TIDMVELO
RNS Number : 6518X
Azul Holding 2 Sarl
09 December 2010
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR
IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
9 December 2010
RECOMMENDED CASH OFFER
BY
Azul Holding 2 S.à r.l.
TO ACQUIRE THE ENTIRE ISSUED AND TO BE ISSUED ORDINARY SHARE CAPITAL OF
VELOSI LIMITED
Summary
· The directors of Azul and the Velosi Directors are pleased to announce
today that they have reached agreement on the terms of a recommended cash offer
to be made by Azul, to acquire the entire issued and to be issued ordinary share
capital of Velosi.
· Under the terms of the Offer, Velosi Shareholders will receive, for each
Velosi Share held, 165 pence in cash. The Offer values the entire existing
issued and to be issued ordinary share capital of Velosi at approximately
GBP87.8 million and represents a premium of:
· 61.4 per cent. to the Closing Price of 102.25 pence per Velosi Share on 8
December 2010;
· 60.3 per cent. to the average Closing Price of 102.91 pence per Velosi
Share for the month prior to and including 8 December 2010; and
· 56.5 per cent. to the average Closing Price of 105.45 pence per Velosi
Share for the three months prior to and including 8 December 2010.
· Velosi Shareholders, including the Velosi Directors (and certain family
members, related trusts and connected persons, as applicable), have entered into
irrevocable undertakings and letters of intent to accept, or procure acceptance
of, the Offer in respect of their aggregate holding of 25,760,796 Velosi Shares
(representing approximately 53.2 per cent. of the existing issued ordinary share
capital of Velosi).
· Azul's sole shareholder is Azul Holding. Azul Holding is also the sole
shareholder of Applus Technologies Holding S.L. The Applus Group was formed in
2007 with the acquisition of Applus by Azul Holding on behalf of CEP II
Participations S.à r.l. SICAR and CEP III Participations S.à r.l. SICAR together
with their affiliates, collectively doing business as The Carlyle Group.
· The Applus Group is a leader in testing, inspection, certification and
technological services and generated revenues of EUR815.4 million for the year
ended 31 December 2009 (2008: EUR819.6 million). It operates in 39 countries
across five continents. Since January 2008, the Applus Group has made 14
acquisitions in Asia, Europe and the United States to expand its presence
globally.
· Following full acceptance of the Offer and payment of the cash
consideration to the Velosi Shareholders, the Applus Group will consider whether
a restructuring should be undertaken, which may result in Velosi becoming a
subsidiary of Applus.
Recommendation from the Independent Directors
· The Independent Directors, who have been so advised by Robert W. Baird and
Strand Hanson, consider the terms of the Offer to be fair and reasonable. In
providing advice to the Independent Directors, Robert W. Baird and Strand Hanson
have taken into account the commercial assessments of the Velosi Directors. In
addition, the Independent Directors consider the terms of the Offer to be in the
best interests of the Velosi Shareholders as a whole.
· Accordingly, the Independent Directors unanimously recommend that Velosi
Shareholders accept the Offer as the Independent Directors intend to do in
respect of their own beneficial holdings in Velosi, amounting to, in aggregate,
88,888 Velosi Shares, representing approximately 0.2 per cent. of the existing
issued ordinary share capital of Velosi.
· Due to the interests of the Management Team (comprising the executive
directors, Dr. Nabil Abdul Jalil, Joseph Thomas Vincent and Dan Ooi Soon Teik)
in the Incentive Arrangements, the above recommendation is made by the
Independent Directors, rather than by the Board as a whole. However, the
members of the Management Team are fully supportive of the Offer and,
accordingly, have each irrevocably undertaken to accept the Offer in respect of
their own (and certain family members, related trusts and connected persons, as
applicable) beneficial interests in Velosi Shares, amounting to, in aggregate,
7,367,626 Velosi Shares, representing approximately 15.2 per cent. of the
existing issued ordinary share capital of Velosi.
Commenting on the Offer Alex Wagenberg, Managing Director of The Carlyle Group,
said:
"As expected at the time of our investment in Applus, The Carlyle Group has been
supportive of an accelerated growth and acquisition strategy to transform Applus
into a global leader in its areas of competence. The acquisition of Velosi,
with the additional financial support of The Carlyle Group and its partners, is
the most important step to date in achieving that strategy. We are very excited
about the combined prospects for the enlarged Applus Group as it works with
Velosi and its highly regarded team in very attractive growth markets."
Commenting on the Offer Joaquim Coella, Chief Executive Officer of Applus said:
"Velosi is a leader in its field, and has a very experienced and well respected
management team which has an impressive track record of growth and client
service worldwide. The addition of Velosi to the Applus Group, led by its
current management, will strengthen our international presence and leadership in
several of our current activities. This acquisition will complement our
services to Applus' clients in the energy industry currently focused on
non-destructive testing worldwide and inspection and technical assistance mainly
in Europe and South America, as well as providing Velosi with access to
additional products and technologies for its client base."
Commenting on the Offer Dr. Nabil Abdul Jalil, Velosi's Chief Executive Officer
said:
"The integration with the Applus Group is an important step for Velosi, which
will become part of a global multinational leader in testing, inspection and
certification. With this integration, Velosi will have the business and
economic support to enter new markets by offering the guarantee of a group with
more than EUR1 billion in turnover. Enormous opportunities are opened to Velosi
in terms of exploiting synergies with other divisions of Applus worldwide."
Commenting on the Offer John Hogan, Velosi's Non-executive Chairman said:
"This is an attractive Offer for Velosi Shareholders. The Independent Directors
are unanimous in recommending that Shareholders accept the Offer which
represents a 61.4 per cent. premium to yesterday's share price and, being a cash
offer, provides certainty to all Velosi Shareholders. Becoming part of the
Applus Group will significantly enhance Velosi's ability to achieve its
commercial objectives in the current market environment, which realistically
would be less achievable if the Company continues to operate independently."
Execution Noble is acting as financial adviser to Azul. Robert W. Baird and
Strand Hanson are acting as joint financial advisers to Velosi.
This summary should be read in conjunction with, and is subject to, the full
text of this announcement and the Appendices to this announcement. In
particular, the Offer will be subject to the Conditions set out in Appendix I
and to the further terms set out in the Offer Document. Velosi Shareholders
should also note that, as set out in paragraph 18 below, the Panel has confirmed
that the Company is not subject to the Takeover Code and Velosi Shareholders
will not be afforded any protection under the Code.
Appendix I sets out the conditions and principal further terms of the Offer.
Appendix II contains source notes relating to certain information contained in
this announcement. Appendix III contains details of the irrevocable
undertakings and letters of intent referred to in this announcement. Certain
terms used in this announcement (including the summary) are defined in Appendix
IV to this announcement.
Please carefully read the Offer Documentation in its entirety before making a
decision with respect to the Offer.
Enquiries:
+---------------------------------+---------------------------------+
| The Carlyle Group | +44 (0)20 7894 1630 |
| Emma Thorpe / Rosanna | |
| Konarzewski | |
+---------------------------------+---------------------------------+
| Execution Noble & Company | +44 (0)20 7456 9191 |
| Limited | |
| (Financial adviser to Azul) | |
| John Llewellyn-Lloyd / Sunil | |
| Sanikop | |
+---------------------------------+---------------------------------+
| Velosi Limited | +603 22 826 178 |
| John Hogan, Non-Executive | |
| Chairman | |
| Dr Nabil Abdul Jalil, Chief | |
| Executive Officer | |
+---------------------------------+---------------------------------+
| Robert W. Baird Limited | +44 (0)20 7488 1212 |
| (Joint financial adviser to | |
| Velosi) | |
| Jonathan Harrison / Anand | |
| Baldawa | |
+---------------------------------+---------------------------------+
| Strand Hanson Limited | +44 (0)20 7409 3494 |
| (Joint financial adviser to | |
| Velosi) | |
| James Harris / Stuart Faulkner | |
| / Richard Tulloch | |
+---------------------------------+---------------------------------+
| Charles Stanley Securities | +44 (0)20 7149 6000 |
| (Broker to Velosi) | |
| Mark Taylor | |
+---------------------------------+---------------------------------+
| Cardew Group | +44 (0)20 7930 0777 |
| (Financial PR to Velosi) | |
| Tim Robertson / Catherine | |
| Maitland | |
+---------------------------------+---------------------------------+
This announcement is not intended to, and does not constitute or form any part
of, any offer or an invitation to purchase or subscribe for any securities or
the solicitation of any vote or approval in any jurisdiction pursuant to the
Offer or otherwise. The Offer will be made solely through the Offer Document
and (in relation to Velosi Shares in certificated form) the accompanying Form of
Acceptance, which will together contain the full terms and conditions of the
Offer, including details of how to accept the Offer. Any acceptance or other
response to the Offer should be made only on the basis of the information
contained in the Offer Document and (in relation to Velosi Shares in
certificated form) the Form of Acceptance.
