RNS No 1145q
INTERNET TECHNOLOGY GROUP PLC
8 September 1999
PART 2
13.Information on the ITG Group
Business description
ITG, based in Putney, London, is the parent company of two
leading UK Internet Service Providers: GX Networks and
Global Internet. The combination of the group's growing
base of leased line and web hosting customers through GX
Networks, and extensive dial-up operations through Global
Internet, makes ITG one of the largest carrier-independent
ISPs in the UK.
ITG currently serves the enterprise market in the UK and in
the Netherlands through its GX Networks subsidiary. ITG's
strategy is to provide a range of Internet and networking
services to business clients across Europe. Products and
services are built around high bandwidth, flexible Internet
connections, and value added services, as well as
commercial web hosting products ranging from aggressively
priced solutions for the SME to high-end server solutions.
By taking advantage of the company's high quality data
centres with back-up power, multiple high bandwidth network
connections and peering arrangements, ITG can serve the
most stringent demands of eBusiness.
ITG's Business Services Group provides a complete range of
ISDN Internet access and web hosting products sold through
a specialised telesales group, providing SME customers with
the appropriate product for their network needs.
ITG's UK subscription-based Global Internet service is
targeted at SME, SOHO and serious consumer Internet users,
differentiated through the addition of value added
services. ITG has also recently launched two own-brand,
subscription-free consumer Internet access services: Dial-
Start and FreeNetName. The latter offers consumers a choice
of their own personalised domain name for the email address
and website. Furthermore, through a dedicated sales team,
ITG offers outsourced dial-up access services to major
brand owners who wish to market a free Internet service.
These subscription free Internet services generate income
for ITG in the form of payments from the telephone
companies who terminate the calls.
As part of its strategy to become a pan-European Internet
services company, ITG is starting a subsidiary in France
with a data centre and offices in Paris. ITG has a publicly
stated strategy for expansion further into Europe, aiming
to provide services in the key Northern European markets
(UK, France, Netherlands and Germany) next year, when it
will offer sophisticated services, such as virtual private
networks, on its pan-European infrastructure.
ITG's strategy is underpinned by the commitment of
substantial funds and engineering resources to building a
highly resilient network and dial-up services platform. The
strategy is to use high bandwidth transmission facilities
sourced from a number of different providers to
interconnect POPs owned by ITG in the UK and Europe. ITG's
UK network currently has 35 points of presence (the UK's
largest POP network for the provision of IP services) from
which it can provide service to corporate leased-line
customers. ITG also exploits its relationship with
telecommunications carriers to provide carrier-diverse
local-call coverage across the United Kingdom to modem
banks at several dialup POPs. ITG has also invested in
substantial transatlantic bandwidth to ensure high quality
facilities to the USA, as well as a network within the
United States. ITG has connections directly into the major
US peering points. ITG has also recently invested in
substantial trans-european bandwidth between the UK, the
Netherlands, France, Germany and Sweden, giving
connectivity not only to GX Networks BV in the Netherlands,
but also to major European peering points and data centers
in Paris, Frankfurt and Stockholm. Once completed, the
network is expected to be the largest pan-European network
operated by any carrier-independent ISP.
Financial Information
For the financial year ended 31st October, 1998, for which
accounts have been audited, ITG achieved revenues of #11.0
million, losses from operation of #1.0 million, losses from
continuing operations before tax and exceptional items of
#1.2 million and net earnings of #0.1 million. Reported
net earnings per share were #0.12. Shareholders' equity as
at 31st October, 1998 was #3.4 million.
For the unaudited six month period ended 30th April, 1999,
ITG achieved revenues of #8.9 million, losses from
operations of #1.2 million, losses from continuing
operations before tax and exceptional items of #1.6 million
and net losses of #1.6 million. Reported net losses per
share were #3.55. Shareholders' equity as at 30th April,
1999 was #6.4 million.
14. Background to and reasons for the Offer
The boards of Concentric and ITG believe their businesses
are complementary and that a range of economic, strategic
and operational benefits will arise from combining them.
The telecommunications industry is driven by, among other
factors, the need for achieving scale economies due to the
capital intensive nature of the network services business.
