22nd Mar 2007 07:03
Stagecoach Group PLC22 March 2007 Stagecoach Group plc22 March 2007 Return of Value - mechanics and timing Introduction On 14 March 2007, Stagecoach Group plc ("Stagecoach" or the "Company") announcedits intention, subject to Shareholder approval, to return value of 63 pence perExisting Ordinary Share, or approximately £700 million to Shareholders (the"Return of Value"). Based on the closing share price of Stagecoach ExistingOrdinary Shares on 21 March 2007, the Return of Value is equivalent toapproximately 36 per cent. of the Company's market capitalisation. The announcement on 14 March 2007 included information on the background to theReturn of Value, pension arrangements and an update on Stagecoach's currenttrading and prospects. This announcement provides further information on theproposed structure and timing of the Return of Value. Under the Return of Value, Shareholders will receive 63 pence in cash in respectof each Existing Ordinary Share in issue at the Record Time (which is expectedto be 5.30 p.m. on 11 May 2007) by a structure involving the issue toShareholders of B Shares and/or C Shares and a proportional consolidation of theCompany's Existing Ordinary Shares. This method of returning value toShareholders has been chosen because it allows all Shareholders to be treatedequally pro-rata to the size of their existing shareholdings in Stagecoach, andgives all Shareholders (with the exception of Overseas Shareholders) choices asto when, and in what form, they receive their proceeds from the Return of Value.In addition, it gives clarity as to the quantum and the financial effects of theReturn of Value when compared to certain alternative methods of returning value. A circular (the "Circular") will be sent to Shareholders shortly, which sets outdetails of the Return of Value and explains why the Directors of Stagecoachconsider the Return of Value to be in the best interests of Stagecoach andShareholders as a whole. The Return of Value (together with certain other matters, including proposedamendments to the Articles of Association) requires the approval ofShareholders. These approvals will be sought at an extraordinary general meetingof Stagecoach, which is expected to be held at the Company's registered officeat 10 Dunkeld Road, Perth, PH1 5TW at 12 noon on 27 April 2007. The Notice ofthe Extraordinary General Meeting will be set out in the Circular. Shareholders should read the whole of the Circular and not just rely on thesummarised information set out in this or earlier announcements. In particular,Shareholders should read Part 9 of the Circular which sets out a summary of theexpected tax consequences for UK Shareholders in relation to the Return of Valueand the Shareholder Alternatives. A timetable of expected principal events is set out as Appendix 1 to thisannouncement. All dates in this announcement, including the appendix, areindicative at this stage. Shareholders should read the Circular for confirmationof these dates. Terms of the Return of Value - Existing Ordinary Shares to be consolidated into New Ordinary Shares at a ratio of 9 New Ordinary Shares for every 14 Existing Ordinary Shares held at the Record Time (expected to be 5.30 p.m. on 11 May 2007) - Share consolidation ratio reflects the mid-market closing price of Stagecoach Existing Ordinary Shares on 21 March 2007 - Shareholders can elect to receive the Return of Value in income or capital form by electing for Alternatives 1, 2 or 3 as set out in more detail in "Shareholders' Choices" below - Shareholders electing for Alternative 1 (Income Option) will receive a Single C Share Dividend on their C Shares of 63 pence each in cash (expected to be paid on 25 May 2007) - Shareholders electing for Alternative 2 (Immediate Capital Option) and receiving B Shares as part of their election will have their B Shares redeemed for 63 pence per share in cash (expected to be paid on 5 June 2007) - Shareholders electing for Alternative 3 (Deferred Capital Option) and receiving B Shares will receive a non-cumulative dividend equal to 70 per cent of 6 months' LIBOR, payable twice-yearly in arrears, until such B Shares are redeemed - Shareholders receiving C Shares under Alternatives 2 and/or 3 will be deemed to have elected to have their C Shares acquired by Credit Suisse Securities (Europe) Limited under the Purchase Offer expected to be made on 30 May 2007 with Shareholders expected to be paid the proceeds on 5 June 2007 - Shareholders have the opportunity to elect for a combination of all three Alternatives No application will be made to the UK Listing Authority or to the London StockExchange for any of the B Shares or C Shares to be admitted to the Official Listor to trading on the London Stock Exchange's market for listed securities, norwill the B Shares nor C Shares be admitted to trading on any other recognisedinvestment exchange. The B Shares and C Shares are transferable although, in theabsence of a formal market, Shareholders' ability to sell the B Shares and CShares is likely to be limited. The B Shares and C Shares will have limitedrights. Share Capital ConsolidationAs part of the Return of Value, Existing Ordinary Shares will be replaced by NewOrdinary Shares in order to reduce the number of Existing Ordinary Shares inissue to reflect the Return of Value. Every 14 Existing Ordinary Shares held at the Record Time will be consolidatedinto 9 New Ordinary Shares. Subject to normal