The making of the Offer in, or to certain persons resident in, or citizens or
nationals of, jurisdictions outside the United Kingdom or Jersey or to nominees
of, or custodians, trustees or guardians for such persons may be prohibited or
affected by the laws or regulatory requirements of the relevant overseas
jurisdiction. In particular, the Offer is not being made, directly or
indirectly, in or into or by the use of the mails of, or by any means or
instrumentality (including, without limitation, e-mail, facsimile transmission,
telex, telephone, the internet or other forms of electronic transmission) of
interstate or foreign commerce, or of any facility of a national securities
exchange of a Restricted Jurisdiction and the Offer cannot be accepted by any
such use, means, instrumentality or facility from or within a Restricted
Jurisdiction. Such Overseas Shareholders should inform themselves about and
observe any applicable legal requirements.
Copies of this announcement are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or
from any Restricted Jurisdiction and persons receiving this announcement
(including custodians, nominees and trustees) must not mail or otherwise
forward, distribute or send it in or into or from any Restricted Jurisdiction.
Doing so may render invalid any purported acceptance of the Offer.
Further details in relation to Overseas Shareholders are contained in the Offer
Document.
Although Velosi is incorporated in Jersey, the place of central management of
the Company is currently located outside of the UK, the Channel Islands and the
Isle of Man. Velosi's operations are worldwide and its executive directors are
based in Malaysia. Accordingly, as the Company is not one to which paragraph
3(a)(ii) of the Takeover Code applies, the Panel has confirmed that the Company
is not subject to the Takeover Code and Velosi Shareholders will not be afforded
any protection under the Code. If circumstances change, which could result in
the Company being subject to the Takeover Code, the Company will consult with
the Panel. If the Panel determines that, as a result of such changes, the
Takeover Code becomes applicable to the Company, an announcement will be made.
Execution Noble, which is authorised and regulated in the United Kingdom by the
FSA, is acting as financial adviser exclusively for Azul, and for no one else,
in connection with the Offer. Execution Noble will not regard any other person
as its client nor be responsible to anyone other than Azul for providing the
protections afforded to clients of Execution Noble, nor for providing advice in
relation to the Offer and this announcement or any matter referred to in this
announcement.
Robert W. Baird, which is authorised and regulated in the United Kingdom by the
FSA, is acting as joint financial adviser exclusively for Velosi, and for no one
else, in connection with the Offer. Robert W. Baird will not regard any other
person as its client nor be responsible to anyone other than Velosi for
providing the protections afforded to its clients, nor for providing advice in
relation to the Offer or any matter referred to in this announcement.
Strand Hanson, which is authorised and regulated in the United Kingdom by the
FSA, is acting as joint financial adviser exclusively for Velosi, and for no one
else, in connection with the Offer. Strand Hanson will not regard any other
person as its client nor be responsible to anyone other than Velosi for
providing the protections afforded to its clients, nor for providing advice in
relation to the Offer or any matter referred to in this announcement.
The Velosi Directors accept responsibility for the information contained in this
announcement relating to Velosi and its subsidiaries, the Velosi Directors,
members of their immediate families, related trusts and other connected persons.
The Independent Directors accept responsibility for their views and opinions
contained in this announcement, including their recommendation in respect of the
Offer. The directors of Azul accept responsibility for all of the other
information contained in this announcement. To the best of the knowledge and
belief of the Velosi Directors, the Independent Directors and the directors of
Azul (who have taken all reasonable care to ensure that such is the case), the
information contained in this announcement, for which they are respectively
responsible, is in accordance with the facts and does not omit anything likely
to affect the import of such information.
Forward looking statements
This announcement contains "forward-looking statements" concerning the Applus
Group and the Velosi Group. Often but not always, forward-looking information
statements can be identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes", or variations (including negative variations) of
such words and phrases, or state that certain actions, events or results "may",
"could", "should", "would", "might", "will" or "continue to" be taken, occur or
be achieved. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Velosi, Applus and/or their respective subsidiaries to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Factors that would
cause actual results to differ materially from those described in this
announcement include: costs and terms related to the acquisition of Velosi; the
economic environment of the industries in which the Applus Group and the Velosi
Group operate; failure to retain management; and regulatory change in the
industry and/or the general economic environment.
This list is not exhaustive of the factors that may affect the forward-looking
information. These and other factors should be considered carefully and readers
should not place undue reliance on such forward-looking information. Although
Azul and the Velosi Group have attempted to identify important factors that
could cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors that cause
actions, events or results to differ from those anticipated, estimated or
intended.
Any forward-looking statements made in this announcement in respect of the
Applus Group and/or the Velosi Group are made as of the date of this
announcement and are based on the opinions and estimates of the respective
management teams. Subject to requirements to update under any applicable
regulation or law, Azul and Velosi disclaim any obligation to update any
forward-looking statements, whether as a result of new information, estimates or
opinions, future events or results or otherwise.
There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements.
Publication on websites
A copy of this announcement is and will be available free of charge, subject to
certain restrictions relating to persons resident in Restricted Jurisdictions,
for inspection on Velosi's website at www.velosi.com during the course of the
Offer.
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR
IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
9 December 2010
RECOMMENDED CASH OFFER
BY
Azul Holding 2 S.à r.l.
TO ACQUIRE THE ENTIRE ISSUED AND TO BE ISSUED ORDINARY SHARE CAPITAL OF
VELOSI LIMITED
1. Introduction
The directors of Azul and the Velosi Directors are pleased to announce today
that they have reached agreement on the terms of a recommended cash offer to be
made by Azul, to acquire the entire issued and to be issued ordinary share
capital of Velosi.
Azul is a newly-incorporated company, formed specifically for the purpose of
implementing the Offer. Azul's sole shareholder is Azul Holding. Azul Holding
is also the sole shareholder of Applus Technologies Holding S.L.. These
companies together with their subsidiaries form the Applus Group.
Under the terms of the Offer, Velosi Shareholders will receive, for each Velosi
Share held, 165 pence in cash. The Offer values the entire existing issued and
to be issued ordinary share capital of Velosi at approximately GBP87.8 million.
2. Summary of the Offer
The Offer, which will be subject to the conditions and principal further terms
set out below and in Appendix I to this announcement and to the full terms and
conditions set out in the Offer Document, is being made on the following basis:
165 pence in cash for each Velosi Share
The Offer values the existing issued and to be issued ordinary share capital of
Velosi at approximately GBP87.8 million.
The Offer price represents a premium of approximately:
· 61.4 per cent. to the Closing Price of 102.25 pence per Velosi Share on 8
December 2010, being the latest practicable Business Day prior to the date of
this announcement;
· 60.3 per cent. to the average Closing Price of 102.91 pence per Velosi
Share for the month prior to and including 8 December 2010, being the latest
practicable Business Day prior to the date of this announcement; and
· 56.5 per cent. to the average Closing Price of 105.45 pence per Velosi
Share for the three months prior to and including 8 December 2010, being the
latest practicable Business Day prior to the date of this announcement.
The Velosi Directors believe that the Offer represents an immediate and certain
exit for Velosi Shareholders at an attractive premium of 61.4 per cent. to the
Closing Price of 102.25 pence per Velosi Share on 8 December 2010, the last
Business Day prior to the date of this announcement.
The Offer Price has been determined on the basis that no dividend in respect of
the ordinary share capital of Velosi will be declared or paid by Velosi after
the date of this announcement.
3. Recommendation
The Independent Directors, who have been so advised by Robert W. Baird and
Strand Hanson, consider the terms of the Offer to be fair and reasonable. In
providing advice to the Independent Directors, Robert W. Baird and Strand Hanson
have taken into account the commercial assessments of the Velosi Directors. In
addition, the Independent Directors consider the terms of the Offer to be in the
best interests of the Velosi Shareholders as a whole.
Accordingly, the Independent Directors unanimously recommend that Velosi
Shareholders accept the Offer as the Independent Directors intend to do in
respect of their own beneficial holdings in Velosi, amounting to, in aggregate,
88,888 Velosi Shares, representing approximately 0.2 per cent. of the existing
issued ordinary share capital of Velosi.
Due to the interests of the Management Team (comprising the executive directors
Dr Nabil Abdul Jalil, Joseph Thomas Vincent and Dan Ooi Soon Teik) in the
Incentive Arrangements, the above recommendation is made by the Independent
Directors, rather than by the Board as a whole. However, the members of the
Management Team are fully supportive of the Offer and, accordingly, have each
irrevocably undertaken (together with certain family members, related trusts and
connected persons) to accept the Offer in respect of their own beneficial
holdings in Velosi Shares, amounting to, in aggregate, 7,367,626 Velosi Shares,
representing approximately 15.2 per cent. of the existing issued ordinary share
capital of Velosi.
4. Background to, and reasons for, recommending the Offer
The Velosi business was founded in 1982. Velosi itself was admitted to AIM on
21 August 2006, with a market capitalisation of GBP34.3 million at the placing
price of 90 pence per Velosi Share. Velosi has since achieved significant
growth in revenue and profitability through a combination of organic growth and
strategic acquisitions, enabling Velosi to expand its service offering and
geographical reach to 39 countries across five continents.
