where its focusedapproach to business has enabled it to generate five year compound annual growthin earnings per share of 39 per cent.. Anglo Irish has extensive experience inproperty finance in the UK and had Euro8,916 million loans and advances tocustomers secured on property as at 30 September 2004. As at 30 September 2004, Anglo Irish's total assets stood at Euro34,340 millioncompared to total assets for 2003 of Euro25,520 million. The total capitalresources of Anglo Irish at 30 September 2004 were Euro3,872.7 million. AngloIrish generated profit before tax of Euro504.1 million for the year ended 30September 2004, up from Euro346.5 million in 2003 derived from gross income ofEuro1,668.9 million up from Euro1,230.5 million in 2003. 8. Information on Ashtenne Ashtenne has focused on creating value for its shareholders through a pro-activeapproach to asset management, predominantly through investment and trading inindustrial property. Following the formation of AIF in 2001, fund management has become an increasingcontributor to Ashtenne's revenues. In August 2004, Ashtenne completed the saleof a portfolio of properties to AIF for £133 million and AIF now has investmentproperties of £686 million, with Ashtenne owning a 5 per cent. stake in thefund. Ashtenne used the proceeds of this disposal to return £142 million toshareholders in August 2004. The remaining property interests owned by Ashtenneas at 31 December 2004 totalled £79 million. Ashtenne generated profit before tax of £73.9 million for the year ended 31December 2004 (compared to £31.8 million in 2003) and had equity shareholders'funds of £151.7 million at 31 December 2004 compared with £235.7 million at theend of 2003. Simultaneously with the issue of this announcement, Ashtenne has released itspreliminary results for the year ended 31 December 2004. 9. Financing of the Offer IFL will finance the Offer from: i. a new debt facility provided by Anglo Irish; ii. a shareholder loan provided by Warner; and iii. equity subscribed by Warner and Anglo Irish. Warner will finance its obligations to IFL from existing cash resources andfacilities and from a placing for cash representing 5 per cent. of the existingissued share capital of Warner, raising gross proceeds of approximately £13.8million. The placing is also announced today and is fully underwritten by HSBC. Further information regarding the financing of the Offer will be set out in theOffer Document, which will be posted to Ashtenne Shareholders in due course. 10. Inducement fee As an inducement to IFL to make the Offer, Ashtenne and Warner have entered intoan agreement under which Ashtenne has agreed to pay Warner a fee of £1,191,455(including any VAT payable save to the extent that such VAT is recoverable bythe Company), in the event that (i) the directors of the Company withdraw, oradversely modify, or make subject to any condition or qualification, theirrecommendation of the Offer; or (ii) the Offer lapses or is withdrawn and beforethe lapse or withdrawal an Independent Competing Offer for the Company has beenannounced which subsequently becomes unconditional at a price in excess of thevalue of the Transaction. For these purposes, an "Independent Competing Offer"means an offer, scheme of arrangement or other similar transaction relating toAshtenne which, where it involves a third party, is made by or in collaborationwith a party which is not Warner's associate (as defined in the City Code). 11. Management and employees The directors of IFL have given assurances to Ashtenne that, if the Offerbecomes or is declared unconditional in all respects, the existing employmentrights, including pension rights, of all Ashtenne management and employees willbe fully safeguarded. If the Offer becomes or is declared unconditional in all respects, it isintended that the employment contracts of Morgan Jones and Ian Watson will beimmediately terminated although, as part of the termination arrangements, theyhave agreed to work with Warner for a transitional period and to enter intocertain non-compete covenants for a period of two years in favour of AIF. 12. Ashtenne Share Option Scheme The Offer will extend to any Ashtenne Shares which are issued or unconditionallyallotted while the Offer remains open for acceptance (or, subject to the CityCode, by such earlier date as IFL may decide), including Ashtenne Shares issuedpursuant to the exercise of options granted under the Ashtenne Share OptionScheme or otherwise. If the Offer becomes or is declared unconditional in all respects, to the extentthat options remain unexercised, IFL intends to make appropriate proposals tothe holders of options under the Ashtenne Share Option Scheme, which willinclude provisions to enable optionholders to receive the Special Dividend. 