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Severn River Cross (50IE)

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Friday 13 April, 2012

Severn River Cross

Notice of Stockholder Meeting

RNS Number : 2561B
Severn River Crossing PLC
13 April 2012
 



13 April 2012

SEVERN RIVER CROSSING PLC

 

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt about the action you should take, you should immediately consult your stockbroker, bank manager, solicitor, accountant or other independent professional adviser duly authorised under the Financial Services and Markets Act 2000.

If you have sold or transferred all of your Debenture Stock (as defined herein) in Severn River Crossing Plc, please pass this document, together with the accompanying documents, at once to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.

 

SEVERN RIVER CROSSING PLC
(incorporated in England and Wales with registered number 2379695)

Notice of a meeting of the holders of the
£127,500,000 6.125 per cent. index linked debenture stock (the "Debenture Stock")

This document contains details of proposals being made by Sever River Crossing Plc (the "Company") to holders of the Debenture Stock (the "Stockholders").

Notice of a meeting of the holders of the Debenture Stock of the Company to be held at 2.00 p.m. on 11 May 2012 at the offices of Clifford Chance LLP at 10 Upper Bank Street, London E14 5JJ is set out at the end of this document. Stockholders will find enclosed a Proxy Form for use at the meeting.  To be valid the Proxy Forms must be completed and returned to the Company's registrars, Capita Registrars, at:  PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as practicable and in any event so as to be received not later than 2.00 p.m. on 9 May 2012.  Forms may be either returned by post to this address or sent by fax on 01454 633893.

 

 

LETTER FROM THE CHAIRMAN

Date:    13 April 2012

To:       The holders (the "Stockholders") of the 6.125 per cent. Index Linked Debenture Stock issued by Severn River Crossing Plc

 

Dear Stockholder

1.         INTRODUCTION

The Company and the Highways Agency (the "HA"), being an executive agency of the Department for Transport which undertakes the functions of the Secretary of State for Transport (the "Secretary") set out in the Concession Agreement, have been involved in detailed and prolonged discussions regarding certain issues that have arisen in connection with the Concession Agreement.  Those issues relate specifically to:

(a)        recent changes in tax legislation which have had an impact on the Company;

(b)        the introduction by the Company of credit card payment systems in respect of the Estuarial Crossings pursuant to a request of the HA; and

(c)        the major inspection programme to be carried out towards the end of the concession period.

In order to address and resolve these issues, the Company and the HA have agreed in principle certain amendments to the Concession Agreement, including an adjustment to the RCRR (the total toll collection revenue amount to which the Company is entitled). These amendments will be effected by the execution of a third supplemental agreement (the "Third Supplemental Agreement") in relation to the Concession Agreement, a draft of which is attached to this Circular as Annex A.

The Company is seeking the consent of the Stockholders to enter into the Third Supplemental Agreement.

In addition, the Company is seeking the consent of the Stockholders to revise the definition of "Authorised Investments" contained in the Trust Deed to allow the Company to invest its cash balances with a wider range of appropriately rated banks and building societies than currently permitted in order to mitigate risks which may arise from the Company having significant exposures to a small number of counterparties and maintain a sufficiently diversified spread of institutions and investments.

Further, the Company is seeking the consent of the Stockholders to enter into a new secured short term facility agreement (the "New Facility") in order to provide the Company with additional funding towards its repayment obligations to the Stockholders on the Debenture Stock's scheduled repayment date.

2.         THIRD SUPPLEMENTAL AGREEMENT

A summary of the background and reasons for the changes contemplated by the Third Supplemental Agreement (which are more fully described therein) follows.

2.1       Tax changes

Industrial Buildings Allowances ("IBAs")

Under the tax regime which formed the basis for the Concession Agreement, the Company was able to claim IBAs of 4% per annum.  Pursuant to the Finance Act 2008, IBAs have been phased out and the Company is no longer able to make such claims.

The Company considers that the phasing out of such IBAs should, in accordance with clause 29 of the Concession Agreement, be treated as an Adverse Relevant Event under the Concession Agreement, and thus may give rise to an amendment to the Concession Agreement in accordance with the procedure set out in paragraph 2.2 below.

V.A.T.

Tolls collected by the Company in respect of the Estuarial Crossings are inclusive of V.A.T.  On 4 January 2011 the rate of V.A.T. that the Company is obliged to account for in respect of Tolls increased from 17.5 per cent. to 20 per cent.

The Company and the HA agree that such increase should, in accordance with clause 29 of the Concession Agreement, be treated as an Adverse Relevant Event under the Concession Agreement, and thus may give rise to an amendment to the Concession Agreement in accordance with the procedure set out in paragraph 2.2 below.

Corporation Tax

Pursuant to the Finance Act 2011, the rate of corporation tax payable by the Company was reduced to a rate of 26 per cent. with effect from 1 April 2011 and further reduced to a rate of 25 per cent. with effect from 1 April 2012.

The Company and the HA agree that such reductions in corporation tax should, in accordance with clause 29 of the Concession Agreement, be treated as a Beneficial Relevant Event under the Concession Agreement, and thus may give rise to an amendment to the Concession Agreement in accordance with the procedure set out in paragraph 2.2 below.

Further corporation tax changes (including those announced in the 2012 Budget Report) may give rise to additional Adverse Relevant Events or Beneficial Relevant Events.  However, such events are outside of the scope of the Third Supplemental Agreement.

2.2       Amendments to the Concession Agreement contemplated by the Third Supplemental Agreement as a result of tax changes

The Concession Agreement provides that where tax changes are treated as Adverse Relevant Events or Beneficial Relevant Events, the Company or the Secretary, as appropriate, may put forward proposals in order to mitigate or remedy the effects of such events.  If the parties are unable to agree both the consequences of such Relevant Events and/or what, if any, amendment to the Concession Agreement or adjustment to the RCRR and/or Toll is appropriate, then the matter shall be referred to the Disputes Resolution Procedure (as set out in clause 6 of the Concession Agreement).

In respect of the tax changes described in the paragraph 2.1 above, the draft Third Supplemental Agreement provides for an adjustment to RCRR as the appropriate remedy.  There is no right under the Concession Agreement for the Company to insist on a cash remedy as an alternative.

