Acquisition
Senior PLC
19 September 2006
19 September 2006
FOR PUBLICATION IN THE UNITED KINGDOM ONLY. NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION INTO ANY OTHER JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA,
CANADA, JAPAN, NEW ZEALAND OR SOUTH AFRICA, OR IN OR INTO ANY OTHER JURISDICTION
WHERE THE EXTENSION OR AVAILABILITY OF THE RIGHTS ISSUE WOULD BREACH ANY
APPLICABLE LAW.
SENIOR PLC
PROPOSED ACQUISITION OF AEROSPACE MANUFACTURING TECHNOLOGIES, INC.
and
FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE £27.3 MILLION
Senior plc ('Senior' or the 'Company') announces the proposed acquisition of
Aerospace Manufacturing Technologies, Inc. ('AMT') for a cash consideration of
US$110 million (£58.7 million), less the amount of any outstanding indebtedness
of AMT upon completion of the Acquisition. The Board intends to fund the
Acquisition through a Rights Issue to raise approximately £27.3 million (before
expenses) and a New Revolving Credit Facility of up to £80 million.
Acquisition highlights
• AMT is a US based manufacturer of structural aluminium parts for the
commercial aerospace industry, with Boeing as its principal customer.
• The Acquisition provides increased exposure to Boeing's two most
important existing aircraft, the Boeing 737 and Boeing 777, and also to
Boeing's new wide-bodied mid-range aircraft, the Boeing 787.
• Senior is acquiring AMT during a period of strong revenue and profit
growth for AMT and at a time of strong future growth potential.
• The Directors expect the Acquisition to be earnings enhancing in the
first full year of ownership, being the financial year ending 31 December
2007(1).
Rights Issue highlights
• Rights Issue to raise proceeds of approximately £27.3 million (before
expenses).
• 1 New Ordinary Share for every 5 Existing Ordinary Shares held on the
Record Date at 42 pence per New Ordinary Share.
• The Rights Issue Price of 42 pence per New Ordinary Share represents a
26.6 per cent. discount to the Closing Price of an Existing Ordinary Share
of 57.25 pence on 18 September 2006 (being the latest practicable date prior
to the publication of this announcement).
• The Rights Issue has been underwritten by Hoare Govett Limited in full.
Commenting, Graham Menzies, Chief Executive, Senior plc said:
'Senior is very pleased to announce the proposed acquisition of AMT, a growing,
profitable, well-managed and well-invested aerospace manufacturing business with
Boeing as its principal customer. This acquisition, together with the existing
growth prospects within Senior, leaves the enlarged group well placed for the
future.'
This summary should be read in conjunction with the full text of this announcement.
Appendix I sets out the expected timetable of principal events.
Appendix II sets out the definitions of terms used in this announcement.
Enquiries:
Senior plc
Graham Menzies, Group Chief Executive Tel: 01923 714702
Mark Rollins, Group Finance Director 01923 714738
Hoare Govett Limited (sole sponsor, financial adviser, corporate broker and underwriter)
Antonia Rowan Tel: 020 7678 8000
John MacGowan
Julian Goodwin
Sean Wegerhoff
Finsbury Group (public relations) Tel: 020 7251 3801
James Murgatroyd
Adrian Howard
A conference call with analysts and investors will be held at 9.30 a.m. (London
time) today, Tuesday 19 September 2006.
Information on Senior
Senior is an international manufacturing group with 22 operating entities based
in 11 countries. Senior designs, manufactures and markets high technology
components and systems for the principal original equipment producers in the
worldwide aerospace, diesel engine, exhaust systems and energy markets. As at 30
June 2006, the Group employed over 5,200 staff. The Company's address is 59/61
High Street, Rickmansworth, Hertfordshire WD3 1RH.
General
This announcement has been issued by, and is the sole responsibility of, Senior
plc.
Hoare Govett Limited, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting as sole sponsor, financial adviser,
corporate broker and underwriter to the Company and no one else in connection
with the Acquisition and the Rights Issue and will not be responsible to anyone
other than the Company for providing the protections afforded to clients of
Hoare Govett Limited or for providing advice in relation to the Acquisition, the
Rights Issue or for any other matters referred to in this announcement.
The distribution of this announcement and/or the Provisional Allotment Letter
and/or the transfer of Nil Paid Rights, Fully Paid Rights and/or New Ordinary
Shares may be restricted by law and therefore persons into whose possession this
announcement and/or any accompanying announcements comes should inform
themselves about and observe any such restrictions. Any failure to comply with
any such restrictions may constitute a violation of the securities laws of any
such jurisdictions. In particular, subject to certain exceptions, this
announcement, should not be distributed, forwarded to or transmitted in or into
the United States, Australia, Canada, Japan, New Zealand or South Africa, or in
or into any other jurisdiction where the extension or availability of the Rights
Issue would breach any applicable law.
A combined circular to Shareholders relating to the Acquisition and prospectus
relating to the Rights Issue (the 'Prospectus') and the Provisional Allotment
Letters are expected to be despatched today. The Prospectus gives further
details of the Acquisition and contains a notice of an Extraordinary General
Meeting of the Company to approve the Acquisition and approve The Senior plc
2006 Savings-Related Share Option Scheme, expected to be held at 10.00 a.m. on 5
October 2006 at the offices of ABN AMRO at 250 Bishopsgate, London EC2M 4AA. The
Prospectus gives further details of the New Ordinary Shares, the Nil Paid Rights
and the Fully Paid Rights to be offered pursuant to the Rights Issue, the
Company's business, the industry in which the Company operates and an indication
of the size of the Enlarged Group.