13. Securities in issue As at 7 a.m. on 31 March 2005 Ashtenne had 35,534,712 ordinary shares of 20pence in issue (ISIN number GB00B01WG395) and options outstanding over 570,000Ashtenne Shares. 14. Ashtenne B shares Ashtenne's B shares, which are currently traded on the London Stock Exchange,may be redeemed by the Company at any time after 5 April 2005 at £2 per B share.Warner will not be making an offer for the B shares. Ashtenne will give dueconsideration to the redemption of the B shares after 5 April 2005 and Warnerhas confirmed that it would not object to any such redemption. 15. Compulsory acquisition, delisting and cancellation of trading If the Offer becomes or is declared unconditional in all respects and sufficientacceptances are received, it is IFL's intention: (a) to apply the provisions of section 428 to 430F (inclusive) of the Actto acquire compulsorily any remaining Ashtenne Shares to which the Offer relateson the same terms as the Offer; and (b) to procure that Ashtenne applies to the UK Listing Authority forcancellation of the listing of the Ashtenne Shares on the Official List and tothe London Stock Exchange for the cancellation of trading of Ashtenne Shares onthe London Stock Exchange's market for listed securities. It is anticipated that the cancellation of the listing and admission to tradingof Ashtenne Shares will take effect no earlier than the expiry of twentybusiness days after the date on which the Offer becomes or is declaredunconditional in all respects. Delisting would significantly reduce theliquidity and marketability of any Ashtenne Shares not assented to the Offer. It is also anticipated that Ashtenne will be re-registered as a private companyin due course. 16. Overseas shareholders The availability of the Offer to persons not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions. Such persons shouldinform themselves about and observe any applicable requirements. The Offer will not be made, directly or indirectly, in or into the UnitedStates, Canada, Australia or Japan and, subject to certain exceptions, the Offerwill not be capable of acceptance in or from the United States, Canada,Australia or Japan. In addition, the Offer will not be made, directly orindirectly, in or into or by use of the mails or by any means or instrumentality(including without limitation, by means of telephone, facsimile, telex, internetor other forms of electronic transmission) of interstate or foreign commerce of,or any facilities of a national securities exchange of, the United States and,subject to certain exceptions, the Offer will not be capable of acceptance byany such use, means, instrumentality or facilities or from within the UnitedStates. Accordingly, copies of this announcement are not being, and must notbe, mailed or otherwise forwarded, distributed or sent in, into or from theUnited States, Canada, Australia or Japan. Custodians, nominees and trusteesshould observe these restrictions and must not send or distribute thisannouncement in, into or from the United States, Canada, Australia, or Japan. 17. General The Offer will be subject to the applicable requirements of the City Code. TheOffer Document and the Form of Acceptance containing the full terms andconditions of the Offer will be posted to Ashtenne Shareholders (other than toany Ashtenne Shareholders with addresses in the United States, Canada, Australiaor Japan) in due course. In deciding whether or not to accept the Offer in respect of their AshtenneShares, Ashtenne Shareholders should rely on the information contained in, andfollow the procedures described in, the Offer Document and Form of Acceptance. Save in respect of the irrevocable undertakings referred to in paragraph 3 aboveneither IFL nor any of its Directors, nor, so far as IFL is aware, any partyacting in concert with it, owns or controls any Ashtenne Shares or holds anyoptions to purchase Ashtenne Shares or has entered into any derivativereferenced to securities of Ashtenne which remain outstanding. The conditions to and certain further terms of the Offer are set out in AppendixI. Although paragraph 1(a) of that Appendix provides that the acceptancecondition may (at IFL's discretion) be satisfied at a lower level of acceptancesthan the 90 per cent. figure set out in that paragraph, the terms of IFL'sfinancing arrangements mean that IFL cannot, without the consent of Anglo Irishunder the new acquisition debt