23rd Sep 2009 07:00
23 September 2009
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
LIBERTY INTERNATIONAL PLC
PLACING OF UP TO 56.1 MILLION NEW ORDINARY SHARES
Liberty International PLC ("Liberty International" or the "Group") today announces it is placing up to 56.1 million new ordinary shares (the "Placing") representing up to 9.9 per cent of the Group's issued ordinary share capital immediately prior to the Placing.
Purpose of the Placing
The proceeds of the Placing will enable the Group to resume investment in, and so enhance returns from, its prime UK regional shopping centres and Central London assets. Except for pre-existing commitments, the Group's investment plans were placed on hold approximately twelve months ago as a result of the exceptional turmoil in financial and property markets at that time.
The Placing addresses the Group's investment requirements beyond the net £592 million capital raised in April 2009, the purpose of which was to provide funds for already committed capital expenditure, debt repayment and covenant cures on non-recourse debt facilities for the period to December 2010. These further investments can, in most cases, be undertaken by the Group at its discretion and are not contingent on third party decisions.
Approximately half of the proceeds of this Placing are expected to fund identified active management initiatives across the Group's fourteen UK regional shopping centres which were valued at £4.4 billion at 30 June 2009. These initiatives, which are not individually of significant size, but cover most of the Group's centres, are expected to deliver rental and capital value enhancement over the coming years. In addition, the Group has plans to implement a number of larger strategic projects at selected centres, subject to gaining the appropriate planning approvals.
The Group intends to use the other half of the proceeds of the Placing to fund capital expenditure, including tactical acquisitions, to further the Group's objectives for its prime Central London assets in Covent Garden and to fund Earls Court & Olympia through to securing planning consent.
Expected benefits of the Placing
The expected benefits of the Placing are to:
Restore positive momentum to the overall business, the focus of which has recently been primarily on balance sheet and liability management;
Provide funds for the Group to improve the competitive position of its prime UK regional shopping centres through active asset management initiatives in the short-term and more substantial enhancement and expansion projects in the medium-term;
Position the Group to further consolidate and develop its holdings in the prime Covent Garden estate in Central London; and
Enable the Group to actively pursue the development potential of Earls Court & Olympia.
The programme of disposals of non-core UK assets embarked upon when Liberty International became a REIT in January 2007 is largely complete. The Group considers that it is not in the interests of shareholders to embark on a further programme of substantial disposals at the current time, although this position is kept under regular review.
Financial position as at 30 June 2009
Following the capital raising in April this year, the Group had a total cash balance of £568 million and net external debt of £3,390 million at 30 June 2009, representing a debt to assets ratio of 56 per cent. Net assets per share (diluted, adjusted) were 448 pence at 30 June 2009.
As explained at the time of the earlier capital raising, this cash balance is earmarked to fund:
Committed capital expenditure, which amounted to £172 million at 30 June 2009, in particular in relation to the St. David's, Cardiff development which is opening in October this year;
Debt repayment and amortisation in 2009 and 2010 of £174 million, including the repayment of the remaining £79 million of 3.95 per cent convertible bond due September 2010; there is a further £113 million of amortisation due in 2011 and 2012;
The remaining REIT entry charge of £19 million by December 2010 and £103 million in total; and
Covenant cures in non-recourse debt facilities should there be further falls in property values. As anticipated in the Interim Report, since 30 June 2009 the Group has contributed or will be contributing, in aggregate, £36 million (including associated costs). As illustrated in the Interim Report, a further 10 per cent reduction in values would require a further cash cure of approximately £90 million.
The Group is also considering the refinancing prior to maturity in 2011 of the net £591 million of borrowings secured by way of CMBS on the Group's flagship asset Lakeside, Thurrock, which may require some equity contribution to reflect a lower amount of debt on refinancing.
The St. David's Limited Partnership, in which the Group has a 50 per cent interest, recently concluded a £290 million debt facility secured against the St. David's, Cardiff shopping centre of which the Group's share is £145 million, with £37 million currently drawn. This will partially address the Group's funding requirements.
In addition to its non-recourse debt, the Group has a corporate revolving credit facility of £360 million to provide financial flexibility and meet short-term borrowing requirements. This facility, which is committed to June 2011, is currently undrawn.
Property and debt market background
The cumulative decline from the peak valuation of Liberty International's investment properties amounted to 36.2 per cent at 30 June 2009, outperforming the IPD UK All-Property Monthly Index decline over the comparable period of 44.1 per cent. Since 30 June 2009, the UK property market has shown signs of improvement, particularly for prime assets of smaller lot sizes, with the IPD index in August 2009 showing its first positive monthly return since summer 2007.
Recent months have shown some recovery and improved liquidity in credit markets, with reducing spreads evident on listed UK property-related debt securities. However, the availability of finance for real estate remains significantly constrained, with only a small number of banks willing to advance new facilities and generally only against the most prime assets.
Capital Shopping Centres ("CSC")
Since the Interim Report, occupancy levels at CSC's UK regional shopping centres have increased, with headline occupancy at 31 August 2009 of 98.8 per cent (30 June 2009 - 98.3 per cent). As a result of continued positive re-letting activity, occupancy levels (adjusted for units affected by administrations and still to be re-let) have increased to 97.3 per cent (30 June 2009 - 96.3 per cent).
The rate of tenant failures has slowed further in the third quarter, with only 7 retailers, affecting 14 units, failing since the half year, compared with an aggregate 184 units out of CSC's 2,028 units in the three quarters to 30 June 2009.
Estimated footfall at CSC's centres continues to be encouraging with our 12 completed centres continuing to record an increase of over 3 per cent on the previous year.
Whilst the retail letting market remains challenging, we are encountering more activity and interest from retailers in securing well configured space in our leading locations.
The 967,500 sq.ft. extension to St. David's, Cardiff is expected to open on 22 October 2009, with the new 260,000 sq.ft. John Lewis store opening on 24 September 2009. 66 per cent of the area and 61 per cent of the anticipated rental income is currently either exchanged or in solicitors' hands (30 June 2009 - 64 per cent and 53 per cent respectively).
St. Andrew's Way mall at Eldon Square, due to complete in February 2010, now has 88 per cent by area and 92 per cent by anticipated rental income either exchanged or in solicitors' hands (30 June 2009 - 85 per cent and 83 per cent respectively).