The boards of Concentric and ITG believe that the two
companies combined are more likely to achieve sustainable
scale economies than they would as two independent
entities. The acquisition of ITG will also provide
Concentric with the ability to begin to penetrate the
European market as the ITG network is built out throughout
Europe. The boards of both Concentric and ITG believe that
the two companies will have a broader product offering as a
combined entity and therefore will be a stronger competitor
in the marketplace. Both companies predict strong revenue
growth from the SME market segment and marketing efforts
will target the SME customer base.
Concentric and ITG have been working together since
September 1998. This relationship provides the strong
foundation for moving forward as a successful combined
business. Both companies view innovative products and
quality of service as key differentiators in today's
market. ITG will lead the effort to expand Concentric in
the European region.
With 35 points of presence in the UK and over 350
metropolitan areas served in the US, Concentric will be
able to reach a significant SME customer base offering a
broad portfolio of business IP-based network services
including web hosting, e-commerce, virtual private
networks, internet access, and transit services.
Industry analysts expect the world wide market size for
both value-added IP data networking services and Internet
access to grow rapidly as businesses and consumers increase
their use of the Internet, intranets and privately managed
IP networks. Therefore, in addition to pursuing a strategy
of growth in North America, Concentric is pursuing a
strategy that positions it as a global service provider.
Following the acquisition of ITG, Concentric is expected to
have:
* approximately 960 employees and contractors
* 35 points of presence in the UK and over 350
metropolitan areas served in the United States
* over 30,000 business customers in Europe and North
America
* a broad portfolio of business IP-based network services
* operations in Europe and North America
* enhanced internet transit offerings
15. Management and employees
Concentric has given assurances to the board of ITG that it
will honour the current employment agreements in place for
key members of ITG management and intends to ensure that
they have industry competitive compensation packages.
Concentric has also given assurances to the board of ITG
that the existing rights of the employees of the ITG Group
will be fully safeguarded.
16. ITG Share Option Schemes
The Offer will extend to any ITG Shares issued or
unconditionally allotted prior to the Scheme becoming
effective as a result of the exercise of options granted
under the ITG Share Option Schemes or otherwise.
Appropriate proposals will be made to participants in the
ITG Share Option Schemes in the Scheme Document.
17. Other Arrangements between Concentric and ITG
Concentric has agreed to provide to ITG a loan facility of
up to $10 million to fund certain short term expenditure
requirements. The loan will be made available to ITG with
the benefit of security in the form of (a) a first fixed
and floating charge over the Non-ISP Interests and (b) a
second fixed and floating charge over the other assets and
undertaking of ITG, to rank after existing security granted
in favour of MCI Worldcom. In the event that for any
reason the Scheme does not become effective or the Offer
lapses for any reason, the loan is repayable after a three
month grace period for repayment. In the event of a change
of control occurring with respect to ITG, the loan becomes
repayable within 5 days of demand.
It having been a pre-condition to the announcement of the
Offer and the Warrant Proposals and to the provision of the
loan facility described above, ITG has agreed to pay to
Concentric a fee of #1 million in the event of any third
party announcing a firm intention to make a takeover offer
for, or proposal for merger with, ITG (whether or not an
announcement is subject to any pre-conditions provided that
all such pre-conditions have been accepted by, or are
acceptable to, the Panel) and the Scheme does not become
effective. ING Barings and the directors of ITG consider
the amount of this fee and the circumstances in which it
may become payable to be in the best interests of ITG
Shareholders.
18.General
The availability of the Offer and the Warrant Proposals to
persons not resident in the United Kingdom may be affected
by the laws of the relevant jurisdiction. Persons who are
not resident in the United Kingdom should inform themselves
of and observe any applicable requirements.
No application will be made for listing of the new
Concentric Shares on the London Stock Exchange or any other
recognised investment exchange other than the Nasdaq
National Market.
As at 7th September, 1999 (the latest practicable date
prior to this announcement), neither Concentric, nor any of
the directors of Concentric nor, so far as Concentric is
aware, any party acting in concert with Concentric (other
than Jan Murray, Laurence Blackall and The Monument Trust
Company Limited who are interested in 1,470,441, 3,239,362
and 14,975,605 ITG Shares, respectively, together
representing 34.1 per cent of the fully diluted issued
share capital of ITG), owned or controlled any ITG Shares
or held options to purchase ITG Shares.