The change to RCRR proposed in the Third Supplemental Agreement arising from tax changes would lead to an increase of £23.72 million in the RCRR, the effect of which is to make good the overall value of the Concession Agreement to the Company in light of the changes to its tax position.  However, this change does not improve the negative effect on cash flow arising from the loss of IBAs from 2008 and the increased V.A.T. rate now payable by the Company since January 2011.

2.3       Introduction of credit cards payment systems

The Company has, at the request of the HA, implemented credit card payment systems as a means of paying Tolls on the Estuarial Crossings, the overall projected costs (capital expenditure and operating expenditure) of which to the end of the Concession are £13.63 million (in 2011 prices).

Under the Concession Agreement, works not included in the Government's Requirements but which the Secretary may request to be carried out pursuant to Clause 21 of the Concession Agreement are Entrusted Works. The process for Entrusted Works is for the Secretary to prepare documents necessary for the Company to invite tenders for the Entrusted Works.  The Company then conducts the tender process, following which the Secretary chooses a contractor, in consultation with the Company.  The Company then manages the relevant contracts and is entitled to reimbursement in full for all costs incurred under the contracts, and reasonable profits.

Although this process has not been followed in relation to the credit card payment systems due to existing arrangements with the Company's tolling software supplier, the Company considers the implementation of such payment systems to be Entrusted Works for the purpose of the Concession Agreement.

The Third Supplemental Agreement includes an agreement between the HA and the Company for an increase to the RCRR of £9.36 million in July 1989 prices (which is sufficient to compensate the Company for the projected costs of £13.63 million in 2011 prices) in connection with the work undertaken in respect of the credit card payment systems.

2.4       New Facility

The projected costs of the implementation of the credit card payment system up to the scheduled redemption date of the Debenture Stock are £4.32 million.  In order to mitigate the cash flow impact of such costs on the ability of the Company to repay the Debenture Stock, the Company and the Secretary have agreed in principle that, subject to certain conditions (as set out in the New Facility Consent Letter), the Secretary will consent to the Company entering into arrangements for additional secured financing of up to £4.32 million, which will rank ahead of its creditors other than holders of Debenture Stock.  Amounts borrowed pursuant to such financing will be available for application by the Company towards repayment of the Debenture Stock on the scheduled repayment date.

The Company is seeking the consent of the Stockholders to enter into a new secured short term facility agreement. The proposed approval from the Stockholders does not limit the amount of such facility to £4.32 million. This is to avoid having to seek further consent of the Stockholders in the event that the Company is able to obtain consent from the Secretary in relation to additional financing in connection with the scheduled redemption of the Debenture Stock. Any such financing will need to be in place at least 6 months prior to the scheduled redemption of the Debenture Stock, to ensure certainty of funds and avoid a deferral of the redemption date of the Debenture Stock as permitted by the Trust Deed.

The proposed Extraordinary Resolution, whilst not limiting the amount of any new facility, does require that all amounts borrowed by the Company under such facility are applied towards repayment of the Debenture Stock on its scheduled repayment date. 

Conditional upon the Extraordinary Resolutions being duly passed and the Secretary entering into the New Facility Consent Letter, the Company undertakes to use reasonable endeavours to procure additional secured financing of the maximum amount permissible in accordance with the conditions set out in the New Facility Consent Letter.

2.5       Special Principal Inspection

The Concession Agreement currently requires a major inspection programme to be carried out 2 years prior to the handing back of the project to the HA.  It is proposed in the Third Supplemental Agreement that this requirement be met as part of the Company's rolling 6 year inspection programme.  This change should reduce hand-back risk and expenditure to the Company.

2.6       Overall impact on the RCRR

The overall impact on RCRR in respect of the events described above will result in the RCRR being increased by £33.08 million (being the aggregate of £23.72 million in respect of tax changes and £9.36 million in respect of the credit card systems) from £995.83 million to £1,028.91 million.

2.7       V.A.T. changes

The Company is currently pursuing a claim against H.M. Revenue & Customs in relation to under-recovered input V.A.T. relating to the construction of the Second Estuarial Crossing.  If such claim is successful and the amount of money the Company receives as a result is not treated as a Beneficial Relevant Event for the purposes of the Concession Agreement, the Third Supplemental Agreement provides that an amendment to the RCRR amount will be made so that the new RCRR takes into account the receipt by the Company of the rebate in respect of such under-recovered V.A.T.  However, this amendment will only occur once the Debenture Stock has been redeemed or otherwise repaid in full, and therefore this provision will have no effect on the Stockholders.

2.8       Effect of the Third Supplemental Agreement

If the Third Supplemental Agreement is implemented, the Company considers that the advantages are as follows:

(a)        a financial remedy will be provided for the loss by the Company of its right to claim IBAs;

(b)        the RCRR will increase by £33.08 million (net), thereby increasing the financial value of the Concession Agreement to the Company;

(c)        the implementation of the credit card payment systems will be able to proceed as planned; and

(d)        the proposed changes should facilitate the handing back of the project to the HA at the end of the Concession.

If the Third Supplemental Agreement is not implemented, the expected consequences are:

(a)        the Company having to undertake a lengthy dispute resolution process in respect of the tax changes described above with uncertain outcome;

(b)        the implementation of the credit card payment systems may be delayed or cancelled, with possible adverse consequences on traffic flow and consequently the commercial reputation of the Company;

(c)        potential damage to the Company's relationship with the HA; and

(d)        the requirement for the Company to carry out a Special Principal Inspection at the end of the Concession will remain, which is likely to be burdensome.

3.         AUTHORISED INVESTMENTS - REVISED DEFINITION

In addition to the proposed amendments to the Concession Agreement, the Company is also proposing a change to the existing definition of "Authorised Investments" contained in the Trust Deed. A corresponding change will be made in the Government's Subordinated Loan Agreement.  The proposed form of the new definition is detailed in Extraordinary Resolution 2 set out in the notice of meeting of the Stockholders at the end of this document.

The Company currently has significant cash balances and seeks the ability to invest its funds with a wider range of banks and building societies than currently permitted, in order to mitigate risks which may arise from the Company having significant exposures to a small number of counterparties and maintain a sufficiently diversified spread of institutions and investments.

The proposed definition of "Authorised Investments" is based on that used in more  recent PFI projects and allows investment in debt obligations issued by appropriately rated banks/building societies, rather than only those banks/building societies which are listed in the UK.

The Company considers the amendment will not be materially prejudicial to the interests of the Stockholders, and is seeking an Extraordinary Resolution from the Stockholders approving this change.

