RNS Number:0264J
Border Television PLC
13 April 2000
Not for release, publication or distribution in or into the USA, Canada,
Australia or Japan.
CAPITAL RADIO PLC
RECOMMENDED OFFER
for
BORDER TELEVISION PLC
SUMMARY
- The Boards of Capital Radio plc ("Capital Radio") and Border Television plc
("Border") announce that they have reached agreement on the terms of a
recommended offer (the "Offer") for Border to be made by Credit Suisse First
Boston on behalf of Capital Radio to acquire the entire issued and to be
issued ordinary share capital of Border.
- The Offer will be made on the basis of 92 New Capital Radio Shares for every
100 Border Shares, which, based upon the closing price of a Capital Radio
Share of #14.70 on 12 April 2000, the dealing day prior to this announcement,
values each Border Share at #13.52 and the existing issued share capital of
Border at approximately #146 million.
- Capital Radio will also provide a full Cash Alternative of #13.00 for each
Border Share.
- The Offer represents a premium of approximately 64 per cent. over the
closing price of a Border Share of #8.225 on 9 March 2000, the dealing day
prior to the announcement of the possibility of an offer by SRH. The Offer
represents a premium of approximately 5 per cent. over the closing price of a
Border Share of #12.83 on 12 April 2000.
- As at the close of business on 12 April 2000, the Capital Radio share offer
represented a premium of approximately 6 per cent. over the value of the SRH
revised share offer of #12.81 per Border Share, based on the closing price of
a SRH share of #15.375 on 12 April 2000. The Cash Alternative of #13.00
represents a premium of #0.25 over the value of the SRH revised cash
alternative of #12.75 per Border Share.
- The Offer will be unanimously recommended by the directors of Border, and
Capital Radio has received from directors of Border (and certain persons
controlled by or connected with them) irrevocable undertakings to deliver to a
custodian Forms of Acceptance in respect of their entire beneficial holdings
of 387,539 Border Shares, representing, in aggregate, approximately 3.6 per
cent. of Border's issued share capital.
- Capital Radio has received similar irrevocable undertakings from Border
Shareholders which, together with the undertakings received from the directors
of Border (and certain persons controlled by or connected with them) relate to
a total of 2,738,513 Border Shares, representing, in aggregate, approximately
25.3 per cent. of Border's issued share capital.
- The acquisition is consistent with Capital Radio's strategy of building a
national analogue radio presence and strengthens Capital Radio's position as
Britain's leading commercial radio group.
- James Graham will continue to lead the successful team at Border Television.
- Capital Radio is pleased to report that the advertising market remains very
strong and that the Capital Radio Group will shortly be reporting radio
revenues for the half year approximately 14 per cent. ahead of the same period
last year. Revenue remains buoyant for the third quarter, from April to June,
and on this basis the directors of Capital Radio look forward to a strong
performance for the full year.
Commenting on the recommended Offer, David Mansfield, Chief Executive of
Capital Radio said:
"This is an excellent deal for Capital Radio and demonstrates our commitment
to grow not only organically but through acquisition. Border represents a
very attractive opportunity to acquire a well-branded and dynamic radio
business with good potential for further growth and a television franchise
which is extremely well run with a strong management team. It strengthens
Capital Radio's national presence and allows our advertisers to target
consumers in every major metropolitan market in England and Wales. With the
acquisition of Border, we will further consolidate our position as Britain's
leading commercial radio group."
Commenting on the recommended Offer, James Graham, Chairman of Border said:
"This is a very exciting deal for Border. Capital Radio understand the value
in Border's radio and television business and the board of Border is delighted
that Border will be forming a significant part of Britain's leading commercial
radio group. With Capital Radio, we will be reaching audiences from the South
East of England to the Scottish Borders and contributing strongly to Capital
Radio's growth strategy. We believe we have found a good home for our
shareholders, our staff and for the ambitions of the company"
Capital Radio is being advised by Credit Suisse First Boston and Border by
KPMG Corporate Finance and Charterhouse Securities. Cazenove is acting as
broker to the Offer.
This summary should be read in conjunction with the full text of the following
announcement.
ENQUIRIES
Capital Radio Telephone: 020 7766 6288
David Mansfield
Peter Harris
Credit Suisse First Boston Telephone: 020 7888 8888
Anthony Fry
Gillian Sheldon
Stuart Upcraft
Cazenove & Co Telephone: 020 7588 2828
John Paynter
Finsbury Telephone: 020 7251 3801
Rupert Younger
Jamie Leviton
Border Telephone: 01228 525 101
James Graham
Paul Corley
KPMG Corporate Finance Telephone: 020 7311 1000
Nicholas Fry
David Elms
Charterhouse Securities Telephone: 0131 527 3040
Garry Frier
Ludgate Communications Telephone: 020 7253 2252
Richard Hughes
Alex Brog
Credit Suisse First Boston, which is regulated by The Securities and Futures
Authority Limited, is acting exclusively for Capital Radio and for no one else
in connection with the Offer and will not be responsible to anyone other than
Capital Radio for providing the protections afforded to customers of Credit
Suisse First Boston nor for providing advice in relation to the Offer.
KPMG Corporate Finance is acting exclusively for Border as joint financial
adviser in connection with the Offer. KPMG Corporate Finance is not acting
for any other person (including any recipient of this announcement) and will
not be responsible to anyone other than Border for providing the protections
afforded to clients of KMPG Corporate Finance nor for providing advice in
relation to the Offer. KPMG Corporate Finance is a division of KPMG which is
authorised by the Institute of Chartered Accountants in England and Wales to
carry on investment business.
Charterhouse Securities Limited is acting exclusively for Border as joint
financial adviser in connection with the Offer. Charterhouse Securities
Limited is not acting for any other person (including any recipient of this
announcement) and will not be responsible to anyone other than Border for
providing the protections afforded to customers of Charterhouse Securities
Limited nor for providing advice in relation to the Offer. Charterhouse
Securities Limited is regulated in the UK by The Securities and Futures
Authority Limited.