The Offer and the Warrant Proposals will be subject to the
conditions and certain further terms which are set out in
Appendix I and Appendix II to this announcement and to such
other terms which will be set out in the Scheme Document,
the Form of Election, the Warrantholders' Form of Election
and as may be required to comply with the rules and
regulations of Nasdaq, the London Stock Exchange (so far as
they relate to the Alternative Investment Market) and the
provisions of the City Code.
Bear, Stearns International, which is regulated in the
United Kingdom by The Securities and Futures Authority
Limited, is acting for Concentric in connection with the
Offer and the Warrant Proposals and for no-one else and
will not be responsible to anyone other than Concentric for
providing the protections afforded to customers of Bear,
Stearns International, or for providing advice in relation
to the Offer or the Warrant Proposals.
ING Barings, which is regulated in the United Kingdom by
The Securities and Futures Authority Limited, is acting for
ITG in connection with the Offer and the Warrant Proposals
and for no-one else and will not be responsible to anyone
other than ITG for providing the protections afforded to
customers of ING Barings, or for providing advice in
relation to the Offer or the Warrant Proposals.
This announcement does not constitute an offer or
invitation to purchase any securities nor an offer of the
new Concentric Shares in the United States.
This announcement contains forward looking statements
regarding Concentric's proposed acquisition of ITG, and the
potential benefits to be realised by the combined group,
including but not limited to expansion of Internet services
into Europe, that are subject to risks and uncertainties.
Actual results may differ materially from those described
in the forward looking statements as a result of a number
of factors, including the requirement for ITG Shareholders'
approval, court and regulatory approval and the ability of
the combined group successfully to integrate and expand
their service offerings.
The directors of ITG accept responsibility for the
information contained in this announcement relating to the
ITG Group.
Jan Murray and The Monument Trust Company Limited accept
responsibility for the information contained in this
announcement relating to Red Wave.
The directors of Concentric accept responsibility for all
other information contained in this announcement.
Appendix VII contains the definitions of certain terms used
in this announcement.
Enquiries:
Hank Nothhaft/James Isaacs
+(1) 408 817 2222/+(1) 408 817 2829
Concentric Network Corporation
Laurence Blackall/Richard Brocksom
0181 957 1180
Internet Technology Group plc
Richard Strang
0171 516 6937
Bear, Stearns International
Graham Edgerton/Julian Briant
0171 767 1000
ING Barings
David Simpson
0171 253 2252
Ludgate Communications
Nicola Weiner/Archie Berens
0171 457 2020
College Hill Associates
Appendix I
Conditions and certain further terms of or relating to the
Offer and the Warrant Proposals
The Offer and the Warrant Proposals will comply with the
City Code, the applicable rules and regulations of Nasdaq
and (insofar as they relate to the Alternative Investment
Market) of the London Stock Exchange, except to the extent
of any dispensation, waiver or exemption granted by the
appropriate body or (as the case may be) the Panel.
Part A: Circumstances in which the Offer and Warrant
Proposals will not proceed or may be varied
1. If a valid prospectus, drawn up in accordance with the
Public Offers of Securities Regulations 1995, in
relation to the Red Wave Shares, the Red Wave Offer
and the Non-ISP Interests has not been prepared by Red
Wave and posted to ITG Shareholders and Warrantholders
together with the Scheme Document and filed with the
Registrar of Companies for England and Wales in
accordance with Regulation 4 of those Regulations on
or before 31st October, 1999 (or such later date as
Concentric and ITG, with the consent of Red Wave and,
if required, the Court may agree), Concentric may
decide not to proceed with the Offer and the Warrant
Proposals. In the alternative, Concentric may, in
these circumstances, elect to proceed with the Offer
on the basis that the sale of the Non-ISP Interests to
Red Wave shall not take place and the Red Wave Offer
will not be made available to ITG Shareholders and
Warrantholders (and that, accordingly, no such person
will be able to elect to have the Additional Cash
Payments due to him under the Scheme applied in
subscribing for Red Wave Shares). If Concentric so
elects, the Offer and the Warrant Proposals will
proceed on the basis that the condition set out in
paragraph (g) of Part B of this Appendix I shall not
be a condition of the Scheme.