facility, decide to treat that condition assatisfied below that 90 per cent. threshold. At 30 March 2004, the latest business day prior to announcement, a company orcompanies within the HSBC group held a total of 23,910 Ashtenne Shares. In viewof the requirement for confidentiality, neither Warner nor IFL have made anyenquiries in this respect of certain parties who may be deemed by the Panel tobe acting in concert with either of them for the purposes of the Offer. This announcement does not constitute an offer or an invitation to purchase anysecurities. ENQUIRIES: Warner Estate Holdings plc +44 20 7907 5100 Philip Warner Peter Collins HSBC - Financial Adviser to Warner +44 20 7991 8888 Maxwell James Oliver Smith HSBC - Corporate Broker to Warner +44 20 7991 8888 Heraclis Economides James A Taylor City Profile - PR Adviser to Warner +44 20 7448 3244 Simon Courtenay Oliver Winters Ashtenne Holdings plc +44 20 7930 9425 Morgan Jones Ian Watson JPMorgan Cazenove - Financial Adviser +44 20 7588 2828and Corporate Broker to Ashtenne Richard Cotton Roger Clarke Tavistock Communications - PR adviser to Ashtenne +44 20 7920 3150 Jeremy Carey HSBC, which is regulated in the United Kingdom by The Financial ServicesAuthority, is acting for Warner and IFL and no one else in relation to the Offerand the matters referred to in this announcement and will not be responsible toany person other than Warner or IFL for providing the protections afforded tocustomers of HSBC nor for providing advice in relation to the Offer or any othermatters referred to in this announcement. JPMorgan Cazenove Limited, which is regulated in the United Kingdom by TheFinancial Services Authority, is acting for Ashtenne and no one else inconnection with the Offer and the matters referred to herein and will not beresponsible to any other person for providing the protections offered to clientsof JPMorgan Cazenove Limited or for providing advice in relation to the Offer orany other matters referred to herein. The Offer will not be made, directly or indirectly, in or into the UnitedStates, Canada, Australia or Japan and, subject to certain exceptions, the Offerwill not be capable of acceptance in or from the United States, Canada,Australia or Japan. In addition, the Offer will not be made, directly orindirectly, in or into or by use of the mails or by any means or instrumentality(including without limitation, by means of telephone, facsimile, telex, internetor other forms of electronic transmission) of interstate or foreign commerce of,or any facilities of a national securities exchange of, the United States,Canada, Australia or Japan and, subject to certain exceptions, the Offer willnot be capable of acceptance by any such use, means, instrumentality orfacilities or from within the United States, Canada, Australia or Japan.Accordingly, copies of this announcement are not being, and must not be, mailedor otherwise forwarded, distributed or sent in, into or from the United States,Canada, Australia or Japan. Custodians, nominees and trustees should observethese restrictions and must not send or distribute this announcement in, into orfrom the United States, Canada, Australia, or Japan. The availability of the Offer to persons not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions. Such persons shouldinform themselves about and observe any applicable requirements of thosejurisdictions. Any person who, alone or acting together with any other person(s) pursuant to anagreement or understanding (whether formal or informal) to acquire or controlsecurities of Ashtenne, owns or controls, or becomes the owner or controller,directly or indirectly, of one per cent. or more of any class of securities ofAshtenne is generally required under the provisions of Rule 8 of the City Codeto notify a Regulatory Information Service and the Panel by not later than 12.00noon (London time) on the business day following the date of the transaction ofevery dealing in such securities during the period from the date of thisannouncement to the date on which the Offer becomes or is declared unconditionalas to acceptances or lapses or is withdrawn. Dealings by IFL or its "associates" (within the definition set out in the City Code) in any class of securities ofAshtenne until the end of such period must also be disclosed. Please consultyour independent financial adviser authorised under the Financial Services andMarkets Act 2000 immediately if you believe this Rule may be applicable to youor consult the Panel's website at www.thetakeoverpanel.org.uk or contact thePanel on +44 (0)20 7638 0129. APPENDIX I Conditions to and further terms of the Offer The Offer, which will be made by HSBC on behalf of IFL, will comply with theapplicable rules and regulations of the UK Listing Authority, the London StockExchange and the City Code, will be governed by English law and will be subjectto the jurisdiction of the courts of England. In addition it will be subject tothe terms and conditions to be set out in the Offer Document and related Form ofAcceptance. 