4.         STATUS OF HA DISCUSSIONS

As noted above, the HA have agreed in principle to each of the Third Supplemental Trust Deed, the New Facility Consent Letter and a draft letter amending the definition of "Authorised Investments" in the Government's Subordinated Loan Agreement. Once the Extraordinary Resolutions are passed, the Company does not expect any delays in the execution of these documents.

5.         MEETING

A notice convening a meeting of the Stockholders is set out on pages 11 to 16 of this document. 

The resolutions set out in the notice sanction the taking of, and authorise the Trustee to execute documentation to implement, the steps necessary to effect the proposals set out above (including changes to the documents referred to above) (the "Proposals").

The resolutions set out in the notice of meeting are to be passed as Extraordinary Resolutions, which need a majority in favour of not less than three-fourths of the people voting at the meeting on a show of hands to be passed (or three-fourths of the votes given in any poll, with each Stockholder being entitled to one vote for every £1 in nominal amount of Stock of which he is a holder). The quorum for a meeting of Stockholders is two or more persons present in person or by proxy and holding or representing in the aggregate a clear majority in nominal amount of the Debenture Stock. If the first meeting is not quorate, it shall be adjourned for at least 10 days and the quorum for the adjourned meeting is two or more persons present holding Debenture Stock or voting certificates or being proxies, whatever the nominal amount they represent. The result of the vote on each resolution shall bind all Stockholders whether or not they voted and whether they were present or not at the meeting.

6.         ACTION TO BE TAKEN

Important: A Proxy Form is enclosed with this circular for use by the Stockholders at the meeting of Stockholders of which notice is being given, as set out below.  Stockholders are asked to complete and sign it in accordance with the instructions printed thereon and return it as soon as possible and in any event so as to be received by not later than 2.00 p.m. on 9 May 2012. Forms may be either returned by post to the address provided or faxed to 01454 633893. Completion and return of the Proxy Form will not prevent Stockholders from attending the meeting in person if they so wish.

If the procedures to be adopted in completing the Proxy Form are not clear, please contact Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or call 0871 664 0300 if calling within the United Kingdom or +44 20 8639 3399 if calling from outside the United Kingdom. Lines are open 8:30am - 5:30pm Mon-Fri. Calls to the helpline from within the United Kingdom cost 10 pence per minute (including VAT) from a BT landline. Other service providers' costs may vary. Calls to the helpline from outside the United Kingdom will be charged at applicable international rates. Calls may be recorded and monitored for security and training purposes.

7.         TRUSTEE

In accordance with normal practice, The Prudential Assurance Company Limited, as Trustee for the Debenture Stock, does not express any opinion as to the merits of the Proposals. It has, however, authorised it to be stated that it has no objection to the resolutions set out in the Notice convening the Meeting being submitted to the Stockholders for their consideration.  The Trustee has not been involved in formulating the Proposals nor does it make any representation that all relevant information has been disclosed to the Stockholders with respect to the Proposals.  The Trustee recommends Stockholders who are in any doubt as to the impact of the implementation of the Proposals to seek their own legal and financial advice.

8.         ASSOCIATION OF BRITISH INSURERS

These Proposals have been considered by a special committee of the Association of British Insurers who represent holders of, in aggregate principal amount, approximately 51.6 per cent. of the outstanding principal amount of the Debenture Stock. The members of the special committee consider that the Proposals are acceptable and intend to lodge their proxies in favour of the Extraordinary Resolutions.

9.         DOCUMENTS AVAILABLE FOR INSPECTION

Stockholders may, at any time during normal business hours on any weekday from the date hereof up to and including the date of the Meeting and at the Meeting and at any adjourned Meeting (and, in each case, for 15 minutes prior thereto), inspect copies of the documents listed below at the specified office of the Company and at the Meeting itself and at any adjourned Meeting (and, in each case, for 15 minutes prior thereto).

The documents available for inspection are:

(a)        the Trust Deed;

(b)        the draft Third Supplemental Trust Deed;

(c)        the Concession Agreement;

(d)        the draft Third Supplemental Agreement to the Concession Agreement;

(e)        the Government's Subordinated Loan Agreement;

(f)         the draft letter amending the Government's Subordinated Loan Agreement; and

(g)        the draft New Facility Consent Letter.

10.       BOARD RECOMMENDATION

Throughout the negotiations with the HA on the provisions of the Third Supplemental Agreement, the Company has considered the position of the Stockholders and sought to protect that position as far as possible.

Although the tax changes and the costs associated with the implementation of the credit card payment systems will have an adverse impact on the Company's cash flow, the Third Supplemental Agreement improves the robustness of the Company's financial position under the Concession Agreement through an increase in RCRR and, together with the Company's plans to enter into additional funding arrangements, takes steps to ensure that the position of the Stockholders is made more secure overall.

The Board of Directors of the Company consider the Proposals to be in the best interests of the Company and not materially prejudicial to interests of the Stockholders, and recommends the approval of the Proposals, including the voting in favour of the Extraordinary Resolutions to be proposed at the meeting of Stockholders, notice of which is attached.

 

 

 

Yours faithfully

 

………………………………….

Arthur Moore

Chairman

Severn River Crossing Plc

 

 

THIS NOTICE IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.  If you are in any doubt about the action you should take, you should immediately consult your stockbroker, bank manager, solicitor, accountant or other independent professional adviser duly authorised under the Financial Services and Markets Act 2000.

NOTICE OF MEETING OF HOLDERS

£127,500,000 6.125 per cent. Index Linked Debenture Stock

issued by Severn River Crossing Plc

Severn River Crossing Plc (the "Company") hereby gives notice to the holders (the "Stockholders") of the £127,500,000 6.125 per cent. index linked debenture stock issued by the Company (the "Debenture Stock") that, in accordance with the provisions of Schedule 3 of the trust deed dated 29 October 1990, as amended or supplemented from time to time (the "Trust Deed") relating to the Debenture Stock and made between the Company and The Prudential Assurance Company Limited as trustee for the Stockholders (the "Trustee"), a meeting of the Stockholders will be held at the offices of Clifford Chance LLP, 10 Upper Bank Street, London E14 5JJ on 11 May 2012 at 2 p.m. (London time) for the purposes of considering and, if thought fit, passing the following resolutions, each of which will be proposed as an Extraordinary Resolution in accordance with the provisions of the Trust Deed:

EXTRAORDINARY RESOLUTIONS

1.         THAT:

(a)        the proposed amendments to the concession agreement dated 29 October 1990 between the Company and the Secretary of State for Transport, as amended or supplemented from time to time (the "Concession Agreement") set out in the draft third supplemental agreement to the Concession Agreement to be executed by the Company and the Secretary of State for Transport and attached as Annex A hereto be sanctioned and approved; and

(b)        the approval referred to in ‎(a) above shall constitute approval for the purposes of clause 11(E)(2) (Covenants by the Company - Project Related Undertakings - Variations of Concession Agreement) of the Trust Deed.