2. Concentric will be entitled, with the consent of the
Panel, not to proceed with the Offer and the Warrant
Proposals if any event, circumstance or matter occurs
with respect to ITG or any member of the ITG Group
prior to the Posting Date which would (or would be
reasonably likely to), if it were to occur subsequent
to the Posting Date, result in any of the conditions
set out in Part B of Appendix I not being satisfied or
fulfilled or would be reasonably likely to prevent any
such condition from being satisfied or fulfilled, or
would or would be reasonably likely to give Concentric
grounds not to proceed with the Offer.
3. ITG will be entitled, with the consent of the Panel,
not to proceed with the posting of the Scheme Document
if any event, circumstance or matter occurs with
respect to Concentric or any member of the Concentric
Group prior to the Posting Date which would (or would
be reasonably likely to), if it were to occur
subsequent to the Posting Date and on the basis that
the conditions set out in Part B of Appendix I of this
announcement were to apply to Concentric on the same
terms, mutatis mutandis, as they apply to ITG, result
in any such conditions not being satisfied or
fulfilled or would be reasonably likely to prevent any
such condition from being satisfied or fulfilled.
4. If the Scheme Document has not been posted to ITG
Shareholders on or before 31st October, 1999, either
Concentric or ITG may elect not to proceed with the
Offer and the Warrant Proposals or the Scheme as the
case may be.
Part B: Conditions of the Scheme
The Scheme will be subject to the following conditions
being satisfied or, where permitted, waived on or before
31st January, 2000:
(a) (i) the approval by a majority in number
representing three fourths or more in value of
the ITG Shareholders present and voting, either
in person or by proxy, at the Court Meeting and
at any separate class meeting which may be
required by the Court or appropriate undertakings
to be bound by the Scheme being received from ITG
Shareholders and the passing of the resolutions
necessary to implement the Scheme and the Warrant
Proposals at the Extraordinary General Meetings;
(ii) the sanction (with or without modification agreed
to by Concentric and ITG) of the Scheme by the
Court and a certified copy of the interlocutor
confirming the order made at the Court Hearing
being delivered for registration to the Registrar
of Companies in Scotland;
(b) the Office of Fair Trading in the United Kingdom not
having indicated that it proposes to refer the
proposed acquisition of ITG by Concentric, or any
matter arising therefrom or related thereto, to the
Competition Commission;
(c) all filings having been made and all or any
appropriate waiting periods under the United States
Hart-Scott-Rodino Antitrust Improvements Act of 1976
and the regulations thereunder having expired, lapsed
or been terminated as appropriate in each case in
respect of the Scheme and the proposed acquisition of
any ITG Shares or control of ITG by the Offeror or any
member of the Concentric Group;
(d) (i) Faultbasic Limited and Drive Memory Limited
each having received a written indication from
the Secretary of State for Trade and Industry, in
terms reasonably satisfactory to Concentric, to
the effect that the proposed acquisition of ITG
by Concentric or any matter arising therefrom or
related thereto will not lead to the revocation
of any licences ("Licences") issued pursuant to
the Telecommunications Act 1984 which are held by
Faultbasic Limited and Drive Memory Limited
respectively; and
(ii) Faultbasic Limited and Drive Memory Limited each
having received written confirmation from the
Office of Telecommunications on behalf of the
Director General of Telecommunications (the
"Director") in terms reasonably satisfactory to
Concentric that the Director has not (x) made,
and does not intend to make, any modifications to
any of the Licences other than modifications
which are or will be made to all or substantially
all such licences issued pursuant to the
Telecommunications Act 1984; or (y) taken, and
does not intend to take, any steps pursuant to
section 16 of the Telecommunications Act 1984 to
secure compliance with any of the conditions in
any of the Licences, except for, in the case of
(x), such modifications, or, in the case of (y),
such steps as would not have a material adverse
effect on Faultbasic Limited, Drive Memory
Limited or ITG following the proposed acquisition
of ITG by Concentric;
(e) a resolution setting out the First Issue Warrant
Proposals having been validly approved at a meeting of
the holders of the First Issue Warrants duly convened
and held;
(f) a resolution setting out the Third Issue Warrant
Proposals having been validly approved at a meeting of
the holders of the Third Issue Warrants duly convened
and held;
(g) the Implementation Agreement becoming unconditional as
to completion of the sale and purchase of the Non-ISP
Interests save in respect of any condition relating to
satisfaction of the conditions of the Scheme and all
steps necessary to complete the sale and purchase of
the Non-ISP Interests having been taken save for
payment of the consideration due thereunder;
(h) the new Concentric Shares to be issued pursuant to the
Scheme and the exercise of any Warrants having been
approved for listing on the Nasdaq National Market
subject to official notice of issuance of such new
Concentric Shares;
(i) all necessary consents with regard to the proposed
acquisition of any ITG Shares or of ITG by the Offeror