The Offer will not be made, directly or indirectly, in or into, or by the use
of the mails of, or by any means or instrumentality (including, without
limitation, telephonically or electronically) of, interstate or foreign
commerce of, or of any facilities of a national securities exchange of, the
USA, or in or into Canada, Australia or Japan and the Offer will not be
capable of acceptance by any such use, means, instrumentality or facilities or
from within the USA, Canada, Australia or Japan. Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed
or sent in or into the USA, Canada, Australia or Japan and persons receiving
this announcement, including custodians, nominees and trustees should not
forward this announcement into the United States, Canada, Australia or Japan.
The New Capital Radio Shares have not been, and will not be, registered under
the US Securities Act of 1933, as amended. Furthermore, the relevant
clearances have not been, and will not be obtained from the securities
commission of any province of Canada, nor any city or prefecture of Japan. No
prospectus in relation to the New Capital Radio Shares has been, or will be,
lodged with or registered by the Australian Securities Commission.
Accordingly, except pursuant to an exemption, if available, from any
applicable registration requirements or otherwise in compliance with all
applicable laws, the New Capital Radio Shares may not be offered, sold, resold
or delivered, directly or indirectly, in or into the United States, Canada,
Australia or Japan.
This announcement does not constitute an offer or invitation to purchase any
securities.
Not for release, publication or distribution in or into the USA, Canada,
Australia or Japan.
CAPITAL RADIO PLC
RECOMMENDED OFFER
for
BORDER TELEVISION PLC
Introduction
The Boards of Capital Radio and Border announce that they have reached
agreement on the terms of a recommended offer for Border to be made by Credit
Suisse First Boston on behalf of Capital Radio to acquire the entire issued
and to be issued ordinary share capital of Border.
The Offer will be made on the basis of 92 New Capital Radio Shares for every
100 Border Shares, which, based upon the closing price of a Capital Radio
Share of #14.70 on 12 April 2000, values each Border Share at #13.52 and the
existing issued share capital of Border at approximately #146 million.
Capital Radio will also provide a full Cash Alternative of #13.00 for each
Border Share.
The Offer represents a premium of approximately 64 per cent. over the closing
price of a Border Share of #8.225 on 9 March 2000, the dealing day prior to
the announcement of the possibility of an offer by SRH. The Offer represents a
premium of approximately 5 per cent. to the closing price of a Border Share of
#12.83 on 12 April 2000.
As at 12 April 2000, the Capital Radio share offer represented a premium of
approximately 6 per cent. over the value of the revised SRH share offer of
#12.81 per Border Share, based on the closing price of a SRH share of #15.375
on 12 April 2000. The Cash Alternative of #13.00 represents a premium of
#0.25 over the value of the revised SRH cash alternative of #12.75 per Border
Share.
The directors of Border have received financial advice from KPMG Corporate
Finance and Charterhouse Securities. The directors, who have been so advised
by Charterhouse Securities under Rule 3 of the Code, consider the terms of the
Offer to be fair and reasonable and in the best interests of Border and its
shareholders as a whole. KPMG Audit plc acts as auditor to Capital Radio and,
as a consequence of Rule 3 of the Code, KPMG Corporate Finance is not acting
as independent adviser to Border for the purposes of the Offer. In providing
advice to the directors of Border, KPMG Corporate Finance and Charterhouse
Securities have taken into account the commercial assessments of the directors
of Border.
The directors of Border unanimously recommend all Border Shareholders accept
the Offer. The directors of Border (and certain persons controlled by or
connected with them) have irrevocably undertaken to deliver to a custodian
Forms of Acceptance in respect of their entire beneficial holdings totalling
387,539 Border Shares representing approximately 3.6 per cent. of Border's
issued share capital.
Capital Radio has received similar irrevocable undertakings from Border
Shareholders which, together with the undertakings received from the directors
of Border (and certain persons controlled by or connected with them) relate to
a total of 2,738,513 Border Shares representing, in aggregate, approximately
25.3 per cent. of Border's issued share capital.
The Offer
On behalf of Capital Radio, Credit Suisse First Boston will offer to acquire
all of the issued and to be issued Border Shares.
The Offer will be made on the following basis:
For every 100 Border Shares 92 New Capital Radio Shares
and so in proportion to the number of Border Shares held.
The Offer will be subject to the conditions and further terms set out below
and in Appendix I to this announcement and to be set out in the Offer Document
and Form of Acceptance.
The Border Shares are to be acquired under the Offer fully paid and free from
all liens, charges, and encumbrances, rights of pre-emption and other third
party rights and interests and together with all rights attaching thereto,
including the right to receive and retain all dividends and other
distributions declared, made or paid after the date of this announcement.
The New Capital Radio Shares to be issued in connection with the Offer will be
issued credited as fully paid and will rank pari passu in all respects with
the existing Capital Radio Shares, including the right to all dividends and
other distributions declared, made or paid in respect of Capital Radio Shares
hereafter. The New Capital Radio Shares will be issued free from all liens,
charges, equitable interests, encumbrances and other interests. Application
will be made for the New Capital Radio Shares to be admitted to the Official
List and, as appropriate, to trading on the London Stock Exchange.
The directors of Border (and a company controlled by one of the directors)
have irrevocably undertaken to deliver to a custodian Forms of Acceptance and
to receive New Capital Radio Shares in respect of 373,039 Border Shares.
Full acceptance of the Offer by the Border Shareholders (excluding holders of
options under the Border Share Option Scheme) would require the issue of up to
9,949,978 New Capital Radio Shares, representing approximately 11.7 per cent.
of the enlarged issued share capital of Capital Radio.
Fractions of New Capital Radio Shares will not be allotted or issued to
persons accepting the Offer, but will be aggregated and sold in the market on
their behalf (save that individual entitlements to amounts of less than #3.00
will be retained for the benefit of the Enlarged Capital Radio Group).