1. Conditions of the Offer The Offer will be subject to the following conditions: (a) valid acceptances being received (and not, where permitted,withdrawn) by not later than 3.00 p.m. (London time) on the first closing dateof the Offer (or such later time(s) and/or date(s) as IFL may, subject to therules of the City Code or with the consent of the Panel, decide) in respect ofnot less than 90 per cent. (or such lower percentage as IFL may decide) innominal value of the Ashtenne Shares to which the Offer relates, provided thatthis condition will not be satisfied unless IFL (together with its wholly ownedsubsidiaries) shall have acquired or agreed to acquire (whether pursuant to theOffer or otherwise) Ashtenne Shares carrying in aggregate more than 50 per cent.of the voting rights then normally exercisable at a general meeting of Ashtenne,including for this purpose (except to the extent otherwise agreed by the Panel)any such voting rights attaching to Ashtenne Shares that are unconditionallyallotted or issued before the Offer becomes or is declared unconditional as toacceptances whether pursuant to the exercise of any outstanding subscription orconversion rights or otherwise. For the purposes of this condition: (i) Ashtenne Shares which have been unconditionally allottedshall be deemed to carry the voting rights they will carry upon issue; and (ii) the expression "Ashtenne Shares to which the Offerrelates" shall be construed in accordance with sections 428 to 430F of the Act; (b) no government or governmental, quasi-governmental,supranational, statutory, regulatory, environmental, administrative, fiscal orinvestigative body, court, trade agency, association, institution or any othercompetent body or person whatsoever in any jurisdiction (each a "Third Party")having decided to take, institute, implement or threaten any action, proceeding,suit, investigation, enquiry or reference, or having required any action to betaken or otherwise having done anything or having enacted, made or proposed anystatute, regulation, decision, order or change to published practice and therenot continuing to be outstanding any statute, regulation, decision or orderwhich would or might: (i) make the Offer, its implementation or the acquisition orproposed acquisition of any Ashtenne Shares or control of Ashtenne, by anymember of the IFL Group void, illegal and/or unenforceable under the laws of anyjurisdiction, or otherwise directly or indirectly prohibit, or materiallyrestrain, restrict, delay or otherwise interfere with the implementation of, orimpose material additional conditions or obligations with respect to, orotherwise materially challenge or require amendment of the Offer or theacquisition of any such Ashtenne Shares by any member of the IFL Group; (ii) require, prevent or materially delay the divestiture ormaterially alter the terms envisaged for such divestiture by any member of theIFL Group or by any member of the Wider Ashtenne Group of all or any part of itsbusinesses, assets or property or impose any limitation on the ability of any ofthem to conduct their businesses (or any part thereof) or to own any of theirassets or properties (or any part thereof) to an extent which is material in thecontext of the Ashtenne Group taken as a whole or the IFL Group taken as a whole(as the case may be); (iii) impose any material limitation on, or result in amaterial delay in, the ability of any member of the IFL Group directly orindirectly to acquire or hold or to exercise effectively all or any rights ofownership in respect of shares or other securities in Ashtenne or on the abilityof any member of the Wider Ashtenne Group or any member of the IFL Groupdirectly or indirectly to hold or exercise effectively any rights of ownershipin respect of shares or other securities (or the equivalent) in, or to exercisemanagement control over, any member of the Wider Ashtenne Group; (iv) require any member of the Wider IFL Group or the WiderAshtenne Group to acquire or offer to acquire any shares, other securities (orthe equivalent) or interest in any member of the Wider Ashtenne Group or anyasset owned by any third party (other than in the implementation of the Offer); (v) require, prevent or materially delay a divestiture by anymember of the IFL Group of any shares or other securities (or the equivalent) inAshtenne; (vi) result in any member of the Wider Ashtenne Group ceasingto be able to carry on business under any name under which it presently carrieson business to an extent which is material in the context of the Ashtenne Grouptaken as a whole; (vii) impose any material limitation on the ability of any memberof the Wider IFL Group or any member of the Wider Ashtenne Group to integrate orco-ordinate all or any part of its business with all or any part of the businessof any other member of the Wider IFL Group and/or the Wider Ashtenne Group; or (viii) except as fairly disclosed in writing by Ashtenne to IFLprior to the date of this announcement or as publicly announced to a RegulatoryInformation Service by or on behalf of Ashtenne before that date or contained inthe Ashtenne Preliminary Results, otherwise affect the business, assets, profitsor prospects of any member of the Wider Ashtenne Group or any member of theWider IFL Group in a manner which is adverse to and material in the context ofthe Ashtenne Group taken as a whole or of the obligations of any members of theIFL Group taken as a whole in connection with the financing of the Offer; and all applicable waiting and other time periods during which any such ThirdParty could decide to take, institute, implement or threaten any such action,proceeding, suit, investigation, enquiry or reference or take any other stepunder the laws of any jurisdiction in respect of the Offer or the acquisition orproposed acquisition of any Ashtenne Shares or otherwise intervene havingexpired, lapsed, or been terminated; (c) no undertakings or assurances being sought from IFL, any memberof the Wider IFL Group or any member of the Wider Ashtenne Group by theSecretary of State for Trade and Industry or any other Third Party, except onterms satisfactory to IFL; (d) all necessary or appropriate notifications, filings orapplications having been made in connection with the Offer and all necessarywaiting periods (including any extensions thereof) under any applicablelegislation or regulation of any jurisdiction having expired, lapsed or beenterminated (as appropriate) and all statutory and regulatory obligations in anyjurisdiction having been complied with and all Authorisations necessary orappropriate in any jurisdiction for or in respect of the Offer and theacquisition or the proposed acquisition of any shares or other securities in, orcontrol of, Ashtenne by any member of the Wider IFL Group having been obtainedin terms and in a form satisfactory to IFL from all appropriate Third Parties or(without prejudice to the generality of the foregoing) from any person or bodieswith whom any member of the Wider Ashtenne Group or the Wider IFL Group hasentered into contractual arrangements and all such Authorisations necessary orappropriate to carry on the business of any member of the Wider Ashtenne Groupin any jurisdiction having been obtained and all such Authorisations remainingin full force and effect at the time at which the Offer becomes otherwiseunconditional and there being no notice or intimation of an intention to revoke,suspend, restrict, modify or not to renew such Authorisations; (e) except as fairly disclosed in the Annual Report and Accounts orthe Interim Results or the Ashtenne Preliminary Results or as publicly announcedto a Regulatory Information Service by or on behalf of Ashtenne before the dateof this announcement or as fairly disclosed in writing by Ashtenne to IFL or itsshareholders before the date of this announcement, there being no provision ofany arrangement, agreement, licence, permit, lease or other instrument to whichany member of the Wider Ashtenne Group is a party or by or to which any suchmember or any of its assets is or may be bound or be subject or any event orcircumstance which, as a consequence of the Offer or the acquisition or theproposed acquisition by any member of the IFL Group of any shares or othersecurities in Ashtenne or because of a change in the control or management ofany member of the Wider Ashtenne Group or otherwise, could or might reasonablybe expected to result in, in each case to an extent which is material in thecontext of the Wider Ashtenne Group taken as a whole or to the obligations ofany member of the IFL Group in connection with the financing of the Offer: (i) any monies borrowed by, or any other indebtedness,actual or contingent, of any member of the Wider