No offer, invitation or inducement to acquire shares or other securities in the
Company is being made by or in connection with this announcement. Any offer,
invitation or inducement to acquire shares in the Company will be made solely by
means of the Prospectus, as updated by any supplementary prospectuses, and any
decision to keep, buy or sell shares in the Company should be made solely on the
basis of the information contained in such document(s).
This announcement contains forward-looking statements, which are based on the
Board's current expectations and assumptions and involve known and unknown risks
and uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. It is
believed that the expectations reflected in these statements are reasonable, but
they may be affected by a number of variables which could cause actual results
or trends to differ materially. Each forward-looking statement speaks only as of
the date of the particular statement. Except as required by the Listing Rules,
the Disclosure Rules, the Prospectus Rules, the London Stock Exchange or
otherwise by law, the Company expressly disclaims any obligation or undertaking
to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
The New Ordinary Shares, the Nil Paid Rights, the Fully Paid Rights and the
Provisional Allotment Letters have not been and will not be registered under the
Securities Act or under any relevant securities laws of any state or other
jurisdiction of the United States and may not be offered, sold, taken up,
exercised, resold, renounced, transferred or delivered, directly or indirectly,
within the United States absent registration or an applicable exemption from the
registration requirements of the Securities Act and in compliance with state
securities laws. The New Ordinary Shares,the Nil Paid Rights, the Fully Paid Rights
and the Provisional Allotment Letters have not been approved or disapproved by the SEC,
any state securities commission in the United States or any US regulatory authority,
nor have any of the foregoing authorities passed upon or endorsed the merits of the
offering of the New Ordinary Shares, the Nil Paid Rights, the Fully Paid Rights and the
Provisional Allotment Letters or the accuracy or adequacy of this document. Any
representation to the contrary is a criminal offence in the United States. In
addition, none of the New Ordinary Shares, the Nil Paid Rights, the Fully Paid
Rights or the Provisional Allotment Letters will qualify for distribution under
any of the relevant securities laws of Australia, Canada, Japan, New Zealand or
South Africa. Accordingly, the New Ordinary Shares, the Nil Paid Rights, the
Fully Paid Rights and the Provisional Allotment Letters may not be offered,
sold, taken up, exercised, resold, renounced, transferred or delivered, directly
or indirectly, within Australia, Canada, Japan, New Zealand or South Africa.
No statement in this announcement is intended to be a profit forecast or to
imply that the earnings of Senior for the current year or future years will
necessarily match or exceed the historical or published earnings of Senior or
AMT.
19 September 2006
FOR PUBLICATION IN THE UNITED KINGDOM ONLY. NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION INTO ANY OTHER JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA,
CANADA, JAPAN, NEW ZEALAND OR SOUTH AFRICA, OR IN OR INTO ANY OTHER JURISDICTION
WHERE THE EXTENSION OR AVAILABILITY OF THE RIGHTS ISSUE WOULD BREACH ANY
APPLICABLE LAW.
SENIOR PLC
PROPOSED ACQUISITION OF AEROSPACE MANUFACTURING TECHNOLOGIES, INC.
and
FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE £27.3 MILLION
Introduction
The Company announces today that Senior Operations Inc., a wholly-owned
subsidiary of the Company, has signed a conditional agreement for the
acquisition of Aerospace Manufacturing Technologies, Inc. ('AMT'), a North
American manufacturer of structural aluminium parts for the commercial aerospace
industry, for a cash consideration of US$110 million (£58.7 million), less the
amount of any outstanding indebtedness of AMT upon completion of the
Acquisition.
The Board intends to fund the Acquisition through a Rights Issue to raise
approximately £27.3 million (before expenses) and a New Revolving Credit
Facility of up to £80 million. The New Revolving Credit Facility replaces an
existing facility of £46 million.
The proceeds of the Rights Issue will be used to part fund payment of the
consideration for the Acquisition. The Rights Issue Price of 42 pence per New
Ordinary Share represents a 26.6 per cent. discount to the Closing Price of an
Existing Ordinary Share of 57.25 pence on 18 September 2006 (being the latest
practicable date prior to the publication of this announcement). The Rights
Issue has been underwritten by Hoare Govett in full.
Completion of the Acquisition is subject to the satisfaction of a number of
conditions, including Admission, and shareholder approval of the Acquisition,
due to the size of AMT relative to that of Senior. Shareholder approval will be
sought at an Extraordinary General Meeting to be held on 5 October 2006. The
Rights Issue is not subject to shareholder approval at the Extraordinary General
Meeting.
Information on AMT
AMT, a privately owned US corporation located in Washington State in the US, is
a manufacturer of structural aluminium parts for the commercial aerospace
industry. AMT was founded in 1983 and purchased by the AMT Shareholders in 1993.
AMT has demonstrated a strong track record of delivering high quality products
and establishing strong relationships with its customer base, particularly
Boeing.
AMT's experience and capabilities span multiple segments of an aircraft,
including the engine pylon, struts, wing box, wings, wheel well and the
interior. AMT's success is based on utilising proprietary manufacturing
techniques to manufacture high quality, complex parts through cost effective
production. Given its breadth of capabilities and strong customer relationships,
AMT has substantial content on the aviation industry's most popular aircraft,
such as the Boeing 737 and Boeing 777, as well as positions on future aircraft,
such as the Boeing 787. AMT is one of eight members of the Boeing 737 supplier
council.