Cash Alternative
Border Shareholders who validly accept the Offer will be entitled to elect to
receive cash in respect of all or part of their holdings of Border Shares on
the following basis:
For every Border Share #13.00 in cash
The Cash Alternative is conditional upon the Offer becoming or being declared
unconditional in all respects.
If on any closing date of the Offer on which the Cash Alternative remains open
for acceptance, the Offer is then (or is then capable of being declared)
unconditional as to acceptances, the Cash Alternative will remain open for 14
days thereafter, but may then be closed without prior notice. If on any
closing date the Offer is not (and is not capable of being declared)
unconditional as to acceptances and is extended beyond that time, Capital
Radio and Credit Suisse First Boston reserve the right to close or to extend
the Cash Alternative on such date. If the Cash Alternative closes, the right
is also reserved to re-introduce a cash alternative as long as the Offer is
then still conditional as to acceptances.
Elections in full for the Cash Alternative from Border Shareholders (excluding
holders of options under the Border Share Option Scheme and those Border
Shareholders who have irrevocably committed to deliver to a custodian Forms of
Acceptance to accept the Offer) would require a payment of approximately #136
million. The consideration payable under the Cash Alternative will be
financed using new bank facilities and from the existing cash resources of
Capital Radio.
Irrevocable Undertakings
Capital Radio has received irrevocable undertakings to deliver to a custodian
Forms of Acceptance from CN Group Limited, Scudder Threadneedle Investments
Limited and directors of Border (and persons controlled by or connected with
them) in respect of a total of 2,738,513 Border Shares representing
approximately 25.3 per cent. of Border's issued share capital.
The undertaking given by Scudder Threadneedle Investment Limited in respect of
855,000 Border Shares will lapse if another offer is made for the entire
issued share capital of Border which is on terms which represent an
improvement on the value of the Offer at the date such offer is announced.
All other irrevocable undertakings will not lapse in the event of a higher
offer.
Background to and reasons for the Offer
Analogue Radio
The acquisition of Border is consistent with Capital Radio's stated strategy
of building a national analogue radio presence, and strengthens Capital
Radio's position as Britain's leading commercial radio group.
The acquisition will take the Company's ownership of radio stations from 85
points to 110 points, leaving the Enlarged Capital Radio Group with 12 per
cent. headroom for further expansion.
Border's three Century radio stations, two of which were launched less than
two years ago, have grown rapidly and have good potential for further audience
and revenue growth.
Capital Radio has demonstrated through past acquisitions, such as Invicta FM,
BRMB FM and most recently Red Dragon FM, its ability to integrate new
acquisitions successfully and to strengthen brands, increase audiences and
grow revenue. It has a strong track record over the last five years in
growing its radio turnover and profit before tax, and its acknowledged skills
and resources will enable it to maximise the potential of Border's radio
business.
Border has been successful in its applications for regional analogue licences
and the Enlarged Capital Radio Group will continue to apply for new analogue
licences.
Enhanced Proposition for Advertisers
Border's stations will enable Capital Radio to provide an enhanced offer to
advertisers:
- An additional potential audience of approximately 9.2 million adults,
creating a total potential audience of approximately 25.4 million adults
(approximately 54 per cent. of the UK adult population), an increase of
approximately 57 per cent.
- An increased weekly audience reach of approximately 1.3 million adults,
creating a total of approximately 7.7 million adults, an increase of
approximately 20 per cent.
- An increase of approximately 12 million listening hours, creating a total of
approximately 82 million hours, an increase of approximately 17 per cent.
- The opportunity to target every major metropolitan area in England and
Wales. Border's stations cover major metropolitan areas in the North West
and North East England, and the East Midlands; Capital's stations are in
London, the West Midlands, Wales and the South of England.
Capital Radio Advertising is considered the key sales point by customers
(Clark Chapman Research December 1999) with leading airtime sales operations
in London and Manchester. The Company believes it is well placed to drive the
revenue growth of the Enlarged Capital Radio Group, capitalising on Border's
fast growing radio assets and a national presence which includes London.
Digital Radio
Border will strengthen Capital Radio's leading position in digital radio. Its
forthcoming applications for regional digital multiplex licences for the North
East, North West, West Midlands, Yorkshire and Severn regions will give the
Enlarged Capital Radio Group further opportunities to expand in digital radio.
Internet
There are strong synergies between radio and the internet, and Capital Radio
has operated a network of websites since 1996. It is aiming to develop the
UK's leading music portal, featuring a strong combination of on-line music,
quality content and CD sales, with an investment of #5.5 million in the
current year. The strong analogue presence of the Enlarged Capital Radio
Group will help drive the development of that business by giving it exposure
to more potential customers and more cross-promotional opportunities.
Television
Border's television advertising revenue growth has outperformed the ITV
network average in five out of the past six years and, in 1999, had the
highest average share of audience of any ITV region. James Graham will
continue to lead the successful team at Border Television. It is intended
that Border's national television advertising and the transmission of Border's
television programmes will remain contracted to Granada Media Group.
The Board expects that the acquisition of Border will enable Capital Radio to
deliver growth over and above that which Capital Radio would achieve on a
standalone basis. Shareholders in the Enlarged Capital Radio Group will
benefit from this future growth.
Information on Capital Radio
Capital Radio is Britain's leading commercial radio group, with the most
listened to commercial radio stations in all its broadcast areas.
The London-based company operates 95.8 Capital FM, London's most popular
commercial radio station, and 14 other commercial stations in London,
Birmingham, Cardiff, Hampshire, Kent, Sussex and Oxford. Capital Radio's FM
stations offer contemporary hit radio, while Capital Gold, its AM service,
offers classic hits from the 70's, 80's and 90's and is networked across
Capital Radio's transmission areas. Capital Radio's national sales
organisation, Capital Radio Advertising, sells airtime to national advertisers
on behalf of all Capital Radio's stations plus Newslink and the Pepsi Chart
Show.