being obtained from the providers of finance to any
member of the ITG Group;
(j) the entitlement of any person to receive ITG Shares
other than Warrantholders, holders of ITG Options or
pursuant to the ITG Share Option Schemes having been
settled, satisfied or discharged;
(k) not fewer than four of the senior management team of
ITG (comprising Laurence Blackall, Richard Brocksom,
Alex Bligh, Maria Cappella, Peter Venmore and Robert
Rainford) remaining in the employment of the ITG Group
and no notice having been given by such persons to the
ITG Group the result of which would be that fewer than
four members of the senior management team remain in
such employment;
(l) except as fairly disclosed in writing by ITG to
Concentric by letter dated 7th September, 1999, there
being no provision of any agreement, arrangement,
licence, permit or other instrument to which any
member of the wider ITG Group is a party or by or to
which any such member or any of its assets may be
bound, entitled or subject, which in consequence of
the Scheme or the proposed acquisition of any shares
or other securities in ITG or because of a change in
the control or management of ITG or otherwise, could
or might result in:
(i) any moneys borrowed by or any other indebtedness
(actual or contingent) of, or grant available to
any such member, being or becoming repayable or
capable of being declared repayable immediately
or earlier than their or its stated maturity date
or repayment date or the ability of any such
member to borrow moneys or incur any indebtedness
being withdrawn or inhibited or being capable of
becoming or being withdrawn or inhibited;
(ii) any such agreement, arrangement, licence, permit
or instrument or the rights, liabilities,
obligations or interests of any such member
thereunder being terminated or modified or
affected or any obligation or liability arising
or any action being taken thereunder;
(iii)any assets or interests of any such member
being or falling to be disposed of or charged or
any right arising under which any such asset or
interest could be required to be disposed of or
charged;
(iv) the creation or enforcement of any mortgage,
charge or other security interest over the whole
or any material part of the business, property or
assets of any such member;
(v) the rights, liabilities, obligations or interests
of any such member in, or the business of any
such member with, any person, firm or body (or
any arrangement or arrangements relating to any
such interest or business) being terminated,
adversely modified or affected;
(vi) the value of any such member or its financial or
trading position or prospects being prejudiced or
adversely affected; or
(vii)any such member ceasing to be able to carry
on business under any name under which it
presently does so,
and no event having occurred which, under any
provision of any agreement, arrangement, licence,
permit or other instrument to which any member of the
wider ITG Group is a party or by or to which any such
member or any of its assets may be bound, entitled or
subject, could result in any of the events or
circumstances as are referred to in sub-paragraphs (i)
to (vii) of this paragraph (l) which would be material
in the context of the wider ITG Group;
(m) no government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental or
investigative body, court, trade agency, association,
institution or any other body or person whatsoever in
any jurisdiction (each a "Third Party") having decided
to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference,
or enacted, made or proposed any statute, regulation,
decision or order, or having taken any other steps
which would or might reasonably be expected to:
(i) require, prevent or delay the divestiture, or
alter the terms envisaged for any proposed
divestiture by any member of the wider Concentric
Group or any member of the wider ITG 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
respective businesses (or any of them) or to own
any of their respective assets or properties or
any part thereof;
(ii) require, prevent or delay the divestiture by any
member of the wider Concentric Group of any
shares or other securities in ITG;
(iii)impose any limitation on, or result in a
delay in, the ability of any member of the wider
Concentric Group directly or indirectly to
acquire or to hold or to exercise effectively any
rights of ownership in respect of shares or loans
or securities convertible into shares or any
other securities (or the equivalent) in any
member of the wider ITG Group or the wider
Concentric Group or to exercise management
control over any such member;
(iv) otherwise adversely affect the business, assets,
profits or prospects of any member of the wider
Concentric Group or of any member of the wider
ITG Group;
(v) make the Scheme, the Warrant Proposals, the
implementation of either of them or the
acquisition or proposed acquisition by Concentric
or any member of the wider Concentric Group of
any shares or other securities in, or control of
ITG void, illegal, and/or unenforceable under the
laws of any jurisdiction, or otherwise, directly
or indirectly, restrain, restrict, prohibit,
delay or otherwise materially interfere with the
same, or impose additional conditions or
obligations with respect thereto, or otherwise
challenge or interfere therewith;
(vi) require any member of the wider Concentric
Group or the wider ITG Group to offer to acquire
any shares or other securities (or the
equivalent) or interest in any member of the