Led by Matthew Reinhard, AMT's management team has played an integral role in
the long-term success of the business. Its senior management has an average of
17 years of aerospace experience and an average of 11 years of employment with
AMT. It is the intention of Senior that the entire senior management team and
all of the current employees of AMT, will remain with the Enlarged Group
following completion of the Acquisition. Matthew Reinhard will remain as AMT's
President and Chief Executive Officer. AMT has a non-unionised workforce of
approximately 300 employees.
AMT has an established reputation with its customer base and has maintained a
diverse aircraft presence, while simultaneously expanding its business with its
largest customers. AMT possesses long-standing customer relationships with the
industry's leading original equipment manufacturers ('OEMs') in the large,
business and regional jet markets. Its principal customer is Boeing, but its
customer base also includes Bombardier Inc. and Raytheon Company in the business
jet market, and Bombardier Inc. in the regional jet market. Furthermore, AMT has
established relationships with commercial aerospace Tier I and Tier II suppliers
such as Hexcel Corporation, Avcorp Industries, Inc., Fuji Heavy Industries and
Spirit Aerosystems, Inc., among others. Direct and indirect sales to Boeing
represented approximately 81 per cent. of AMT's sales for the year ended 31
December 2005.
Summary financial information on AMT
The selected financial information set out below, as at and for the three years
ended 31 December 2003, 2004 and 2005 and as at and for the six months ended 30
June 2006, is presented in accordance with IFRS.
Six months
Year ended Year ended Year ended ended
31 December 31 December 31 December 30 June
2003 2004 2005 2006
US$ million US$ million US$ million US$ million
Revenue 21.8 25.6 33.6 26.5
Operating profit before
shareholder payments and
transaction costs(1) 2.7 2.8 3.8 6.1
Finance costs (0.2) (0.2) (0.4) (0.4)
--------- --------- --------- ---------
Profit before shareholder
payments, transaction
costs(1) and taxation 2.5 2.6 3.4 5.7
========= ========= ========= =========
Profit before taxation 2.0 2.2 2.2 3.9
========= ========= ========= =========
Current assets 7.6 11.1 13.1 21.0
Non-current assets 7.5 9.5 15.7 15.8
--------- --------- --------- ---------
Gross assets 15.1 20.6 28.8 36.8
Current liabilities (2.7) (3.4) (7.5) (10.3)
Non-current liabilities (2.8) (6.2) (8.6) (10.6)
--------- --------- --------- ---------
Net assets 9.6 11.0 12.7 15.9
========= ========= ========= =========
(1) Transaction costs are those associated with the sale of AMT.
AMT's results, in particular those for the six months to 30 June 2006, highlight
the growth that AMT is currently experiencing. AMT derives the vast majority of
its revenue from acting as a key supplier of certain components on Boeing
aircraft.
Having grown steadily during 2003 and 2004, AMT's revenue increased more rapidly
in 2005 as new Boeing 777 programmes went into production. The first six months
of 2006 benefited from the continued increase in Boeing 777 related sales as
well as the start, in May 2006, of the US$16 million per annum five year Boeing
737 wing-rib kit contract.
Historical financial information on AMT
The accountant's report on AMT to be contained in the Prospectus has been
qualified due to a limitation in scope relating to inventory in respect of the
financial years ended 31 December 2003, 2004 and 2005. The accountant's report
also covers the six month period to 30 June 2006, which has not been qualified.
The Directors believe that the qualification is not significant due to its
historic nature. The uncertainty over the historic inventory responsible for the
qualification has been rectified by the adoption of new inventory systems and
procedures in October 2005, and stock reconciliations as at 31 December 2005 and
30 June 2006 have been formally audited. Accordingly, the effectiveness of the
new systems and procedures has been verified by the unqualified accountant's
report for the period to 30 June 2006.
The Directors believe that, notwithstanding the qualification of the
accountant's report for the financial years ended 31 December 2003, 2004 and
2005, the Acquisition is in the best interests of the Company and its
Shareholders as a whole.
Background to, reasons for and benefits of the Acquisition
The large commercial aircraft manufacturers and engine suppliers have strong
order books and the aerospace market is forecast to continue to grow. Against
this positive background and in line with Senior's strategic objective to
maintain a significant part of its overall business focused on the worldwide
aerospace markets, the Directors believe that the Acquisition will strengthen
Senior's position in the aerospace market.
The Directors believe that the Acquisition offers significant benefits and
opportunities, including:
• acquisition of a well established, standalone and profitable business
enjoying a high level of customer loyalty;
• increased exposure to Boeing's two most important existing aircraft,
the Boeing 737 and Boeing 777;
• access to significant involvement on Boeing's new wide-bodied mid-range
aircraft, the Boeing 787, which Boeing is forecasting to commence delivery to
its customers in late 2008;
• acquisition of a business manufacturing products complementary to those
of Senior's existing aerospace operations and whose nature falls within the
skill base of Senior's Group and divisional management;
• acquisition of AMT during a period of strong revenue and profit growth
for AMT and at a time of strong future growth potential;
• acquisition of a well-equipped modern facility (where more than US$15
million is expected to have been invested in the three years ending 31 December
2006) capable of machining highly complex and value-added structural aluminium
parts;
• acquisition of a business run by a stable, focused and proven
management team; and
• additional Group sales with a minimal increase in central and
divisional costs.
Financial effects of the Acquisition on Senior
AMT is a profitable, well-managed company operating from a single site in
Washington State in the US, close to the manufacturing facilities of its
principal customer, Boeing. Senior's intention is to maintain the business at
its current location and for it to continue to be managed by its existing strong
management team. Consequently, other than the transaction costs associated with
the Acquisition and the Rights Issue, the costs associated with the integration
of AMT into the Group are expected to be minimal.