CE Digital, Capital Radio's joint venture with Emap, has been awarded digital
multiplex licences in London, Birmingham and Manchester and Capital Radio has
been awarded a further multiplex in Cardiff. To date, Capital Radio has been
awarded 20 digital licences, 13 of which are for new stations. The first of
these to launch was its national digital station 'Life' in January 2000 on
Digital One's national multiplex.
Capital Interactive, the Company's Internet business, offers web sites to
complement the Company's radio stations and has launched an online music
store, MusicCapital.com. Capital Interactive is currently developing what it
intends to be the UK's leading music portal, which is expected to go live in
late spring. Capital Radio is also active in the recording industry through
its 50 per cent. interest in the record label, Wildstar, a joint venture with
Telstar.
For the year ended 30 September 1999, Capital Radio had sales of #112 million
(1998: #100 million) and operating profit from continuing operations of #32.6
million (1998: #29.2 million). As at 30 September 1999, Capital Radio had net
assets of #42.4 million (1998: #48.8 million).
Current Trading
Capital Radio is pleased to report that the advertising market remains very
strong and that the Capital Radio Group will shortly be reporting radio
revenues for the half year approximately 14 per cent. ahead of the same period
last year. Revenue remains buoyant for the third quarter, from April to June,
and on this basis the directors of Capital Radio look forward to a strong
performance for the full year.
Information on Border
Border is a television and radio broadcaster. Its principal television
activity comprises the operation of the Channel 3 television licence for the
South of Scotland, Cumbria and the Isle of Man. Both the selling of national
television advertising and the transmission of Border's television programmes
are contracted to Granada Media Group for a period of seven years. For the
six months ended 31 October 1999, Border's television division contributed
revenues of approximately #7.2 million, representing approximately 62 per
cent. of Border's total revenue.
In 1994, Border diversified into commercial radio and now owns four commercial
radio stations, which together have a potential audience of approximately 9.2
million adults. Three of the radio stations are branded as Century Radio and
broadcast in the North West, the North East and the East Midlands regions of
England, with studios in Manchester, Newcastle and Nottingham. The fourth
station is branded as Sun FM and operates in Sunderland. For the six months
ended 31 October 1999, the radio division contributed revenues of
approximately #4.3 million, representing approximately 38 per cent. of
Border's total revenue.
For the year ended 30 April 1999, Border had sales of approximately #19.9
million (1998: #15.8 million) and operating profit from continuing operations
(before pre operational costs) of approximately #2.4 million (1998: #2.8
million). For the six months ended 31 October 1999, Border had sales of
approximately #11.5 million (1998: #9.5 million) and operating profit from
continuing operations (before pre operational costs) of approximately #1.7
million (1998: #1.6 million). As at 31 October 1999 Border had net assets of
approximately #5.7 million (1998: #5.2 million).
Conditions
The Offer will be conditional, inter-alia, upon the New Capital Radio Shares
being admitted to the Official List and, as appropriate, to trading on the
London Stock Exchange. The Offer will also be conditional on Border not being
in material default under the terms of its local radio licences and its
Channel 3 television licence which, in each case, might reasonably be expected
to lead to termination or withdrawal of such licences. Furthermore, the Offer
will also be conditional on the Radio Authority and the ITC confirming in
terms satisfactory to Capital Radio that the relevant licences held by members
of the Enlarged Capital Radio Group will not be materially affected following
implementation of the Offer, and that neither the Radio Authority nor the ITC
has any intention of issuing any material direction in respect of the relevant
licence.
The Articles of Association of Border generally limit the holding which any
person may have in Border Shares to 10 per cent. of the issued share capital.
The Offer will be conditional on the Articles of Association of Border being
amended so as to permit Capital Radio to own all the Border Shares. The board
of Border will convene an extraordinary general meeting of Border to amend the
Articles of Association accordingly and until such amendment is made, under
the terms of the Offer, Forms of Acceptance will be delivered to a custodian
to hold on behalf of the relevant Border Shareholders.
Management and employees
Capital Radio is keen to ensure that the skill and dedication of existing
Border employees are retained for the benefit of the Enlarged Capital Radio
Group. The existing employment rights, including pension rights, of the
management and employees of Border will be fully safeguarded.
Border Share Option Scheme
The Offer will extend to all Border Shares unconditionally allotted or issued
while the Offer remains open for acceptance (or prior to such earlier date as
Capital Radio may, subject to the Code, determine) as a result of the exercise
of options granted under the Border Share Option Scheme.
In the event that the Offer becomes or is declared unconditional in all
respects, it is intended that appropriate proposals will be made to
participants in the Border Share Option Scheme.
General
Neither Capital Radio nor any of the directors of Capital Radio nor, so far as
Capital Radio is aware, any party acting in concert with Capital Radio, owns
or controls any Border Shares or holds any options to purchase Border Shares
or has entered into any derivative referenced to Border Shares which remains
outstanding. In the interest of secrecy, Capital Radio has not made enquiries
in respect of certain parties who may be deemed to be acting in concert with
it for the purposes of the Offer.
It is intended that the Offer Document will be sent to Border Shareholders as
soon as practicable.
ENQUIRIES
Capital Radio Telephone: 020 7766 6288
David Mansfield
Peter Harris
Credit Suisse First Boston Telephone: 020 7888 8888
Anthony Fry
Gillian Sheldon
Stuart Upcraft
Cazenove & Co Telephone: 020 7588 2828
John Paynter
Finsbury Telephone: 020 7251 3801
Rupert Younger
Jamie Leviton
Border Telephone: 01228 525 101
James Graham
Paul Corley
KPMG Corporate Finance Telephone: 020 7311 1000
Nicholas Fry
David Elms
Charterhouse Securities Telephone: 0131 527 3040
Garry Frier
Ludgate Communications Telephone: 020 7253 2252
Richard Hughes
Alex Brog
Credit Suisse First Boston, which is regulated by The Securities and Futures
Authority Limited, is acting exclusively for Capital Radio and for no one else
in connection with the Offer and will not be responsible to anyone other than
Capital Radio for providing the protections afforded to customers of Credit
Suisse First Boston nor for providing advice in relation to the Offer.