Velosi continues to gain market share with good visibility on future revenues,
although a cautious outlook on investment in new oil and gas projects by
multinational and state-owned companies has put pressure on Velosi's margins and
its ability to grow.
The Velosi Directors believe that being part of the Enlarged Group, with greater
resources and cross-selling opportunities, would enable Velosi to expand its
product portfolio and geographic presence and enhance its brand and competitive
position.
Furthermore, the Velosi Directors believe that the Offer represents an immediate
and certain exit for Velosi Shareholders at an attractive premium of 61.4 per
cent. to the Closing Price of 102.25 pence per Velosi Share on 8 December 2010,
the last Business Day prior to the date of this announcement.
Taking into account the factors set out above, the Independent Directors believe
that all Velosi Shareholders should have the opportunity to consider the Offer
and have therefore unanimously agreed to recommend it.
5. Current trading and outlook
As announced by Velosi in its interim results on 21 September 2010 (available on
the Company's website at www.velosi.com), the Company increased revenues by
approximately 6.0 per cent. in the first half of 2010 to $94.5 million (2009:
$89.2 million). Profit before tax decreased to $7.4 million (2009: $7.9
million), reflecting increased investment in new offices and personnel and
changes in the business mix of the Velosi Group, including less higher-margin
work. Velosi continued to focus on maintaining a strong cash position to enable
investment with a view to driving future revenue growth through new office
openings and expansion of its service offering, and as at 30 June 2010 Velosi
had a net cash position of $18.4 million.
In the first half of the current financial year, Velosi continued to gain market
share by winning new contracts and it also continued its track record of
retaining existing contracts. Since the half-year end, trading has continued to
be positive, with stable demand for Velosi's services, new contract wins and
further retention of existing contracts. However, a cautious outlook on
investment in new oil and gas projects by multinational and state-owned
companies has put pressure on Velosi's growth and margins.
6. Irrevocable undertakings and letters of intent to accept the
Offer
The executive Velosi Directors (and certain family members, related trusts and
connected persons, as applicable) have entered into irrevocable undertakings to
accept, or procure the acceptance of, the Offer in respect of their beneficial
interests in Velosi Shares amounting, in aggregate, to 7,367,626 Velosi Shares,
representing (as at the date of this announcement) approximately 15.2 per cent.
of the existing issued ordinary share capital of Velosi. The executive Velosi
Directors (and certain family members, related trusts and connected persons, as
applicable) have also undertaken to accept the Offer in respect of any Ordinary
Shares issued to them pursuant to the exercise of any share options granted to
them by the Company, amounting to up to 2,495,596 Ordinary Shares. This
represents, in aggregate, approximately 18.5 per cent. of the Velosi Fully
Diluted Share Capital. As an alternative, such Velosi Directors may accept the
proposals to be made by Azul in relation to share options or may allow their
options to lapse.
In addition, certain other Velosi Shareholders have entered into irrevocable
undertakings to accept, or procure the acceptance of, the Offer in respect of
their beneficial interests in Velosi Shares amounting, in aggregate, to
18,304,282 Velosi Shares, representing approximately 37.8 per cent. of the
existing issued ordinary share capital of Velosi. These Velosi Shareholders
have also undertaken to accept the Offer in respect of any Ordinary Shares
issued to them pursuant to the exercise of any share options granted to them by
the Company, amounting to up to 60,000 Ordinary Shares. This represents, in
aggregate, approximately 34.5 per cent. of the Velosi Fully Diluted Share
Capital. As an alternative, such Velosi Shareholders may accept the proposals
to be made by Azul in relation to share options or may allow their options to
lapse.
In addition, the Independent Directors have provided letters of intent
indicating their intention to procure the acceptance of the Offer in respect of
their beneficial interests in Velosi Shares amounting, in aggregate, to 88,888
Velosi Shares, representing (as at the date of this announcement) approximately
0.2 per cent. of the existing issued ordinary share capital of Velosi. The
Independent Directors have also indicated their intention to accept the Offer in
respect of any Ordinary Shares issued to them pursuant to the exercise of any
share options granted to them by the Company, amounting to up to 196,112
Ordinary Shares. This represents, in aggregate, approximately 0.5 per cent. of
the Velosi Fully Diluted Share Capital. As an alternative, such Independent
Directors may accept the proposals to be made by Azul in relation to share
options or allow their options to lapse.
Accordingly, irrevocable undertakings and letters of intent to accept, or
procure the acceptance of, the Offer have been received in respect of, in
aggregate, 25,760,796 Velosi Shares (and 28,512,504 Ordinary Shares on a fully
diluted basis), representing approximately 53.2 per cent. of the existing issued
ordinary share capital of Velosi (and 53.6 per cent. of the Velosi Fully Diluted
Share Capital).
These undertakings will cease to be binding in the event that the Offer is not
declared wholly unconditional in all respects by Azul by 9 April 2011 or in the
event that the Offer lapses or is withdrawn by Azul in accordance with its terms
without having become wholly unconditional. These undertakings remain binding
even if a higher offer is made by a third party.
Further details of these irrevocable undertakings and letters of intent are set
out in Appendix III to this announcement.
7. Information on Velosi
The Velosi business was founded in 1982. Velosi itself was incorporated on 28
March 2006 as a limited liability company under the Companies (Jersey) Law. The
Company was quoted on AIM and admitted to trading on AIM on 21August 2006. The
principal activity of the Company, since the incorporation of Velosi Malaysia in
1982, has been the provision of testing, inspection and certification services
to the oil and gas sector. The Company has a broad range of customers including
leading national and multinational oil and gas companies. The Velosi Group
operates globally through five regional headquarters in the USA, UK, Malaysia,
South Africa and the UAE and has 63 offices in 39 countries worldwide.
For the financial year ended 31 December 2009, Velosi reported profit on
ordinary activities before taxation of $16.8 million (2008: $14.9 million) on
revenue of $183.6 million (2008: $182.1 million). Net assets as at 31 December
2009 were $76.3 million (31 December 2008: $62.4 million).
For the six months ended 30 June 2010, Velosi reported profit on ordinary
activities before taxation of $7.4 million (2009: $7.9 million) on revenue of
$94.5 million (2009: $89.2 million). Net assets as at 30 June 2010 were $84.3
million (30 June 2009: $71.0 million).
To view these financial results in further detail please access them through the
website http://www.velosi.com.
8. Information on Azul, The Carlyle Group and Applus
Azul
Azul is a company incorporated in Luxembourg on 18 November 2010 specifically
for the purpose of making the Offer. Since its incorporation, Azul has not
traded, other than to the extent necessary to finance and make the Offer. Azul's
sole shareholder is Azul Holding. Azul Holding is managed and majority
controlled by The Carlyle Group, which is its majority shareholder.
The Carlyle Group
CEP II Participations S.à r.l. SICAR and CEP III Participations S.à r.l. SICAR
are part of The Carlyle Group. The Carlyle Group is a global alternative asset
manager with $97.7 billion of assets under management committed to 76 funds as
of 30 September 2010. The Carlyle Group invests across three asset classes -
private equity, real estate and credit alternatives - in Africa, Asia,
Australia, Europe, North America and South America, focusing on aerospace and
defence, automotive and transportation, consumer and retail, energy and power,
financial services, healthcare, industrial, infrastructure, technology and
business services and telecommunications and media. Since 1987, the firm has
invested $64.7 billion of equity in over 1,000 transactions. The Carlyle Group
employs more than 900 people in 19 countries. As of 30 June 2010, in aggregate,
The Carlyle Group portfolio companies have more than $84 billion in revenue and
employ more than 398,000 people around the world.
For further information on The Carlyle Group, please access the website
www.carlyle.com.
The Applus Group
The Applus Group was formed in 2007 with the acquisition of Applus by Azul
Holding on behalf of CEP II Participations S.à r.l. SICAR and CEP III
Participations S.à r.l. SICAR together with their affiliates, collectively doing
business as The Carlyle Group, and other institutional and private investors.
The Applus Group is a leader in testing, inspection, certification and
technological services and generated revenues of EUR815.4 million for the year
ended 31 December 2009 (2008: EUR819.6 million). It operates in 39 countries
across five continents. The Applus Group provides services in more than 14
sectors through the following five operational divisions:
· Inspection and Technical Assistance Division: focuses on project quality
management services, asset integrity management services and health, safety and
environmental consultancy for the energy, industrial and construction sectors in
Spain and Latin America;
· Non-destructive Testing and Inspection Division: focuses on conventional
and advanced non-destructive testing and inspection for the energy and
petrochemical sectors on a global basis;
· Laboratories and Certification Division: focuses on testing, inspection of
products, product development and system and product certification, in Europe,
Asia and Latin America;
· Automobile Engineering and Testing Division: offers top-level proving
ground facilities and complete solutions for product development projects,
including engineering, testing and homologation in Europe and Asia; and
· Vehicle Inspection Division: focuses on the assessment of vehicle safety
and analysis and control of polluting gas emissions in Europe, the US and Latin
America.