At MetroCentre, our remodelling project in Yellow and Blue Quadrants continues on programme. 82 per cent of the area and 73 per cent of anticipated rental income is currently either exchanged or in solicitors' hands (30 June 2009 - 81 per cent and 70 per cent respectively) with a further 5 per cent by income in active negotiation. Six of the eight restaurants on the upper level are open for trade. Both Namco and Odeon are anticipated to be open for trade shortly, in November and December 2009 respectively.
Capital & Counties
Covent Garden
The Group's holding in Covent Garden comprises around 750,000 sq.ft. over 44 buildings with 305 lettable units. The estate was valued at £529 million at 30 June 2009. Portfolio occupancy continues to be strong at 99 per cent taking into account units under offer and under refurbishment, with net rental income in line with expectations. Work on the refurbishment of the prominent Bedford Chambers building is expected to complete on schedule with a world class tenant opening for business in Spring 2010.
The strategy is to drive income through the introduction of an enhanced retail and hospitality mix with particular focus on locations with currently low rental levels. Opportunities to enhance our substantial presence in the district are now presenting themselves, either by way of improvement works to the existing portfolio or direct acquisitions. Part of the proceeds of the Placing will fund expansionary capital expenditure in these prime locations.
Earls Court & Olympia (50 per cent controlling interest)
The Group reported at 30 June 2009 a satisfactory performance from the underlying exhibition business which has continued in the second half of the year. The estate including the adjacent Empress State building was valued at £524 million at 30 June 2009.
The Group intends to use part of the proceeds of the Placing to continue to pursue a planning consent for comprehensive redevelopment. Significant progress has been made in making all stakeholders cognisant of the scale of the opportunity, with both relevant London boroughs publishing strategy consultation drafts recognising that Earls Court should be redeveloped. The project also has the support of the Greater London Authority (GLA), which has described the site as one of the most important development sites in London, capable of implementation in the next 5 years. A Collaboration Agreement is well advanced with adjacent land owners, who are working together to establish a Conditional Joint Venture Agreement.
Dividends
As noted in the Interim Report, the Board intends, subject to available resources, to pay a dividend in respect of 2009 on the enlarged share capital amounting to 16.5 pence per share in aggregate, which is the same level as in 2008. Shares issued as a result of the Placing will not be entitled to the interim dividend of 5.0 pence per share in respect of 2009. Such shares will be entitled to receive the anticipated final dividend payment of 11.5 pence per share in respect of 2009 payable in 2010.
Prospects
Liberty International has a high quality and defensive business, with 14 UK regional shopping centres (including 9 of the UK's top 30) and prime central London assets including the Covent Garden Estate and Earls Court & Olympia. The Board believes the Group is well positioned for recovery as the property market improves, with prime assets and large scale destinations expected to outperform secondary assets and inferior locations. Due to recent adverse market conditions, the supply of new retail space in the UK has been sharply curbed which should be beneficial to the Group.
As stated in the Interim Report, tenant failures in the three quarters to 30 June 2009 amounting to over £30 million of CSC's passing rent will adversely impact underlying earnings, despite the positive progress on re-lettings noted above. As was also stated, earnings per share will be negatively impacted in the short-term due to the impact of cash balances earning a low return pending the most effective deployment, and also due to the Group being overhedged with regard to interest rate risk.
Nevertheless, with the benefit of further capital and stability returning to the UK market, the Group will have the opportunity to implement a number of active asset management initiatives within its existing business to enhance returns to shareholders.
Details of the Placing
Liberty International intends to place up to 56.1 million new ordinary shares, representing up to 9.9 per cent of Liberty International's issued ordinary share capital immediately prior to the Placing, with institutional and other investors (the "Placing Shares"). The Placing is being conducted, subject to the satisfaction of certain conditions, through an accelerated book-building process to be carried out by Merrill Lynch International ("Merrill Lynch"). The book will open with immediate effect. The timing of the closing of the book, pricing and allocations is at the discretion of Liberty International and Merrill Lynch although the book-building is expected to close not later than 4.30 pm (London time) today. However, Merrill Lynch may accept further bids after initial allocations have been made on the basis explained in the Appendix. The number of Placing Shares and the price at which the Placing Shares are to be placed (the "Placing Price") will be agreed by Liberty International with Merrill Lynch at the close of the book-building process. Details of the Placing Price will be announced as soon as practicable after the close of the book-building process.
The Placing Shares will be issued credited as fully paid and will rank pari passu with the Company's existing ordinary shares, including the right to receive all dividends and other distributions declared in respect of such shares after the date of issue of the Placing Shares. The Placing Shares will not be entitled to the interim dividend of 5.0 pence per share in respect of 2009. The Placing Shares will be entitled to receive the anticipated final dividend payment of 11.5 pence per share in respect of 2009 payable in 2010.
The Company will apply for admission of the Placing Shares to the Official List of the Financial Services Authority and to listing on the London Stock Exchange's main market for listed securities ("Admission"). It is expected that Admission will take place and that trading will commence on 5 October 2009. Application will also be made to JSE Ltd in South Africa for the Placing Shares to be admitted to the Johannesburg Stock Exchange.
Settlement of the Placing Shares will be on a T + 8 basis (according to business days in the UK) and is expected to occur on 5 October 2009.
The Appendix to this Announcement (which forms part of this Announcement) sets out the terms and conditions of the Placing.
Enquiries:
Liberty International PLC
David Fischel Chief Executive +44 (0)20 7960 1207
Ian Durant Finance Director +44 (0)20 7960 1210
Kate Bowyer Investor Relations +44 (0)20 7960 1250
BofA Merrill Lynch +44 (0)20 7628 1000
Simon Mackenzie-Smith
Simon Fraser
Rupert Hume-Kendall
Public relations
UK: Michael Sandler +44 (0)20 7796 4133
Hudson Sandler
SA: Nicholas Williams
College Hill Associates +27 (0)11 447 3030
Certain statements made in this Announcement constitute forward-looking statements. Forward looking statements are typically identified by the use of forward looking terminology such as 'believes', 'expects', 'may', 'will', 'could', 'should', 'intends', 'estimates', 'plans', 'assumes' or 'anticipates' or the negative thereof or other variations thereon or comparable terminology, or by discussions of, e.g. future plans, present or future events, or strategy that involve risks and uncertainties. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's current beliefs and expectations about future events. Such statements are based on current expectations and, by their nature, are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statement. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company and its subsidiaries. Factors that might cause forward-looking statements to differ materially from actual results include, among other things, the following: global economic conditions; economic conditions in the UK and other jurisdictions in which Liberty International operates or invests; volatile property prices; any inability of the Company to hedge certain risks economically; and exposure to various types of market risk (e.g. interest rate risk and foreign exchange rate risk). The forward-looking statements contained in this Announcement speak only as of the date of this Announcement and the Company undertakes no duty to, and will not necessarily, update any of them in light of new information or future events, except to the extent required by applicable law, the Prospectus Rules, the Listing Rules and the Disclosure and Transparency Rules.