KPMG Corporate Finance is acting exclusively for Border as joint financial
adviser in connection with the Offer. KPMG Corporate Finance is not acting
for any other person (including any recipient of this announcement) and will
not be responsible to anyone other than Border for providing the protections
afforded to clients of KMPG Corporate Finance nor for providing advice in
relation to the Offer. KPMG Corporate Finance is a division of KPMG which is
authorised by the Institute of Chartered Accountants in England and Wales to
carry on investment business.
Charterhouse Securities Limited is acting exclusively for Border as joint
financial adviser in connection with the Offer. Charterhouse Securities
Limited is not acting for any other person (including any recipient of this
announcement) and will not be responsible to anyone other than Border for
providing the protections afforded to customers of Charterhouse Securities
Limited nor for providing advice in relation to the Offer. Charterhouse
Securities Limited is regulated in the UK by The Securities and Futures
Authority Limited.
The Offer will not be made, directly or indirectly, in or into, or by the use
of the mails of, or by any means or instrumentality (including, without
limitation, telephonically or electronically) of, interstate or foreign
commerce of, or of any facilities of a national securities exchange of, the
USA, or in or into Canada, Australia or Japan and the Offer will not be
capable of acceptance by any such use, means, instrumentality or facilities or
from within the USA, Canada, Australia or Japan. Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed
or sent in or into the USA, Canada, Australia or Japan and persons receiving
this announcement, including custodians, nominees and trustees should not
forward this announcement into the United States, Canada, Australia or Japan.
The New Capital Radio Shares have not been, and will not be, registered under
the US Securities Act of 1933, as amended. Furthermore, the relevant
clearances have not been, and will not be obtained from the securities
commission of any province of Canada, nor any city or prefecture of Japan. No
prospectus in relation to the New Capital Radio Shares has been, or will be,
lodged with or registered by the Australian Securities Commission.
Accordingly, except pursuant to an exemption, if available, from any
applicable registration requirements or otherwise in compliance with all
applicable laws, the New Capital Radio Shares may not be offered, sold, resold
or delivered, directly or indirectly, in or into the United States, Canada,
Australia or Japan.
This announcement does not constitute an offer or invitation to purchase any
securities.
APPENDIX I
CONDITIONS OF THE OFFER
The Offer, which will be made by Credit Suisse First Boston on behalf of
Capital Radio, will comply with all applicable Rules and Regulations of the
London Stock Exchange and/or as appropriate the UK Listing Authority and the
Code and will be governed by English law and be subject to the jurisdiction of
the Courts of England and will be subject to the terms and conditions set out
below and to be set out in the Offer Document and the Form of Acceptance.
1 CONDITIONS OF THE OFFER
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted, withdrawn) by
3.00 p.m. on the first closing date (or such later time(s) and/or date(s) as
Capital Radio may, subject to the rules of the Code, decide) in respect of not
less than 90 per cent. (or such lesser percentage as Capital Radio may decide)
of the Border Shares to which the Offer relates, provided that this condition
will not be satisfied unless Capital Radio shall have acquired or agreed to
acquire, whether pursuant to the Offer or otherwise, Border Shares carrying,
in aggregate, more than 50 per cent. of the voting rights then exercisable at
a general meeting of Border, including for this purpose to the extent (if any)
required by the Panel, any such voting rights attaching to any Border Shares
that may be unconditionally allotted or issued before the Offer becomes or is
declared unconditional as to acceptances whether pursuant to the exercise of
any outstanding conversion or subscription rights or otherwise; and for this
purpose:
(i) the expression "Border Shares to which the Offer relates" shall be
construed in accordance with sections 428-430F of the Companies Act 1985; and
(ii) shares which have been unconditionally allotted shall be deemed to carry
the voting rights which they will carry upon issue;
(b) the London Stock Exchange agreeing to admit the New Capital Radio Shares
to the Official List and such admission becoming effective in accordance with
paragraph 7.1 of the Listing Rules or, in respect of New Capital Radio Shares
to be issued on or after 1 May 2000, admission to the Official List of the UK
Listing Authority and admission to trading on the London Stock Exchange of
such New Capital Radio Shares becoming effective by the decision of the UK
Listing Authority to admit such shares being announced in accordance with
paragraph 7.1 of the Listing Rules and by the announcement of the decision by
the London Stock Exchange to admit such shares to trading being announced in
accordance with the LSE Admission Standards;
(c) the Office of Fair Trading indicating, in terms satisfactory to Capital
Radio, that it is not the intention of the Secretary of State for Trade and
Industry to refer the proposed acquisition of Border by Capital Radio or any
matter arising therefrom to the Competition Commission;
(d) the passing at a general meeting of Border (or at any adjournment thereof)
of a resolution or resolutions to amend the Border Articles of Association in
a manner which results in:
(i) Capital Radio (and its subsidiary undertakings and persons acting in
concert with it) being permitted to own or hold an interest in all of the
Border Shares; and
(ii) any notice given under Article 145 prior to the amendment becoming
effective being deemed to have been withdrawn and to have ceased to have
effect and all restrictions and obligations imposed by virtue of any such
notice being deemed to have terminated;
and such resolution or resolutions remaining in full force and effect at the
time that the Offer becomes, apart from this condition, unconditional in all
respects;
(e) no government or governmental, quasi-governmental, supranational,
statutory or regulatory body, court, trade agency, professional association or
any other person or body in any jurisdiction (each a "Relevant Authority")
having decided to take, instituted, implemented or threatened any action,
proceedings, suit, investigation or enquiry, or made, proposed or enacted any
statute, regulation or order or taken any other steps and there not continuing
to be outstanding any statute, legislation or order thereof, which would or
might:
(i) make the Offer or the acquisition by Capital Radio of any Border Shares,
or control of Border void, illegal or unenforceable or otherwise restrict,
restrain, prohibit or otherwise interfere with the implementation of, or
impose material adverse additional conditions or obligations with respect
thereto, or otherwise challenge or interfere therewith;
