Return of Cash to Shareholder
BODYCOTE PLC
RETURN OF CASH TO SHAREHOLDERS AND SHARE CAPITAL CONSOLIDATION
21 November 2008
On 28 August 2008, Bodycote PLC ('Bodycote' or the 'Company') announced the conditional sale of its Testing Business (the 'Sale') and its intention to return approximately £260m of the proceeds of the Sale to shareholders of the Company (the ' Shareholders'). The Sale was completed on 17 October 2008.
Bodycote issued its Interim Management Statement on 17 November 2008, in which it stated that, due to unprecedented financial market conditions since the initial announcement of the Sale and following consultations with a number of its leading Shareholders and the Company's advisors, the Board had concluded that it would not be in the best interests of Shareholders or the Company to return the previously indicated £260m to Shareholders. It stated that the Board therefore now intends to return to Shareholders approximately £130m (equivalent to 40 pence per existing ordinary share of 10 pence each ('Existing Ordinary Share')) (the 'Return of Cash'), with the remainder of the proceeds of the Sale being used to pay down the existing debt of the Company. The Interim Management Statement also provided an update on Bodycote's current trading and prospects. This announcement provides further information on the proposed structure and timing of the Return of Cash.
The Return of Cash (together with certain other matters, including proposed amendments to the articles of association of the Company necessary to effect the Return of Cash) requires the approval of Shareholders. These approvals will be sought at a general meeting of Bodycote, which is expected to be held at 11.30 am on 8 December 2008 at the Company's registered office, Springwood Court, Springwood Close, Tytherington Business Park, Macclesfield, Cheshire, SK10 2XF (the 'General Meeting'). A circular (incorporating a notice of General Meeting) concerning the Return of Cash and Share Capital Consolidation ('the Circular') will be posted later today to Shareholders.
Shareholders should read the whole of the Circular and not just rely on the summarised information set out in this or earlier announcements. In particular, Shareholders should read Part 6 of the Circular which will set out a summary of the expected tax consequences for UK Shareholders in relation to the Return of Cash and the options available to Shareholders.
Under the Return of Cash, Shareholders will receive one B share of 40 pence each ('B Share') for every one Existing Ordinary Share held on the Ordinary Share Record Date (expected to be 5.00pm on 8 December 2008). At the closing middle-market price of 95 pence per Existing Ordinary Share on 20 November 2008, the proposed Return of Cash to Shareholders represents approximately 42 per cent. of Bodycote's market capitalisation at that date. The main features of the B Shares and the choices available to Shareholders are summarised below. In addition to the receipt of B Shares by Shareholders under the Return of Cash, there will be a one-off share capital consolidation whereby the Existing Ordinary Shares will be replaced by new ordinary shares of 17 3/11 pence each (the 'New Ordinary Shares') so as to reduce the number of shares of the Company in issue approximately in proportion to the percentage of the Company's market capitalisation which is to be returned to Shareholders by the Return of Cash (the 'Share Capital Consolidation'). The aim of the Share Capital Consolidation is to ensure that, so far as possible, the market price of an ordinary share in the capital of the Company remains the same before and after the Return of Cash and to maintain comparability of historical and future per share data. The ratio used for the Share Capital Consolidation has been set by reference to the closing middle-market price of 95 pence per Existing Ordinary Share on 20 November 2008. Further details of the Share Capital Consolidation are summarised below.
The New Ordinary Shares will be admitted to listing on the Official List and to trading on the London Stock Exchange plc's main market for listed securities in the same way as the Existing Ordinary Shares and will be equivalent in all material respects to the Existing Ordinary Shares, including their dividend, voting and other rights. The B Shares will not be admitted to listing on the Official List or to trading on the London Stock Exchange plc's main market for listed securities.
A timetable of expected principal events is set out as the Appendix to this announcement. All dates in this announcement, including those detailed in the Appendix, are indicative at this stage. Shareholders should read the Circular for confirmation of these dates.