This Announcement is for information purposes only and shall not constitute an offer to buy, sell, issue, or acquire, or the solicitation of an offer to buy, sell, issue, or acquire any securities in any jurisdiction, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In particular, this Announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Australia, Canada or Japan. This Announcement has been issued by and is the sole responsibility of the Company and should not be relied upon in connection with any decision to subscribe for or acquire any of the Placing Shares. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Merrill Lynch International ("Merrill Lynch") or by any of its Affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
Merrill Lynch, which is authorised and regulated in the United Kingdom by the FSA, is acting for the Company and for no-one else in connection with the Placing, and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Merrill Lynch or for providing advice to any other person in relation to the Placing or any other matter referred to herein.
South African residents should be aware that South African Exchange Control Regulations apply or may apply to a participation in the Placing. Accordingly, they should obtain through an authorised dealer any necessary approval or establish that an existing exchange control approval or exemption applies to such investment. Within South Africa subscriptions can only be made for a minimum subscription amount of Rand 100,000 per single addressee acting as principal.
The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.
APPENDIX
TERMS AND CONDITIONS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE (1) QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 AS AMENDED ("FSMA"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2.1(e)(i), (ii) OR (iii) OF DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE") AND (2) IN THE UNITED KINGDOM FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") OR ARE PERSONS WHO FALL WITHIN ARTICLE 49(2)(a) TO (d) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN LIBERTY INTERNATIONAL.
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING SOLICITED BY THIS ANNOUNCEMENT AND THIS APPENDIX AND IF SENT IN RESPONSE TO INFORMATION CONTAINED IN THIS ANNOUNCEMENT OR THIS APPENDIX, WILL NOT BE ACCEPTED.THIS ANNOUNCEMENT AND ANY OFFER IF MADE SUBSEQUENTLY IS ONLY ADDRESSED TO AND DIRECTED AT PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC) ("QUALIFIED INVESTORS").
By participating in the bookbuilding procedure (the "Bookbuilding") and the Placing, Placees will be deemed to have read and understood this Appendix and the remainder of this Announcement in its entirety (together referred to as the "Announcement"), and to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained herein.
In particular each such Placee represents, warrants and acknowledges that it:
1. is a Relevant Person and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;
2. in the case of a Relevant Person in a member state of the EEA which has implemented the Prospectus Directive (each a "Relevant Member State") who acquires any Placing Shares pursuant to the Placing:
(i) it is a Qualified Investor; and
(ii) in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, that (a) the Placing Shares subscribed for and/or acquired by it in the Placing have not been subscribed for and/or acquired on behalf of, nor have they been or will be acquired with a view to their offer or resale to, persons in any Relevant Member State other than Qualified Investors or in circumstances in which the prior consent of Merrill Lynch has been given to the offer or resale; or (b) where Placing Shares have been acquired by it on behalf of persons in any member state of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons; and
3. is acquiring the Placing Shares for its own account or is acquiring the Placing Shares for an account with respect to which it exercises sole investment discretion and has the authority to make, and does make, the acknowledgements, representations and agreements contain in this Appendix and that it (and any such account) is outside the United States or it is a dealer or other professional fiduciary in the United States acting on a discretionary basis for non-US beneficial owners (other than an estate or trust), and is acquiring the Placing Shares in an offshore transaction in reliance upon Regulation S under the US Securities Act of 1933, as amended (the "Securities Act") and it is not purchasing the Placing Shares for the account of another person who is resident or located in the United States unless (a) the instruction to purchase was received from a person outside the United States and (b) the person giving such instruction has confirmed that it (i) has the authority to give such instruction and (ii) either (x) has investment discretion over such account or (y) is an investment manager or investment company and that, in the case of each of (x) and (y), is purchasing the Placing Shares in an "offshore transaction" within the meaning of Regulation S under the Securities Act; or if it is not outside the United States, it is a qualified institutional buyer ("QIB") as defined in Rule 144A under the Securities Act, or purchasing Placing Shares on behalf of a QIB, who will sign a letter in the form agreed between the Company and Merrill Lynch ("US Investor Letter") and understands (or, if it is acting for the account of another person, such person has confirmed that such person understands) the resale and transfer restrictions set out in "Representations and further terms" contained herein.
This Announcement does not constitute or form part of an offer to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction including, without limitation, the United Kingdom, South Africa, the United States, Canada, Australia or Japan. This Announcement and the information contained herein is not for publication or distribution, directly or indirectly, to persons in the United States, Canada, Australia, Japan or in any jurisdiction in which such publication or distribution is unlawful. No public offering of securities will be made in connection with the Placing in the United Kingdom, the United States or elsewhere.
The Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or under the securities laws of any State or other jurisdiction of the United States, and may not be offered or sold directly or indirectly in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any State of the United States. Any offering to be made in the United States will be made to a limited number of qualified institutional investors ("QIBs") pursuant to an exemption from registration under the Securities Act in a transaction not involving any public offering. The Placing Shares are being offered and sold outside the United States in accordance with Regulation S under the Securities Act.
The Placing Shares have not been approved or disapproved by the US Securities and Exchange commission (the "SEC"), any State securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States. Persons (including without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Appendix or this Announcement should seek appropriate advice before taking any action.
South African residents should be aware that South African Exchange Control Regulations apply or may apply to a participation in the Placing. Accordingly, they should obtain through an authorised dealer any necessary approval or establish that an existing exchange control approval or exemption applies to such investment. Within South Africa subscriptions can only be made for a minimum subscription amount of Rand 100,000 per single addressee acting as principal.
The distribution of this Announcement and the Placing and/or issue of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, Merrill Lynch, or any of their respective Affiliates, that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and Merrill Lynch to inform themselves about and to observe any such restrictions.