2.         THAT:

(a)        the Trustee be authorised and instructed to, and the Company be authorised to, enter into (on such terms as it shall approve) the third supplemental deed to the Trust Deed (the "Third Supplemental Trust Deed") which shall modify the Trust Deed by the deletion of the definition of " Authorised Investments" in Clause 1(A) thereof and its replacement with the following definition:

"Authorised Investments" means investments having an outstanding maturity of less than 24 months from the date of purchase denominated in Sterling in any of the following:

(a)        freely transferable and marketable debt securities issued by H.M. Government which constitute direct, primary and unsubordinated obligations; or

(b)        bank debt obligations in the form of certificates of deposit, time deposits or banker's acceptances with, as at the date of purchase (and provided that any reinvestment of funds at maturity of the initial investment shall be deemed a purchase for these purposes), long term senior debt ratings of A- or better by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies Inc and A3 or better by Moody's Investor Services Limited, issued in the United Kingdom by a bank which is an authorised institution (for the purposes of the Financial Services and Markets Act 2000) or a building society (which is an authorised institution under the Building Societies Act 1986); or

(c)        other investments as may be agreed in writing between the Company and the Trustee (or sanctioned by an Extraordinary Resolution).

Authorised Investments shall not include any investment with or in any Person who, for the time being, is (a) a shareholder of the Company or (b) an associate of such a shareholder being a company which is the shareholder's holding company or subsidiary or another subsidiary of such holding company (except investments entered into on an arms-length commercial basis). For these purposes "subsidiary" shall mean a subsidiary or subsidiary undertaking within the meaning of the Companies Act 1985, as amended from time to time and for the above purposes equity share capital has the meaning given to that term in section 744 of the Companies Act 1985, as amended from time to time.

If the amount of total Cash held by the Company at any time is £10,000,000 or more, no more than the lower of (i) 25% of such total Cash and (ii) £30,000,000 may be invested in any one bank or building society at any time.  If the amount of such total Cash is less than £10,000,000, no more than £2,000,000 of such total Cash may be invested in any one bank or building society at any time.  No more than 5% of such total Cash may be invested in a single issue of securities by any issuer at any time.

For these purposes "Cash" means:

(a)        cash;

(b)        the credit balance on any bank account or other account in which the Company is permitted to deposit its money in accordance with the definition of "Authorised Investments"; and

(c)        (to the extent not falling within paragraph (b) above) the amount of any Authorised Investment (which shall be the cost of its acquisition);

(b)        the Company be authorised to agree to an amendment to the Government's Subordinated Debt Instrument (as defined in the Trust Deed) in order to replace the definition of "Authorised Investments" set out in clause 1 (Interpretation) of the Government's Subordinated Debt Instrument with the definition set out in (a) above, and the Company be authorised to approve the terms of and execute any document necessary to effect such amendment; and

(c)        the approvals provided in (a) and (b) above will constitute the consent of the Stockholders for the purposes of clause 11(E)(5) (Covenants by the Company - Project Related Undertakings - Variations to other Project Agreements) of the Trust Deed.

3.         THAT:

(a)        the entry by the Company into a facility agreement, provided that all amounts borrowed by the Company under such facility agreement are applied towards repayment of the Debenture Stock on its scheduled repayment date, be sanctioned and approved; and

(b)        the approval referred to in (a) above will constitute the consent of the Stockholders for the purposes of clause 11(D)(11) (Covenants by the Company - General and Financial - Restrictions on Further Indebtedness) of the Trust Deed.

4.         THAT:

(a)        the Trustee is hereby discharged and exonerated, and we direct the Company to discharge and exonerate the Trustee, from all liability for which it may have become or may become responsible under the Trust Deed or the Conditions, and any and all documents and agreements to which they relate, in respect of any act or omission in connection with the Extraordinary Resolutions; and

(b)        the Trustee shall not have any liability for acting upon the Extraordinary Resolutions even if it may be subsequently found that there is a defect in the passing of the Extraordinary Resolutions or that for any reason the Extraordinary Resolutions are not valid or binding upon them. 

The attention of Stockholders is drawn in particular to the quorum required for the Meeting and for an adjourned Meeting which is set out in paragraph 3 of "Voting and Quorum" below.

By order of the board

 

________________________

Arthur Moore

Director

Date:    13 April 2012

 
 
VOTING AND QUORUM

1.         Who is entitled to vote on the proposed Extraordinary Resolutions?

The persons entered in the register kept by the Company as Stockholders are entitled to vote on the Extraordinary Resolutions.  For further details see "Procedures for Voting" below.

2.         Procedures for Voting

Stockholders may vote on the proposed Extraordinary Resolutions by attending and voting at the Meeting (i) in person, in the case of a Stockholder that is an individual; (ii) in the case of a Stockholder that is a corporation, by its representative duly authorised by a resolution of that corporation's directors or other governing body as required by paragraph 12 of Schedule 3 of the Trust Deed, such duly authorised person to be present at the Meeting; or (iii) in the case both individual or corporate Stockholders, by proxy appointed in the manner set out in paragraphs 13-15 of Schedule 3 of the Trust Deed and present at the Meeting.

To be effective, the instrument appointing a proxy and any authority under which it is executed, (or a notarially certified copy of such authority) must be deposited at the offices of Capita Registrars, at: PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, not less than 48 hours before the time for holding the meeting or adjourned meeting or the taking of a poll at which the person named in the instrument proposes to vote.  Forms may be either returned by post to this address or sent by fax on 01454 633893. A Proxy Form is enclosed with this notice.  Completion and return of the Proxy Form will not preclude Stockholders from attending and voting in person at the meeting. 

