SDX Business System - Recommended Cash Offer-Part 2
June 08 1998 - 4:13AM
UK Regulatory
RNS No 5495j
SDX BUSINESS SYSTEMS PLC
8th June 1998
PART 2
APPENDIX II
Particulars of the Loan Notes
The #100,000,000 Floating Rate Guaranteed Unsecured
Loan Notes 2002 of the Offeror will be created by a
resolution of the Board of the Offeror or a duly authorised
committee thereof and will be constituted by a Loan Note
Instrument (the "Loan Note Instrument") executed as a deed
by the Offeror and Lucent. The issue of the Loan Notes is
conditional on the Offer becoming or being declared
unconditional in all respects. The Loan Note Instrument will
contain provisions, inter alia, to the following effect:
1. The Loan Notes will be issued by the Offeror in
amount and integral multiples of #1 in nominal
amount and will constitute unsecured obligations of
the Offeror. The Loan Note Instrument will not
contain any restrictions on borrowing, disposals or
charging of assets by the Offeror. If valid
elections for the Loan Note Alternative would not
result in at least #1 million in nominal value of
Loan Notes being issued, no Loan Notes will be
issued unless the Board of the Offeror otherwise
determines.
2. Payment of principal and interest on the Loan Notes
and all obligations of the Offeror under the Loan
Note Instrument will be unconditionally guaranteed
by Lucent (the "Guarantor") as provided in the Loan
Note Instrument.
3. Interest on the Loan Notes will be payable (subject
to any requirement to deduct tax therefrom)
semi-annually in arrears on 30 June and 31 December
in each year or, if such a day is not a business
day, on the immediately preceding business day
("Interest Payment Dates") except that the first
payment of interest on the Loan Notes will be made
on 31 December, 1998, in respect of the period from
and including the date of issue of the relevant
Loan Notes up to but excluding 31 December, 1998.
The period from and including the date of first
issue of the Loan Notes up to but excluding 31
December, 1998 and the period from and including
that or any subsequent Interest Payment Date up to
but excluding the next following Interest Payment
Date is herein called an Interest Period.
4. (a) The rate of interest on the Loan Notes for
each Interest Period will be the rate per
annum which is one half of one per cent.
below LIBOR. For these purposes, LIBOR
means:
(i) the rate per annum of the offered
quotation for six-month sterling
deposits which appears on Telerate
Page 3750 soon after 11.00am on the
first business day of the relevant
Interest Period; or
(ii) if no such offered quotation appears
on Telerate Page 3750 at or about
such time (or there is then no such
Telerate Page 3750), the arithmetic
mean (rounded upwards, if necessary,
to four decimal places) of the
offered quotations for six-month
sterling deposits which appear on
the Reuters Screen "LIBO" page (or
such other page(s) as may replace
the "LIBO" page for the purpose of
displaying offered rates of leading
reference banks in London for
inter-bank sterling deposits) soon
after 11.00am providing the rate as
at 11.00am on the first business
day of the relevant Interest Period;
or
(iii) if no such offered quotation
appears on the Telerate Page 3750
(or there is then no such Telerate
Page 3750) and no such offered
quotations appear on the Reuters
Screen "LIBO" page or such
replacement page(s) as aforesaid
(or there is then no such "LIBO"
page nor any replacement therefor),
such rate at which National
Westminster Bank plc (or, failing
which, such other London clearing
bank as the Offeror may select for
this purpose) is offering six-month
sterling deposits to prime banks in
the London inter-bank market at or
about 11.00am on the first business
day of the relevant Interest Period.
For the purposes of this definition, "Telerate Page
3750" means the display designated as "Page 3750"
on the Telerate Service (or such other page as may
replace Page 3750 on that service or such other
service as may be nominated by the British Bankers'
Association as the information vendor for the
purpose of displaying British Bankers' Association
Interest Settlement Rates for sterling deposits).
(b) If a rate of interest cannot be established
in accordance with the provisions of
sub-paragraph (a) above for any Interest
Period, the rate of interest on the Loan
Notes for that Interest Period shall be the
same as that applicable to the Loan Notes
during the previous Interest Period, unless
such prime bank in the London inter-bank
market as the Offeror shall reasonably
select for the purpose shall have been
prepared to offer a rate as aforesaid, in
which case the rate of interest for the
relevant Interest Period shall be
determined on the basis of the rate so
offered.
5. Each instalment of interest shall be calculated on
the basis of a 365 day year and the number of days
elapsed in the relevant Interest Period.
6. A holder of Loan Notes (a "Noteholder") may require
the Offeror to repay the whole or any part (being
#500 nominal or any integral multiple thereof) of
the principal amount of his/her holding of Loan
Notes at par, together with accrued interest
(subject to any requirement to deduct tax
therefrom) up to but excluding the date of
repayment, on any Interest Payment Date, from and
including 31 December, 1998 and thereafter on any
Interest Payment Date falling prior to 30 June,
2002 by giving not less than 30 days' prior notice
in writing to the Offeror accompanied by the
certificate(s) for all the Loan Notes to be repaid
and a notice of redemption.
