CME Group Announces New Capital Structure Initiatives
June 23 2008 - 8:00AM
PR Newswire (US)
-- Authorizes $1.1 Billion Share Buyback Program CHICAGO, June 23
/PRNewswire-FirstCall/ -- CME Group (NYSE:CMENASDAQ:CME) today
announced that its board of directors has authorized new
initiatives to return capital to shareholders while continuing to
aggressively execute its global growth strategy. The initiatives
include a share buyback program of up to $1.1 billion of CME Group
Class A common stock, subject to market conditions. The buyback
program will take place over a period of up to 18 months. The
board's authorization permits the repurchase of shares through the
open market, an accelerated program, a tender offer or privately
negotiated transactions. In addition, CME Group intends to declare
a special dividend of $5.00 per common share, following the
resolution of the company's pending NYMEX transaction. "The board's
authorization to institute a share buyback program represents an
efficient use of our capital and demonstrates continued confidence
in CME Group's strategy and growth potential," said CME Group
Executive Chairman Terry Duffy. "We recognize that our successful
merger with the Chicago Board of Trade and our continued growth and
success will result in significant free cash flow generation that
will exceed what we need to have on hand in order to continue our
aggressive global growth strategy. The combination of a flexible
share buyback program and a special dividend addresses the
different interests and preferences of our diverse shareholder
base." "With the completion of the merger with CBOT and the pending
acquisition of NYMEX, our need to significantly build cash balances
has changed," said CME Group Chief Executive Officer Craig Donohue.
"Today's initiatives positively address the interests of our
shareholders, while allowing us to successfully complete our
pending acquisition of NYMEX in a highly disciplined fashion. CME
Group will continue to take advantage of the many growth
opportunities we are pursuing globally through product innovation,
increased distribution, over- the-counter initiatives, and
additional strategic partnerships such as our agreement with
BM&F Bovespa." "We believe our new capital structure
initiatives reflect the high operating efficiency and relatively
low capital requirements inherent in our business model," said CME
Group Chief Financial Officer Jamie Parisi. "We will incur up to $4
billion of debt initially to execute both the NYMEX transaction and
this return of capital. We are balancing the shareholder benefits
of incurring some debt with the critical role CME Group plays in
global capital markets and we are, therefore, targeting a very
strong investment grade credit rating." Under SEC rules, CME Group
will not be able to repurchase shares during certain restricted
time periods. The share repurchase plan does not obligate CME Group
to repurchase any specific dollar amount or number of shares of its
Class A common stock. CME Group intends to conduct any such
repurchases in compliance with the applicable provisions of Rules
10b-5 and 10b-18 and Regulation M of the Securities Exchange Act of
1934, as amended, and any other applicable laws and regulations.
About CME Group CME Group (http://www.cmegroup.com/) is the world's
largest and most diverse derivatives exchange. Formed by the 2007
merger of the Chicago Mercantile Exchange (CME) and the Chicago
Board of Trade (CBOT), CME Group serves the risk management needs
of customers around the globe. As an international marketplace, CME
Group brings buyers and sellers together on the CME Globex
electronic trading platform and on its trading floors. CME Group
offers the widest range of benchmark products available across all
major asset classes, including futures and options based on
interest rates, equity indexes, foreign exchange, agricultural
commodities, and alternative investment products such as weather
and real estate. CME Group is traded on the New York Stock Exchange
and NASDAQ under the symbol "CME." Forward-Looking Statements
Statements in this news release that are not historical facts are
forward- looking statements. These statements are not guarantees of
future performance and involve risks, uncertainties and assumptions
that are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or implied in
any forward-looking statements. Among the factors that might affect
our performance are: our ability to obtain the required approvals
and to satisfy the closing conditions for our proposed merger with
NYMEX Holdings, Inc. and our ability to realize the benefits and
control the costs of the proposed transaction; our ability to
successfully integrate the businesses of CME Group and NYMEX
Holdings, including the fact that such integration may be more
difficult, time consuming or costly than expected and revenues
following the merger may be lower than expected; increasing
competition by foreign and domestic entities, including increased
competition from new entrants into our markets and consolidation of
existing entities; our ability to keep pace with rapid
technological developments, including our ability to complete the
development and implementation of the enhanced functionality
required by our customers; our ability to continue introducing
competitive new products and services on a timely, cost-effective
basis, including through our electronic trading capabilities, and
our ability to maintain the competitiveness of our existing
products and services; our ability to adjust our fixed costs and
expenses if our revenues decline; our ability to continue to
generate revenues from our processing services; our ability to
maintain existing customers and attract new ones; our ability to
expand and offer our products in foreign jurisdictions; changes in
domestic and foreign regulations; changes in government policy,
including policies relating to common or directed clearing or as a
result of a combination with the Securities and Exchange Commission
and the Commodity Futures Trading Commission; the costs associated
with protecting our intellectual property rights and our ability to
operate our business without violating the intellectual property
rights of others; our ability to generate revenue from our market
data that may be reduced or eliminated by decreased demand or the
growth of electronic trading; changes in our rate per contract due
to shifts in the mix of the products traded, the trading venue and
the mix of customers (whether the customer receives member or
non-member fees or participates in one of our various incentive
programs) and the impact of our tiered pricing structure; the
ability of our financial safeguards package to adequately protect
us from the credit risks of clearing members; the ability of our
compliance and risk management methods to effectively monitor and
manage our risks; changes in price levels and volatility in the
derivatives markets and in underlying fixed income, equity, foreign
exchange and commodities markets; economic, political, geopolitical
and market conditions; natural disasters and other catastrophes,
our ability to accommodate increases in trading volume and order
transaction traffic without failure or degradation of performance
of our systems; our ability to execute our growth strategy and
maintain our growth effectively; our ability to manage the risks
and control the costs associated with our acquisition, investment
and alliance strategy; our ability to continue to generate funds
and/or manage our indebtedness to allow us to continue to invest in
our business; industry and customer consolidation; decreases in
trading and clearing activity; the imposition of a transaction tax
on futures and options on futures transactions; and the seasonality
of the futures business. The share repurchase authorization does
not require CME Group to purchase a specific number of shares and
it may be modified, suspended or terminated at any time. The timing
and number of shares repurchased, if any, pursuant to the
authorization will be subject to a number of factors, including
current market conditions, legal constraints and available cash or
other sources of funding. CME Group is in discussion with lenders
to provide financing for transactions pursuant to the
authorization, but there can be no assurance that CME Group will be
able to secure financing in the amount that it desires or at terms
acceptable to CME Group. The availability and terms of additional
financing are subject to a number of factors, some of which are
beyond the control of CME Group, including general economic
conditions. More detailed information about factors that may affect
our performance may be found in our filings with the Securities and
Exchange Commission, including our most recent Annual Report on
Form 10-K, which is available in the Investor Relations section of
the CME Group Web site. We undertake no obligation to publicly
update any forward-looking statements, whether as a result of new
information, future events or otherwise. The Globe logo, CME,
Chicago Mercantile Exchange, CME Group, Globex and E- mini, are
trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago
Board of Trade are trademarks of the Board of Trade of the City of
Chicago. All other trademarks are the property of their respective
owners. Further information about CME Group and its products can be
found at http://www.cmegroup.com/. CME-G DATASOURCE: CME Group
CONTACT: Media, Anita Liskey, +1-312-466-4613, or William Parke,
+1-312- 930-3467, both at ; Investor, John Peschier,
+1-312-930-8491, all of CME Group Web site: http://www.cme.com/
http://www.cmegroup.mediaroom.com/
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