Since January 2008, the Applus Group has made 14 acquisitions in Asia, Europe
and the United States to expand its presence globally.
For further information on the Applus Group, please access the website
www.applus.com.
9. Financing for the Offer
The cash consideration payable under the Offer to the Velosi Shareholders will
be financed from, inter alia, funds directly or indirectly available to Azul,
which have been underwritten by CEP II Fund and CEP III Fund, being entities
doing business as The Carlyle Group.
Following full acceptance of the Offer and payment of the cash consideration to
the Velosi Shareholders, the Applus Group will consider whether a restructuring
should be undertaken, which may result in Velosi becoming a subsidiary of
Applus. The terms of such restructuring are likely to require security to be
given over, among other things, the share capital of entities within the
Enlarged Group.
Execution Noble is satisfied that the necessary financial resources are
available to Azul to enable it to satisfy in full the consideration payable to
the Velosi Shareholders by Azul under the terms of the Offer.
10. Incentive Arrangements
Upon the Offer being or becoming declared unconditional in all respects, Azul
has agreed that Velosi will put in place an incentive bonus plan ("Plan") for
senior Velosi managers which will reward them by reference to the future
financial performance of the Velosi Group. Senior managers will receive awards
("Awards") under the Plan entitling them, subject to the satisfaction of various
performance and other conditions, to participate in a proportion of the payments
under the Plan. The Management Team will be recipients of substantial Awards
under the Plan if the performance targets are met or exceeded. Payments under
the Plan could be substantially higher than historic bonus payments paid to
senior managers of the Company, but would only be paid if challenging targets
are met.
The Plan will operate as a pooled arrangement to be shared amongst the senior
Velosi managers. The amounts payable will be calculated prima facie by reference
to the excess adjusted EBITDA ("Adjusted EBITDA") of the Velosi Group generated
over a hurdle amount in respect of either of the two financial years ending 31
December 2012 and 2013, such hurdle amount being $23 million of Adjusted EBITDA.
The aggregate amount of all the payments under the Plan will be subject to a
cap ("Cap"). Subject to the satisfaction of the various conditions, some of
which are outlined below, and the Cap, the effect of such calculation will be
that an aggregate amount of up to approximately one third of such Adjusted
EBITDA generated in either of the relevant financial years could be paid out to
senior managers under the Plan. Adjusted EBITDA for these purposes means the
consolidated EBITDA for the Velosi Group calculated by reference to the
consolidated accounts of the Company together with its share of profits from
certain associate companies.
Payments will be made to senior managers provided that certain conditions are
met relating, inter alia, to minimum levels of cash flow generation by the
Velosi Group during the life of the Plan, and in the case of the entitlements of
individual senior managers, continued employment of the relevant senior manager
(subject to customary provisions entitling senior managers to receive payments
under the Plan if they are a good leaver).
11. Velosi's directors, management and employees
Azul intends to grow Velosi's business and attaches great importance to the
skills and experience of the existing management and employees of Velosi, as
they will be instrumental in achieving this growth. Azul has given assurances
to the Velosi Directors that, if the Offer becomes or is declared unconditional
in all respects, the existing employment rights, including pension rights, of
all of Velosi's employees will be fully safeguarded in accordance with statutory
and contractual requirements.
Following the Offer becoming or being declared unconditional in all respects,
each member of the Management Team will enter into a new service contract.
12. Offer to option holders
The Offer extends to any Velosi Shares unconditionally allotted or issued
pursuant to the exercise of options or awards made under the Velosi Option
Schemes while the Offer remains open for acceptance. In the event that the Offer
becomes or is declared unconditional in all respects, Azul will make appropriate
proposals to participants in the Velosi Option Schemes to the extent that their
options or awards have not been exercised or vested. Such proposals will not
extend to options which have been granted at an exercise price in excess of the
Offer Price.
13. Amendments to be made to the Velosi Option Schemes
Velosi has today posted the Circular to Velosi Shareholders. The purpose of the
Circular and notice of extraordinary general meeting enclosed therewith is to
set out the background to certain proposed amendments to the Option Schemes and
to convene anextraordinary general meeting at which a resolution will be
proposed authorising the Velosi Directors to amend the rules of the Option
Schemes. The effect of these amendments would be to enable certain share
options granted by Velosi, that would not otherwise be capable of exercise in
connection with the Offer, to be capable of exercise in certain circumstances,
including, in connection with the Offer.
14. Inducement Fee Arrangements
Pursuant to an agreement dated 8 December 2010, Velosi has agreed to pay an
inducement fee, in the sum of GBP878,000, to Azul upon the occurrence of certain
trigger events. Pursuant to the terms of the Inducement Fee Agreement, a fee
will become payable by the Company if: (a) a Competing Offer is made by a person
other than Azul or any person acting in concert with Azul (a "Third Party")
before the Offer lapses or is withdrawn in accordance with its terms and either:
(i) the Velosi Directors recommend such Competing Offer and the Offer
subsequently lapses or is withdrawn; or (ii) such Competing Offer becomes or is
declared unconditional in all respects; or (b) before the Offer lapses or is
withdrawn in accordance with its terms, any of the Independent Directors
withdraw or adversely modify their recommendation of the Offer and the Offer
subsequently lapses or is withdrawn (save where such withdrawal or modification
is as a result of Azul becoming unable or unwilling to complete the Offer in
accordance with its terms).
In addition, Velosi has undertaken to Azul pursuant to the terms of the
Inducement Fee Agreement that until such time as the Offer is declared wholly
unconditional, lapses or is withdrawn (the "Exclusivity Period") it will not,
directly or indirectly, solicit, encourage or seek to procure any interest from
a Third Party in relation to a Relevant Transaction or facilitate any
discussions or negotiations which relate to or may be expected to lead to a
Relevant Transaction. These obligations are subject to the Velosi Directors'
fiduciary and statutory duties to the Company and will not prevent the Velosi
Directors from complying with any obligations that they would have under the
Code, if the Company was a company to which the Code applied. In addition,
Velosi has agreed to notify Azul if an approach is made to it by a Third Party
in relation to a Relevant Transaction during the Exclusivity Period.
15. Conditionality to the Offer
The conditions to the Offer are set out in full in Appendix I to this
announcement.
The Offer will be conditional, amongst other things, upon Azul receiving valid
acceptances of the Offer in respect of not less than 90 per cent. of the Velosi
Shares to which the Offer relates (or such lower percentage as Azul may decide
provided that such Condition will not be satisfied unless Azul and/or any other
members of Carlyle have acquired or agreed to acquire, whether pursuant to the
Offer or otherwise, Velosi Shares carrying in aggregate more than 50 per cent.
of the voting rights then normally exercisable at general meetings of Velosi).
16. Overseas Velosi Shareholders
The availability of the Offer to Velosi Shareholders who are not resident in the
United Kingdom or Jersey may be affected by the laws of their relevant
jurisdictions. Such persons should inform themselves of, and observe, any
applicable legal or regulatory requirements of their jurisdictions. If you
remain in any doubt, you should consult an appropriate independent professional
adviser in the relevant jurisdiction without delay.
Copies of this announcement are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or
from a Restricted Jurisdiction and persons receiving this announcement
(including custodians, nominees and trustees) must not mail or otherwise
forward, distribute or send it in or into or from a Restricted Jurisdiction.
Doing so may render invalid any purported acceptance of the Offer.
17. Compulsory acquisition and cancellation of trading in Velosi
Shares on AIM
If Azul has by virtue of the Offer acquired or contracted to acquire 90 per
cent. or more in nominal value of the Velosi Shares to which the Offer relates
and the Offer becomes or is declared unconditional in all respects, Azul intends
to exercise its rights pursuant to the provisions of Part 18 of the Companies
(Jersey) Law to acquire compulsorily any outstanding Velosi Shares not acquired
or contracted to be acquired pursuant to the Offer.
If the Offer becomes or is declared unconditional in all respects and Azul
receives acceptances of the Offer which result in Azul and/or any other members
of the Applus Group or The Carlyle Group holding Velosi Shares carrying in
aggregate 75 per cent. or more of the total number of Velosi Shares, Azul
intends to procure that Velosi applies to the London Stock Exchange for the
cancellation of the admission of the Velosi Shares to trading on AIM
("Cancellation"). Not less than 20 Business Days' notice of the proposed
Cancellation will be given, commencing either on the date the Offer becomes or
is declared unconditional in all respects by Azul or on the first date of the
issue of compulsory acquisition notices under Part 18 of the Companies (Jersey)
Law.
Accordingly, Velosi Shareholders who do not accept the Offer in respect of all
or part of their Velosi Shares may be left with minority holdings in an unquoted
public company. Velosi Shareholders should note that Cancellation is likely to
significantly reduce the liquidity and marketability of Velosi Shares with
respect to which the Offer has not been accepted.