The Directors believe that if the Acquisition had occurred at the beginning of
the year ended 31 December 2005, the Group's earnings per share would have
declined. However, the growth achieved by AMT during 2005 and in the first six
months of 2006, and AMT's future prospects, mean the Directors expect the
Acquisition to be earnings enhancing in the first full year of ownership, being
the financial year ending 31 December 2007(2).
Principal terms of the Acquisition
Under the terms of the Acquisition Agreement, Senior Operations Inc. has agreed
to acquire AMT by purchasing all of the issued and outstanding capital stock of
AMT.
The total consideration payable to the AMT Shareholders is US$110 million (£58.7
million), less the amount of any outstanding indebtedness of AMT as at Closing.
This amount will be paid at Closing, at which time an appropriate adjustment
will also be made to the consideration in the event that the actual amount of
adjusted net assets of AMT at Closing differs from the actual adjusted net
assets of AMT at 30 June 2006, based on a formula contained in the Acquisition
Agreement. Of the consideration payable to the AMT Shareholders, US$4 million
(£2.1 million) is to be deposited in an escrow fund for up to 18 months to be
released under certain circumstances. The escrow fund is to provide the primary,
but not only, source for the payment of any liabilities of the AMT Shareholders
under the Acquisition Agreement, such as under the representations, warranties
and indemnities.
The Acquisition Agreement is conditional upon, inter alia: (i) the approval of
the Acquisition by the Shareholders at the EGM; (ii) Admission; and (iii) any
waiting period (and any extension thereof) applicable to the consummation of the
Acquisition under the HSR Act having expired or been terminated. The Board is
confident that the regulatory condition referred to in (iii) above will be
satisfied.
Either the Company or the AMT Shareholders may, prior to Closing, terminate the
Acquisition Agreement if: (i) there exist certain material breaches of
representations or material breaches of covenants; (ii) the Acquisition has not
been completed by 30 November 2006; or (iii) there is mutual agreement to
terminate between Senior Operations Inc. and the AMT Shareholders'
representative.
The Board currently expects that completion of the Acquisition will take place
by late October 2006.
Current trading and prospects
(a) The Group
Overall, Senior's current trading and prospects remain as stated in the
announcement of its interim results for the six months ended 30 June 2006
published on 3 August 2006.
The large commercial aircraft manufacturers and engine suppliers have strong
order books and the aerospace market is forecast to continue to grow. Boeing and
Airbus are forecast to continue to increase build rates over the coming years
(source: Teal), with the availability and prices of metals, such as aluminium
and titanium, potentially dictating the rate of increase. Following its recent
acquisition, prospects for Sterling Machine Co., Inc. are encouraging as its
main customer, Sikorsky, is in the process of substantially increasing the build
rate of its helicopters. The development of new aircraft, such as the Boeing
787, Airbus 350XWB and Airbus 400M, also offers significant opportunities for
Senior.
Sales of the new heavy duty diesel engine products, which go into production
shortly, are expected to provide a significant improvement to Senior Flexonics'
turnover, albeit the recent cancellation of one contract will affect the rate of
growth. It is anticipated that the plant and equipment associated with this
contract will be sold or utilised elsewhere within the Group. Prospects for
being awarded additional programmes for these heavy duty diesel engine products
remain positive. Elsewhere, the Group's automotive markets are expected to
remain stable, but competitive, and the power generation and energy markets are
anticipated to remain healthy, aided by tightening emission standards and the
high price of oil.
Overall, the Directors believe the Group is well placed to deliver future
healthy growth.
(b) AMT
AMT derives the vast majority of its revenues from Boeing aircraft, with the 737
and 777 being the key aircraft. A major new five-year programme (US$16 million
per annum) for the supply of wing-rib kits for the Boeing 737 commenced in May
2006. AMT's other major customers are Bombardier Inc., and Raytheon Company.
Boeing is currently increasing the build rate of both its 737 and 777 aircraft
and this, combined with the Boeing 737 wing-rib contract and three recently won
programmes on Boeing's new wide-bodied mid-range aircraft, the 787, allows the
Directors to be confident of future growth.
(c) The Enlarged Group
The Directors believe that, following completion of the Acquisition, the
Enlarged Group should be well placed to deliver healthy future growth. The
Directors are confident of the underlying financial and trading prospects of the
Enlarged Group for the current financial year. The Directors expect the
Acquisition to be earnings enhancing in the first full year of ownership by
Senior, being the financial year ending 31 December 2007(3).
Summary of the principal terms of the Rights Issue
The New Ordinary Shares will be offered by way of rights to all Qualifying
Shareholders (other than, subject to certain exceptions, Qualifying Shareholders
with a registered address in the United States or other Excluded Territories) on
the following basis:
1 New Ordinary Share at 42 pence per New Ordinary Share for every 5 Existing Ordinary Shares
held and registered in their name at the close of business on the Record Date.
Fractions of New Ordinary Shares will not be allotted to any Qualifying
Shareholders, but will be aggregated and sold in the market ultimately for the
benefit of the Company. New Ordinary Shares representing fractional entitlements
will not be allotted to Qualifying Shareholders and, where necessary,
entitlements to New Ordinary Shares will be rounded down to the nearest whole
number. Qualifying Shareholders with fewer than five Existing Ordinary Shares
will not be entitled to any New Ordinary Shares. The New Ordinary Shares will
rank pari passu with the Existing Ordinary Shares in all respects (save that
they will not carry the right to receive the 2006 Interim Dividend). The New
Ordinary Shares will trade 'ex' the 2006 Interim Dividend under a separate ISIN
from the Existing Ordinary Shares until the record date for the 2006 Interim
Dividend.