Ashtenne Group being orbecoming repayable, or capable of being declared repayable, immediately or priorto its or their stated maturity date or repayment date, or the ability of anysuch member to borrow monies or incur any indebtedness being withdrawn orinhibited or being capable of becoming or being withdrawn or inhibited; (ii) the rights, liabilities, obligations, interests orbusiness of any member of the Wider Ashtenne Group or any member of the WiderIFL Group under any such arrangement, agreement, licence, permit, lease orinstrument or the interests or business of any member of the Wider AshtenneGroup or any member of the Wider IFL Group in or with any other firm or companyor body or person (or any agreement or arrangement relating to any such businessor interests) being terminated or adversely modified or affected or any onerousobligation or liability arising or any adverse action being taken thereunder; (iii) any member of the Wider Ashtenne Group ceasing to be ableto carry on business under any name under which it presently carries on businessto an extent which is material in the context of the Ashtenne Group taken as awhole; (iv) any assets or interests of, or any asset the use of whichis enjoyed by, any member of the Wider Ashtenne Group being or falling to bedisposed of or charged or any right arising under which any such asset orinterest could be required to be disposed of or charged or could cease to beavailable to any member of the Wider Ashtenne Group otherwise than in theordinary course of business; (v) the creation or enforcement of any mortgage, charge orother security interest over the whole or any part of the business, property orassets of any member of the Wider Ashtenne Group; (vi) the value of, or the financial or trading position orprospects of, any member of the Wider Ashtenne Group being prejudiced oradversely affected; (vii) the creation of any liability (actual or contingent) by anymember of the Wider Ashtenne Group; or (viii) any liability of any member of the Wider Ashtenne Group tomake any severance, termination, bonus or other payment to any of its directorsor other officers; (f) except as fairly disclosed in the Annual Report and Accountsor the Interim Results or the Ashtenne Preliminary Results or as publiclyannounced to a Regulatory Information Service by or on behalf of Ashtenne beforethe date of this announcement or as fairly disclosed in writing by Ashtenne toIFL or its shareholders before the date of this announcement, no member of theWider Ashtenne Group having, since 31 December 2003: (i) issued or agreed to issue or authorised or proposed theissue of additional shares of any class, or securities or securities convertibleinto, or exchangeable for, or rights, warrants or options to subscribe for oracquire, any such shares or convertible securities (save, where relevant, asbetween Ashtenne and wholly-owned subsidiaries of Ashtenne and save for theissue of Ashtenne Shares on the exercise of options granted before the date ofthis announcement in the ordinary course); (ii) save for the Special Dividend, recommended, declared,paid or made or proposed to recommend, declare, pay or make any bonus, dividendor other distribution (whether payable in cash or otherwise) other than toAshtenne or one of its wholly-owned subsidiaries; (iii) save for transactions between Ashtenne and its wholly-owned subsidiaries, merged with or demerged from or acquired any body corporate,partnership or business or acquired or disposed of, or, other than in theordinary course of business, transferred, mortgaged or charged or created anysecurity interest over, any assets or any right, title or interest in any asset(including shares and trade investments) or authorised, proposed or announcedany intention to do so which taken as a whole are material in the context of theAshtenne Group taken as a whole; (iv) save as between Ashtenne and its wholly-owned subsidiariesor between such wholly-owned subsidiaries, made, authorised, proposed orannounced an intention to propose any change in its loan capital; (v) issued, authorised or proposed the issue of any debenturesor (save in the ordinary course of business and save as between Ashtenne and itswholly-owned subsidiaries or between such wholly-owned subsidiaries) incurred orincreased any indebtedness or become subject to any contingent liability to anextent which is material in the context of the Ashtenne Group; (vi) entered into or varied or authorised, proposed orannounced its intention to enter into or vary any contract, transaction,arrangement or commitment (whether in respect