In this Appendix, unless the context otherwise requires, the "Company" means Liberty International PLC and "Placee" includes a person (including individuals, funds or others) on whose behalf a commitment to acquire Placing Shares has been given.
No prospectus
No prospectus or other offering document has been or will be submitted to be approved by the FSA in relation to the Placing and the Placees' commitments will be made solely on the basis of the information contained in this Announcement, the Pricing Announcement and any information publicly announced to a Regulatory Information Service by or on behalf of the Company prior to the date of this Announcement (the "Publicly Available Information"). Each Placee, by participating in the Placing, agrees that it has neither received nor relied on any other information, representation, warranty or statement made by or on behalf of either Merrill Lynch or the Company and neither Merrill Lynch, the Company nor any person acting on such person's behalf nor any of their Affiliates has or shall have any liability for any Placee's decision to accept this invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability will be accepted by Merrill Lynch or any of its employees, Affiliates, advisers or agents or any other person as to or in relation to, the accuracy or completeness of any of the Publicly Available Information or this Announcement or any other written or oral information made available to any Placee, any person acting on such Placee's behalf or any of their respective advisers, and any liability therefore is expressly disclaimed.
Details of the Placing Agreement and the Placing Shares
Merrill Lynch has entered into a placing agreement (the "Placing Agreement") with the Company under which Merrill Lynch has undertaken, on the terms and subject to the conditions set out in the Placing Agreement, to use its reasonable endeavours as agent of the Company to seek to procure Placees for the Placing Shares. In accordance with the terms of the Placing Agreement, Merrill Lynch has agreed to underwrite the settlement risk in the event that any Placees fail to take up their allocation of Placing Shares.
The Placing Shares will, when issued, be subject to the memorandum and articles of association of the Company and be credited as fully paid and will rank pari passu in all respects with the existing issued ordinary shares of 50 pence per share in the capital of the Company, including the right to receive all dividends and other distributions declared in respect of such ordinary shares after the date of issue of the Placing Shares. The Placing Shares will not be entitled to the interim dividend of 5.0 pence per share in respect of 2009. The Placing Shares will be entitled to receive the anticipated final dividend payment of 11.5 pence per share in respect of 2009 payable in 2010.
Application for admission to listing and trading
Application will be made to the FSA for admission of the Placing Shares to the official list maintained by the FSA (the "Official List") and to the London Stock Exchange for admission to trading of the Placing Shares on the London Stock Exchange's market for listed securities (together "Admission"). Application will also be made to the JSE for the Placing Shares to be admitted to the JSE at the same time as Admission occurs. It is expected that Admission will take place at 8.00 a.m. on 5 October 2009 and that dealings in the Placing Shares on the London Stock Exchange's main market for listed securities will commence at that time.
Bookbuilding
Merrill Lynch will today commence the Bookbuilding to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
Merrill Lynch and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuilding as they may, in their sole discretion, determine.
Principal terms of the Bookbuilding and Placing
1. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Merrill Lynch. Merrill Lynch is entitled to enter bids in the Bookbuilding.
2. The Bookbuilding will establish a single price (the "Placing Price") payable to Merrill Lynch by all Placees whose bids are successful. The Placing Price will be agreed between Merrill Lynch and the Company following completion of the Bookbuilding and any discount to the market price of the ordinary shares of the Company will be determined in accordance with the Listing Rules. The Placing Price will be announced (the "Pricing Announcement") on a Regulatory Information Service following the completion of the Bookbuilding.
3. To bid in the Bookbuilding, Placees should communicate their bid by telephone to their usual sales contact at Merrill Lynch. Each bid should state the number of shares in the Company which a prospective Placee wishes to acquire at either the Placing Price which is ultimately established by the Company and Merrill Lynch or at prices up to a price limit specified in its bid. Bids may be scaled down by Merrill Lynch on the basis referred to in paragraph 6 below.
4. The Bookbuilding is expected to close no later than 4.30 p.m. on 23 September 2009 but may be closed earlier or later at the sole discretion of Merrill Lynch. Merrill Lynch may, in agreement with the Company, accept bids that are received after the Bookbuilding has closed.
5. Allocations will be confirmed orally by Merrill Lynch as soon as practicable following the close of the Bookbuilding. Merrill Lynch's oral confirmation of an allocation will give rise to a legally binding commitment by the Placee concerned, in favour of Merrill Lynch and the Company, under which it agrees to acquire the number of Placing Shares allocated to it on the terms and subject to the conditions set out in this Appendix and the Company's Memorandum and Articles of Association.
6. Subject to paragraphs 1 and 4 above, Merrill Lynch may choose to accept bids, either in whole or in part, on the basis of allocations determined at its discretion (in agreement with the Company) and may scale down any bids for this purpose on such basis as it may determine. It may also, notwithstanding paragraphs 1 and 4, subject to the prior consent of the Company (a) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (b) allocate Placing Shares after the Bookbuilding has closed to any person submitting a bid after that time.
7. A bid in the Bookbuilding will be made on the terms and subject to the conditions in this Appendix and will be legally binding on the Placee on behalf of which it is made and except with Merrill Lynch's consent will not be capable of variation or revocation after the time at which it is submitted. Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to Merrill Lynch, to pay to it (or as it may direct) in cleared funds an amount equal to the product of the Placing Price and the amount of Placing Shares such Placee has agreed to acquire. Each Placee's obligations will be owed to the Company and to Merrill Lynch. Merrill Lynch is arranging the Placing as agent of the Company.
8. Except as required by law or regulation, no press release or other announcement will be made by Merrill Lynch or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.
9. Irrespective of the time at which a Placee's allocation(s) pursuant to the Placing is/are confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".
10. All obligations under the Bookbuilding and Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing".
11. By participating in the Bookbuilding each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
12. To the fullest extent permissible by law, neither Merrill Lynch nor any of its Affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither Merrill Lynch nor any of its Affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) in respect of Merrill Lynch's conduct of the Bookbuilding or of such alternative method of effecting the Placing as Merrill Lynch and the Company may agree.
Registration and Settlement
If Placees are allocated any Placing Shares in the Placing they will be sent a contract note or electronic confirmation which will confirm the number of Placing Shares allocated to them, the Placing Price and the aggregate amount owed by them to Merrill Lynch. Each Placee will be deemed to agree that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which they have in place with Merrill Lynch. Payment in full for any Placing Shares so allocated at the Placing Price must be made by no later than midday (or such other time as shall be notified to each Placee by Merrill Lynch on 5 October 2009 (or such other time and/or date as the Company and Merrill Lynch may agree)).