The Nil Paid Rights or Fully Paid Rights represented by a Provisional Allotment
Letter may be converted into uncertificated form, that is, deposited into CREST
(whether such conversion arises as a result of a renunciation of those rights or
otherwise). Similarly, Nil Paid Rights or Fully Paid Rights held in CREST may be
converted into certificated form, that is, withdrawn from CREST.
The Rights Issue Price of 42 pence per New Ordinary Share represents a 26.6 per
cent. discount to the Closing Price of an Existing Ordinary Share of 57.25 pence
on 18 September 2006 (being the latest practicable date prior to the publication
of this announcement). If a Qualifying Shareholder does not take up the offer of
New Ordinary Shares in full, his/her proportionate shareholding will be diluted
by 16.7 per cent.
The Company has arranged for the Rights Issue to be fully underwritten by Hoare
Govett in order to provide certainty as to the amount of capital to be raised.
The Rights Issue is conditional, amongst other things, upon: (i) the
Underwriting Agreement having become unconditional in all respects (save for the
condition relating to Admission) and not having been terminated (and no
termination rights existing under it having arisen) before Admission; and (ii)
Admission taking place not later than 8.00 a.m. on 20 September 2006 (or such
later time and/or date as Hoare Govett and the Company may agree being not later
than 8.00 a.m. on 26 September 2006). Prior to Admission, Hoare Govett may
terminate the Underwriting Agreement in certain circumstances, the likelihood of
which the Directors consider to be remote. After Admission, however, the
Underwriting Agreement will not be subject to any right of termination
(including in respect of any statutory withdrawal rights).
The Rights Issue is not conditional on the Acquisition. After Admission, the
Rights Issue will proceed even if the Acquisition does not. In the unlikely
event that completion of the Acquisition does not take place, the Directors'
current intention is that the net proceeds of the Rights Issue will be invested
in short term securities while the Directors' consider how best to return
surplus capital to Shareholders. Any such return of capital may have adverse tax
consequences for Shareholders. In considering how any such proceeds might be
returned to Shareholders, the Directors will take into account, amongst other
things, the tax implications for Shareholders. Prior to completion of the
Acquisition, the proceeds of the Rights Issue will be held by the Company and
placed in an interest-bearing deposit account.
Application has been made to the UK Listing Authority for the New Ordinary
Shares (nil and fully paid) to be admitted to the Official List and to the
London Stock Exchange for the New Ordinary Shares (nil and fully paid) to be
admitted to trading on the London Stock Exchange's main market for listed
securities. It is expected that Admission will become effective and that
dealings in the New Ordinary Shares will commence on the London Stock Exchange,
nil paid, at 8.00 a.m. on 20 September 2006. It is expected that dealings in the
New Ordinary Shares, fully paid, will commence on the London Stock Exchange at
8.00 a.m. on 11 October 2006.
The Rights Issue will result in the issue of 64,960,962 New Ordinary Shares
(representing approximately 16.7 per cent. of the Enlarged Share Capital). The
New Ordinary Shares will, when issued and fully paid, rank pari passu in all
respects with, and will carry the same voting and dividend rights as, the
Existing Ordinary Shares, save that the New Ordinary Shares will not have the
right to receive the 2006 Interim Dividend. Application has been made for the
New Ordinary Shares to be admitted to CREST and held in uncertificated form. The
New Ordinary Shares are also capable of being held in certificated form.
Structure of the Rights Issue
In addition to funding the Acquisition, the Rights Issue has been structured in
a way that is expected to create additional distributable reserves approximately
equal to the net proceeds of the Rights Issue less the nominal value of the New
Ordinary Shares. In the future, it should be possible for the Company to declare
dividends from these reserves, provided that they have not otherwise been
reduced, the Company has sufficient cash resources to fund such dividends and
the Directors consider it appropriate to declare such dividends.
Dividend policy
Following the events of 11 September 2001 and the subsequent downturn in the
aerospace industry, the Board took action to protect the long-term prospects of
the Group. This included restricting capital expenditure and discretionary costs
and reducing the level of dividend payable by the Group in order to restore
dividend cover to more appropriate levels for the business. Since this time, the
Board has focused on reducing debt and has maintained the annual level of
dividend per share paid as dividend cover has been restored. As at 31 December
2005, Senior's net debt was £62.4 million and dividend cover was 2.0 times based
on the total dividend per share paid for 2005 of 2.00 pence and adjusted
earnings per share of 4.01 pence (excluding the effect of the disposal of
businesses and fixed assets). As at 30 June 2006, Senior's net debt was £75.6
million following the Board's decision to increase levels of capital expenditure
to support development of the Group's heavy duty diesel engine parts, which are
scheduled to go into production in the final quarter of 2006.
In light of the Board's confidence in the future prospects for the Group, the
Directors intend to return to a progressive dividend policy in the future, which
will take into account the bonus element of the Rights Issue. Using the final
dividend of 1.35 pence per Ordinary Share for the financial year ended 31
December 2005 as an example, the bonus adjustment would have resulted in the
final dividend being 1.29 pence per Ordinary Share. However, as any dividends
will be dependent upon the performance of the underlying businesses of the
Enlarged Group, this should not be construed as either a dividend forecast or as
a guarantee that any dividends will be paid in the future.