market movements, the Share Capital Consolidation is intendedto: - Make the share price directly comparable before and after the Return of Value; - Maintain the comparability of future earnings and dividend per share amounts with previously reported figures; and - Maintain the intrinsic value of awards that have been made under Stagecoach Share Schemes, such as the grant of share options to employees. The New Ordinary Shares will have in all material respects the same rights asthe Existing Ordinary Shares and are expected to be admitted to the OfficialList and to trading on the London Stock Exchange's market for listed securitiesat 8.00 a.m. on 14 May 2007. Fractional entitlements to New Ordinary Shares will be rounded down to thenearest whole New Ordinary Share. Any fractional entitlements so arising will beaggregated and sold in the market. To the extent the fractional entitlements areless than £3.00 the proceeds will be retained by the Company. The Companyestimates that all such fractional entitlements under the Return of Value willbe less than £3.00. Shareholders' choices Shareholders will have the following choices: Alternative 1 (Income Option) - expected to be paid on 25 May 2007 Shareholders who elect for Alternative 1 (Income Option) will receive one CShare for each Existing Ordinary Share they hold at the Record Time and on whichthey make a valid election. Each C Share that Shareholders receive, because they have elected forAlternative 1 (Income Option), will entitle them to receive a single dividend of63 pence (the "Single C Share Dividend"). This Single C Share Dividend isexpected to be declared on 14 May 2007 and paid on 25 May 2007. Shareholders who fail to make a valid election in respect of some or all oftheir Existing Ordinary Shares will receive C Shares in respect of whateverwhole number of their Existing Ordinary Shares they failed to make an election.Shareholders who wish to receive the Single C Share Dividend in respect of allof their Share Entitlement need not complete the Form of Election. OverseasShareholders will be deemed to have elected to receive the Single C ShareDividend in respect of all of their Share Entitlement. Alternative 2 (Immediate Capital Option) - expected to be paid on 5 June 2007 Shareholders who elect for Alternative 2 (Immediate Capital Option) will receiveone B Share (or possibly one C Share) for each Existing Ordinary Share they holdat the Record Time and on which they make a valid election. Each B Share that Shareholders receive, because they have elected forAlternative 2 (Immediate Capital Option), will be redeemable and is expected tobe redeemed at a price of 63 pence per B Share on 30 May 2007, with the proceedsexpected to be paid to Shareholders on 5 June 2007. If the number of B Shares in respect of which valid elections are receivedexceeds the maximum number of B Shares that can be issued (for a detailedexplanation of the reasons why this may be the case, please refer to theCircular), elections for B Shares will be scaled back. However, even ifelections for B Shares are scaled back, Shareholders electing for Alternative 2will still be entitled to the Return of Value of 63 pence per Existing OrdinaryShare and will receive some C Shares. In relation to any C Shares that Shareholders may receive under Alternative 2(Immediate Capital Option), these C Shares are not redeemable and are expectedto be sold to Credit Suisse under the Purchase Offer, free of all dealingexpenses and commissions, further details of which are set out in the Circular.The Purchase Offer is expected to result in Shareholders being paid on 5 June2007, 63 pence per C Share purchased. Alternative 3 (Deferred Capital Option) Shareholders who elect for Alternative 3 (Deferred Capital Option) will receiveone B Share (or possibly one C Share) for each Existing Ordinary Share they holdat the Record Time and on which they make a valid election. Each B Share that Shareholders receive, because they have elected forAlternative 3 (Deferred Capital Option), will be redeemable twice a year withthe first date on which Shareholders can have their B Shares redeemed being 30November 2007. Shareholders holding B Shares issued under Alternative 3(Deferred Capital Option) will also receive a continuing non-cumulative dividendon their B Shares of 70 per cent. of six months' LIBOR payable on the principalamount of 63 pence per B Share which will be payable twice a year in arrearsuntil the B Shares are redeemed. Stagecoach may redeem, at 63 pence per B Share, all of the B Shares remaining inissue at any time on or after 31 May 2012, or at any time (not before 31 May2008) after the total number of B Shares remaining in issue becomes less than 20per cent of the total number of B Shares issued. If, as under Alternative 2 (Immediate Capital Option), the number of B Shares inrespect of which valid elections are received exceeds the maximum number of BShares that can be issued, elections for B Shares will be scaled back pro rata(as nearly as may be) to the number of B Shares which each Shareholder elects toreceive, and the excess number of elections will instead result in Shareholdersreceiving C Shares. In relation to any C Shares that Shareholders may receiveunder Alternative 3 (Deferred Capital Option), these C Shares are not redeemableand are expected to be sold to Credit Suisse under the Purchase Offer, free ofall dealing expenses and commissions. The Purchase Offer is