Settlement of transactions in the Placing Shares following Admission will take place within the CREST system. Settlement through CREST will be on a T + 8 basis (according to business days in the UK) unless otherwise notified by Merrill Lynch and is expected to occur on 5 October 2009. Settlement will be on a delivery versus payment basis. However, in the event of any difficulties or delays in the admission of the Placing Shares to CREST or the use of CREST in relation to the Placing, the Company and Merrill Lynch may agree that the Placing Shares should be issued in certificated form. Merrill Lynch reserves the right to require settlement for the Placing Shares, and to deliver the Placing Shares to Placees, by such other means as they deem necessary if delivery or settlement to Placees is not practicable within the CREST system or would not be consistent with regulatory requirements in a Placee's jurisdiction.
Interest is chargeable daily on payments not received on the due date in accordance with the arrangements set out above, in respect of either CREST or certificated deliveries, at the rate of two percentage points above prevailing LIBOR.
If Placees do not comply with their obligations Merrill Lynch may sell their Placing Shares on their behalf and retain from the proceeds, for its own account and benefit, an amount equal to the Placing Price of each share sold plus any interest due. Placees will, however, remain liable for any shortfall below the Placing Price and for any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of their Placing Shares on their behalf.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees must ensure that, upon receipt, the conditional contract note is copied and delivered immediately to the relevant person within that organisation.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms.
The obligations of Merrill Lynch under the Placing Agreement are, and the Placing is, conditional on, inter alia:
(a) Admission occurring by not later than 8.00 a.m. (London time) on 6 October 2009 (or such later time and/or date as the Company with Merrill Lynch may agree);
(b) the warranties, representations and undertakings given by the Company in the Placing Agreement being true and accurate and not misleading in any respect on and as of the date of the Placing Agreement and at any time prior to Admission; and
(c) the fulfilment by the Company of its obligations under the Placing Agreement which are required to be performed or satisfied on or prior to Admission, save to the extent that any non-compliance is not material in the context of the Placing,
(all such conditions included in the Placing Agreement being each a "condition" and together the "conditions").
If any condition in the Placing Agreement is not satisfied or waived in accordance with the Placing Agreement within the stated time periods (or such later time and/or date as the Company and Merrill Lynch may agree), or has become incapable of being satisfied or the Placing Agreement is terminated in accordance with its terms, the Placing will lapse and the Placee's rights and obligations under these terms and conditions shall cease and terminate at such time and each Placee agrees that no claim can be made by or on behalf of the Placee (or any person on whose behalf the Placee is acting) in respect thereof.
Merrill Lynch may at its sole discretion and upon such terms as it thinks fit, waive compliance by the Company, or extend the time and/or date for fulfilment by the Company, with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement, save that certain conditions including the condition relating to Admission referred to in paragraph (a) above may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Appendix.
Neither Merrill Lynch nor any of its Affiliates nor the Company shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision any of them may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision any of them may make as to the satisfaction of any condition or in respect of the Placing generally.
Termination of the Placing
Merrill Lynch may, at its absolute discretion, by notice in writing to the Company, terminate the Placing Agreement at any time prior to Admission if, inter alia:
(a) they become aware that the Company is in breach of any of its obligations under the Placing Agreement save to the extent that any breach is not, in the opinion of Merrill Lynch, material in the context of the Placing; or
(b) any of the warranties, undertakings or covenants given by the Company in the Placing Agreement is, or if repeated at any time up to and including Admission (by reference to the facts and circumstances then existing) would be, untrue, inaccurate or misleading or Merrill Lynch become aware that any statement in this Announcement is or becomes untrue, inaccurate or misleading save to the extent that any breach is not, in the opinion of Merrill Lynch, material in the context of the Placing; or
(c) there has been a material adverse change in the condition (financial or otherwise) or prospects of the Company or the Group since the date of the Placing Agreement; or
(d) there has occurred any material adverse change in national or international financial, political or economic conditions or currency exchange rates or exchange controls that has, in the opinion of Merrill Lynch, resulted in the marketing of the Placing Shares or dealings in the Placing Shares becoming impracticable or inadvisable.
If the Placing Agreement is terminated in accordance with its terms, the rights and obligations of each Placee in respect of the Placing as described in this Announcement (including this Appendix) shall cease and terminate at such time and no claim can be made by any Placee in respect thereof.
By participating in the Placing, each Placee agrees with the Company and Merrill Lynch that the exercise by the Company or Merrill Lynch of any right of termination or any other right or other discretion under the Placing Agreement shall be within the absolute discretion of the Company or Merrill Lynch (as the case may be) and that neither the Company nor Merrill Lynch need make any reference to such Placee and that neither the Company, Merrill Lynch nor any of their respective Affiliates shall have any liability to such Placee (or to any other person whether acting on behalf of a Placee or otherwise) whatsoever in connection with any such exercise.
By participating in the Placing, each Placee agrees that its rights and obligations terminate only in the circumstances described above and will not be capable of rescission or termination by it after oral confirmation by Merrill Lynch following the close of the Bookbuilding.