Azul also intends that, following the Offer becoming or being declared
unconditional in all respects and after Cancellation, Velosi will be
re-registered as a private company.
18. The City Code
Although Velosi is incorporated in Jersey, the place of central management of
the Company is currently located outside of the UK, the Channel Islands and the
Isle of Man. Velosi's operations are worldwide and its executive directors are
based in Malaysia. Accordingly, as the Company is not one to which paragraph
3(a)(ii) of the Takeover Code applies, the Panel has confirmed that the Company
is not subject to the Takeover Code and Velosi Shareholders will not be afforded
any protection under the Code. If circumstances change, which could result in
the Company being subject to the Takeover Code, the Company will consult with
the Panel. If the Panel determines that, as a result of such changes, the
Takeover Code becomes applicable to the Company, an announcement will be made.
However, in accordance with the Further Terms of the Offer in the Offer
Document, Azul will conduct the Offer in accordance with a Code timetable and in
accordance with the spirit of the Code.
19. Disclosure of interests in Velosi
At the close of business on 8 December 2010 (being the latest practicable date
prior to this announcement), save as disclosed in this announcement, neither
Azul nor any of the directors of Azul nor any persons acting in concert with
Azul has or has had an interest in Velosi relevant securities.
20. General
The Offer Document, containing the full terms of the Offer, and the Form of
Acceptance (in relation to Velosi Shares in certificated form), will be posted
to Velosi Shareholders and, for information only, to participants in the Velosi
Option Schemes (other than persons with addresses in a Restricted Jurisdiction),
today.
The Offer, made by Azul, is governed by English law and is subject to the
jurisdiction of the courts of England and Wales. The Offer will not be subject
to the applicable requirements of the Code.
Appendix I of this announcement sets out the conditions and principal further
terms of the Offer. Appendix II contains further details of the bases and
sources of certain information contained in this announcement. Appendix III
contains further details of irrevocable undertakings and letters of intent.
Certain terms used in this announcement are defined in Appendix IV to this
announcement.
Enquiries:
+---------------------------------+---------------------------------+
| The Carlyle Group | +44 (0)20 7894 1630 |
| Emma Thorpe / Rosanna | |
| Konarzewski | |
+---------------------------------+---------------------------------+
| Execution Noble & Company | +44 (0)20 7456 9191 |
| Limited | |
| (Financial adviser to Azul) | |
| John Llewellyn-Lloyd / Sunil | |
| Sanikop | |
+---------------------------------+---------------------------------+
| Velosi Limited | +603 22 826 178 |
| John Hogan, Non-Executive | |
| Chairman | |
| Dr Nabil Abdul Jalil, Chief | |
| Executive Officer | |
+---------------------------------+---------------------------------+
| Robert W. Baird Limited | +44 (0)20 7488 1212 |
| (Joint financial adviser to | |
| Velosi) | |
| Jonathan Harrison / Anand | |
| Baldawa | |
+---------------------------------+---------------------------------+
| Strand Hanson Limited | +44 (0)20 7409 3494 |
| (Joint financial adviser to | |
| Velosi) | |
| James Harris / Stuart Faulkner | |
| / Richard Tulloch | |
+---------------------------------+---------------------------------+
| Charles Stanley Securities | +44 (0)20 7149 6000 |
| (Broker to Velosi) | |
| Mark Taylor | |
+---------------------------------+---------------------------------+
| Cardew Group | +44 (0)20 7930 0777 |
| (Financial PR to Velosi) | |
| Tim Robertson / Catherine | |
| Maitland | |
+---------------------------------+---------------------------------+
This announcement is not intended to, and does not constitute or form any part
of, an offer or an invitation to purchase or subscribe for any securities or the
solicitation of any vote or approval in any jurisdiction pursuant to the Offer
or otherwise. The Offer will be made solely through the Offer Document and (in
relation to Velosi Shares in certificated form) the Form of Acceptance, which
will together contain the full terms and conditions of the Offer, including
details of how to accept the Offer. Any acceptance or other response to the
Offer should be made only on the basis of the information contained in the Offer
Document and (in relation to Velosi Shares in certificated form) the Form of
Acceptance.
Execution Noble, which is authorised and regulated in the United Kingdom by the
FSA, is acting as financial adviser exclusively for Azul, and for no one else,
in connection with the Offer. Execution Noble will not regard any other person
as its client nor be responsible to anyone other than Azul for providing the
protections afforded to clients of Execution Noble, nor for providing advice in
relation to the Offer and this announcement or any matter referred to in this
announcement.
Execution Noble has given and has not withdrawn its written consent to the
publication of this announcement containing references to its name in the form
and context in which they appear.
The Offer shall be made solely by Azul and neither Execution Noble nor any of
its respective affiliates are making the Offer.
Robert W. Baird, which is authorised and regulated in the United Kingdom by the
FSA, is acting as joint financial adviser exclusively for Velosi, and for no one
else, in connection with the Offer. Robert W. Baird will not regard any other
person as its client nor be responsible to anyone other than Velosi for
providing the protections afforded to its clients, nor for providing advice in
relation to the Offer or any matter referred to in this announcement.
Robert W. Baird has given and has not withdrawn its written consent to the
publication of this announcement containing references to its name in the form
and context in which they appear.
Strand Hanson, which is authorised and regulated in the United Kingdom by the
FSA, is acting as joint financial adviser exclusively for Velosi, and for no one
else, in connection with the Offer. Strand Hanson will not regard any other
person as its client nor be responsible to anyone other than Velosi for
providing the protections afforded to its clients, nor for providing advice in
relation to the Offer or any matter referred to in this announcement.
Strand Hanson has given and has not withdrawn its written consent to the
publication of this announcement containing references to its name in the form
and context in which they appear.
Forward looking statements
This announcement contains "forward-looking statements" concerning the Applus
Group and the Velosi Group. Often but not always, forward-looking information
statements can be identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes", or variations (including negative variations) of
such words and phrases, or state that certain actions, events or results "may",
"could", "should", "would", "might", "will" or "continue to" be taken, occur or
be achieved. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Velosi, Applus and/or their respective subsidiaries to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Factors that would
cause actual results to differ materially from those described in this
announcement include: costs and terms related to the acquisition of Velosi; the
economic environment of the industries in which the Applus Group and the Velosi
Group operate; failure to retain management; and regulatory change in the
industry and/or the general economic environment.
This list is not exhaustive of the factors that may affect the forward-looking
information. These and other factors should be considered carefully and readers
should not place undue reliance on such forward-looking information. Although
Azul and the Velosi Group have attempted to identify important factors that
could cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors that cause
actions, events or results to differ from those anticipated, estimated or
intended.
Any forward-looking statements made in this announcement in respect of the
Applus Group and/or the Velosi Group are made as of the date of this
announcement and are based on the opinions and estimates of the respective
management teams. Subject to requirements to update under any applicable
regulation or law, Azul and Velosi disclaim any obligation to update any
forward-looking statements, whether as a result of new information, estimates or
opinions, future events or results or otherwise.
There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements.
Publication on websites
A copy of this announcement is and will be available free of charge, subject to
certain restrictions relating to persons resident in Restricted Jurisdictions,
for inspection on Velosi's website at www.velosi.com during the course of the
Offer.