Holders of New Ordinary Shares issued as part of the Rights Issue will not be
entitled to receive the 2006 Interim Dividend in respect of the New Ordinary
Shares.
The Senior Group Share Schemes
In accordance with the rules of the Senior Group Share Schemes, outstanding
options and awards may be adjusted to take account of the Rights Issue in such
manner as the Remuneration Committee may consider appropriate under the
circumstances. This is subject to the prior approval (where required) of HM
Revenue & Customs. Participants will be notified of any adjustments in due
course.
SAYE Scheme 2006
The Directors believe that employee share schemes are an important tool in
encouraging employees to align their interests with those of Shareholders and,
to that end, the Company has operated employee share schemes for a number of
years, including the current savings related share option scheme which was
established in 1996 and expired this year.
The Directors therefore propose to seek the approval of Shareholders at the
Extraordinary General Meeting to establish The Senior plc 2006 Savings-Related
Share Option Scheme (the 'SAYE Scheme 2006') to replace the current scheme. The
SAYE Scheme 2006 will give all eligible employees the opportunity to acquire
shares in the Company using the proceeds of their own savings under a three or
five year save-as-you-earn contract with a nominated savings authority. Subject
to the SAYE Scheme 2006 being approved by HM Revenue & Customs, employees who
take advantage of this opportunity will not normally be subject to income tax on
the gains realised upon the exercise of options. Instead, they may be liable to
capital gains tax when they dispose of their shares.
The rules of the SAYE Scheme 2006 allow the Directors to make such amendments as
may be necessary or desirable to obtain or maintain favourable tax, exchange
control or regulatory treatment for participants or for any company in the
Group. In certain circumstances, it may be desirable, or more appropriate, to
set up separate schemes for employees working overseas and the SAYE Scheme 2006
accordingly includes an international section.
Restricted Shareholders
New Ordinary Shares will be provisionally allotted to all Qualifying
Shareholders, including all Qualifying Shareholders with a registered address in
the United States, Australia, Canada, Japan, New Zealand or South Africa.
However, due to securities law restrictions in the United States, Australia,
Canada, Japan, New Zealand and South Africa, subject to certain exceptions,
Qualifying Shareholders with a registered address in any such jurisdiction will
not be sent a Provisional Allotment Letter nor will they have their stock
accounts in CREST credited with entitlements to Nil Paid Rights, as applicable.
Notwithstanding the above, if Qualifying Shareholders provide to the Company
proof satisfactory to the Company that they are able properly and lawfully to
receive a Provisional Allotment Letter or have their stock account in CREST
credited with their entitlements to Nil Paid Rights, as applicable, without the
contravention of any registration or other legal requirement in any
jurisdiction, the Company may (at its sole and absolute discretion) elect to
send them a Provisional Allotment Letter or have their stock account in CREST
credited with their entitlements to Nil Paid Rights, as applicable. Any
Shareholder who believes that he or she may be able to take advantage of the
exception outlined above should contact the Company Secretary (Andrew Bodenham)
either in writing at the address on the front of this announcement or by
telephone on +44 (0) 1923 775547.
Prospectus, Provisional Allotment Letters and Extraordinary General Meeting
A combined circular to Shareholders relating to the Acquisition and prospectus
relating to the Rights Issue (the 'Prospectus') and Provisional Allotment
Letters are expected to be despatched today. The Prospectus gives further
details of the Acquisition and contains a notice of an Extraordinary General
Meeting of the Company to approve the Acquisition and approve the SAYE Scheme
2006, expected to be held at 10.00 a.m. on 5 October 2006 at the offices of ABN
AMRO at 250 Bishopsgate, London EC2M 4AA. The Rights Issue is not subject to
Shareholder approval at the Extraordinary General Meeting. The Prospectus gives
further details of the New Ordinary Shares, the Nil Paid Rights and the Fully
Paid Rights to be offered pursuant to the Rights Issue, the Company's business,
the industry in which the Company operates and an indication of the size of the
Enlarged Group.
Appendix I
Expected timetable of principal events in respect of the rights issue and the
acquisition
2006
Record Date for the Rights Issue the close of business on Friday 15 September
Announcement of the Acquisition and the Rights Issue and
publication of the Prospectus Tuesday 19 September
Despatch of Provisional Allotment Letters (to Qualifying
non-CREST Shareholders, excluding Restricted Shareholders, only) Tuesday 19 September
Dealings in New Ordinary Shares, nil paid, commence on the
London Stock Exchange 8.00 a.m. on Wednesday 20 September
Existing Ordinary Shares marked 'ex-rights' by the London Stock
Exchange 8.00 a.m. on Wednesday 20 September
Nil Paid Rights credited to stock accounts in CREST (Qualifying
CREST Shareholders, excluding Restricted Shareholders, only) as soon as practicable after 8.00 a.m.
on Wednesday 20 September
Nil Paid Rights and Fully Paid Rights enabled in CREST as soon as practicable after 8.00 a.m.