wider ITG Group or the wider Concentric Group
owned by any third party;
(vii)impose any limitation on the ability of any
member of the wider ITG Group to co-ordinate its
business, or any part of it, with the businesses
of any other members; or
(viii)result in any member of the wider ITG Group
ceasing to be able to carry on business under any
name under which it presently does so,
and all applicable waiting and other time periods
during which any such Third Party could institute,
implement or threaten any action, proceeding, suit,
investigation, enquiry or reference or any other step
under the laws of any jurisdiction in respect of the
Scheme, the Offer, the Warrant Proposals or the
acquisition or proposed acquisition of any ITG Shares
having expired, lapsed or been terminated;
(n) all necessary filings or applications having been made
in connection with the Scheme, the Offer and the
Warrant Proposals and all statutory or regulatory
obligations in any jurisdiction having been complied
with in connection with the Scheme, the Offer and the
Warrant Proposals or the acquisition by any member of
the wider Concentric Group of any shares or other
securities in, or control of, ITG and all
authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances,
permissions and approvals deemed appropriate by
Concentric for or in respect of the Scheme, the Offer,
the Warrant Proposals or the proposed acquisition of
any shares or other securities in, or control of, ITG
by any member of the wider Concentric Group having
been obtained in terms and in a form satisfactory to
Concentric from all appropriate Third Parties or
persons with whom any member of the wider ITG Group
has entered into contractual arrangements and all such
authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances,
permissions and approvals together with all material
authorisations orders, recognitions, grants, licences,
confirmations, clearances, permissions and approvals
necessary or appropriate to carry on the business of
any member of the wider ITG Group remaining in full
force and effect and all filings necessary for such
purpose have been made and there being no notice or
intimation of any intention to revoke or not to renew
any of the same at the time at which the Scheme would
otherwise become effective and all necessary statutory
or regulatory obligations in any jurisdiction having
been complied with;
(o) except as publicly announced by ITG prior to 8th
September, 1999 or fairly disclosed in writing by ITG
to Concentric by letter dated 7th September, 1999 no
member of the wider ITG Group having, since 31st
October, 1998:
(i) save as between ITG and wholly-owned subsidiaries
of ITG or for ITG Shares issued pursuant to the
exercise of options granted under ITG Share
Option Schemes, Warrants or ITG Options, issued,
authorised or proposed the issue of additional
shares of any class;
(ii) save as between ITG and wholly-owned subsidiaries
of ITG or for the grant of options under ITG
Share Option Schemes, issued or agreed to issue,
authorised or proposed the issue of securities
convertible into shares of any class or rights,
warrants or options to subscribe for, or acquire,
any such shares or convertible securities;
(iii) other than to another member of ITG Group,
recommended, declared, paid or made or proposed
to recommend, declare, pay or make any bonus,
dividend or other distribution whether payable in
cash or otherwise;
(iv) save for intra-ITG Group transactions, merged or
demerged with any body corporate or acquired or
disposed of or transferred, mortgaged or charged
or created any security interest over any assets
or any right, title or interest in any asset
(including shares and trade investments) or
authorised or proposed or announced any intention
to propose any merger, demerger, acquisition or
disposal, transfer, mortgage, charge or security
interest in each case, (other than in the
ordinary course of business);
(v) save for intra-ITG Group transactions, made or
authorised or proposed or announced an intention
to propose any change in its loan capital;
(vi) issued, authorised or proposed the issue of any
debentures or (save in the ordinary course of
business or intra-ITG Group transactions)
incurred or increased any indebtedness or become
subject to any contingent liability;
(vii) purchased, redeemed or repaid or announced
any proposal to purchase, redeem or repay any of
its own shares or other securities or reduced or
save in respect to the matters mentioned in sub-
paragraph (i) above made any other change to any
part of its share capital;
(viii) implemented, or authorised, proposed or
announced its intention to implement, any
reconstruction, amalgamation, scheme, commitment
or other transaction or arrangement otherwise
than in the ordinary course of business or
entered into or changed the terms of any contract
with any director or senior executive;
(ix) entered into or materially varied or authorised,
proposed or announced its intention to enter into
or vary any contract, transaction or commitment
(whether in respect of capital expenditure or
otherwise) which is of a long term, onerous or
unusual nature or magnitude or which is or could
be materially restrictive on the businesses of
any member of the wider ITG Group or the wider
Concentric Group or which involves or could
involve an obligation of such a nature or
magnitude or which is other than in the ordinary
course of business;
(x) (other than in respect of a member which is