(ii) result in a delay in the ability of Capital Radio, or render Capital
Radio unable to, acquire some or all of the Border Shares;
(iii) require or prevent the divestiture by Border or any of its subsidiaries
or subsidiary undertakings or any associated company or any company of which
20 per cent. or more of the voting capital is held by the Border Group or any
partnership, joint venture, firm or company in which any member of the Border
Group may be interested (the "wider Border Group") or by Capital Radio or any
of its subsidiaries or subsidiary undertakings or any associated company or
any company of which 20 per cent. or more of the voting capital is held by
Capital Radio Group or any partnership, joint venture, firm or company in
which any member of Capital Radio Group may be interested (the "wider Capital
Radio Group") of all or any portion of their respective businesses, assets or
property or impose any limitation on the ability of any of them to conduct
their businesses or own their assets or property, in each case, where the same
is materially adverse to Capital Radio;
(iv) impose any limitation on the ability of any member of the wider Border
Group or the wider Capital Radio Group to acquire or to hold or to exercise
effectively any rights of ownership of shares or loans or securities
convertible into shares in any member of the wider Capital Radio Group or of
the wider Border Group held or owned by it or to exercise management control
over any member of the wider Capital Radio Group or of the wider Border Group;
(v) require any member of the wider Capital Radio Group or the wider Border
Group to offer to acquire any shares in any member of the wider Border Group,
in each case, where the same is materially adverse to Capital Radio; or
(vi) otherwise materially and adversely affect the business, profits or
prospects of any member of the wider Capital Radio Group or of any member of
the wider Border Group;
and all applicable waiting and other time periods during which any such
Relevant Authority could decide to take, institute, implement or threaten any
such action, proceeding, suit, investigation or enquiry having expired, lapsed
or been terminated;
(f) no member of the wider Border Group being in material default under any
of the terms or provisions of the ITC Licence which might reasonably be
expected to result in the ITC terminating or withdrawing it and the ITC
confirming in terms satisfactory to Capital Radio that it has no intention of:
(i) taking any action which would result in the ITC Licence not continuing on
the same or substantially the same terms following the Offer and its
implementation;
(ii) issuing any material direction under the terms or provisions of the ITC
Licence which would have a material adverse effect thereon; or
(iii) imposing any material sanction or penalty in respect of the ITC Licence;
(g) no member of the wider Border Group being in material default of any of
the terms or provisions of any local radio licence held by it which might
reasonably be expected to result in the Radio Authority terminating or
withdrawing it and the Radio Authority confirming in terms satisfactory to
Capital Radio in respect of the local radio licences held by members of the
wider Border Group and Capital Radio Group respectively that it has no
intention of:
(i) taking any action which would result in any such local radio licence not
continuing on the same or substantially the same terms following the Offer and
its implementation;
(ii) issuing any material direction under the terms of any such local radio
licence which would have a material adverse effect thereon; or
(iii) imposing any material sanction or penalty in respect of any such local
radio licence;
(h) all necessary filings having been made, all appropriate waiting periods
under any applicable legislation or regulations of any jurisdiction having
expired, lapsed or been terminated, in each case in respect of the Offer and
the acquisition of any Border Shares, or of control of Border, by Capital
Radio, and all authorisations, orders, recognitions, grants, consents,
licences, confirmations, clearances, permissions and approvals
("Authorisations") necessary or appropriate for, or in respect of, the Offer
and the proposed acquisition of any Border Shares, or of control of Border, by
Capital Radio and to carry on the business of any member of Capital Radio
Group or of the Border Group having been obtained, in terms and in a form
satisfactory to Capital Radio, from all appropriate Relevant Authorities and
from persons or bodies with whom any member of Capital Radio Group or the
Border Group has entered into contractual arrangements and all such
Authorisations remaining in full force and effect and there being no notice of
an intention to revoke or not to renew any of the same and all necessary
statutory or regulatory obligations in any jurisdiction having been complied
with;
(i) there being no provision of any arrangement, agreement, licence or other
instrument to which any member of the wider Border Group is a party or by or
to which any such member or any of their assets may be bound, entitled or be
subject and which, in consequence of the proposed acquisition of any Border
Shares, or control of Border, by Capital Radio or otherwise, would or might,
to an extent which is material, result in:
(i) any monies borrowed by, or other indebtedness actual or contingent of, any
such member of the wider Border Group being or becoming repayable or being
capable of being declared immediately or prior to their stated maturity;
(ii) the creation of any mortgage, charge or other security interest over the
whole or any part of the business, property or assets of any such member or
any such security (whenever arising or having arisen) becoming enforceable;
(iii) any such arrangement, agreement, licence or instrument being terminated
or adversely modified or any action being taken of an adverse nature or any
obligation arising thereunder;
(iv) any assets of any such member being disposed of other than in the
ordinary course of business;
(v) the interest or business of any such member in or with any firm or body
or person, or any arrangements relating to such interest or business, being
terminated or adversely modified or affected;
(vi) any such member ceasing to be able to carry on business under any name
under which it presently does so; or
(vii) the creation of liabilities by any such member, other than in the
ordinary course of business;
(j) except as publicly announced by Border prior to the date hereof, no
member of the wider Border Group having, since 30 April 1999:
(i) issued or authorised or proposed the issue of additional shares of any
class, or securities convertible into, or rights, warrants or options to
subscribe for or acquire, any such shares or convertible securities (save as
between Border and wholly-owned subsidiaries of Border and save for options
granted, and for any Border Shares allotted upon exercise of options granted
under the Border Share Option Scheme) or redeemed, purchased or reduced any
part of its share capital;
(ii) declared, paid or made or proposed to declare, pay or make any bonus in
