TIDMCHU
RNS Number : 9842G
Chaucer Holdings PLC
20 May 2011
Not for release, publication or distribution, in whole or in
part, directly or indirectly, in, into or from any jurisdiction
where to do so would constitute a violation of the relevant laws or
regulations of such jurisdiction
20 May 2011
UPDATE ON RECOMMENDED CASH ACQUISITION OF
CHAUCER HOLDINGS PLC ("CHAUCER" OR "THE COMPANY")
BY THE HANOVER INSURANCE GROUP, INC. ("THE HANOVER")
AND LOAN NOTE ALTERNATIVE
1 Introduction
On 11 May 2011 Chaucer published a circular setting out the
terms of the recommended cash acquisition of the entire issued and
to be issued ordinary share capital of Chaucer by 440 Tessera
Limited ("BidCo"), a wholly-owned subsidiary of The Hanover, and
the background to, and reasons for, the Chaucer Directors'
recommendation of the Acquisition. The Acquisition is being
implemented by means of a Court-sanctioned scheme of arrangement
under Part 26 of the Companies Act.
Following further discussions between Chaucer and The Hanover
and taking into account views expressed by some Chaucer
Shareholders, Chaucer is pleased that The Hanover has agreed to a
Loan Note Alternative being made available by BidCo under the
Scheme. Under the Loan Note Alternative, Scheme Shareholders (other
than Restricted Overseas Persons) will be entitled to elect to
receive Loan Notes as an alternative to some or all of the cash
consideration which would otherwise be receivable by them under the
Scheme.
Chaucer is today posting to shareholders a supplementary
circular (the "Supplementary Scheme Circular") providing additional
information in relation to Chaucer, the Acquisition, the Loan Note
Alternative and the Scheme.
2 Summary of the terms of the Acquisition
Under the terms of the Acquisition, which is subject to the
Conditions and further terms set out in the Scheme Circular,
Chaucer Shareholders will be entitled to receive:
53.3 pence in cash for each Chaucer Share (the Acquisition
Price); and
2.7 pence in cash for each Chaucer Share as a final dividend in
relation to the year ended
31 December 2010 (the Final Dividend).
The Final Dividend, which was announced by Chaucer on 7 March
2011, will be paid to those Chaucer Shareholders who were on
Chaucer's register of members on 6 May 2011. The Final Dividend
will be paid to eligible Chaucer Shareholders on 27 May 2011.
3 The Loan Note Alternative
As an alternative to receiving some or all of the cash
consideration, Scheme Shareholders (other than Restricted Overseas
Persons, who may not participate in the Loan Note Alternative)
will, subject to the Scheme becoming effective in accordance with
its terms, be entitled to elect to receive unsecured fixed rate
loan notes issued by BidCo ("Loan Notes") in respect of some or all
of their Scheme Shares to be issued by BidCo (the "Loan Note
Alternative") on the following basis:
for every GBP1 of cash consideration GBP1 nominal value of Loan
Notes
The Loan Note Alternative will not be the subject of a
recommendation by the Chaucer Directors. Scheme Shareholders are
recommended to consider carefully, in light of their own investment
objectives and tax position, whether they wish to elect for Loan
Notes under the Loan Note Alternative and are strongly advised to
seek their own independent financial advice before making any such
election.
The Loan Notes will be unlisted, and there are no plans to seek
a public quotation on any recognised investment exchange or other
market for the Loan Notes which may be issued under the Loan Note
Alternative.
The maximum aggregate nominal value of Loan Notes available
under the Loan Note Alternative will be GBP20 million. If the
number of Loan Notes available is insufficient to satisfy in full
all such elections, then each such election shall be scaled down
pro rata (or as near thereto as BidCo in its absolute discretion
considers practicable) amongst the electors and each such election
shall be valid only in respect of the number of Scheme Shares so
scaled down and the excess shall be treated as Cancellation Shares
in respect of which such Scheme Shareholders shall receive the cash
consideration to which they would otherwise have been entitled
under this Scheme.
The Loan Notes will be issued fully paid in registered form in
amounts and integral multiples of GBP1 and the balance of any
entitlement that is not a whole multiple of GBP1 will be
disregarded and not issued.
The Loan Notes will constitute direct, unsecured and
unsubordinated obligations of BidCo.
The interest rate on the Loan Notes will be a fixed rate of 0.25
per cent. per annum.