APPENDIX I
CONDITIONS AND PRINCIPAL FURTHER TERMS OF THE OFFER
The Offer, made by Azul, which will be governed by English law and subject to
the jurisdiction of the courts of England and Wales, will be subject to the
terms and conditions set out below, in the Offer Document and (in respect of
certificated Velosi Shares) in the Form of Acceptance. The Offer will not be
subject to the requirements of the Code. The Offer is subject to the following
conditions:
1. The Offer is subject to the following Conditions:
1.1 valid acceptances being received (and not, where permitted, withdrawn)
by not later than 3.00 p.m. on 30 December 2010 (or such later time as Azul may
decide in accordance with the provisions of Part B of this Appendix 1), provided
that no such date shall be later than 7 February 2011), unless agreed in writing
by Velosi, in respect of not less than 90 per cent. (or such lesser percentage
as Azul may decide) in nominal value of the Velosi Shares to which the Offer
relates, provided that this Condition will not be satisfied unless Azul shall
have acquired or agreed to acquire (whether pursuant to the Offer or otherwise),
Velosi Shares carrying, in aggregate, over 50 per cent. of the voting rights
then normally exercisable at general meetings of Velosi; and for the purpose of
this Condition 1.1 (i) the expression "Velosi Shares to which the Offer relates"
shall be construed in accordance with Article 116 of the Companies (Jersey) Law;
and (ii) valid acceptances shall be deemed to have been received in respect of
Velosi Shares which are treated for the purposes of Part 18 of the Companies
(Jersey) Law as having been acquired or contracted to be acquired by Azul by
virtue of acceptances of the Offer;
1.2 in so far as the Offer requires approval pursuant to merger control,
antitrust or competition laws in any jurisdiction, without which completion of
the Offer would be unlawful or otherwise prohibited or restricted, in each case
to an extent that is Material, either;
1.2.1 all Relevant Authorities have:
1.2.1.1 declined jurisdiction over the Offer;
1.2.1.2 explicitly granted clearance at the first stage review of the Offer,
either unconditionally or on conditions reasonably satisfactory to Azul; or
1.2.1.3 through the expiry of time periods available for their investigation,
been deemed to have granted consent or clearance; or
1.2.2 all applicable waiting and other time periods during which any
Relevant Authority could take, institute, implement or threaten any action,
investigation, enquiry or reference or otherwise intervene under the laws of any
jurisdiction having expired, lapsed or been terminated;
1.3 since 30 June 2010 (being the date to which the latest published interim
results of Velosi were made up), save as Disclosed:
1.3.1 no litigation, arbitration, prosecution or other legal proceedings
which could reasonably be expected to be Material to the Velosi Group having
been instituted, announced or threatened by or against any member of the Velosi
Group; and
1.3.2 no adverse change or deterioration having occurred in the business,
assets, financial or trading position or profits of the Velosi Group, which in
any case is Material; and
1.4 no member of the Velosi Group having since 30 June 2010 (being the date
to which the latest published interim results of Velosi were made up), save as
Disclosed:
1.4.1 issued or agreed to issue additional shares of any class or issued
or granted or agreed to issue or grant securities convertible into or rights,
warrants or options to subscribe for or acquire such shares or redeemed,
purchased or reduced any of its own shares or other securities or announced any
intention to do so or made any other change to any part of its share capital;
1.4.2 recommended, declared, paid or made any dividend, bonus or other
distribution other than dividends lawfully paid to Velosi or wholly-owned
subsidiaries of Velosi and save for the final dividend in respect of the
financial year of the Velosi Group ended 31 December 2009 paid by Velosi on 30
July 2010;
1.4.3 to an extent that is Material, issued any debentures or incurred or
increased any indebtedness;
1.4.4 to an extent that is Material, disposed of or transferred, mortgaged
or encumbered any asset or any right, title or interest in any asset, other than
in the ordinary course of business;
1.4.5 to an extent that is Material, entered into any contract,
arrangement or other transaction otherwise than in the ordinary course of
business;
1.4.6 to an extent that is Material, entered into, or materially varied
the terms of, any contract or agreement with any of the directors or senior
executives of Velosi;
1.4.7 to an extent that is Material, entered into any contract,
transaction or arrangement which is restrictive on the business of the Velosi
Group;
1.4.8 to an extent that is Material, taken any corporate action for its
winding-up or for the appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of all or any of its assets and revenues;
or
1.4.9 to an extent that is Material, been unable or admitted that it is
unable to pay its debts generally or having stopped or suspended payment of its
debts generally or ceased or threatened to cease carrying on all or a
substantial part of its business.
2. Azul reserves the right (but shall be under no obligation) to waive all or
any of the Conditions above, in whole or in part, except Condition 1.1.
3. Conditions 1.2 to 1.4 (inclusive) must be fulfilled or, if capable of
waiver, waived by midnight on 28 February 2011 or such later date as may be
agreed in writing by Azul and Velosi, failing which the Offer will lapse, except
that Azul shall not lapse the Offer by invoking Condition 1.3 or 1.4 unless and
until either (i) Velosi has agreed in writing in advance that Azul is entitled
to invoke Condition 1.3 or Condition 1.4 or (ii) the Expert decides that Azul is
entitled to invoke Condition 1.3 or Condition 1.4 in accordance with the
procedure set out below or the Expert fails to give notice of its decision to
Azul and Velosi within ten Business Days of Azul first notifying Velosi of its
intention to invoke Condition 1.3 or Condition 1.4.
4. Azul shall be under no obligation to waive or treat as fulfilled or
satisfied any of Conditions 1.2 to 1.4 (inclusive) by a date earlier than the
latest date specified above for the fulfilment or satisfaction thereof
notwithstanding that the other Conditions of the Offer may at such earlier date
have been waived or fulfilled or satisfied and that there are at such earlier
date no circumstances indicating that any such Conditions may not be capable of
fulfilment or satisfaction, provided that Conditions 1.3 and 1.4 shall be
treated as satisfied immediately prior to the Offer otherwise becoming or being
declared wholly unconditional unless either Condition has been invoked before
then.
5. Any dispute between Velosi and Azul as to whether Azul is entitled to invoke
Condition 1.3 or 1.4 shall be determined by an independent expert (the "Expert")
in accordance with this paragraph 5. If the parties are unable to agree on the
appointment of an Expert within two Business Days of either party serving
details in writing of a suggested expert on the other, the Expert shall be such
internationally recognised firm of accountants as is appointed by The Institute
of Chartered Accountants in England and Wales at the request of either party.
The Expert shall have access to all accounting records or other relevant
documents of Velosi which it requests for the purposes of its determination,
subject to any existing confidentiality provisions. The Expert is required to
prepare a written decision and give notice (including a copy) of the decision to
both parties within a maximum of ten Business Days of Azul first notifying
Velosi of its intention to invoke Condition 1.3 or 1.4. The Expert shall act as
an expert and not as an arbitrator, and the Expert's written decision on the
matters referred to it shall be final and binding in the absence of manifest
error or fraud. The Expert's fees and expenses shall be borne by the parties
equally or in such other proportions as the Expert shall direct.
6. If any matter is referred to the Expert and (i) the Expert has not given his
decision before 3.30 p.m. on 28 February 2011 and (ii) the last date on which
the Expert may give his decision ("Final Date") is after 28 February 2011, all
references in this announcement to 28 February 2011 shall be read as the earlier
of: (i) the Final Date or (ii) the date on which the Expert gives his decision,
provided that the Offer has not lapsed or been withdrawn. Azul will make an
announcement by not later than 4.30 p.m. on 28 February 2011 disclosing: (i)
that a matter has been referred to the Expert, (ii) the Final Date and (iii)
that references in this announcement to 28 February 2011 will be read as the
earlier of: (i) the Final Date or (ii) the date on which the Expert gives his
decision.
APPENDIX II
BASES AND SOURCES OF INFORMATION
(a) Unless otherwise stated, the financial information relating to
Applus has been extracted or derived (without any adjustment) from Applus'
audited accounts for the year ended 31 December 2009.
(b) Unless otherwise stated, the financial information relating to
Velosi has been extracted or derived (without any adjustment) from the latest
published audited report and accounts of Velosi for the year ended 31 December
2009 and the unaudited interim accounts of Velosi for the six month period ended
30 June 2010.
(c) The value attributed to the entire issued and to be issued share
capital of Velosi is based upon 48,384,548 Ordinary Shares in issue and
4,838,208 "in the money" options as at the close of business on 8 December 2010.
(d) All prices for Velosi Shares have been derived from the Daily
Official List and represent the Closing Price on the relevant date.
(e) All the times referred to in this announcement are London times,
unless otherwise stated.
APPENDIX III
DETAILS OF IRREVOCABLE UNDERTAKINGS AND LETTERS OF INTENT
+---------------+----------------+--------------+--------------+--------------+--------------+
| Name of | Total | Percentage | Total | Total | Percentage |
| Shareholder | number of | of | number | number | of |
| giving | Velosi | existing | of | of | Ordinary |
| irrevocable | Shares in | issued | Velosi | Ordinary | Shares in |
| undertaking | respect | ordinary | options | Shares | respect of |
| or letter of | of which | share | 'in the | in | which |
| intent to | undertaking | capital of | money' | respect | undertaking |
| accept or | or letter | Velosi | in | of which | or letter |
| procure | of intent | | respect | undertaking | of intent |
| acceptance of | is given | | of which | or letter | is given on |
| the Offer | | | undertaking | of intent | a fully |
| | | | or letter | is given on | diluted |
| | | | of intent | a fully | basis |
| | | | is given** | diluted | |
| | | | | basis | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Velosi | | | | | |
| Directors*: | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Dr. Nabil | - | - | 855,238 | 855,238 | 1.6% |
| Abdul Jalil | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Bunny Nabil | 74,148*** | 0.2% | - | 74,148 | 0.1% |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Raptor | 5,327,465**** | 11.0% | - | 5,327,465 | 10.0% |
| Worldwide | | | | | |
| Limited | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Joseph Thomas | 1,646,345***** | 3.4% | 778,959 | 2,425,304 | 4.6% |
| Vincent | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Pitchuta | 27,434 | 0.1% | - | 27,434 | 0.1% |
| Jayapipat | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Dan Ooi Soon | 292,234 | 0.6% | 726,399 | 1,018,633 | 1.9% |
| Teik | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Beatrice | - | - | 135,000 | 135,000 | 0.3% |
| Dorall | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| John Anthony | 55,555## | 0.1% | 100,556 | 156,111 | 0.3% |
| Hogan (L) | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Marcus John | 33,333### | 0.1% | 95,556 | 128,889 | 0.2% |
| Gregory | | | | | |
| Stanton (L) | | | | | |
| | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| | ------------ | ------------ | ------------ | ------------ | ------------ |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Sub-total | 7,456,514 | 15.4% | 2,691,708 | 10,148,222 | 19.1% |
+---------------+----------------+--------------+--------------+--------------+--------------+
| | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Other Velosi | | | | | |
| Shareholders: | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Axzar | 8,575,632 | 17.7% | - | 8,575,632 | 16.1% |
| Investment | | | | | |
| Limited | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Mohamed | 2,235,030 | 4.6% | 30,000 | 2,265,030 | 4.3% |
| Ashari bin | | | | | |
| Abas | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Dato Mohd Jai | 760,975 | 1.6% | 30,000 | 790,975 | 1.5% |
| bin Suboh | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Chee Peck | 5,187,935**** | 10.7% | - | 5,187,935 | 9.7% |
| Kiat****** | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Ong Thean | 1,544,710# | 3.2% | - | 1,544,710 | 2.9% |
| Huat# | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| | ------------ | ------------ | ------------ | ------------ | ------------ |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Sub-total | 18,304,282 | 37.8% | 60,000 | 18,364,282 | 34.5% |
+---------------+----------------+--------------+--------------+--------------+--------------+
| | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
| Total | 25,760,796 | 53.2% | 2,751,708 | 28,512,504 | 53.6% |
| irrevocable | | | | | |
| undertakings | | | | | |
| or letter of | | | | | |
| intent given | | | | | |
| to accept or | | | | | |
| procure to | | | | | |
| procure | | | | | |
| acceptance of | | | | | |
| the Offer | | | | | |
+---------------+----------------+--------------+--------------+--------------+--------------+
(L) Indicates a letter of intent.