Representations and further terms
By submitting a bid in the Bookbuilding, each prospective Placee (and any person acting on such Placee's behalf) represents, warrants, acknowledges and agrees that:
1. it has read and understood this Announcement (including this Appendix) in its entirety and that its purchase of the Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein and that it has not relied on any information given or any representations or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares, or otherwise, other than the information contained in this Announcement and that in accepting the offer of its placing participation it will be relying solely on the information contained in the Announcement;
2. it has not received a prospectus or other offering document in connection with the Placing and acknowledges that no prospectus or other offering document has been prepared in connection with the Placing;
3. if the Placing Shares were offered to it in the United States, it represents and warrants that in making its investment decision, (i) it has consulted its own independent advisers or otherwise has satisfied itself concerning, without limitation, the effects of United States federal, state and local income tax laws and foreign tax laws generally and the US Employee Retirement Income Security Act of 1974 ("ERISA"), the US Investment Company Act of 1940 and the Securities Act, (ii) it has received all information that it believes is necessary or appropriate in order to make an investment decision in respect of the Company and the Placing Shares and (iii) it is aware and understands that an investment in the Placing Shares involves a considerable degree of risk and no US federal or state or non-US agency has made any finding or determination as to the fairness for investment or any recommendation or endorsement of the Placing Shares;
4. (i) it has made its own assessment of the Company, the Placing Shares and the terms of the Placing based on Publicly Available Information, (ii) neither Merrill Lynch, nor the Company nor their respective Affiliates has made any representation to it, express or implied, with respect to the Company, the Placing or the Placing Shares or the accuracy, completeness or adequacy of the Publicly Available Information and (iii) it has made its own investigation of the business, financial and other position of the Company and the terms of the Placing, satisfied itself that the information is still current and relied on that investigation for the purposes of its decision to participate in the Placing;
5. the content of this Announcement is exclusively the responsibility of the Company and neither Merrill Lynch nor any person acting on its behalf is responsible for or has or shall have any liability for any information or representation relating to the Company contained in this Announcement or the Publicly Available Information nor will be liable for any Placee's decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement, the Publicly Available Information or otherwise. Nothing in this Appendix One shall exclude any liability of any person for fraudulent misrepresentation;
6. it is not and it will not be subscribing on behalf of a resident of Australia, Canada or Japan at the time the Placing Shares are acquired, and each of it and the beneficial owner of the Placing Shares is, and at the time the Placing Shares are acquired will be, (i) outside the United States or (ii) a QIB, or (iii) acquiring the Placing Shares in an 'offshore transaction' in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act, and it is not purchasing the Placing Shares for the account of another person who is resident or located in the United States unless (a) the instruction to purchase was received from a person outside the United States and (b) the person giving such instruction has confirmed that it (i) has the authority to give such instruction and (ii) either (x) has investment discretion over such account or (y) is an investment manager or investment company and that, in the case of each of (x) and (y), is purchasing the Shares in an "offshore transaction" within the meaning of Regulation S under the Securities Act and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Placing Shares, is able to bear the economic risk of an investment in the Placing Shares, has adequate means of providing for its current and contingent needs, is able to sustain a complete loss of the investment in the Placing Shares and has no need for liquidity with respect to its investment in the Placing Shares and represents and, in the case of (ii) above, warrants that it is acquiring the Placing Shares for its own account or for one or more accounts as to each of which it exercises sole investment discretion and each of which is a QIB, and will sign the US Investor Letter, for investment purposes and not with a view to any distribution or for resale in connection with, the distribution (within the meaning of US Securities Laws) thereof in whole or in part, in the United States;
7. the Placing Shares have not been and will not be registered or otherwise qualified for offer and sale nor will a prospectus be cleared or approved in respect of any of the Placing Shares under the securities laws of the United States, Australia, Canada or Japan and, subject to certain exceptions, may not be offered or sold directly or indirectly, in or into Australia, Canada or Japan;
8. it and/or each person on whose behalf it is participating:
(i) is entitled to acquire Placing Shares pursuant to the Placing under the laws of all relevant jurisdictions;
(ii) has fully observed such laws;
(iii) has capacity and authority and is entitled to enter into and perform its obligations as an acquirer of Placing Shares and will honour such obligations; and
(iv) has obtained all necessary consents and authorities (including, without limitation, in the case of a person acting on behalf of a Placee, all necessary consents and authorities to agree to the terms set out or referred to in this Appendix) under those laws or otherwise and complied with all necessary formalities;
9. the Placing Shares have not and will not be registered under the Securities Act, or under the securities laws of any state of the United States, and are being offered and sold on behalf of the Company in offshore transactions (as defined in Regulation S under the Securities Act) or in the case of QIBs only, in reliance upon an exemption from the registration requirements under the Securities Act or in a transaction not including a "public offering";
10. the Placing Shares offered and sold in the United States are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act;
11. so long as the Placing Shares are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, it will segregate such Placing Shares from any other shares in the Company that it holds that are not restricted securities and will not deposit the Placing Shares into any depositary receipt facility maintained by any depositary bank in respect of the Company's Ordinary Shares;
12. whether or not it currently holds the Company's American Depositary Receipts ("ADRs"), it will receive the Placing Shares in the form of ordinary shares and not in the form of ADRs and until one year after the latest date on which the Placing Shares are delivered in the Placing (which is currently expected to be 5 October 2009), no depositary will accept deposits of the Placing Shares in the Company's ADR facility or permit pre-releases of the Company's American Depositary Shares from its ADR facility unless it (or a broker on its behalf) certifies, among other things, that the shares to be deposited were not subscribed or purchased pursuant to the Placing, and that it has not borrowed shares to be deposited with the intention of replacing them with Placing Shares subscribed or purchased pursuant to the Placing;
13. a purchase of Placing Shares by an employee benefit plan subject to ERISA or a plan subject to Section 4975 of the US Internal Revenue Code of 1986, as amended (the "Code"), or by any entity whose assets are treated as assets of any such plan, could result in severe penalties or other liabilities for the Company; and it represents, warrants and agrees that it is not (a) (i) an employee benefit plan as described in Section 3(3) of ERISA and subject to ERISA, (ii) a plan subject to Section 4975 of the Code, (iii) any entities whose assets are treated as assets of any such plan by reason of such employee benefit plan's or plan's investment in the entity, or (iv) a "benefit plan investor" as such term is otherwise defined in the regulations promulgated by the US Department of Labor, and (b) if we are a governmental plan, church or other plan which is subject to any federal, state or local law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code, our purchase, holding or disposition of Placing Shares will not constitute or result in a non-exempt violation under any such substantially similar law (the entities referred to in (a)-(b), being referred to as "ERISA Entities");
14. it will not reoffer, sell, pledge or otherwise transfer the Placing Shares except (i) in an offshore transaction in accordance with Rule 903 or 904 of Regulation S under the Securities Act (and, if in a privately negotiated transaction, to a person that is not an ERISA Entity); (ii) in the United States to QIBs that are not ERISA Entities pursuant to Rule 144A under the Securities Act; (iii) pursuant to Rule 144 under the Securities Act (if available); or (iv) pursuant to an effective registration statement under the Securities Act and that, in each such case, such offer, sale, pledge, or transfer will be made in accordance with any applicable securities laws of any State of the United States;