of capital expenditure orotherwise) which is of a long term, unusual or onerous nature, or which involvesor could involve an obligation of a nature or magnitude which is, in any suchcase, material in the context of the Ashtenne Group or which is materiallyrestrictive on the business of any member of the Wider Ashtenne Group; (vii) entered into or varied the terms of any service agreementwith any director or senior executive of the Wider Ashtenne Group which taken asa whole are material in the context of the Ashtenne Group taken as a whole; (viii) proposed, agreed to provide or modified in any materialrespect the terms of any share option scheme, incentive scheme, or other benefitrelating to the employment or termination of employment of any employee of theWider Ashtenne Group which, taken as a whole, are material in the context of theAshtenne Group taken as a whole; (ix) made or agreed or consented to any significant change tothe terms of the trust deeds constituting the pension schemes established forits directors, employees or their dependants or the benefits which accrue, or tothe pensions which are payable, thereunder, or to the basis on whichqualification for, or accrual or entitlement to, such benefits or pensions arecalculated or determined or to the basis on which the liabilities (includingpensions) of such pension schemes are funded or made, or agreed or consented toany change to the trustees involving the appointment of a trust corporation; (x) implemented or effected, or authorised, proposed orannounced its intention to implement or effect, any composition, assignment,reconstruction, amalgamation, commitment, scheme or other similar transaction orsimilar arrangement (other than the Offer); (xi) purchased, redeemed or repaid or announced any proposal topurchase, redeem or repay any of its own shares or other securities or reducedor, save in respect of the matters mentioned in sub-paragraph (i) above, madeany other change to any part of its share capital to an extent which (other thanin the case of Ashtenne) is material in the context of the Ashtenne Group; (xii) waived or compromised any claim otherwise than in theordinary course of business which is material in the context of the AshtenneGroup taken as a whole; (xiii) made any material alteration to its memorandum or articlesof association or other incorporation documents; (xiv) (other than in respect of a member which is dormant and wassolvent at the relevant time) taken or proposed any steps, corporate action orhad any legal proceedings instituted or threatened against it in relation to thesuspension of payments, a moratorium of any indebtedness, its winding-up(voluntary or otherwise), dissolution, reorganisation or for the appointment ofany administrator, receiver, manager, administrative receiver, trustee orsimilar officer of all or any of its assets or revenues or any analogousproceedings in any jurisdiction or appointed any analogous person in anyjurisdiction or had any such person appointed; (xv) been unable, or admitted in writing that it is unable, topay its debts or commenced negotiations with one or more of its creditors with aview to rescheduling or restructuring any of its indebtedness, or having stoppedor suspended (or threatened to stop or suspend) payment of its debts generallyor ceased or threatened to cease carrying on all or a substantial part of itsbusiness; or (xvi) entered into any contract, commitment, agreement orarrangement otherwise than in the ordinary course of business or passed anyresolution or made any offer (which remains open for acceptance) with respect toor announced an intention to, or to propose to, effect any of the transactions,matters or events referred to in this condition; (g) since 31 December 2003, and except as fairly disclosed in theAnnual Report and Accounts or the Interim Results or the Ashtenne PreliminaryResults or as publicly announced to a Regulatory Information Service by or onbehalf of Ashtenne or as fairly disclosed in writing by Ashtenne to IFL in eachcase before the date of this announcement: (i) there having been no adverse change in the business,assets, financial, trading position, profits or expectation of performance ofany member of the Wider Ashtenne Group to an extent which is material to theAshtenne Group taken as a whole; (ii) no litigation, arbitration proceedings, prosecution orother legal proceedings having been threatened, announced or instituted by oragainst or remaining outstanding against any member of the Wider Ashtenne Groupor to which any member of the Wider Ashtenne Group is or may become