If not previously repaid or purchased, each Loan Note will be
repaid in full by BidCo on 31 December 2016 (or, if such day is not
a business day, on the next following business day) at its
principal amount together with accrued interest.
The Loan Notes will only be transferable to certain permitted
transferees.
The Loan Notes have not been, and will not be, listed on any
stock exchange and have not been, and will not be, registered under
the US Securities Act or under any relevant laws of any state or
other jurisdiction of the United States, nor have clearances been,
nor will they be, obtained from the securities commission or
similar authority of any province or territory of Canada and no
prospectus has been, or will be, filed, or registration made, under
any securities law of any province or territory of Canada, nor has
a prospectus in relation to the Loan Notes been, nor will one be,
lodged with, or registered by, the Australian Securities and
Investments Commission, nor have any steps been taken, nor will any
steps be taken, to enable the Loan Notes to be offered in
compliance with applicable securities laws of Japan. Accordingly,
unless an exemption under relevant securities laws is available,
the Loan Notes may not be offered, sold, re-sold or delivered,
directly or indirectly, in, into or from any restricted
jurisdiction in which an offer of Loan Notes would constitute a
violation of relevant laws or require registration of the Loan
Notes, or to or for the account or benefit of any US person or
resident of any other restricted jurisdiction.
Further details of the Loan Note Alternative will be set out in
the Supplementary Scheme Circular.
To reflect the introduction of the Loan Note Alternative,
Chaucer and The Hanover have each consented, subject to the
approval of the Court, to various modifications to the form of the
Scheme set out in the Scheme Circular.
Each of the parties that has given an irrevocable undertaking to
vote in favour of the Scheme (details of which were set out in the
Scheme Circular) has confirmed that it remains bound by its
undertaking.
4 Timetable
In order that Scheme Shareholders have sufficient opportunity to
review the Supplementary Scheme Circular, Chaucer has sought leave
from the Court to adjourn the Court Meeting and the Court has
granted discretion to the chairman of the Meeting to do so; the
Court Meeting will start at 11.00 a.m. on 7 June 2011. Likewise, at
the Chaucer General Meeting to be held on 3 June 2011, it will be
proposed to adjourn the Chaucer General Meeting so that the
adjourned Court Meeting and adjourned Chaucer General Meeting will
take place on the same date. Shareholders are therefore encouraged
not to attend the Chaucer General Meeting which is scheduled for 3
June 2011. There are no other changes to the expected timetable,
which remain as set out in the Scheme Circular. The expected
timetable of principal events is set out in the Appendix to this
Announcement.
5 Recommendation
The Chaucer Directors, who have been so advised by Kinmont and
Willis Capital Markets & Advisory, reiterate that they consider
the terms of the Acquisition to be fair and reasonable. In
providing their advice, Kinmont and Willis Capital Markets &
Advisory have taken into account the commercial assessment of the
Chaucer Directors. Accordingly, the Chaucer Directors unanimously
recommend to Chaucer Shareholders to vote in favour of the Scheme
at the adjourned Court Meeting and the Chaucer General Meeting
Resolutions at the adjourned Chaucer General Meeting. The Chaucer
Directors who are also Chaucer Shareholders have given irrevocable
undertakings to vote in favour of the Scheme Resolution and the
Chaucer General Meeting Resolutions in respect of 7,793,925 Chaucer
Shares representing approximately 1.42 per cent. of the existing
issued share capital of Chaucer.
Terms and expressions used in this Announcement and not
otherwise defined have the meanings given in the Scheme Circular
dated 11 May 2011.
Enquiries
The Hanover Tel: +1 508 855 1000
Oksana Lukasheva, Investor Relations
Michael Buckley, Media Relations
Goldman Sachs International Tel: +44 (0) 20 7774 1000
(Sole financial adviser to The Hanover)
Tom Vandever
Nimesh Khiroya
Chaucer Tel: +44 (0) 20 7397 9700
Bob Stuchbery, Chief Executive
Kinmont Tel: +44 (0) 20 7087 9100
(Joint financial adviser to Chaucer)
John O'Malley
Mat Thackery
Willis Capital Markets & Advisory Tel: +44 (0) 20 3124
6000
(Joint financial adviser to Chaucer)
Michiel Bakker
John Philipsz
Numis Securities Limited Tel: +44 (0) 20 7260 1000
(Corporate broker to Chaucer)
Oliver Hemsley
Charles Farquhar
Citigate Dewe Rogerson Tel: +44 (0) 20 7638 9571
(PR adviser to Chaucer)
Justin Griffiths
Sarah Gestetner
Appendix
Timetable
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The following indicative timetable sets out the expected dates
for implementation of the
Acquisition.