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting to be held on the above date and any adjournment(s) thereof by using the procedures described in the CREST Manual.  CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST Manual.  The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company's agent (ID: RA10) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting.  For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.  After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages.  Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.  It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.  In this regard, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

3.         Quorum

The quorum required at the Meeting is two or more persons being Stockholders present in person or by proxy and holding or representing in the aggregate a clear majority in nominal amount of the Stock for the time being outstanding.

4.         Adjourned Meeting

If within 5 minutes (or such longer period not exceeding 20 minutes as the Chairman may decide to wait) from the time appointed for the Meeting a quorum is not present the Meeting shall stand adjourned to a date that is not less than 10 days nor more than 28 days from the date of the original Meeting and to such time and place as may be appointed by the Chairman of the Meeting.  The quorum required at such adjourned Meeting is two or more persons being Stockholders present in person or by proxy, whatever the nominal amount of Stock held by them.

5.         Procedures at the Meeting

(a)        Every resolution submitted to the Meeting will be decided on a show of hands unless (before or on the declaration of the result of the show of hands) a poll is demanded by the Chairman of the Meeting or by three or more Stockholders present in person or by proxy or by one or more persons holding or representing by proxy at least one-twentieth in nominal amount of the Stock for the time being outstanding.  Unless a poll is so demanded, a declaration by the Chairman that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.

(b)        If at any meeting a poll is demanded it shall be taken in such manner as the Chairman may direct and the result of a poll shall be deemed to be a resolution of the Meeting.

(c)        On a show of hands every Stockholder who (being an individual) is present in person or (being a corporation) is present by its representative duly authorised in accordance with paragraph 12 of Schedule 3 to the Trust Deed (as described in paragraph ‎2 (Procedures for Voting) above), or is present by proxy shall have one vote.

(d)        On a poll every Stockholder who (being an individual) is present in person or (being a corporation) is present by its representative duly authorised in accordance with paragraph 12 of Schedule 3 to the Trust Deed (as described in paragraph ‎2 (Procedures for Voting) above), or is present by proxy shall have one vote for every £1 in nominal amount of Debenture Stock of which he is the holder.

(e)        In case of an equality of votes whether on a show of hands and on a poll, the Chairman of the Meeting shall have a casting vote in addition to any vote or votes (if any) to which he may be entitled as a Stockholder or as a proxy.

(f)         To be passed, each Extraordinary Resolution requires a majority of not less than three quarters of the persons voting at the Meeting on a show of hands or if a poll is demanded a majority consisting of not less than three quarters of the votes given on such poll.

(g)        If passed, the Extraordinary Resolutions will be binding on all Stockholders, whether or not present at the Meeting and each Stockholder and (subject to certain exceptions set out in the Trust Deed) the Trustee shall be bound to give effect thereto accordingly.

 

 

PROXY FORM

SEVERN RIVER CROSSING PLC

(the "Company")

FORM OF PROXY

FOR USE AT THE

MEETING OF THE HOLDERS OF

THE 6.125 PER CENT. INDEX-LINKED

DEBENTURE STOCK

OF THE COMPANY

CONVENED FOR 2 p.m. ON 11 MAY 2012 AND

ANY ADJOURNED MEETING

 

I/We ………………………………………………………… [BLOCK CAPITALS PLEASE]

of ………………………………………………………………………………………………

being a holder/holders of [             ] [Note 1]  of the 6.125 per cent. index linked debenture stock of Severn River Crossing Plc (the "Debenture Stock"),

HEREBY APPOINT ………………………………………………………………..  [Note 2]

or failing whom (or if no person is named) the chairman of the meeting, as my/our proxy to attend, act and vote for me/us and on my/our behalf at the meeting of the holders of the Debenture Stock to be held at 2.00 pm on 11 May 2012 and any adjourned meeting.

Please indicate with a tick below how you wish your vote(s) to be cast in respect of the Extraordinary Resolutions.

 

 

 

FOR

AGAINST

1.

EXTRAORDINARY RESOLUTION TO SANCTION AND APPROVE the execution of the third supplemental agreement to the Concession Agreement

 

 

2.

EXTRAORDINARY RESOLUTION TO SANCTION AND APPROVE the amendment to the definition of "Authorised Investments"

 

 

3.

EXTRAORDINARY RESOLUTION TO SANCTION AND APPROVE the entry by the Company into a facility agreement, provided all amounts borrowed are applied towards repayment of the Debenture Stock on its scheduled repayment date

 

 

4.

EXTRAORDINARY RESOLUTION TO DISCHARGE AND EXONERATE the Trustee from any liability in connection with the Extraordinary Resolutions

 

 

 

Date ..…………………………….., 2012      Signature(s) ……………………….…

1.           Please insert nominal amount of Debenture Stock held.  If no amount is entered the proxy appointment will be deemed to be in respect of your entire holding.

2.           A Stockholder entitled to attend and vote at the meeting is also entitled to appoint a proxy to attend and, on a poll, vote instead of him.  The proxy need not be a Stockholder.  A proxy of a Stockholder's own choice may be appointed by inserting the proxy's name on this Proxy Form in the space provided. 

3.           If the Proxy Form is returned without an indication of to how the proxy must vote on a particular matter, the proxy will exercise his discretion as to whether, and if so how, he votes.

4.           To be effective, the Proxy Form and any authority under which it is executed (or a notarially certified copy of such authority) must be deposited at the Company's registrars, Capita Registrars, at:  PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, not less than 48 hours before the time for holding the meeting or adjourned meeting or the taking of a poll at which the person named in the instrument proposes to vote.  Forms may be either returned by post to this address or sent by fax on 01454 633893. Completion and return of the Proxy Form will not preclude Debenture Stockholders from attending and voting in person at the meeting.

5.           CREST members should use the CREST electronic proxy appointment service and refer to paragraph 2 of the section entitled "Voting and Quorum" in the Notice of Meeting in relation to the submission of a proxy appointment via CREST.

6.           The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or in the case of a corporation, under its common seal or the hand of the duly authorised officer or attorney.

7.           In the case of joint holders of the Debenture Stock, the vote of the most senior who tenders the vote whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose, seniority shall be determined by the order in which the names stand in the register of Stockholders.

8.           Sign and date the Proxy Form in the spaces provided.

 

DEFINITIONS

"Adverse Relevant Event" has the meaning given to such term in the Concession Agreement.