* Together with their immediate families, related trusts and connected persons.
** The relevant option holders are not obliged to exercise the options held by
them. Alternatively, they may accept the proposals to be made to Azul to option
holders, or allow their options to lapse.
*** Registered in the name of Pershing Nominees Limited (as nominee for Bunny
Nabil).
**** Held on trust for Dr. Nabil Abdul Jalil.
***** Registered in the name of Rock (Nominees) Limited (as nominee for Joseph
Thomas Vincent).
****** Registered in the name of Rock (Nominees) Limited (as nominee for Chee
Peck Kiat).
# 177,050 of which are registered in the name of Rock (Nominees) Limited (as
nominee for Ong Thean Huat).
## Registered in the name of Rock (Nominees) Limited (as nominee for John
Anthony Hogan).
### Registered in the name of Strand Nominees Limited (as nominee for Marcus
John Gregory Stanton).
The undertakings in respect of the Velosi Directors and their immediate
families, related trusts and connected persons, and the other Velosi
Shareholders listed above will cease to be binding in the event that:
(a) the Offer is not declared wholly unconditional in all respects by Azul
by 9 April 2011; or
(b) the Offer lapses or is withdrawn by Azul without having become wholly
unconditional,
and, in each case, the termination of the obligations of those persons giving
undertakings have not been waived in writing.
There undertakings remain binding even if a higher offer is made by a third
party.
APPENDIX IV
DEFINITIONS
The following definitions apply throughout this announcement, unless the context
requires otherwise:
+----------------------+-----------------------------------------+
| Act | the UK Companies Act 2006; |
+----------------------+-----------------------------------------+
| acting in concert | has the meaning that would be given to |
| | the expression pursuant to the Code if |
| | Velosi was a company to which the Code |
| | applied; |
+----------------------+-----------------------------------------+
| AIM | the AIM market, a market operated by |
| | the London Stock Exchange; |
+----------------------+-----------------------------------------+
| announcement | this announcement; |
+----------------------+-----------------------------------------+
| Applus | Applus Technologies Holding S.L., a |
| | company incorporated in Spain with |
| | registration number B61122933 and |
| | having its registered office at Campus |
| | UAB Carretera acceso a la Facultad de |
| | Medicina s/n, 08193, Bellaterra, |
| | Barcelona, Spain; |
+----------------------+-----------------------------------------+
| Applus Group | Azul Holding and its subsidiary |
| | undertakings from time to time |
| | including Applus and Azul; |
+----------------------+-----------------------------------------+
| Australia | the Commonwealth of Australia, its |
| | states, territories and possessions; |
+----------------------+-----------------------------------------+
| Azul | means Azul Holding 2 S.à r.l., a |
| | company incorporated in Luxembourg with |
| | registration number B157045 and having |
| | its registered office at 2, Avenue |
| | Charles de Gaulle, L-1653 Luxembourg, |
| | Grand Duchy of Luxembourg; |
+----------------------+-----------------------------------------+
+----------------------+-----------------------------------------+
| Azul Holding | Azul Holding S.C.A., a company |
| | incorporated in Luxembourg with |
| | registration number B131319 and having |
| | its registered office at 2, Avenue |
| | Charles de Gaulle, L-1653 Luxembourg, |
| | Grand Duchy of Luxembourg; |
+----------------------+-----------------------------------------+
| Business Day | a day, not being a public holiday, |
| | Saturday or Sunday, on which clearing |
| | banks in London are open for normal |
| | business; |
+----------------------+-----------------------------------------+
| Canada | Canada, its provinces, territories and |
| | all areas subject to its jurisdiction |
| | and any political sub-division thereof; |
+----------------------+-----------------------------------------+
| CEP II Fund | CEP II Managing GP Holdings, Ltd. on |
| | behalf of CEP II Managing GP, L.P. and |
| | Carlyle Europe Partners II, L.P.; |
+----------------------+-----------------------------------------+
| CEP III Fund | CEP III Managing GP Holdings, Ltd. on |
| | behalf of CEP III Managing GP, L.P. and |
| | Carlyle Europe Partners III, L.P.; |
+----------------------+-----------------------------------------+
| certificated or in | the description of a share or other |
| certificated form | security which is not in uncertificated |
| | form (that is, not in CREST); |
+----------------------+-----------------------------------------+
| Channel Islands | The islands of Jersey, Guernsey, |
| | Alderney and Sark; |
+----------------------+-----------------------------------------+
| Circular | the circular of the Company dated the |
| | same date as the Offer Document |
| | relating to certain amendments proposed |
| | to be made to the Velosi Option |
| | Schemes; |
+----------------------+-----------------------------------------+
| City Code or Code or | the City Code on Takeovers and Mergers; |
| Takeover Code | |
+----------------------+-----------------------------------------+
| Closing Price | the closing middle market quotation of |
| | a Velosi Share on the date concerned as |
| | derived from the AIM Appendix to the |
| | Daily Official List; |
+----------------------+-----------------------------------------+
| Companies (Jersey) | Companies (Jersey) Law 1991 (as amended |
| Law | or re-enacted); |
+----------------------+-----------------------------------------+
| Competing Offer | (i) an offer for a majority of the |
| | issued and to be issued share capital |
| | of Velosi by a person other than (a) |
| | Azul; and (b) any person acting in |
| | concert with Azul (a "third party"); |
| | (ii) a scheme of arrangement between |
| | the Company and some or all of its |
| | members where the effect would be to |
| | vest a majority of the issued and to be |
| | issued share capital of Velosi in a |
| | third party; and (iii) a transaction |
| | which involves the transfer to a third |
| | party of the whole or substantially the |
| | whole of the business and/or assets of |
| | the Company or the Velosi Group; |
+----------------------+-----------------------------------------+
| Computershare | Computershare Investor Services PLC, |
| | Corporate Actions Projects, the |
| | Receiving Agents; |
+----------------------+-----------------------------------------+
| Conditions | the conditions to the Offer, as set out |
| | in Appendix I to this announcement; |
+----------------------+-----------------------------------------+
| connected person | has the meaning given to it in section |
| | 252 of the Act; |
+----------------------+-----------------------------------------+
| CREST | the relevant system (as defined in the |
| | CREST Regulations) in respect of which |
| | Euroclear is the Operator (as defined |
| | in the CREST Regulations); |
+----------------------+-----------------------------------------+
| CREST Regulations | the Uncertificated Securities |
| | Regulations 2001 (SI 2001/3755) as |
| | amended; |
+----------------------+-----------------------------------------+
| Daily Official List | the Daily Official List published by |
| | the London Stock Exchange; |
+----------------------+-----------------------------------------+
| Disclosed | (i) disclosed in the annual report and |
| | accounts of Velosi for the financial |
| | year ended 31 December 2009, (ii) |
| | disclosed in the interim results of |
| | Velosi for the six months ended 30 June |
| | 2010, (iii) publicly announced by |
| | Velosi (by the delivery of an |
| | announcement to a Regulatory |
| | Information Service) prior to 9 |
| | December 2010, (iv) disclosed in this |
| | announcement or (v) otherwise fairly |
| | disclosed by or on behalf of Velosi, to |
| | the Applus Group or its advisers, prior |
| | to 9 December 2010 in the context of |
| | the Offer; |
+----------------------+-----------------------------------------+
| Enlarged Group | the combined Applus Group and Velosi |
| | Group from the date at which the Offer |
| | becomes or is declared wholly |
| | unconditional; |
+----------------------+-----------------------------------------+
+----------------------+-----------------------------------------+
| Euroclear | Euroclear UK & Ireland Limited |
| | (formerly known as CRESTCo Limited); |
+----------------------+-----------------------------------------+
| Execution Noble | Execution Noble & Company Limited, |
| | which is authorised and regulated in |
| | the United Kingdom by the Financial |
| | Services Authority and has its |
| | registered address at 76 George Street, |
| | Edinburgh, EH2 3BU; |
+----------------------+-----------------------------------------+
| Form of Acceptance | the form of acceptance and authority |
| | relating to the Offer which (where |
| | appropriate) will accompany the Offer |
| | Document when issued; |
+----------------------+-----------------------------------------+
| FSA | the UK Financial Services Authority |
| | acting in its capacity as the competent |