Latest time for lodging Forms of Proxy
for the:
Adjourned Court Meeting (blue form) 11.00 a.m. on 5 June
2011(1)
Adjourned Chaucer General Meeting (white 11.10 a.m. on 5 June
form) 2011(2)(3)
Voting Record Time 6.00 p.m. on 5 June
2011(4)
Adjourned Court Meeting 11.00 a.m. on 7 June
2011
Adjourned Chaucer General Meeting 11.10 a.m. on 7 June
2011(2)(5)
Latest time for receipt of Forms of Election 11.00 a.m. on 28 June
and TTE messages for the Loan Note Alternative 2011
Court Hearing to sanction the Scheme 28 June 2011
Court Hearing to confirm the Reduction 30 June 2011
of Capital
Last day of dealings in Chaucer Shares 30 June 2011(6)
Dealings in Chaucer Shares suspended in 5.00 p.m. on 30 June
London 2011(6)
Scheme Record Time 6.00 p.m. on 30 June
2011(6)
Effective Date 1 July 2011(6)
Cancellation of listing of Chaucer Shares 8.00 a.m. on 2 July
by no later than 2011(6)
Despatch of cheques in respect of the Acquisition by 15 July 2011(6)
Price and settlement through CREST
Notes:
(1) It is requested that blue Forms of Proxy for the adjourned
Court Meeting be lodged by 11.00 a.m. on 5 June 2011 or, if
the adjourned Court Meeting is further adjourned, not later
than 48 hours prior to the time appointed for the further adjourned
Court Meeting (excluding any part of such 48 hour period falling
on a weekend or a public holiday in the UK unless otherwise
announced). Blue Forms of Proxy not so lodged may be handed
to the Registrars (on behalf of the chairman of the adjourned
Court Meeting) before the start of the meeting and will still
be valid.
(2) The date specified assumes the Chaucer General Meeting is
adjourned to the same date as the adjourned Court Meeting.
(3) White Forms of Proxy for the adjourned Chaucer General Meeting
must be lodged by 11.10 a.m. on 5 June 2011 or, if the adjourned
Chaucer General Meeting is further adjourned, not later than
48 hours prior to the time appointed for the further adjourned
Chaucer General Meeting (excluding any part of such 48 hour
period falling on a weekend or a public holiday in the UK unless
otherwise announced).
(4) If either the adjourned Court Meeting or the adjourned Chaucer
General Meeting is further adjourned, the Voting Record Time
for the relevant further adjourned meeting will be 6.00 p.m.
on the day falling two days before the date of the further adjourned
meeting.
(5) Or as soon thereafter as the adjourned Court Meeting shall
have concluded or been further adjourned.
(6) These dates are indicative only and will depend, among other
things, on the date upon which the Court sanctions the Scheme
and confirms the associated reduction of capital and whether
the Conditions are satisfied or waived.
All references in this document to times are to UK time unless
otherwise stated.
If any of the above expected dates change, Chaucer will give
notice of the change by issuing an announcement through a Regulatory
Information Service.
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This announcement is not intended to and does not constitute, or
form part of, any offer to sell or subscribe for or an invitation
to purchase or subscribe for any securities or the solicitation of
any vote or approval in any jurisdiction pursuant to the
Acquisition or otherwise, nor shall there be any sale, issuance or
transfer of securities of Chaucer in any jurisdiction in
contravention of applicable law. The Acquisition will be made
solely by means of the Scheme Circular (including any document
supplemental thereto), which will contain the full terms and
conditions of the Acquisition, including details of how to vote in
favour of the Acquisition. Any vote in respect of the Acquisition
should be made only on the basis of information in the Scheme
Circular (including any document supplemental thereto). Chaucer
Shareholders are advised to read all the formal documentation in
relation to the Acquisition carefully.
Whether or not certain Chaucer Shares are voted at the Court
Meeting or the Chaucer General Meeting, if the Scheme becomes
Effective, those Chaucer Shares will be cancelled pursuant to the
Scheme in return for the payment of 53.3 pence in cash per Chaucer
Share.