dormant and was solvent at the relevant time)
taken any corporate action or had any legal
proceedings started or threatened against it for
its winding-up, dissolution or reorganisation or
for the appointment of a receiver, administrative
receiver, administrator, trustee or similar
officer of all or any of its assets or revenues
or any analogous proceedings in any jurisdiction
or had any such person appointed;
(xi) entered into any contract, transaction or
arrangement which would be restrictive on the
business of any member of the wider ITG Group or
the wider Concentric Group and which would be
material in the context of the wider ITG Group
other than to a nature and extent which is normal
in the context of the business concerned;
(xii) waived or compromised any claim otherwise
than in the ordinary course of business; or
(xiii) entered into any contract, commitment,
arrangement or agreement otherwise than in the
ordinary course of business or passed any
resolution or made any offer (which remains open
for acceptance) with respect to or announced any
intention to, or to propose to, effect any of the
transactions, matters or events referred to in
this condition,
and, for the purposes of paragraphs (iii),(iv), (v)
and (vi) of this condition, the term "ITG Group" shall
mean ITG and its wholly-owned subsidiaries;
(p) since 31st October, 1998 and save as disclosed in the
accounts for the year then ended and save as publicly
announced by ITG prior to 8th September, 1999 or as
fairly disclosed in writing by ITG to Concentric by
letter dated 7th September, 1999 or which in any such
case is material in the context of the wider ITG Group
taken as a whole:
(i) no adverse change or deterioration having
occurred in the business, assets, financial or
trading position or profits or prospects of any
member of the wider ITG Group;
(ii) no litigation, arbitration proceedings,
prosecution or other legal proceedings to which
any member of the wider ITG Group is or may
become a party (whether as a plaintiff, defendant
or otherwise) and no investigation by any Third
Party against or in respect of any member of the
wider ITG Group having been instituted announced
or threatened by or against or remaining
outstanding in respect of any member of the wider
ITG Group which in any such case might reasonably
be expected to adversely affect any member of the
wider ITG Group;
(iii) no contingent or other liability having
arisen or become apparent to Concentric which
would be likely to adversely affect any member of
the wider ITG Group; and
(iv) no steps having been taken which are likely to
result in the withdrawal, cancellation,
termination or modification of any licence held
by any member of the wider ITG Group which is
necessary for the proper carrying on of its
business;
(q) save as publicly announced by ITG prior to 8th
September, 1999 or as otherwise fairly disclosed in
writing by ITG to Concentric by letter dated 7th
September, 1999, Concentric not having discovered:
(i) that any financial, business or other information
concerning the wider ITG Group as contained in
the information publicly disclosed at any time by
or on behalf of any member of the wider ITG Group
is materially misleading, contains a material
misrepresentation of fact or omits to state a
fact necessary to make that information not
misleading and which is material in the context
of the wider ITG Group;
(ii) that any member of the wider ITG Group or any
partnership, company or other entity in which any
member of the wider ITG Group has a significant
economic interest and which is not a subsidiary
undertaking of ITG is subject to any liability
(contingent or otherwise) which is not disclosed
in the annual report and accounts of ITG for the
year ended 31st October, 1998; or
(iii) any information which affects the import of
any information disclosed at any time by or on
behalf of any member of the wider ITG Group and
which is material in the context of the wider ITG
Group taken as a whole;
(r) Concentric not having discovered that:
(i) any past or present member of the wider ITG Group
has failed to comply with any and/or all
applicable legislation or regulation, of any
jurisdiction with regard to the disposal,
spillage, release, discharge, leak or emission of
any waste or hazardous substance or any substance
likely to impair the environment or harm human
health or animal health or otherwise relating to
environmental matters, or that there has
otherwise been any such disposal, spillage,
release, discharge, leak or emission (whether or
not the same constituted a non-compliance by any
person with any such legislation or regulations,
and wherever the same may have taken place) any
of which disposal, spillage, release, discharge,
leak or emission would be likely to give rise to
any liability (actual or contingent) on the part
of any member of the wider ITG Group; or
(ii) there is, or is likely to be, for that or any
other reason whatsoever, any liability (actual or
contingent) of any past or present member of the
wider ITG Group to make good, repair, reinstate
or clean up any property or any controlled waters
now or previously owned, occupied, operated or
made use of or controlled by any such past or
present member of the wider ITG group, under any
environmental legislation, regulation, notice,
circular or order of any government,
governmental, quasi-governmental, state or local
government, supranational, statutory or other
regulatory body, agency, court, association or
any other person or body in any jurisdiction.