Terms of the Return of Cash
* Existing Ordinary Shares to be consolidated into New Ordinary Shares at a ratio of 11 New Ordinary Shares for every 19 Existing Ordinary Shares held at the Ordinary Share Record Date (expected to be 5.00 p.m. on 8 December 2008)
* The Share Capital Consolidation ratio reflects the mid-market closing price of the Existing Ordinary Shares on 20 November 2008
* Shareholders can elect to receive the Return of Cash in income or capital form by electing for Alternatives 1, 2 or 3 (or a combination thereof) as set out in more detail in the paragraph headed 'Shareholders' Choices' below
* Shareholders electing for Alternative 1 (Initial Redemption) will have their B Shares redeemed by Bodycote at 40 pence per B Share (expected to be paid on 23 December 2008), free of all dealing expenses and commissions
* Shareholders electing for Alternative 2 (Single B Share Dividend) will receive a single dividend of 40 pence per B Share in respect of those B Shares (expected to be paid on 23 December 2008)
* Shareholders electing for Alternative 3 (Final Redemption) will have the B Shares in respect of which they have made this election redeemed by Bodycote (expected to be on 6 April 2009) at 40 pence per B Share, free of all dealing expenses and commissions
* Shareholders (other than US Shareholders) have the opportunity to elect for a combination of all three Alternatives
* The B Shares will neither be admitted to the Official List nor to trading on the London Stock Exchange plc's main market for listed securities nor will the B Shares be admitted to trading on any other recognised investment exchange. Whilst the B Shares are technically transferable it is highly unlikely that an active market for them will develop or, if developed, be sustained.
Share Capital Consolidation
In addition to the receipt of B Shares by Shareholders under the Return of Cash, there will be a one-off Share Capital Consolidation as a result of which Shareholders will receive 11 New Ordinary Shares for every 19 Existing Ordinary Shares held on the Ordinary Share Record Date (expected to be 5.00pm on 8 December 2008). As a result of the Share Capital Consolidation, the Existing Ordinary Shares will be replaced by the New Ordinary Shares so as to reduce the number of shares in issue approximately in proportion to the percentage of the Company's market capitalisation which is to be returned to Shareholders by way of the B Share Scheme. The aim of this is to ensure that, so far as possible, the market price of an Ordinary Share remains the same before and after the Return of Cash and to maintain comparability of historical and future per share data. The ratio used for the Share Capital Consolidation has been set by reference to the closing middle-market price of 95 pence per Existing Ordinary Share on 20 November 2008.
The New Ordinary Shares will be admitted to listing on the Official List and to trading on the London Stock Exchange plc's main market in the same way as the Existing Ordinary Shares and will be equivalent in all material respects to the Existing Ordinary Shares, including their dividend, voting and other rights. The B Shares will not be admitted to listing on the Official List or to trading on the London Stock Exchange plc's main market for listed securities. Further information in relation to the rights and restrictions attached to the B Shares will be set out in Part 4 of the Circular.
Fractional entitlements of all Shareholders will be aggregated and sold in the market on their behalf. The proceeds of sale will be distributed pro rata to the relevant Shareholders. Should the cash consideration for the fractional entitlement be less than £3, you will not receive a cheque in respect of that entitlement; rather, the proceeds will be retained by the Company.
Shareholders' choices
Shareholders will have the following choices:
Alternative 1 Initial Redemption
Shareholders who choose this alternative in respect of some or all of their B Shares will have those B Shares redeemed by Bodycote on the Initial Redemption Date (expected to be on 16 December 2008) at 40 pence per B Share, free of all dealing expenses and commissions.
It is expected that the proceeds from this redemption will be paid on 23 December 2008 and that they will generally be treated as capital for United Kingdom tax purposes.
Alternative 2: Single B Share Dividend
Shareholders who choose this alternative in respect of some or all of their B Shares will receive a single dividend of 40 pence per B Share in respect of those B Shares. It is expected that this will be paid on 23 December 2008; following which those B Shares will be automatically converted into deferred shares (the 'Deferred Shares') and then redeemed by the Company on 6 April 2009 (or such other date as the Directors may determine). The Deferred Shares will not be listed, will carry extremely limited rights and will have negligible value as Shareholders will have already received a cash pay-out in relation to those shares.