on Wednesday 20 September
Latest time and date for receipt of Forms of Proxy 10.00 a.m. on Tuesday 3 October
Recommended latest time for requesting withdrawal of Nil Paid
Rights or Fully Paid Rights from CREST (i.e. if your Nil Paid
Rights or Fully Paid Rights are in CREST and you wish to convert
them into certificated form) 4.30 p.m. on Wednesday 4 October
Extraordinary General Meeting 10.00 a.m. on Thursday 5 October
Recommended latest time and date for depositing renounced
Provisional Allotment Letters, nil paid or fully paid, into
CREST or for dematerialising Nil Paid Rights or Fully Paid
Rights into a CREST stock account 3.00 p.m. on Thursday 5 October
Latest time and date for splitting Provisional Allotment
Letters, nil paid or fully paid 3.00 p.m. on Friday 6 October
Latest time and date for acceptance and payment in full and
registration of renounced Provisional Allotment Letters 11.00 a.m. on Tuesday 10 October
Dealings in New Ordinary Shares, fully paid, commence on the
London Stock Exchange and New Ordinary Shares credited to CREST
stock accounts (uncertificated holders only) 8.00 a.m. on Wednesday 11 October
Expected date of despatch of definitive share certificates for
New Ordinary Shares in certificated form by Wednesday 18 October
Completion of the Acquisition by the end of October
Notes:
(i) Each of the times and dates set out in the above timetable and mentioned in
this announcement and the Provisional Allotment Letter is subject to change by
the Company (with the agreement of Hoare Govett), in which event details of the
new times and dates will be notified to the Financial Services Authority and,
where appropriate, to Shareholders.
(ii) References to times in this announcement are to London time.
(iii)If you have any queries on the procedure for acceptance and payment or on
the procedure for splitting Provisional Allotment Letters you should contact
Lloyds TSB Registrars, 3rd Floor, Princess House, 1 Suffolk Lane, London EC4R
0AX, on 0870 609 2158 if calling from the UK or on +44 1903 276 342 if calling
from outside the UK between 8.30 a.m. and 5.30 p.m. Monday to Friday. For legal
reasons the shareholder helpline will not be able to provide advice on the
merits of the Rights Issue or to provide financial, tax or investment advice.
Appendix II
The definitions set out below apply throughout this announcement, unless the
context requires otherwise.
'2006 Interim Dividend' the declared interim dividend of 0.65 pence per Existing
Ordinary Share announced on 3 August 2006 and payable on 30
November 2006 to those Shareholders on the register of members
of the Company as at 3 November 2006 (but not in respect of the
New Ordinary Shares);
'Acquisition' the proposed acquisition of all of the issued and outstanding
capital stock of AMT;
'Acquisition Agreement' the stock purchase agreement between AMT, the AMT Shareholders
and Senior Operations Inc. dated 18 September 2006, in relation
to the Acquisition;
'Admission' admission of the New Ordinary Shares, nil paid, to the Official
List and to trading on the main market for listed securities of
the London Stock Exchange;
'AMT' Aerospace Manufacturing Technologies, Inc. and/or its
respective subsidiaries and subsidiary undertakings (or, as the
context requires, any one or more of such companies);
'AMT Shareholders' all the existing shareholders of AMT as at 18 September 2006,
who are to sell all of their issued and outstanding capital
stock pursuant to the Acquisition Agreement (including, amongst
others, Matthew Reinhard, John Tennant, Ralph Miller, Kenneth
Singer, Ned Buhler, Richard Bass and Norman Webb);
'Board' the board of directors of the Company from time to time;
'Business Day' any day on which banks are generally open in London for the
transaction of business other than a Saturday or Sunday or
public holiday;
'certificated' a share or other security which is not in uncertificated form
or 'in (that is, not in CREST);
certificated form'
'Closing' the completion of the Acquisition;
'Closing Price' the closing middle market quotation of an Existing Ordinary
Share, as published in the Daily Official List;
'Companies Act' the Companies Act 1985, as amended;
'CREST' the system for the paperless settlement of trades in securities
and the holding of uncertificated securities in accordance with
the CRESTCo Regulations operated by CRESTCo;
'CRESTCo' CRESTCo Limited;
'CREST member' a person who has been admitted by CRESTCo as a system-member
(as defined in the CRESTCo Regulations);
'CRESTCo the Uncertificated Securities Regulations 2001 (SI 2001 No.
Regulations' 3755), as amended from time to time;
'CREST Shareholders' Shareholders holding Ordinary Shares in uncertificated form;
'CREST sponsor' a CREST participant admitted to CREST as a CREST sponsor;
'Daily Official List' the Daily Official List of the London Stock Exchange;
'Director' a director of the Company;
'Disclosure the disclosure rules made under Part VI of FSMA (as set out in
Rules' the FSA Handbook), as amended;
'Enlarged Group' the Company together with its subsidiaries and subsidiary
undertakings, as enlarged by the Acquisition;
'Enlarged Share the issued ordinary share capital of the Company following the
Capital' issue of the New Ordinary Shares pursuant to the Rights Issue;
'EU' the European Union first established by treaty made at
Maastricht on 7 February 1992;
'euro' or '€' the single currency of the member states of the European
Communities that adopt or have adopted the euro as their lawful
currency under the legislation of the EU or European Monetary
Union;
'Excluded the United States, Australia, Canada, Japan, New Zealand, South
Territories' Africa and any other jurisdiction where the extension or
availability of the Rights Issue (and any other transaction
contemplated thereby) would breach any applicable law;
'Existing the ordinary shares of 10 pence each in the capital of the
Ordinary Shares' Company at the date of this announcement;
'Extraordinary the extraordinary general meeting of the Company to be convened
General Meeting'or 'EGM' pursuant to the notice set out at the end of the Prospectus;
'ex-rights date' 20 September 2006;
'FSMA' the Financial Services and Markets Act 2000, as amended;
'Fully Paid Rights' rights to acquire New Ordinary Shares, fully paid;