"Beneficial Relevant Event" has the meaning given to such term in the Concession Agreement.

"Company" means Severn River Crossing Plc.

"Concession" means all necessary rights to design and build the second tolled Severn estuarial crossing, and to finance, maintain and operate both Estuarial Crossings.

"Concession Agreement" means the concession agreement dated 29 October 1990 between the Company and the Secretary of State for Transport in connection with the construction and operation of the Estuarial Crossings, as amended and supplemented from time to time.

"CREST" means the clearing system operated by CREST Co. Limited.

"Debenture Stock" means the 6.125 per cent. Index-Linked Debenture Stock of the Company.

"Dispute Resolution Procedure" means the procedure set out in Schedule 5 to the Concession Agreement.

"DfT" means the Department for Transport.

"Entrusted Works" means those works not included in the Government's Requirements but which the Secretary of State may request to be carried out pursuant to Clause 21 (Entrusted Works) of the Concession Agreement.

"Estuarial Crossings" has the meaning given to such term in the Concession Agreement.  

"Government's Requirements" means the requirements set out identified in Schedule 3, Part 1 to the Concession Agreement.

"Government's Subordinated Loan Agreement" means the subordinated loan agreement between the Company and the Secretary of State for Transport dated 29 October 1990.

"HA" means the Highways Agency.

"New Facility Consent Letter" means the draft letter attached as Annex B to this Circular.

"Proxy Form" means the proxy form attached to the Notice of Meeting of the Stockholders.

"RCRR" means required cumulative real revenue and is further defined in the Concession Agreement.

"Secretary" means the Secretary of State for Transport.

"Special Principal Inspection" means an inspection programme undertaken by the Company in relation to the Estuarial Crossings and related facilities, as described in the Concession Agreement.

"Stockholders" means the holders of Debenture Stock.

"Third Supplemental Trust Deed" means the draft third supplemental deed to the Trust Deed which shall modify the Trust Deed by the replacement of the definition of " Authorised Investments" in Clause 1(A) thereof in accordance with the Extraordinary Resolution set out in paragraph 2 of the Notice of Meeting.

"Tolls" means the toll to be applied to traffic in accordance with Schedule 2, Part 1 of the Concession Agreement.

"Trust Deed" means the trust deed dated 29 October 1990 (as supplemented by the First Supplemental Trust Deed dated 16 January 1997 and the Second Supplemental Trust Deed dated 20 December 2002) made between the Company and the Trustee.

"Trustee" means The Prudential Assurance Company Limited, as trustee for the Stockholders.

 

ANNEX A

THIRD SUPPLEMENTAL AGREEMENT

 

THIS DEED is made on [•] 2012

BETWEEN

(1)        THE SECRETARY OF STATE FOR TRANSPORT of Great Minster House, 33 Horseferry Road, London SW1P 4DR (the "Secretary of State"); and

(2)        SEVERN RIVER CROSSING PLC (registered number 2379695), whose registered office is at Bridge Access Road, Aust, South Gloucestershire BS35 4BD (the "Concessionaire" and, together with the Secretary of State, the "Parties").

BACKGROUND

(A)       This deed is supplemental to and varies the Concession Agreement dated 29 October 1990, as supplemented and varied by the First Supplemental Agreement to the Concession Agreement dated 3 April 2000 and the Second Supplemental Agreement to the Concession Agreement dated 20 December 2002 (together the "Concession Agreement") between the Parties.

(B)       Under the tax regime which formed the basis for the Concession Agreement, industrial buildings allowances were available to the Concessionaire.  The Finance Act 2008 led to a phasing out of industrial buildings allowances (the "IBA Elimination").  The IBA Elimination constitutes an Adverse Relevant Event for the purposes of the Concession Agreement.

(C)       From 4 January 2011 the rate of V.A.T. for which the Concessionaire is obliged to account in respect of Tolls (the "V.A.T. Rate") increased from 17.5 per cent. to 20 per cent (the "V.A.T. Increase"), which pursuant to clause 29.2 of the Concession Agreement constitutes an Adverse Relevant Event under the Concession Agreement.

(D)       The rate of corporation tax payable by the Concessionaire (the "Concessionaire Corporation Tax") was reduced to a rate of (i) 26 per cent. with effect from 1 April 2011 and (ii) 25 per cent. with effect from 1 April 2012 (the "Corporation Tax Reduction"), pursuant to the Finance Act 2011.  The Corporation Tax Reduction constitutes a Relevant Event for the purposes of the Concession Agreement.

(E)       The Concessionaire has implemented card payment systems as a means of paying Tolls in respect of the Estuarial Crossings (the "Card Payment Systems").  The implementation and operation of the Card Payment Systems necessitates an amendment to the Concession Agreement as set out herein.

(F)       Having regard to each Relevant Event and Adverse Relevant Event referred to in Recitals (B) to (D) above and the necessary amendments referred to in Recital (E) above (together, the "Events"), the Secretary of State and the Concessionaire have agreed to vary the terms of the Concession Agreement in accordance with its provisions and on the terms set out in this deed.

IT IS AGREED as follows:

1.         Definitions and Interpretations

1.1       Words and expressions defined in the Concession Agreement have the same meaning in this deed except where otherwise provided for or unless the context otherwise requires.

1.2       Clauses 1.2 to 1.9 of the Concession Agreement shall be deemed to be incorporated into this deed as if set out, mutatis mutandis, herein.

2.         RCRR Adjustment

2.1       In full and final settlement of the Events, but without prejudice to the provisions of clause 6 below, the Parties agree that with effect from the date of this deed, the Concession Agreement shall be amended in accordance with clause 2.2 below.

2.2       The definition of "RCRR" shall be deleted and replaced with the following definition:

""RCRR" means the required cumulative real revenue of £1,028,910,000 (as amended from £976,834,740 as set out in the Concession Agreement dated 29 October 1990 to £995,830,000 pursuant to the Second Supplemental Agreement to the Concession Agreement dated 20 December 2002, and to £1,028,910,000 by the Third Supplemental Agreement to the Concession Agreement dated [●] 2012), or such other sum certified pursuant to Clause 5.1 (Financial Terms and Documentation) expressed in July 1989 prices which the Concessionaire requires to receive during the Maximum Concession Period."

3.         Special Principal Inspection

3.1       The Parties agree that with effect from the date of this deed, the Concession Agreement shall be amended in accordance with clauses 3.2 to 3.5 below.