It is expected that the Single B Share Dividend will be treated as income for United Kingdom tax purposes.
Alternative 3: Final Redemption
Shareholders who choose this alternative in respect of some or all of their B Shares will have the B Shares in respect of which they have made this election redeemed by Bodycote (expected to be on 6 April 2009) at 40 pence per B Share, free of all dealing expenses and commissions.
It is expected that the proceeds from the redemption will be paid on 13 April 2009 and that they will generally be treated as capital for United Kingdom tax purposes.
It may be of some value to a Shareholder from a tax perspective to hold some or all of his B Shares until 6 April 2009.
Unless a Shareholder is a US Holder a Shareholder may elect to receive any one of, or a combination of, the B Share Alternatives
Credit Suisse Securities (Europe) Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting as financial adviser, sponsor and corporate broker to Bodycote PLC and is acting for no-one else in connection with the Return of Cash or the Share Capital Consolidation, and will not be responsible to anyone other than Bodycote PLC for providing the protections afforded to customers of Credit Suisse Securities (Europe) Limited nor for providing advice to any other person in relation to the Return of Cash.
Contacts:
Bodycote PLC Telephone - 01625 505 300
John Hubbard, Chief Executive Officer
David Landless, Group Finance Director
Credit Suisse Securities (Europe) Limited Telephone - 020 7888 8888
Richard Probert
Chris Byrne
Financial Dynamics Telephone - 020 7831 3113
Jon Simmons
Capita Registrars Telephone - 020 8639 2101
Gary Angus
APPENDIX : EXPECTED TIMETABLE OF PRINCIPAL EVENTS
|
Latest time and date for receipt of Form of Proxy for General Meeting |
11.30am on 6 December 2008 |
|
General Meeting |
11.30am on 8 December 2008 |
|
Latest time and date for dealings in Existing Ordinary Shares |
4.30pm on 8 December 2008 |
|
Ordinary Share Record Date for the Capital Reorganisation. Existing Ordinary Share register closed and Existing Ordinary Shares disabled in CREST |
5.00pm on 8 December 2008 |
|
New Ordinary Shares admitted to listing on the Official List and to trading on the London Stock Exchange's main market for listed securities |
8.00am on 9 December 2008 |
|
Dealings in the New Ordinary Shares commence and enablement in CREST. New Ordinary Shares and B Shares entered into CREST |
8.00am on 9 December 2008 |
|
Latest time for receipt of Election Forms and USE Instructions from CREST holders in relation to the B Share Alternatives |
3.00pm on 12 December 2008 |
|
B Share Record Date for participation in the Return of Cash |
4.30pm on 12 December 2008 |
|
Initial Redemption Date and Single B Share Dividend Date. B Shares in respect of which the Single B Share Dividend is payable will convert into Deferred Shares |
16 December 2008 |
|
CREST accounts credited in respect of B Shares to be redeemed on the Final Redemption Date (Alternative 3) |
16 December 2008 |
|
Despatch of the New Ordinary Share certificates and cheques or CREST accounts credited in respect of fractional entitlements |
23 December 2008 |
|
Despatch of the B Share certificates in respect of B Shares to be redeemed on the Final Redemption Date (Alternative 3) |
23 December 2008 |
|
Despatch of cheques or CREST accounts credited (as appropriate) in respect of the Single B Share Dividend (Alternative 2) |
23 December 2008 |
|
Despatch of cheques or CREST accounts credited (as appropriate) in respect of B Shares redeemed on the Initial Redemption Date (Alternative 1) |
23 December 2008 |
|
Final Redemption Date |
6 April 2009 |
|
Despatch of cheques or CREST accounts credited (as appropriate) in respect of B Shares redeemed on Final Redemption Date |
13 April 2009 |
N.B. All dates are subject to change.
References to times in this announcement are to London time.
All events in the above timetable following listing of the New Ordinary Shares on the Official List are conditional upon admission of the New Ordinary Shares on the London Stock Exchange plc's main market for listed securities.
This information is provided by RNS
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