7. If, at any time, the principal amount of all Loan
Notes outstanding equals or is less than #500,000
or 10 per cent, of the total nominal amount of Loan
Notes issued in connection with the Offer, the
Offeror shall be entitled on giving the remaining
Noteholders not less than 30 days' notice in
writing expiring on any Interest Payment Date
after 30 June, 2000 to redeem all (but not some
only) of the Loan Notes at par together with
accrued interest (subject to any requirement to
deduct tax) up to but excluding the date of
redemption.
8. The Offeror will have the right to redeem the Loan
Notes at par on any Interest Payment Date after 30
June, 2000 on 30 days' written notice if interest
payable under the Loan Notes is reasonably expected
by the Offeror to fall to be treated as a
distribution for corporation tax purposes.
9. Any Loan Notes not previously repaid, redeemed or
purchased will be repaid in full at par on 30 June,
2002, together with accrued interest (subject to
any requirement to deduct tax) up to but excluding
that date.
10. Each Noteholder will be entitled to require all or
part of the Loan Notes held by that Noteholder to
be repaid at par together with accrued interest
(subject to any requirement to deduct any tax) if:
(a) any principal or interest on any of the
Loan Notes held by that Noteholder is not
paid in full within 30 days after the due
date for payment; or
(b) an order is made or an effective resolution
is passed for the winding-up or dissolution
of the Offeror or the Guarantor (other than
for the purposes of a reconstruction,
amalgamation, merger or members' voluntary
winding-up in the case of the Offeror, on
terms previously approved by extraordinary
resolution (as defined in the Loan Note
Instrument) and, in the case of the
Guarantor, not involving insolvency); or
(c) an encumbrancer takes possession of, or a
trustee, receiver, administrator or similar
officer is appointed or an administration
order is made in respect of, the whole or
substantially the whole of the undertaking
or property of the Offeror or the
Guarantor and such person has not been paid
out or discharged within 30 days.
11. The Offeror may at any time purchase any Loan Notes
at any price by tender (available to all
Noteholders alike), private treaty or otherwise by
agreement with the relevant Noteholder(s).
12. Any Loan Notes repaid, redeemed or purchased by the
Offeror, the Guarantor or any subsidiary of the
Guarantor will be cancelled and will not be
available for re-issue.
13. The Loan Notes will be evidenced by certificates
and will be registered and transferable in amounts
or integral multiples of #500, provided that
transfers of Loan Notes will not be registered
during the 14 days immediately preceding an
Interest Payment Date or while the register of
Noteholders is closed.
14. The Noteholders will have power by extraordinary
resolution of the Noteholders passed in accordance
with the provisions of the Loan Note Instrument or
by resolution in writing signed by holders of not
less than 75 per cent. by value of the outstanding
Loan Notes, inter alia, to sanction any abrogation,
modification or compromise or arrangement in respect
of their rights against the Offeror and/or the
Guarantor and to assent to any amendment of the
provisions of the Loan Note Instrument. The Offeror
may, with the consent of its financial advisers,
amend the provisions of the Loan Note Instrument,
without such sanction or consent, if such amendment
is of a formal, minor or technical nature or to
correct a manifest error. Any wholly owned UK
subsidiary of the Guarantor may be substituted for
the Offeror as principal obligor in respect of the
Loan Notes without the sanction or consent of the
Noteholders provided that the Notes continue to be
guaranteed on an unconditional basis by the
Guarantor and provided that to the extent that such
substitution results in a disposal by any
Noteholders for the purposes of UK taxation, the
Offeror will hold such Noteholders indemnified in
respect of any UK taxation suffered in consequence
of such disposal.
15. No application has been made or is intended to be
made to any stock exchange for the Loan Notes to be
listed or otherwise traded.
16. The Loan Notes and the Loan Note Instrument will be
governed by and construed in accordance with English
law.
APPENDIX III
Financial and Other Information on the Offer
1. Bases and Sources
(i) Unless otherwise stated, financial
information concerning Lucent and SDX has
been derived from the published annual
report and accounts and interim and
quarterly statements of the relevant
company for the relevant periods.
(ii) The value of the Offer is based on
approximately 35.5 million SDX shares in
issue, together with approximately 2.6
million SDX shares subject to options under
the SDX Share Option Schemes.
(iii) The closing middle market price of SDX
shares is derived from the London Stock
Exchange Daily Official List for the
relevant date.
2. Financial Effects of Acceptance of the Offer
The following tables show, for illustrative purposes only
and on the bases and assumptions set out in the notes
below, the financial effects of acceptance on capital value
and income for a holder of one SDX share if the Offer
becomes or is declared unconditional in all respects.
A. Increase in Capital Value
As at 7 May 98 As at 2 January 98
(p) (p)
Cash consideration (i) 326.0 326.0
Market value of (ii) 295.5 (iii) 202.5
one SDX share __________ __________
Increase in 30.5 123.5
capital value
This represents an 10.3% 61.0%
increase of
B. Effect on Income
As at 5 June 98
(p)
Income from (iv) 18.55
cash consideration
Dividend income from (v) 3.25
one SDX share ________
Increase in income 15.30
This represents an 470.8%
increase of
Notes:
(i) Cash consideration inclusive of 1.0p (net)
interim dividend for the financial year
ending 31 October, 1998.