For the purposes of these conditions the "wider ITG
Group" means ITG and its subsidiary undertakings,
associated undertakings and any other undertaking in
which ITG and/or such undertakings (aggregating their
interests) have a significant interest and the "wider
Concentric Group" means Concentric and its subsidiary
undertakings, associated undertakings and any other
undertaking in which Concentric and/or such
undertakings (aggregating their interests) have a
significant interest and for these purposes
"subsidiary undertaking", "associated undertaking" and
"undertaking" have the meanings given by the Act,
other than paragraph 20(1)(b) of Schedule 4A to that
Act which shall be excluded for this purpose, and
"significant interest" means a direct or indirect
interest in ten per cent. or more of the equity share
capital (as defined in that Act).
Concentric reserves the right to waive, in whole or in
part, all or any of the above conditions, except
conditions (a) and (h). If condition (g) is waived by
Concentric, not having been satisfied on or prior to
the business day preceding the Hearing Date, the
Scheme shall proceed as described in this announcement
but on the basis that the sale of the Non-ISP
Interests shall not take place and elections for Red
Wave Shares under the Red Wave Offer shall not be
accepted.
If Concentric is required by the Panel to make an
offer for ITG Shares under the provisions of Rule 9 of
the City Code, it may make such alterations to any of
the above conditions as are necessary to comply with
the provisions of that Rule.
Part C: Certain further terms of the Offer and the
Warrant Proposals
Fractions of new Concentric Shares will not be allotted or
issued pursuant to the Scheme to ITG Shareholders or to
holders of First Issue Warrants or of Third Issue Warrants.
Fractional entitlements to new Concentric Shares will be
aggregated and sold in the market with the net proceeds
distributed pro rata to the persons entitled thereto.
However, individual entitlements to amounts of less than #3
will not be distributed but will be retained for the
benefit of the enlarged Concentric Group.
The Scheme will not proceed if it is referred to the
Competition Commission before the date of the Court
Hearing.
The Scheme and the Warrant Proposals will be governed by
Scottish law and be subject to the non-exclusive
jurisdiction of the Scottish courts, to the conditions set
out above and in the Scheme Document, the Form of Election
and the Warrantholders' Form of Election.
The new Concentric Shares will be issued credited as fully
paid and will rank pari passu in all respects with the
existing Concentric Shares.
Upon the Scheme becoming effective, the ITG Shares will be
acquired by Concentric fully paid and free from all liens,
equities, charges, encumbrances and other interests and
together with all rights attaching thereto at or after the
Posting Date, including the right to receive and retain all
dividends and other distributions declared made or paid
after that date.
This announcement contains forward looking statements
regarding Concentric's proposed acquisition of ITG, and the
potential benefits to be realised by the combined group,
including but not limited to expansion of Internet services
into Europe, that are subject to risks and uncertainties.
Actual results may differ materially from those described
in the forward looking statements as a result of a number
of factors, including the requirement for ITG Shareholders'
approval, court and regulatory approval and the ability of
the combined group successfully to integrate and expand
their service offerings.
MORE TO FOLLOW
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