respect of shares, dividends or other distribution other than to other members
of the wider Border Group;
(iii) authorised or proposed or announced its intention to propose any merger
or demerger or acquisition or disposal of assets or shares (other than in the
ordinary course of trading) or any such material change in its share or loan
capital;
(iv) issued or proposed the issue of any debentures or, other than in the
ordinary course of business, incurred any indebtedness or contingent
liability;
(v) disposed of or transferred, other than in the ordinary course of
business, mortgaged or encumbered (other than by operation of law) any asset
or any right, title or interest in any asset;
(vi) entered into any contract or commitment (whether in respect of capital
expenditure or otherwise) which is of a long-term or unusual nature or
magnitude or involves or could involve an obligation of such a nature or
magnitude;
(vii) entered into any reconstruction, amalgamation, transaction or
arrangement (otherwise than in the ordinary course of business);
(viii) taken any corporate action or had any order made for its winding-up,
dissolution or reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of all or
any of its assets and revenues;
(ix) entered into or varied the terms of any service agreement with any of the
directors of Border; or
(x) entered into any agreement or commitment or passed any resolution with
respect to any of the transactions or events referred to in this paragraph
(j);
(xi) made or agreed or consented to any change to the terms of the trust deeds
constituting the pension schemes established for its directors and/or
employees and/or their dependants or to the benefits which accrue, or to the
pensions which are payable thereunder, or to the basis on which qualification
for accrual or entitlement to such benefits or pensions are calculated or
determined, or to the basis upon which the liabilities (including pensions) of
such pension schemes are funded or made or agreed or consented to any change
to the trustees involving the appointment of a trust corporation;
(xii) made any amendment to its memorandum or articles of association;
(k) since 30 April 1999, except as publicly announced by Border prior to the
date hereof;
(i) there having been no material adverse change in the business, financial
or trading position or profits or prospects of any member of the wider Border
Group;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings having been instituted, announced or threatened by or against or
remaining outstanding against any member of the wider Border Group which in
any such case could reasonably be expected to have a material affect on the
Border Group; and
(l) Capital Radio not having discovered that:
(i) the financial or business information concerning the wider Border
Group as contained in the information publicly disclosed at any time by any
member of the wider Border Group either contains a material misrepresentation
of fact or omits to state a fact necessary to make the information contained
therein not materially misleading and which has not been publicly corrected by
such disclosure; or
(ii) any member of the wider Border Group is subject to any liability,
contingent or otherwise, which is not disclosed in the annual report and
accounts of Border for the financial year ended 30 April 1999 or in the
interim report for the six months to 30 October 1999 and which is material in
the context of the Border Group as a whole;
(m) in relation to any release, omission, disposal or other fact or
circumstance which causes or might cause pollution of the environment or harm
to human health, no past or present member of the Border Group having, in any
manner, to an extent which is material in the context of the Border Group as a
whole:
(i) committed any violation of any laws, statutes, ordinances, regulations or
other requirements of any Relevant Authority; and/or
(ii) incurred any liability (whether actual or contingent) with respect
thereto.
Capital Radio reserves the right to waive, in whole or in part, all or any of
conditions (c) to (m) inclusive. If Capital Radio is required by the Panel to
make an offer for Border Shares under the provisions of Rule 9 of the Code,
Capital Radio may make such alterations to the above conditions, including
condition (a) above, as are necessary to comply with the provisions of that
Rule.
The Offer will lapse unless the conditions set out above (other than condition
(a) to the Offer) are fulfilled or (if capable of waiver) waived or, where
appropriate, have been determined by Capital Radio in its reasonable opinion
to be or to remain satisfied no later than 21 days after the first closing
date of the Offer or after the date on which the Offer become or is declared
unconditional as to acceptances, whichever is the later, or such later date as
the Panel may agree. Capital Radio shall not be obliged to waive (if capable
of waiver) or treat as satisfied any condition until the latest date for the
fulfilment of all conditions referred to above.
The Offer will lapse if it is referred to the Competition Commission before
3.00 p.m. on the first closing date of the Offer or the date on which the
Offer becomes or is declared unconditional as to acceptances, whichever is the
later. If the Offer so lapses, the Offer will cease to be capable of further
acceptance and accepting Border Shareholders and Capital Radio will cease to
be bound by forms of acceptance submitted before the time when the Offer
lapses.
APPENDIX II
FINANCIAL EFFECTS OF ACCEPTANCE OF THE OFFER
On the basis of the closing price of a Capital Radio Share of #14.70 on 12
April 2000, the Offer values each Border Share at approximately #13.52 and the
issued ordinary share capital of Border at approximately #146 million.
The value of the Offer represents a premium of approximately:
- 64 per cent. to the closing price of a Border Share of #8.225 on 9 March
1999 (the dealing day prior to the announcement of the possibility of an offer
by SRH for Border);
- 5 per cent. to the closing price of a Border Share of #12.83 on 12 April
2000.
The following tables set out, for illustrative purposes only and on the bases
and assumptions set out in the notes below, the financial effects on capital
value and gross income for a holder of 100 Border Shares accepting the Offer
if the Offer becomes or is declared unconditional in all respects:
A. Increase in capital value
Offer Cash
Alternative
Notes # #
Market value of 92 New Capital Radio Shares (i) 1,352.40
Cash Alternative in respect of 100 Border Shares 1,300.00
Market value of 100 Border Shares (ii) 1,283.00 1,283.00
Increase in capital value 69.40 17.00
This represents an increase of 5.4% 1.3%
B. Increase in gross income
Gross dividend income on 92 New Capital Radio Shares (iii) 17.02
Interest income from the Cash Alternative of #1,300 (iv) 70.46
Gross dividend income on 100 Border Shares (v) 9.78 9.78
Increase in gross income 7.24 60.68
This represents an increase of 74% 620%
Notes:
(i) The market value of the New Capital Radio Shares is based on the closing
middle-market price of #14.70 per Capital Radio Share on 12 April 2000.