Goldman Sachs International, which is authorised and regulated
in the United Kingdom by the Financial Services Authority, is
acting exclusively for The Hanover and BidCo and for no-one else in
connection with the Acquisition and will not be responsible to any
person other than The Hanover and BidCo for providing the
protections afforded to clients of Goldman Sachs International, nor
for providing advice in relation to the Acquisition or any other
matters referred to herein.
Kinmont, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for
Chaucer and for no-one else in connection with the Acquisition and
will not be responsible to any person other than Chaucer for
providing the protections afforded to clients of Kinmont, nor for
providing advice in relation to the Acquisition or any other
matters referred to herein.
Willis Capital Markets & Advisory, which is authorised and
regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for Chaucer and for no-one else in
connection with the Acquisition and will not be responsible to any
person other than Chaucer for providing the protections afforded to
clients of Willis Capital Markets & Advisory, nor for providing
advice in relation to the Acquisition or any other matters referred
to herein.
Numis, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for
Chaucer and for no-one else in connection with the Acquisition and
will not be responsible to any person other than Chaucer for
providing the protections afforded to clients of Numis, nor for
providing advice in relation to the Acquisition or any other
matters referred to herein.
Notice to US holders of Chaucer Shares
The Scheme relates to the shares of an English company that is a
"foreign private issuer" as defined under Rule 3b-4 under the US
Exchange Act and will be governed by English law. Neither the proxy
solicitation rules nor the tender offer rules under the US Exchange
Act will apply to the Scheme. Moreover, the Scheme will be subject
to the disclosure requirements and practices applicable in the UK
to schemes of arrangement, which differ from the disclosure
requirements of the US proxy solicitation rules and tender offer
rules. Financial information included or referred to in this
announcement or the Scheme Circular, or which may be incorporated
by reference into the Scheme Circular, has been or will have been
prepared in accordance with accounting standards applicable in the
UK that may not be comparable to the accounting standards
applicable to financial statements of US companies or companies
whose financial statements are prepared in accordance with
generally accepted accounting principles in the US. If The Hanover
elects to implement the acquisition of the Chaucer Shares by way of
an Offer, the Offer will be made in compliance with applicable
securities laws and regulations.
Chaucer is organised under the laws of England. The majority of
the officers and directors of Chaucer are residents of countries
other than the United States. It may not be possible to sue Chaucer
in a non-US court for violations of US securities laws. It may be
difficult to compel Chaucer and its respective affiliates to
subject themselves to the jurisdiction and judgment of a US
court.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the US Exchange Act, The Hanover or its nominees, or
its brokers (acting as agents), may from time to time make certain
purchases of, or arrangements to purchase Chaucer Shares outside of
the United States, other than pursuant to the Acquisition, until
the date on which the Acquisition and/or Scheme becomes Effective,
lapses or is otherwise withdrawn. These purchases may occur either
in the open market at prevailing prices or in private transactions
at negotiated prices. Any information about such purchases will be
disclosed as required in the UK, will be reported to the Regulatory
Information Service of the London Stock Exchange and will be
available on the London Stock Exchange website at
http://www.londonstockexchange.com/prices-and-news/pricesnews/home.htm.
Overseas Shareholders
The availability of the Acquisition or the distribution of this
announcement to Chaucer Shareholders who are not resident in the
United Kingdom may be affected by the laws of their relevant
jurisdictions in which they are located or of which they are
citizens. Such persons should inform themselves of, and observe,
any applicable legal or regulatory requirements of their
jurisdictions. Chaucer Shareholders who are in any doubt regarding
such matters should consult an appropriate independent professional
adviser in the relevant jurisdiction without delay. Further details
in relation to overseas shareholders will be contained in the
Scheme Circular.
Forward-looking statements
This announcement, oral statements made regarding the
Acquisition and other information published by The Hanover and/or
Chaucer or their respective affiliates may contain certain
statements that are or may be forward-looking. These statements are
based on the current expectations of the management of The Hanover
and/or Chaucer (as applicable) and are naturally subject to
uncertainty and changes in circumstances. The forward-looking
statements contained herein may include statements about the
expected effects of the Acquisition, the expected timing and scope
of the Acquisition, anticipated earnings enhancements, estimated
cost savings and other synergies, costs to be incurred in achieving
synergies, potential disposals and other strategic options and all
other statements in this announcement other than historical facts.