15. it is not acquiring any of the Placing Shares as a result of any form of general solicitation or general advertising (within the meaning of Rule 502(c) of Regulation D under the Securities Act) or directed selling efforts (as defined in Regulation S under the Securities Act);
16. if it will be a "US Holder" as defined below under the heading "Passive Foreign Investment Company", it acknowledges that there is a significant risk that the Company is treated as a Passive Foreign Investment Company for US federal income tax purposes, which status will subject US holders to adverse US federal income tax consequences, and it has read and understood the disclosure thereunder;
17. it acknowledges that where it is acquiring the Placing Shares for one or more managed accounts, it represents and warrants that it is authorised in writing by each managed account to acquire the Placing Shares for each managed account;
18. if it is a pension fund or investment company, its acquisition of Placing Shares is in full compliance with applicable laws and regulations;
19. no representation has been made as to the availability of the exemption provided by Rule 144, Rule 144A or any other exemption under the Securities Act for the reoffer, resale, pledge or transfer of the Placing Shares;
20. participation in the Placing is on the basis that it is not and will not be a client of Merrill Lynch and Merrill Lynch will have no duties or responsibilities to a Placee for providing protections afforded to its clients under the rules of the FSA or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement;
21. it will make payment to Merrill Lynch in accordance with the terms and conditions of this Announcement on the due times and dates set out in this Announcement, failing which the relevant Placing Shares may be placed with others on such terms as Merrill Lynch determine;
22. the person who it specifies for registration as holder of the Placing Shares will be (i) the Placee or (ii) a nominee of the Placee, as the case may be. Merrill Lynch and the Company will not be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. It agrees to acquire Placing Shares pursuant to the Placing on the basis that the Placing Shares will be allotted to a CREST stock account of Merrill Lynch who will hold them as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with it;
23. the allocation, allotment, issue and delivery to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a stamp duty or stamp duty reserve tax liability under (or at a rate determined under) any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depository receipts and clearance services) and that it is not participating in the Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Placing Shares would give rise to such a liability;
24. it and any person acting on its behalf falls within Article 19(5) and/or 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, and undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only and represents and warrants that it is entitled to subscribe for Placing Shares comprised in its allocation under the laws of all relevant jurisdictions which apply to it and that it has fully observed such laws and obtained all governmental and other consents which may be required thereunder and complied with all necessary formalities;
25. it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 (the "FSMA");
26. if it is within the EEA, it is a qualified investor as defined in section 86(7) of FSMA, being a person falling within Article 2.1(e)(i), (ii) or (iii) of the Prospectus Directive;
27. it has only communicated or caused to be communicated and it will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person;
28. it has complied and it will comply with all applicable provisions of the FSMA with respect to anything done by it or on its behalf in relation to the Placing Shares in, from or otherwise involving the United Kingdom;
29. if it has received any confidential price sensitive information about the Company in advance of the Placings, it has not (i) dealt in the securities of the Company; (ii) encouraged or required another person to deal in the securities of the Company; or (iii) disclosed such information to any person, prior to the information being made generally available;
30. acknowledges and accepts that Merrill Lynch may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Placing Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise and, except as required by applicable law or regulation, Merrill Lynch will not make any public disclosure in relation to such transactions;
31. it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (which means Directive 2003/71/EC and includes any relevant implementing measure in any member state);
32. it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, and the Money Laundering Regulations (2003) (the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;
33. if it is resident in South Africa, it is acting as a principal in respect of the Placing for an aggregate subscription price of more than Rand 100,000;
34. if it is resident in South Africa, it has obtained the necessary approvals from the South African Reserve Bank in order to participate in the Placing or is entitled to make use of an exemption to the South African Exchange Control Regulations and accordingly is permitted to participate in the Placing;
35. the Company, Merrill Lynch and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and agreements;
36. the Placing Shares will be issued subject to the terms and conditions of this Appendix;
37. this Appendix, all documents into which this Appendix is incorporated by reference or otherwise validly forms a part will be governed by and construed in accordance with English law. All agreements to acquire shares pursuant to the Bookbuilding and/or the Placing will be governed by English law and the English courts shall have exclusive jurisdiction in relation thereto except that proceedings may be taken by the Company or Merrill Lynch in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange; and
38. it (and any person acting on its behalf) agrees to indemnify and hold the Company, Merrill Lynch and their respective Affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) (i) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix; or (ii) incurred by Merrill Lynch and/or the Company arising from the performance of the Placee's obligations as set out in this Announcement, and further agrees that the provisions of this Appendix shall survive after completion of the Placing.
Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Merrill Lynch would be responsible. If this is the case, it would be sensible for Placees to take their own advice and they should notify Merrill Lynch accordingly. In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.
The representations, warranties, acknowledgements and undertakings contained in this Appendix are given to Merrill Lynch for itself and on behalf of the Company and are irrevocable.
Merrill Lynch is acting exclusively for the Company and no one else in connection with the Bookbuilding and the Placing and Merrill Lynch will not be responsible to anyone (including Placees) other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Bookbuilding or the Placing or any other matters referred to in this Announcement.
Each Placee and any person acting on behalf of the Placee acknowledges that Merrill Lynch does not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement or otherwise.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that Merrill Lynch may (at its absolute discretion) satisfy its obligations to procure Placees by itself agreeing to become a Placee in respect of some or all of the Placing Shares or by nominating any connected or associated person to do so.
When a Placee or any person acting on behalf of the Placee is dealing with Merrill Lynch, any money held in an account with Merrill Lynch on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the Financial Services Authority which therefore will not require Merrill Lynch to segregate such money, as that money will be held by it under a banking relationship and not as trustee.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
All times and dates in this Announcement may be subject to amendment. Merrill Lynch will notify Placees and any persons acting on behalf of the Placees of any changes.
Passive Foreign Investment Company
The following discussion applies only to US Holders of the Company's Ordinary Shares. For this purpose, a US Holder is a beneficial owner of Ordinary Shares that is (i) a citizen or resident of the United States for US federal income tax purposes; (ii) a corporation, or other entity treated as a corporation, created or organised under the laws of the United States or any state thereof; (iii) an estate the income of which is subject to US federal income tax without regard to its source; or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to control all substantial decisions of the trust.
There is a significant risk that the Company may be considered to be a Passive Foreign Investment Company (a "PFIC") for US federal income tax purposes.
If the Company is a PFIC in any year during which a US Holder owns Ordinary Shares, and the US Holder has not made a mark to market or qualified electing fund ("QEF") election, the US Holder will generally be subject to special rules (regardless of whether the Company continues to be a PFIC) with respect to (i) "distributions" exceeding 125 per cent of the average annual distributions received from the Company in the previous three taxable years or, if shorter, the US Holder's holding period for the Ordinary Shares; and (ii) any gain realised on the sale or other disposition of Ordinary Shares.