| | authority for the purposes of Part VI |
| | of the UK Financial Services and the |
| | Markets Act 2000; |
+----------------------+-----------------------------------------+
| Incentive | the arrangements described in paragraph |
| Arrangements | 10 of this announcement; |
+----------------------+-----------------------------------------+
| Independent | each of John Anthony Hogan and Marcus |
| Directors | John Gregory Stanton, each a Velosi |
| | Director and also independent in |
| | relation to the Offer; |
+----------------------+-----------------------------------------+
| Inducement Fee | an agreement entered into by Velosi and |
| Agreement | Azul on 8 December 2010, as more |
| | particularly described in paragraph 14 |
| | of this announcement; |
+----------------------+-----------------------------------------+
+----------------------+-----------------------------------------+
| Japan | Japan, its cities, prefectures, |
| | territories and possessions, and all |
| | other areas subject to its jurisdiction |
| | and any political sub-division thereof; |
+----------------------+-----------------------------------------+
| London Stock | London Stock Exchange plc; |
| Exchange | |
+----------------------+-----------------------------------------+
| Luxembourg | the Grand Duchy of Luxembourg; |
+----------------------+-----------------------------------------+
| Management Team | each of Dr Nabil Abdul Jalil, Joseph |
| | Thomas Vincent and Dan Ooi Soon Teik; |
+----------------------+-----------------------------------------+
| Material | means likely to lead to: (i) a |
| | diminution in the value of the assets |
| | of the Velosi Group of at least |
| | $13,345,675; (ii) a diminution in the |
| | EBITDA of Velosi of at least |
| | $3,097,500; or (iii) an increase in |
| | liabilities of the Velosi Group of at |
| | least $13,345,675 save in circumstances |
| | affecting the industry in which the |
| | Velosi Group operates, the economy or |
| | markets generally; |
+----------------------+-----------------------------------------+
| Offer | the recommended cash offer made on the |
| | date of this announcement by Azul at |
| | the Offer Price for the entire issued |
| | and to be issued ordinary share capital |
| | of Velosi on the terms and subject to |
| | the conditions set out in the Offer |
| | Document and (in respect of |
| | certificated Velosi Shares) the Form of |
| | Acceptance and, where the context so |
| | requires, any subsequent revision, |
| | variation, extension or renewal |
| | thereof; |
+----------------------+-----------------------------------------+
+----------------------+-----------------------------------------+
| Offer Document | the document sent to Velosi |
| | Shareholders containing the Offer; |
+----------------------+-----------------------------------------+
| Offer Price | 165 pence in cash per Velosi Share; |
+----------------------+-----------------------------------------+
| Ordinary Shares | ordinary shares of $0.02 each in the |
| | capital of Velosi; |
+----------------------+-----------------------------------------+
| Overseas | any person (including an individual, |
| Shareholders | partnership, unincorporated syndicate, |
| | limited liability company, |
| | unincorporated organisation, trust, |
| | trustee, executor, administrator or |
| | other legal representative) in, or |
| | resident in, any Restricted |
| | Jurisdiction; |
+----------------------+-----------------------------------------+
| Panel | the Panel on Takeovers and Mergers; |
+----------------------+-----------------------------------------+
| pence or GBP | the lawful currency of the United |
| | Kingdom; |
+----------------------+-----------------------------------------+
| Receiving Agent | Computershare Investor Services PLC, |
| | Corporate Actions Projects, Bristol, |
| | BS99 6AH, United Kingdom; |
+----------------------+-----------------------------------------+
| Regulatory | one of the regulatory information |
| Information Service | services authorised by the Financial |
| | Services Authority to receive, process |
| | and disseminate regulatory information |
| | from listed companies; |
+----------------------+-----------------------------------------+
| Relevant Authority | a government or governmental, |
| | quasi-governmental, supranational, |
| | statutory or regulatory body, court, |
| | authority (including any national |
| | anti-trust or merger control authority) |
| | or any investigative body; |
+----------------------+-----------------------------------------+
| Relevant Transaction | (i) an offer for more that 10 per cent. |
| | of the issued and to be issued share |
| | capital of Velosi; (ii) a scheme of |
| | arrangement between the Company and |
| | some or all of its members the effect |
| | of which would be to vest more than 10 |
| | per cent. of the issued and to be |
| | issued share capital of Velosi in a |
| | third party; or (iii) a transaction |
| | whereby a third party seeks to acquire |
| | all or a material part of the |
| | businesses and assets of the Velosi |
| | Group taken as a whole; |
+----------------------+-----------------------------------------+
+----------------------+-----------------------------------------+
| Restricted | the United States, Canada, Australia |
| Jurisdiction | and Japan; |
+----------------------+-----------------------------------------+
| Robert W. Baird | Robert W. Baird Limited, which is |
| | authorised and regulated in the United |
| | Kingdom by the Financial Services |
| | Authority whose registered address is |
| | Mint House, 77 Mansell Street, London |
| | E1 8AF; |
+----------------------+-----------------------------------------+
| Strand Hanson | Strand Hanson Limited, which is |
| | authorised and regulated in the United |
| | Kingdom by the Financial Services |
| | Authority whose registered address is |
| | 26 Mount Row, London W1K 3SQ; |
+----------------------+-----------------------------------------+
| The Carlyle Group | TC Group, L.L.C. together with its |
| | affiliates, collectively known as The |
| | Carlyle Group; |
+----------------------+-----------------------------------------+
| TTE Instruction | a transfer to escrow instruction (as |
| | defined in the CREST Manual issued by |
| | Euroclear); |
+----------------------+-----------------------------------------+
| uncertificated or | recorded on the register of Velosi |
| in uncertificated | Shares as being held in uncertificated |
| form | form in CREST, entitlement to which, by |
| | virtue of the CREST Regulations, may be |
| | transferred by means of CREST; |
+----------------------+-----------------------------------------+
| United Kingdom or UK | the United Kingdom of Great Britain and |
| | Northern Ireland and its dependent |
| | territories; |
+----------------------+-----------------------------------------+
| United States, USA | the United States of America, its |
| or US | territories and or possessions, any |
| | state of the United States and the |
| | District of Columbia; |
+----------------------+-----------------------------------------+
+----------------------+-----------------------------------------+
| Velosi or the | Velosi Limited, a company incorporated |
| Company | and registered in Jersey with |
| | registered number 92978 and having its |
| | registered office at Walker House, PO |
| | Box 72, 28-34 Hill Street, St. Helier, |
| | Jersey JE4 5TF Channel Islands; |
+----------------------+-----------------------------------------+
| Velosi Directors or | the Directors of Velosi, being John |
| Board | Hogan, Dr. Nabil Abdul Jalil, Joseph |
| | Vincent, Dan Ooi Soon Teik and Marcus |
| | Stanton; |
+----------------------+-----------------------------------------+
| Velosi Fully Diluted | 53,222,756 Ordinary Shares, which |
| Share Capital | comprises 48,384,548 Ordinary Shares |
| | and 4,838,208 options; |
+----------------------+-----------------------------------------+
| Velosi Group | Velosi and its subsidiary undertakings |
| | from time to time; |
+----------------------+-----------------------------------------+
| Velosi Option | the contracted persons share option |
| Schemes | plan adopted by the Company on or |
| | around 21 August 2006 and the employee |
| | share option plan adopted by the |
| | Company on 21 August 2006; |
+----------------------+-----------------------------------------+
| Velosi Share(s) or | the issued and fully paid ordinary |
| Velosi | shares of $0.02 each in the capital of |
| | Velosi; |
+----------------------+-----------------------------------------+
| Velosi Shareholders | the holders of Velosi Shares; |
| or | |
+----------------------+-----------------------------------------+
| Shareholders | |
+----------------------+-----------------------------------------+
| $ | the lawful currency of the United |
| | States. |
+----------------------+-----------------------------------------+
In this announcement, the singular includes the plural and vice versa, unless
the context otherwise requires.
This information is provided by RNS
The company news service from the London Stock Exchange
END
OFFTLBFTMBBMMPM
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