Forward-looking statements include, without limitation, statements
that typically contain words such as: "will", "may", "should",
"could", "continue", "believes", "expects", "intends", "estimates",
"anticipates", "aims", "targets", "plans" and "forecasts" or words
of similar import. The forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements. Many of
these risks and uncertainties relate to factors that are beyond the
ability of the person making the statement to control or estimate
precisely, such as future market conditions and the behaviour of
other market participants. Other unknown or unpredictable factors
could also cause actual results to differ materially from those in
the forward looking statements. Therefore investors should not
place undue reliance on such statements as a prediction of actual
results. The Hanover and Chaucer and their respective affiliates
assume no obligation and do not intend to update these
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required pursuant to
applicable law.
Responsibility
The Hanover Directors and the BidCo Directors (all of whose
names are set out in the Scheme Circular) accept responsibility for
the information contained in this announcement relating to The
Hanover, The Hanover Group and themselves and their immediate
families, related trusts and connected persons. To the best of the
knowledge and belief of The Hanover Directors and the BidCo
Directors (who have taken all reasonable care to ensure that such
is the case), such information for which they are responsible is in
accordance with the facts and does not omit anything likely to
affect the import of such information.
The Chaucer Directors (all of whose names are set out in the
Scheme Circular) accept responsibility for the information
contained in this announcement relating to Chaucer, the Chaucer
Group and themselves and their immediate families, related trusts
and connected persons. To the best of the knowledge and belief of
the Chaucer Directors (who have taken all reasonable care to ensure
that such is the case), such information for which they are
responsible is in accordance with the facts and does not omit
anything likely to affect the import of such information
Disclosure requirements
Under Rule 8.3(a) of the Code, any person who is, or becomes,
"interested" (directly or indirectly) in one per cent. or more of
any class of relevant securities of an offeree company or of any
paper offeror (being any offeror other than an offeror in respect
of which it has been announced that its offer is, or is likely to
be, solely in cash) must make an "Opening Position Disclosure"
following the commencement of the offer period and, if later,
following the announcement in which any paper offeror is first
identified.
An "Opening Position Disclosure" must contain details of the
person's interests and short positions in, and rights to subscribe
for, any "relevant securities" of each of (i) the offeree company
and (ii) any paper offeror. An "Opening Position Disclosure" by a
person to whom Rule 8.3(a) of the Code applies must be made by no
later than 3.30 p.m. (London time) on the 10th business day
following the commencement of the offer period and, if appropriate,
by no later than 3.30 p.m. (London time) on the 10th business day
following the announcement in which any paper offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a paper offeror prior to the deadline for
making an "Opening Position Disclosure" must instead make a
"Dealing Disclosure".
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in one per cent. or more of any class of "relevant
securities" of the offeree company or of any paper offeror must
make a "Dealing Disclosure" if the person deals in any "relevant
securities" of the offeree company or of any paper offeror. A
"Dealing Disclosure" must contain details of the "dealing"
concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any paper offeror, save to the extent that
these details have previously been disclosed under Rule 8 of the
Code. A "Dealing Disclosure" by a person to whom Rule 8.3(b) of the
Code applies must be made by no later than 3.30 p.m. (London time)
on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
"interest" in "relevant securities" of an offeree company or a
paper offeror, they will be deemed to be a single person for the
purpose of Rule 8.3 of the Code.
"Opening Position Disclosures" must also be made by the offeree
company and by any paper offeror and "Dealing Disclosures" must
also be made by the offeree company, by any paper offeror and by
any persons acting in concert with any of them (see Rules 8.1, 8.2
and 8.4 of the Code).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. If you are in any doubt as to whether you are required
to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel's Market Surveillance Unit on +44 (0) 20
7638 0129.
Terms in quotation marks are defined in the Code, which can also
be found on the Panel's website. If you are in any doubt as to
whether or not you are required to disclose a "dealing" under Rule
8 of the Code, you should contact an independent financial adviser
authorised by the FSA under FSMA or consult the Panel's website at
www.thetakeoverpanel.org.uk or contact the Panel on telephone
number +44 (0) 20 7638 0129.
Publication on website
A copy of this announcement will be available free of charge on
Chaucer's website at http://www.chaucerplc.com, and on The
Hanover's website at http://www.hanover.com, by no later than 12
noon (London time) on 20 May 2011.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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