(ii) The market value of the Border Shares is based on the closing
middle-market price of #12.83 per Border Share on 12 April 2000.
(iii) The gross dividend income on New Capital Radio Shares is based on the
total dividend on 16.65p (net) for the financial year ended 30 September 1999,
grossed up by a factor of 100/90.
(iv) The gross interest income on the cash consideration under the Cash
Alternative is calculated on the assumption that the cash is reinvested to
yield approximately 5.42 per cent. per annum, being the gross redemption yield
on UK Government securities with maturity between 5 and 15 years, as published
in the Financial Times on 12 April 2000.
(v) The gross dividend income from Border Shares is based on aggregate
dividends of 8.8p (net) per Border Share being the total of the 5.8p (net)
final dividend for the year ended 30 April 1999 and the 3.0p (net) interim
dividend for the year ended 30 April 2000, grossed up by a factor of 100/90.
(vi) In assessing the financial effects of acceptance of the Offer, no account
has been taken of the treatment of any fractions or any potential liability to
taxation of a Border Shareholder.
APPENDIX III
SOURCES AND BASES
1. Unless otherwise stated, references to historical share prices have been
taken from the closing middle-market prices as derived from the London Stock
Exchange.
2. The value of the whole of the issued share capital of Border is based upon
10,815,194 Border Shares in issue. The percentage of the enlarged issued
share capital of Capital Radio to be issued pursuant to the Offer is based
upon 75,259,343 Capital Radio Shares in issue.
3. Figures for the potential audience, weekly reach and listening hours of
radio services are derived from RAJAR/Ipsos-RSL figures for (unless otherwise
stated) the survey period for the six months ending December 1999. RAJAR is a
company specifically established to manage the UK's agreed system of radio
audience measurement. It is jointly owned by the Commercial Radio Companies
Association (on behalf of commercial radio companies) and the British
Broadcasting Corporation.
APPENDIX IV
DEFINITIONS
"adults" people of 15 years or more of age
"Border" Border Television plc
"Border Group" Border and its subsidiaries and
subsidiary and associated undertakings
and, where the context permits, each
of them
"Border Shareholders" holders of Border Shares
"Border Shares" existing unconditionally allotted or
issued and fully paid ordinary shares
of 10 pence each in the capital of
Border and any further such shares
which are issued or unconditionally
allotted and fully paid prior to the
date on which the Offer closes or,
subject to the provisions of the Code,
such earlier date as Capital Radio may
decide
"Border Share Option Scheme" the Border Executive Share Option
Scheme
"Cash Alternative" the alternative whereby Border
Shareholders validly accepting the
Offer may elect to receive all or part
of the consideration in cash
"Capital Radio" or "Capital" Capital Radio plc
or "Company"
"Capital Radio Group" Capital Radio and its subsidiaries and
subsidiary and associated undertakings
and, where the context permits, each
of them
"Capital Radio Shares" ordinary shares of 2.5p each in the
capital of Capital Radio
"Code" the City Code on Takeovers and Mergers
"Credit Suisse First Boston" Credit Suisse First Boston (Europe)
Limited
"Daily Official List" the Daily Official List of the London
Stock Exchange
"Enlarged Capital Radio Group" the Capital Radio Group as enlarged by
the acquisition of Border
"Form of Acceptance" the form of acceptance, authority and
election relating to the Offer to be
despatched to Border Shareholders with
the Offer Document
"Granada Media Group" Granada Group plc or, where the
context so requires, all or any of its
subsidiary undertakings
"ITC" the Independent Television Commission
established under the provisions of
the Broadcasting Act 1990
"ITC Licence" the licence granted by the ITC to
Border to provide a regional Channel 3
service under Part I of the
Broadcasting Act 1990, as amended
"Listing Rules" the listing rules of the London Stock
Exchange, or as appropriate the
listing rules made by the UK Listing
Authority under section 142 of the
Financial Services Act 1986
"London Stock Exchange" London Stock Exchange Limited
"LSE Admission Standards" the rules issued by the London Stock
Exchange in relation to the admission
to trading of, and continuing
requirements for, securities admitted
to the Official List
"New Capital Radio Shares" new ordinary shares of 2.5p each in
the capital of Capital Radio to be
issued credited as fully paid pursuant
to the Offer
"Offer" the recommended offer to be made by
Credit Suisse First Boston on behalf
of Capital Radio (or one of its wholly
owned subsidiaries) to acquire all of
the issued and to be issued Border
Shares on the terms and subject to the
conditions to be set out or referred
to in the Offer Document and
including, where the context permits,
any elections available thereunder
and/or any subsequent revision,
variation, extension or renewal of
such offer
"Offer Document" the document to be sent to Border
Shareholders setting out the terms and
conditions of the Offer
"Official List" the Official List of the London Stock
Exchange or, as appropriate, the list
maintained by the UK Listing Authority
pursuant to Part IV of the Financial
Services Act 1986
"Panel" The Panel on Takeovers and Mergers
"Radio Authority" the Radio Authority established under
the provisions of the Broadcasting Act
1990
"SRH" Scottish Radio Holdings plc
"UK" United Kingdom of Great Britain and
Northern Ireland
"UK Listing Authority" the Financial Services Authority as
the competent authority for listing in
the United Kingdom
"US" or "USA" or
"United States" the United States of America, its
territories and possessions and any
state of the United States of America
and the District of Columbia and all
other jurisdictions subject to the
jurisdiction of the United States
END
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