(ii) Based on the middle market quotation of an
SDX share of 295.5p as derived from the
London Stock Exchange Daily Official List at
the close of business on 7 May, 1998, the
last business day prior to the announcement
on 8 May, 1998 that SDX had received an
approach which might or might not develop
into an offer being made for SDX.
(iii) Based on the middle market quotation of an
SDX share of 202.5p as derived from the
London Stock Exchange Daily Official List at
the close of business on 2 January, 1998.
(iv) The income from the cash consideration has
been calculated on the assumption that the
cash including the 1.0 p (net) interim
dividend for the financial year ending 31
October, 1998 is re-invested to yield 5.69
per cent. per annum, being the gross yield
shown by the FTSE Actuaries average gross
redemption yield for medium coupon British
Government securities of five to fifteen
years on 5 June, 1998, the last business
day prior to this announcement, as
published in the Financial Times on 6 June,
1998.
(v) The gross dividend income from one SDX
share is based on the aggregate dividends
of 2.6p (net) per SDX share being the total
of the 1.6p (net) final dividend for the
financial year ended 31 October, 1997 and
the 1.0p (net) interim dividend for the
financial year ending 31 October, 1998,
together, in each case, with an associated
tax credit at 20/80th of the amount paid.
(vi) No account has been taken of the Loan Note
Alternative or of any liability to
taxation.
APPENDIX IV
Definitions
The following definitions apply throughout this
announcement unless the context requires otherwise:
"Board" or "Boards" the Boards of Lucent and/or
the Offeror and/or SDX as
the context requires.
"City Code" The City Code on Takeovers
and Mergers.
"Companies Act" the Companies Act 1985 (as
amended).
"Dresdner Kleinwort Benson" Kleinwort Benson Securities
Limited.
"Form of Acceptance" the Form of Acceptance and
authority relating to the
Offer accompanying the
Offer Document.
"LIBOR" London Interbank Offered
Rate for six month sterling
deposits as more
particularly defined in
paragraph 4 (a) of Appendix
II.
"Loan Note Alternative" the alternative whereby SDX
shareholders (other than
certain overseas
shareholders) validly
accepting the Offer may
elect to receive Loan Notes
in lieu of all or part of
the cash consideration to
which they would otherwise
have been entitled under
the Offer.
"Loan Notes" the floating rate
guaranteed unsecured loan
notes 2002 of the Offeror.
"Lucent" Lucent Technologies Inc.
"Lucent Group" Lucent and its subsidiaries
and subsidiary
undertakings.
"Morgan Stanley" Morgan Stanley & Co.
Limited.
"NYSE" The New York Stock
Exchange.
"Offer" the recommended offer to
be made by Morgan Stanley
on behalf of Lucent or one
of its wholly owned
subsidiaries to acquire all
of the SDX shares,
including where the context
so requires, any subsequent
revision, variation,
extension or renewal of such
offer, and subject to the
conditions set out herein.
"Offer Document" the document to be
dispatched to SDX
shareholders containing the
full terms and conditions
of the Offer.
"Offeror" Lucent or the wholly owned
subsidiary of Lucent on
whose behalf the Offer is
made.
"Panel" The Panel on Takeovers and
Mergers.
"SDX" SDX Business Systems plc.
"SDX Group" SDX and its subsidiaries
and subsidiary undertakings.
"SDX Share Option Schemes" the existing share option
schemes of SDX, comprising
the SDX Business Systems
Discretionary Share Option
Scheme, the SDX Business
Systems Savings Related
Share Option Scheme and
the outstanding options
granted between 1995 and
1996 to certain employees
of the SDX Group to
subscribe SDX shares.
"SDX shares" the ordinary shares of
nominal value of 5p each in
the capital of SDX on the
date hereof and any further
such shares which are
unconditionally allotted or
issued prior to the date on
which the Offer closes (or
such earlier date, not
being earlier than the date
on which the Offer becomes
or is declared unconditional
as to acceptances or, if
later, the first closing
date of the Offer, as
Lucent may, subject to the
provisions of the City
Code, decide).
"UK" or "United Kingdom" the United Kingdom of Great
Britain and Northern
Ireland.
"US" the United States of
America, its territories
and possessions, any state
of the United States and
the District of Columbia.
"Wider Lucent Group" the Lucent Group and any
company, joint venture or
partnership or firm in
which any member of the
Lucent Group may be
interested, directly or
indirectly, in 20 per cent.
or more of the equity
capital.
"Wider SDX Group" the SDX Group and any
company, joint venture or
partnership or firm in
which any member of the SDX
Group may be interested,
directly or indirectly, in
20 per cent. or more of the
equity capital.
For the purposes of this announcement, "subsidiary" and
"subsidiary undertaking" have the respective meanings given
by the Companies Act.
END
OFFUBUAWQBGRUMR
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