a party(whether as claimant or defendant or otherwise) and no enquiry or investigationby, or complaint or reference to, any Third Party against or in respect of anymember of the Wider Ashtenne Group having been threatened, announced orinstituted by or against, or remaining outstanding in respect of, any member ofthe Wider Ashtenne Group which, in any such case, might reasonably be expectedmaterially and adversely to affect the Ashtenne Group taken as a whole; (iii) no contingent or other liability having arisen or becomeknown to IFL which would adversely affect the business, assets, financial ortrading position, profits or expectation of performance of any member of theWider Ashtenne Group to an extent which is material to the Ashtenne Group takenas a whole; and (iv) no steps having been taken and no omissions having beenmade which are likely to result in the withdrawal, cancellation, termination ormodification of any licence held by any member of the Wider Ashtenne Group,which is necessary for the proper carrying on of its business and thewithdrawal, cancellation, termination or modification of which is material andlikely adversely to affect the Ashtenne Group taken as a whole; (h) since 31 December 2003, and except as fairly disclosed in theAnnual Report and Accounts or the Interim Results or the Ashtenne PreliminaryResults or as publicly announced to a Regulatory Information Service by or onbehalf of Ashtenne or as fairly disclosed in writing by Ashtenne to IFL or itsshareholders in each case before the date of this announcement IFL not havingdiscovered: (i) that any financial, business or other informationconcerning the Wider Ashtenne Group publicly disclosed or disclosed to anymember of the Wider IFL Group at any time by or on behalf of any member of theWider Ashtenne Group which is material in the context of the acquisition ofAshtenne by any member of IFL Group is misleading, contains a materialmisrepresentation of fact or omits to state a fact necessary to make thatinformation not materially misleading; (ii) that any member of the Ashtenne Group is subject to anyliability, contingent or otherwise, which is not disclosed in the Annual Reportand Accounts or the Interim Results or the Ashtenne Preliminary Results, andwhich is material in the context of the Ashtenne Group; or (iii) any information which affects the import of anyinformation disclosed to IFL at any time by or on behalf of any member of theWider Ashtenne Group which is material in the context of the Ashtenne Group; (i) except as disclosed in writing to IFL or its shareholdersprior to the date of this announcement IFL not having discovered: (i) that any past or present member of the Wider AshtenneGroup has not complied with all applicable legislation or regulations of anyjurisdiction or any Authorisations relating to the storage, carriage, disposal,discharge, spillage, leak or emission of any waste or hazardous substance or anysubstance likely to impair the environment (including property) or harm humanhealth or otherwise relating to environmental matters or the health and safetyof humans, which non-compliance would be likely to give rise to any materialliability including any penalty for non-compliance (whether actual orcontingent) on the part of any member of the Wider Ashtenne Group; or (ii) that there has been a disposal, discharge, spillage,accumulation, leak, emission, release or the migration, production, supply,treatment, storage, transport or use of any waste or hazardous substance or anysubstance likely to impair the environment (including any property) or harmhuman health which (whether or not giving rise to non-compliance with any law orregulation) would be likely to give rise to any material liability (whetheractual or contingent) on the part of any member of the Wider Ashtenne Group; or (iii) that there is or is likely to be any liability (whetheractual or contingent) or requirement to make good, remediate, repair, re-instateor clean up any property or asset currently or previously owned, occupied ormade use of by any past or present member of the Wider Ashtenne Group (or on itsbehalf), or in which any such member may have or previously have had or bedeemed to have had an interest, under any environmental legislation, common law,regulation, notice, circular, Authorisation, other legally binding requirementor order of any Third Party or to contribute to the cost thereof or associatedtherewith or indemnify any person in relation thereto in any such case to anextent which is material in the context of the Ashtenne Group; orRelated Shares:
Wt Wner Usd