3.2       Paragraph 4.2.9(a) of Part 1 of Schedule 10 to the Concession Agreement shall be deleted and replaced with the following:

"The Concessionaire will undertake an inspection programme in relation to the Estuarial Crossings and related facilities which shall commence in January 2011 and continue to the end of the Concession Period (together, the "Special Principal Inspection")."

3.3       Paragraph 4.2.9(c) of Part 1 of Schedule 10 to the Concession Agreement shall be deleted and replaced with the following:

"The Concessionaire will carry out any necessary maintenance and repair work before the end of the Concession Period to ensure to the satisfaction of the Secretary of State that the condition of the Estuarial Crossings is and will remain satisfactory for the outstanding portion of their design life in accordance with the provisions of the Concession Agreement."

3.4       Paragraph 10 (Transfer of Toll Facilities to the Government) of Schedule 10, Part 2, Section 1 (Concessionaire's Operation Proposals) shall be deleted and replaced with the following:

"A joint inspection and inventory of all buildings and equipment to be transferred back to the Government shall be carried out between 2 years and 1 year before the expected end of the Concession Period.  This will enable sufficient time, if necessary, to carry out any agreed tasks prior to the handing over of the facilities to the Government."

3.5       The first two sentences of paragraph 7.10(a) (Transfer of both Estuarial Crossings to the Government at the end of the Concession Period (Schedule 10 Part 1 Clause 4.2.9)) of Schedule 10, Part 2, Section 2 (Concessionaire's Maintenance Proposals) shall be deleted and replaced with the following:

"The Special Principal Inspection would generally follow the format of the normal principal inspections of the various elements of the structure, adopted during the Concession Period, but would involve detailed sampling and testing of materials."

4.         Card Payment Systems

4.1       The Parties agree that with effect from the date of this deed, the Concession Agreement shall be amended in accordance with clauses 4.2 and 4.3 below.

4.2       The following sentence shall be inserted at the end of paragraph 1.3 (Toll Collection) of Schedule 10, Part 2, Section 1 (Concessionaire's Operation Proposals):

"The Concessionaire will operate for the period commencing [• 2012] until the end of the Concession Period a card payment system in accordance with the specification set out in paragraph 4.2.11 (Government's Requirements for a Card Payment System) of Part 1 of Schedule 10"

4.3       The following text shall be inserted as a new paragraph 4.2.11 (Government's Requirements for a Card Payment System) of Part 1 of Schedule 10 (Operation and Maintenance - Government's Requirements) to the Concession Agreement:

"4.2.11   Government's Requirements for a Card Payment System

(a)        The card payment system will be designed and operated to ensure that the following criteria are being met at all times:

-           To provide an automated card method of payment in all 21 Toll Lanes at both Toll Plazas. (Rogiet 13 No. and Aust 8 No.).

-           To ensure, as far as is reasonably practical, that the ability to pay by card is available to users of the Crossings at all times and that sufficient lanes are accepting card payment so as to maintain traffic throughput.

-           To deliver secure transactions whilst maintaining card holder integrity.

-           Compliance with UK banking standards and PCI-DSS requirements, both immediate and long term.

-           Full integration of back office accounting and reconciliation.

-           To provide the customer with a receipt if required.

-           As far as is reasonably practical, to provide the relevant maintenance and operational backup to keep the system operational at all times.

(b)        The system will accept payment from (but not limited to) the following card types:

-           Visa Debit

-           Visa Credit

-           MasterCard Credit

-           Solo

-           American Express"

5.         Certification of the RCRR Adjustment

5.1       The Parties acknowledge and agree that this deed shall constitute the certification of such adjustment to the RCRR as required by clause 5.1.1 (Financial Terms and Documentation) of the Concession Agreement.

6.         Reservation of Position

The Parties expressly reserve their respective positions on the question of entitlement to restitution in respect of the Relevant Events.  In particular, the Parties expressly reserve their respective positions on whether any inability on the part of the Concessionaire to pay a dividend, or any ability to pay only a reduced dividend, as a consequence of an Adverse Relevant Event gives rise to an entitlement to a remedy under the Concession Agreement.

7.         V.A.T. Claim

7.1       The Parties note that as at the date of this deed, the Concessionaire is pursuing a claim against H.M. Revenue & Customs in relation to under-recovered input V.A.T. on the construction services of the Second Estuarial Crossing (the "Claim").

7.2       Should the Claim result in a payment to the Concessionaire from H.M. Revenue & Customs, the amount of such payment (less the Concessionaire's costs incurred in pursuing the Claim) (the "Claim Amount") shall be applied in accordance with the provisions of the Concession Agreement.

7.3       The Parties agree that the amendment to the definition of "RCRR" pursuant to Clause 2.1 of this deed, and in particular the increase of the RCRR amount to £1,028,910,000, was calculated on the basis of cashflow projections set out in the HA/the Company Financial Model Reference December 2010 HA Assumptions Book N version 4 (the "Projections", a copy of which is annexed to this Agreement).

7.4       If the receipt by the Concessionaire of the Claim Amount is not treated as a Beneficial Relevant Event for the purposes of the Concession Agreement (either pursuant to clause 6 (The Effect of the Bill, etc) or clause 29 (Tax) of the Concession Agreement), then the Parties agree that the RCRR amount will be further amended (but not until such time as the Debenture Stock has been redeemed or otherwise repaid in full) from £1,028,910,000 so that it equals the RCRR amount (as determined by the Parties acting in good faith) which would have been calculated on the basis of the Projections if the Projections had included receipt of the Claim Amount on the date on which the Claim Amount was received by the Concessionaire.  For the avoidance of doubt, no changes to the Projections shall be made other than the inclusion of the Claim Amount.  The Parties agree to enter into such documentation as is required to give effect to this amendment to the RCRR amount.

7.5       The Concessionaire agrees to pursue the Claim unless, and until such time as, the likelihood of success and the quantum that is likely to be recovered do not justify further action on the part of the Concessionaire (as determined by the Concessionaire, acting in good faith and in accordance with its legal duties and its directors' legal duties).  The Concessionaire will update the Secretary of State as to progress in relation to the Claim, providing further explanation and external evidence and advice as appropriate and as may reasonably be requested.  The Concessionaire undertakes to consult with the Secretary of State before reaching any decision to cease pursuing the claim.