'Hoare Govett' Hoare Govett Limited;
'HSR Act' the Hart Scott Rodino Anti-Trust Improvements Act of 1976, as
amended;
'IFRS' International Financial Reporting Standards;
'Listing Rules' the listing rules made under Part VI of FSMA (as set out in the
FSA Handbook), as amended;
'London Stock Exchange' London Stock Exchange plc or its successor(s);
'New Ordinary the ordinary shares of 10 pence each in the capital of the
Shares' Company to be issued by the Company pursuant to the Rights
Issue;
'New Revolving the revolving credit facility agreement entered into on 12
Credit Facility' September 2006 between Lloyds TSB Bank plc, the Company and
Senior Investments AG;
'Nil Paid Rights' rights to acquire New Ordinary Shares, nil paid;
'Official List' the Official List of the UK Listing Authority;
'Ordinary Existing Ordinary Shares and/or New Ordinary Shares, as the
Shares' context requires;
'Pounds' or '£' the lawful currency of the United Kingdom;
or 'Pounds
Sterling'
'Prospectus' the combined circular to Shareholders relating to the
Acquisition and prospectus relating to the Rights Issue
expected to be despatched today 19 September 2006;
'Prospectus the prospectus rules made under Part VI of FSMA (as set out in
Rules' the FSA Handbook), as amended;
'Provisional the provisional allotment letter to be issued to Qualifying
Allotment Letter' or 'PAL' non-CREST Shareholders;
'Qualifying Qualifying Shareholders holding Ordinary Shares in
CREST Shareholders' uncertificated form;
'Qualifying Qualifying Shareholders holding Ordinary Shares in certificated
non-CREST form;
Shareholders'
'Qualifying holders of Existing Ordinary Shares on the register of members
Shareholders' of the Company on the Record Date;
'Record Date' the close of business in London on 15 September 2006;
'Registrar' Lloyds TSB Registrars;
'Remuneration the remuneration committee of the Company;
Committee'
'Resolutions' the Acquisition Resolution and the Share Option Scheme
Resolution;
'Restricted Shareholders with registered addresses in, or who are citizens,
Shareholders' residents or nationals of, jurisdictions outside the United
Kingdom;
'Rights Issue' the offer by way of rights to Qualifying Shareholders to
acquire New Ordinary Shares, on the terms and conditions set
out in the Prospectus and, in the case of Qualifying non-CREST
Shareholders only, the Provisional Allotment Letter;
'Rights Issue 42 pence per New Ordinary Share;
Price'
'SEC' United States Securities and Exchange Commission;
'Securities Act' the US Securities Act of 1933, as amended and the regulations
thereunder;
'Senior the Senior aerospace division;
Aerospace'
'Senior' or 'the Senior plc, a company incorporated in England and Wales with
Company' registered number 00282772, whose registered office is at 59/61
High Street, Rickmansworth, Hertfordshire WD3 1RH, United
Kingdom;
'Senior the Group's automotive operations, now part of Senior
Automotive' Flexonics;
'Senior the Senior Flexonics division;
Flexonics'
'Senior the Group's industrial operations, now part of Senior
Industrial' Flexonics;
'Senior Group' Senior plc, as applicable, together with its subsidiaries and
or 'the Group' subsidiary undertakings;
or 'the Company'
'Senior Group The 1996 Savings Related Share Option Scheme, the 1999
Share Schemes' Executive Share Option Plan, and the Senior plc 2005 Long Term
Incentive Plan operated by the Company;
'Shareholders' holders of Ordinary Shares;
'stock account' an account within a member account in CREST to which a holding
of a particular share or other security in CREST is credited;
'subsidiary' a subsidiary as that term is defined in section 736 of the
Companies Act;
'subsidiary a subsidiary undertaking as that term is defined in section 258
undertaking' of the Companies Act;
'uncertificated' a share or other security recorded on the relevant register of
or 'in the share or security concerned as being held in uncertificated
uncertificated form in CREST and title to which, by virtue of the CRESTCo
form' Regulations, may be transferred by means of CREST;
'Underwriting the conditional underwriting agreement described in Part XI of
Agreement' the Prospectus;
'UK Listing the Financial Services Authority acting in its capacity as the
Authority' competent authority for the purposes of FSMA;
'United Kingdom' the United Kingdom of Great Britain and Northern Ireland;
or 'UK'
'United States' the United States of America, its territories and possessions,
or 'US' any state of the United States and the District of Columbia;
and
'US$', 'US the lawful currency of the United States.
dollars' or '$'
--------------------------
(1) This statement is not intended to constitute a profit forecast for the
financial year ending 31 December 2007 or any other period, nor should this
statement be interpreted to mean that earnings or earnings per share will
necessarily be greater or less than those for the relevant preceding financial
period for either Senior or Senior and AMT combined. Rather this statement
should be construed as a reference to potential enhancements to the earnings
that might otherwise have been earned during the relevant financial period.
(2) This statement is not intended to constitute a profit forecast for the
financial year ending 31 December 2007 or any other period, nor should this
statement be interpreted to mean that earnings or earnings per share will
necessarily be greater or less than those for the relevant preceding financial
period for either Senior or Senior and AMT combined. Rather this statement
should be construed as a reference to potential enhancements to the earnings
that might otherwise have been earned during the relevant financial period.
(3) This statement is not intended to constitute a profit forecast for the
financial year ending 31 December 2007 or any other period, nor should this
statement be interpreted to mean that earnings or earnings per share will
necessarily be greater or less than those for the relevant preceding financial
period for either Senior or Senior and AMT combined. Rather this statement
should be construed as a reference to potential enhancements to the earnings
that might otherwise have been earned during the relevant financial period.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 31st May 2024
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