Under these rules (i) the distribution or gain will be allocated rateably over the US Holder's holding period; (ii) the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which the Company was a PFIC will be taxed as ordinary income; and (iii) the amount allocated to each of the other taxable years will be subject to tax at the highest rate of tax applicable to the US Holder for that year and an interest charge for the deemed deferral benefit will be imposed on the resulting tax attributable to each of those other taxable years. If the Company is a PFIC, a US Holder will generally be subject to similar rules with respect to distributions to the Company by, and dispositions by the Company of the shares of, any of the Company's direct or indirect subsidiaries that are also PFICs.
US Holders can avoid the interest charge by making a mark to market election with respect to the Ordinary Shares, provided that the shares are "marketable". Shares will be marketable if they are regularly traded on certain US stock exchanges, or on a foreign stock exchange that satisfies certain regulatory requirements. It is expected that the London Stock Exchange will satisfy these requirements. For purposes of this election, the Ordinary Shares will be considered regularly traded during any calendar year during which they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded. US Holders should consult their tax advisers concerning the availability and consequences of making a mark to market election with respect to the Ordinary Shares.
In some cases a shareholder can avoid the interest charge and the other adverse PFIC consequences described above by making a QEF election to be taxed currently on its share of the PFIC's undistributed income. The Company does not, however, expect to provide US Holders with the information regarding this income that would be necessary for a US Holder to make a QEF election with respect to its Ordinary Shares.
If the Company is a PFIC, each US Holder will be required to make an annual return on IRS Form 8621, reporting distributions received and gains realised with respect to each PFIC in which it holds a direct or indirect interest.
US Holders should consult their tax advisers regarding the potential application of the PFIC regime.
DEFINITIONS
In this Announcement:
"Admission" means the admission of the Placing Shares to the Official List in accordance with the Listing Rules and to trading on the London Stock Exchange's main market for listed securities;
"Affiliate" means any holding company, subsidiary, branch or associated undertaking (including, without limitation, joint venture partners) of Merrill Lynch from time to time or any subsidiary, branch or associated undertaking (including, without limitation, joint venture partners) of any such holding company from time to time;
"Bookbuilding" means the bookbuilding procedure to be carried out by Merrill Lynch in connection with the Placing;
"Board" means the Board of Directors of the Company or a duly authorised committee thereof;
"Directors" means all the directors of the Company;
"FSA" means the Financial Services Authority;
"FSMA" means the Financial Services and Markets Act 2000, as amended;
"Group" means the Company and its subsidiary undertakings;
"JSE" means JSE Limited, a public company incorporated and registered in South Africa (Registration number 2005/022939/06), licensed as a securities exchange in terms of the Securities Service Act, No 36 of 2004, as amended;
"London Stock Exchange" means London Stock Exchange plc;
"Liberty International" or the "Company" means Liberty International PLC;
"Listing Rules" means the listing rules produced by the FSA under Part VI of the FSMA and forming part of the FSA's Handbook of rules and guidance, as from time to time amending;
"Official List" means the list maintained by the FSA in accordance with section 74(1) of the FSMA for the purposes of Part VI of the FSMA;
"Ordinary Shares" means ordinary shares of 50p each in the capital of the Company;
"Placees" means persons (including individuals, funds or others) on whose behalf a commitment to acquire Placing Shares has been given and Placee means any one of them;
"Placing" means the placing of the Placing Shares by Merrill Lynch with institutional and other investors on behalf of the Company;
"Placing Agreement" means the agreement dated 23 September 2009 between the Company and Merrill Lynch in connection with the Placing;
"Placing Price" means the price per Ordinary Share at which the Placing Shares are to be placed with Placees;
"Placing Shares" means the new Ordinary Shares which are to be issued in connection with the Placing;
"Regulatory Information Service" means any of the regulatory information services included within the list maintained on the London Stock Exchange's website;
"Securities Act" means the United States Securities Act of 1933, as amended;
"Shareholders" means holders of Ordinary Shares;
"United Kingdom" or "UK" means the United Kingdom of Great Britain and Northern Ireland; and
"United States" or "US" means the United States of America, its territories and possessions, any State of the United States and the District of Columbia.
NOTE FOR EDITORS: BACKGROUND ON LIBERTY INTERNATIONAL
LIBERTY INTERNATIONAL PLC is one of the UK's largest listed property companies and a constituent of the FTSE-100 Index of the UK's leading listed companies. Liberty International converted into a UK Real Estate Investment Trust (REIT) on 1 January 2007.
Liberty International owns 100 per cent of Capital Shopping Centres ("CSC"), the premier UK regional shopping centre business, and of Capital & Counties, a retail and commercial property investment and development company.
At 30 June 2009, Liberty International owned £6.1 billion of properties of which UK regional shopping centres comprised 73 per cent and retail property in aggregate 86 per cent. Adjusted, diluted shareholders' funds amounted to £2.6 billion.
CAPITAL SHOPPING CENTRES has interests in 14 UK regional shopping centres amounting to some 13 million sq.ft. in aggregate including 9 of the UK's top 30 regional shopping centres with a market value of £4.4 billion at 30 June 2009. CSC's largest centres are Lakeside, Thurrock; MetroCentre, Gateshead; Braehead, Glasgow; The Harlequin, Watford; and Arndale, Manchester. CSC has a 50 per cent share in the extension of St David's, Cardiff, which is due to open in October 2009.
CAPITAL & COUNTIES held assets of £1.7 billion at 30 June 2009, amounting to 7.4 million sq.ft. in aggregate, of which £1,277 million was invested in Central London. Capital & Counties had £529 million invested in the Covent Garden area including the historic Covent Garden Market, and a further £224 million in London's West End, primarily through the Great Capital Partnership, a joint venture with Great Portland Estates plc. Capital & Counties owns 50 per cent of the Earls Court and Olympia Group and of the Empress State building in Earls Court amounting to aggregate assets of £524 million. In addition, Capital & Counties has interests in the USA amounting to £368 million (2.6 million sq.ft.), predominantly comprising retail assets in California, including the 856,000 sq.ft. Serramonte Shopping Centre, Daly City, San Francisco.
Related Shares:
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