8.         Amendment to Second Supplemental Agreement

The Parties recognise that current financial forecasts project that the Concessionaire does not expect to pay dividends to the ordinary shareholders of the Concessionaire.  In view of that, it is agreed that the consent provided by the Secretary of State under clause 4.1 of the Second Supplemental Agreement to the Concession Agreement dated 20 December 2002 in respect of the dividend payment of £32,000,000 in the second half of 2014 is hereby withdrawn.

9.         Third Party Rights

A person who is not party to this deed has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this deed.

10.       Miscellaneous

10.1     Save as expressly provided in this deed all the provisions of the Concession Agreement and all other documents related to the Concession to which the Secretary of State is a party shall remain in full force and effect.

10.2     No Party may assign or transfer any of its rights or obligations under this deed without the prior written consent of the other Party.

10.3     No amendments or modifications to this deed shall be valid and binding on the Parties unless made in writing and signed by duly authorised representatives of both Parties.

10.4     All Disputes arising under, out of, or in connection with this Agreement shall be resolved in accordance with the provisions set out in Schedule 5 (Dispute Resolution Procedure) of the Concession Agreement.

10.5     This deed may be executed in any number of counterparts, each of which is an original and all of which together evidence the same agreement.

11.       Governing Law

This deed and all matters arising out of or in connection with it are governed by English law.

 

IN WITNESS WHEREOF the parties hereto have executed and delivered this deed the day and year first before written.

 

The Corporate Seal of the                              )

SECRETARY OF STATE FOR                 )

TRANSPORT                                              )

hereunto affixed                                              )

is authenticated by:                                         )

 

......................................................................

 

Executed as a Deed by                                   )

SEVERN RIVER CROSSING PLC          )

acting by                                                        )

 

......................................................................

Director

 

......................................................................

Director

 

[Projections will be annexed to executed version]

 

 

ANNEX B

NEW FACILITY CONSENT LETTER

To:       Severn River Crossing plc (the "Company")

Bridge Access Road

Aust

South Gloucestershire

BS35 4BD

From:   The Secretary of State for Transport (the "Secretary of State")

Great Minister House

33 Horseferry Road

London

SW1P 4DR

Date:    [•] 2012

Dear Sirs

New Facility Consent Letter

1.         We refer to:

(a)        a concession agreement dated 29 October 1990 between the Company and the Secretary of State, as supplemented and varied by a first supplemental agreement dated 3 April 2000, a second supplemental agreement dated 20 December 2002 and a third supplemental agreement dated [●] 2012 (together, the "Concession Agreement");

(b)        a subordinated loan agreement dated 29 October 1990 between the Company and the Secretary of State (the "Subordinated Loan Agreement"); and

(c)        an intercreditor agreement dated 29 October 1990 between the Company, the Secretary of State, Bank of America International Limited as Banks' Agent and Senior Trustee and the other parties listed therein (the "Intercreditor Agreement").

2.         Capitalised terms used but not otherwise defined in this letter shall have the meanings given to them in the Intercreditor Agreement.

3.         The Secretary of State notes that the Company has requested its consent to enter into a new secured short term facility agreement (the "New Facility") in order to make repayments in respect of the Debenture Stock.

4.         Pursuant to clause 7.11 of the Subordinated Loan Agreement, the Secretary of State hereby consents to the entry by the Company into the New Facility provided that the following conditions are met:

(a)        the Company does not have sufficient funds available to meet the repayment in full of the Debenture Stock on its scheduled repayment date (the "Repayment Date");

(b)        the amount of the New Facility is no greater than the additional costs incurred by the Company as a result of the introduction and operation of certain credit card payment systems for the Estuarial Crossings (as defined in the Concession Agreement) on or prior to the Repayment Date;

(c)        the security for the New Facility comprises the same property and is granted on substantially the same terms as that granted in respect of the Debenture Stock;

(d)        the final repayment date of the New Facility will be a date falling no later than 12 months after the Repayment Date;

(e)        at the time of entry into the New Facility, the Company's financial projections will show that by entering into the New Facility there will be no reduction in the expected payments to the Secretary of State under the Subordinated Loan Agreement compared to the expected payments if the Company were to defer payments due in respect of the Debenture Stock in accordance with its terms;

(f)         the lender(s) under the New Facility accede to the Intercreditor Agreement and agree to be bound by the Intercreditor Agreement as if they were Debenture Stock Creditors; and

(g)        the entry into the New Facility does not or will not, as at the date the New Facility becomes effective, have or result in a material adverse effect on the interests of the Secretary of State.

5.         On the date of entry into the New Facility, the Company will provide the Secretary of State with a certificate signed by an authorised signatory of the Company confirming that the New Facility complies with the conditions set out in paragraph 4 above.

6.         At least 60 days prior to the proposed date of entry into the New Facility, the Company will notify the Secretary of State of the proposal and provide a draft of the certificate referred to in paragraph 5 above, together with supporting documentation (including a copy of the draft facility agreement (or term sheet, as relevant) and updated financial projections).  The Secretary of State may, within 28 days of receipt of such information, request such further documentation relating to the above conditions as it may require (acting reasonably).  Provided that the Secretary of State is satisfied (acting reasonably) that the conditions set out in paragraph 4 above will be met, the Secretary of State will confirm in writing its consent (which may be subject to receipt of the signed certificate from the Company referred to in paragraph 5 above) to the New Facility no later than 5 days prior to the proposed date of  entry into the New Facility.

7.         The Secretary of State agrees that the consent referred to in paragraphs ‎4 and 6 above shall be deemed to constitute each and every consent that may be required to be given by it under the terms of the Concession Agreement (including, but not limited to, any consent that may be required pursuant to clause 5.4 of the Concession Agreement).  It is hereby agreed that the New Facility shall be a Funding Agreement for the purposes of the Concession Agreement.

8.         This letter may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this letter.

9.         This letter and any non-contractual obligations arising out of or in connection with it are governed by English law.

Please confirm your agreement with the above by signing where indicated below.

Yours faithfully,

 

The Corporate Seal of the                              )

SECRETARY OF STATE FOR                 )

TRANSPORT                                              )

hereunto affixed                                              )

is authenticated by:

 

We hereby agree to the terms of the above letter:

 

......................................................................

Executed as a deed by two directors for and on behalf of

SEVERN RIVER CROSSING PLC

 


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