expected to resultin Shareholders being paid 63 pence per C Share purchased on 5 June 2007. Shareholders should therefore note that some of the proceeds arising from anelection for Alternative 3 (Deferred Capital Option) may not be deferred andwould instead be paid on 5 June 2007. However, elections for Alternative 3 willbe satisfied with B Shares in priority to elections for Alternative 2. Shareholders should refer to the Circular for further information on the reasonsfor, and mechanism of, the scaling back exercise. Update on Pension scheme funding In its announcement on 14 March 2007, the Company confirmed that it had reachedagreement with the trustees of the Stagecoach Group Pension Scheme on the basisset out in the announcement. Further to that announcement, and as a result of the agreement reached with thetrustees, the Pensions Regulator has issued the Company and the trustees with aClearance Statement in respect of the proposed Return of Value. Amendments to Articles of Association A number of amendments to the Articles of Association of the Company arerequired to implement the Return of Value. These include amending the Articlesof Association to include the rights and restrictions attaching to the B Sharesand C Shares outlined above. An amendment to the Articles of Association is alsobeing proposed to replace the existing restriction on borrowings with analternative which the Board considers, in the circumstances, to be moreappropriate. Stagecoach's management, lenders and rating agencies primarilyassess Stagecoach's borrowings with reference to its profitability and cashflowsrather than to its capital and reserves. Accordingly, the board believes that itis in the best interests of shareholders as a whole for the Articles ofAssociation to contain a restriction on the level of borrowings based on similarparameters. In summary, the proposed amendment to the Articles of Association issuch that Group borrowings will be restricted to a level of no more than fivetimes net debt to EBITDA. Separately from the amendments proposed to implement the Return of Value,certain changes are also proposed to reflect amendments made to company law andprovisions of the Companies Act 2006. The principal changes are to permit theCompany to communicate with its shareholders electronically as prescribed in theCompanies Act 2006. Further details of the proposed amendments to the Articlesof Association will be contained in the Circular. Credit Suisse Securities (Europe) Limited, which is regulated in the UnitedKingdom by the Financial Services Authority, is acting as financial adviser andcorporate broker to Stagecoach Group plc and is acting for no-one else inconnection with the Return of Value, and will not be responsible to anyone otherthan Stagecoach Group plc for providing the protections afforded to customers ofCredit Suisse Securities (Europe) Limited nor for providing advice to any otherperson in relation to the Return of Value. Enquiries to: Martin Griffiths, Stagecoach Group - 01738 442111 Ross Paterson, Stagecoach Group - 01738 442111 John Kiely, Smithfield - 020 7360 4900 Nick Bowers, Credit Suisse - 020 7888 8888 Chris Byrne, Credit Suisse - 020 7888 8888 APPENDIX 1 EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2007 Latest time for receipt of Forms of Proxy and CREST 12 noon on 25 Aprilproxy instructions for the Extraordinary GeneralMeeting Extraordinary General Meeting 12 noon on 27 April Latest time for receipt of Forms of Election and 4.30 p.m. on 11 MayTTE instructions from CREST holders in respect ofthe Share Alternatives Latest time and date for dealings in Existing 4.30 p.m. on 11 MayOrdinary Shares Record Time for the Return of Value and Share 5.30 p.m. on 11 MayCapital Consolidation New Ordinary Shares admitted to the Official List 8.00 a.m. on 14 Mayand to trading on the London Stock Exchange'smarket for listed securities; dealings commence inNew Ordinary Shares and CREST accounts creditedwith New Ordinary Shares B Shares and C Shares issued. CREST accounts 8.00 a.m. on 14 Maycredited with B Shares in respect of elections forAlternative 3 (Deferred Capital Option) Single C Share Dividend declared on C Shares issued 9.00 a.m. on 14 Mayin respect of elections for Alternative 1 (IncomeOption) and these C Shares convert into DeferredShares Despatch of cheques or, if mandated instructions 25 Mayheld, bank accounts credited in respect of theproceeds due to Shareholders in respect ofAlternative 1 (Income Option) Despatch of share certificates in respect of (i) 25 MayNew Ordinary Shares and (ii) B Shares issued inrespect of elections for Alternative 3 (DeferredCapital Option) Credit Suisse makes the Purchase Offer, if 8.00 a.m. on 30 Mayapplicable, by means of an announcement on theRegulatory News Service of the London StockExchange Redemption of B Shares that were issued in respect 8.00 a.m. on 30 Mayof elections for Alternative 2 (Immediate CapitalOption) Despatch of cheques or, if held in CREST, CREST 5 Juneaccounts credited in respect of redeemed B Sharesand/or the proceeds from the Purchase Offer inrespect of Alternative 2 (Immediate Capital Option) Notes: All references to time in this announcement are to London time unlessotherwise stated. The dates and times given in this announcement are based onStagecoach's current expectations and Shareholders should read theCircular for the confirmed dates and times. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SGC.L