Announcement re: Rights Issue

RNS Number : 1134P

Inchcape PLC

19 March 2009

 



THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, SINGAPORE, THE REPUBLIC OF SOUTH AFRICA OR SWITZERLAND AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL SECURITIES LAWS OR REGULATIONS. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT

19 March 2009 

PROPOSED 9 FOR 1 RIGHTS ISSUE 

OF 4,143,316,500 NEW ORDINARY SHARES AT 6 PENCE EACH 

TO RAISE NET PROCEEDS OF APPROXIMATELY £232 MILLION

The Board of Inchcape plc ('Inchcape', the 'Company' or the 'Group') today announces a fully underwritten 9 for 1 Rights Issue to raise net proceeds of approximately £232 million, through the issue of 4,143,316,500 New Ordinary Shares. The Rights Issue is subject to approval by Shareholders at a General Meeting to be held on 6 April 2009.

Inchcape has today also released its audited results for the year ended 31 December 2008.

Details of the proposed Rights Issue:

Net proceeds to be used to reduce the Group's financial indebtedness, which should:

• reduce the Group's gearing;

• decrease the Group's total finance charges and costs otherwise payable on its existing finance facilities;

• provide the Group with increased headroom to the only financial covenant (adjusted interest cover) contained within its existing borrowing facilities;

• delay the Group's refinancing requirement to the end of 2012;

• better position the Group to gain market share during the current downturn and to take advantage of growth opportunities when the market recovers; and

• strengthen the Company's capital structure which will further differentiate Inchcape as OEMs focus on well-financed operators during industry rationalisation and consolidation.

André Lacroix, Chief Executive of Inchcape, commented:

'We believe that the Rights Issue we have announced today will strengthen the Group's balance sheet and is part of our ongoing programme to improve the financial robustness of the Group following the rapid industry deterioration in automotive retail and distribution activity across most of our core markets. We have already taken prompt actions to lower our cost base by cutting overheads significantly, including by a reduction of around 2,000 jobs, the implementation of a group wide salary freeze, cutting all non-essential expenses, reducing our inventory by £175m from its recent peak and removing £40m from our capex plans. We have taken our like-for-like cost base down by 12%.

We believe that raising new equity is the right action to take and is in the interests of our shareholders as it will allow us to reduce our debt and improve our financial headroom. The combination of capital strength, a lower cost base and diversified revenue streams will better position Inchcape to deliver a solid performance during the downturn and to take advantage of growth opportunities when the markets recover.

Inchcape is a proven industry leader with a broad geographic spread, a multi-channel business model and long-standing relationships with strong brand partners. I believe that we are well positioned to take advantage of market recovery when it comes for the benefit of all our stakeholders.'

Enquiries:

Group communications, Inchcape plc:	[phone]
Investor Relations, Inchcape plc:	[phone]
Financial Dynamics:	[phone]
Jonathan Brill
Billy Clegg
Merrill Lynch International (Sole Global Coordinator, Sole Sponsor and Joint Bookrunner):	[phone]
Simon Fraser
Simon Gorringe
Rupert Hume-Kendall
Dresdner Kleinwort (Financial Adviser):	[phone]
Charles Batten
Christopher Baird
Ben Bailey
HSBC (Joint Bookrunner):	[phone]
Nick Donald
Nick Uzel
RBS Hoare Govett (Joint Bookrunner):
Lee Morton	[phone]
Neil Collingridge	[phone]
Jimmy Bastock	[phone]

The defined terms set out in the Appendix apply in this announcement. Unless otherwise stated references to time contained in this announcement are to UK time. This announcement has been issued by and is the sole responsibility of Inchcape plc.

The Rights Issue

The Rights Issue will result in the issue of 4,143,316,500 New Ordinary Shares (representing 90 per cent. of the enlarged issued ordinary share capital of Inchcape) at a price of 6 pence per New Ordinary Share, on the basis of:

9 New Ordinary Shares at 6 pence each for every 1 Existing Ordinary Share

The New Ordinary Shares will, when issued and fully paid, rank pari passu with the Existing Ordinary Shares, including the right to receive all dividends or distributions declared. The Issue Price of 6 pence per New Ordinary Share represents an 88.2 per cent. discount to the Closing Price of an Existing Ordinary Share of 50.75 pence on 18 March 2009 (being the latest practicable date prior to the publication of this announcement) and a 42.7 per cent. discount to the theoretical ex-rights price based on that Closing Price.

The Rights Issue is fully underwritten by Merrill Lynch International, HSBC and RBS Hoare Govett as joint bookrunners. Merrill Lynch International is acting as sole sponsor and global coordinator for the Rights Issue and Dresdner Kleinwort is acting as financial adviser to Inchcape. Greenhill & Co International LLP has provided financial advice to Inchcape on its assessment of funding and strategic options and Investec is acting as a selling agent for Inchcape in relation to the Rights Issue. 

A prospectus concerning the Rights Issue is being sent to Shareholders. Further details of the Rights Issue are set out in the Prospectus, which will also be made available on Inchcape's website www.inchcape.com.

Further Information on the Rights Issue

Application will be made to the UK Listing Authority for the New Ordinary Shares (nil and fully paid) to be admitted to the Official List and to the London Stock Exchange for the New Ordinary Shares (nil and fully paid) to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and that dealings in the New Ordinary Shares, nil paid, will commence on the London Stock Exchange at 8.00 am on 7 April 2009 with dealings in the New Ordinary Shares, fully paid, expected to commence at 8.00 am on 24 April 2009.

Background to and reasons for the Rights Issue

The Group has pursued its strategy while aiming to ensure that the financing of its business and its level of borrowings is appropriate given the prevailing economic conditions and that it has access to attractively priced long-term capital suitable to its requirements and the nature of its business. The Group has substantial levels of borrowing facilities over and above its actual levels of debt, and has also secured long-term funding through the private placement market.  

The Group's material banking facilities as at 31 December 2008 are set out in the table below:

Facility	Rate	Term	Maturity
£35 million bilateral term loan	LIBOR floating	3 year	April 2010
£185 million revolving credit facility	LIBOR floating	3 year	July 2011
£40 million bilateral revolving facility	LIBOR floating	3 year	July 2011
£500 million revolving credit facility	LIBOR floating	5 year	April 2013

The notes outstanding as at 31 December 2008 are set out in the table below:

Facility	Rate	Term	Maturity
$350 million loan notes *	5.94%	10 year	May 2017
$200 million loan notes *	6.04%	12 year	May 2019
£1.1 million loan notes **	LIBOR less 1%	5 year	June 2012

* $475 million of the private placement notes is subject to cross-currency interest rate swaps. $75 million is not subject to any swaps.

** Notes issued in connection with the European Motor Holdings plc acquisition. The original issuance was £4.5 million, of which approximately £1.1 million aggregate principal amount remains outstanding.

Both the Group's banking facilities and private placement notes contain only one financial covenant which requires adjusted interest cover to be not less than three to one. The calculation of the adjusted interest cover ratio is typical for the measurement of this financial covenant in this sector and is for these purposes broadly the comparison of operating profit in a given period as a multiple of interest expenses incurred primarily on financial indebtedness subject in each case to certain adjustments and exclusions, notably the cost of supplier finance and pensions related interest costs. For the year ended 31 December 2008, the interest cover ratio was equal to approximately eight to one. Given the substantial deterioration in sales in the Group's core markets over the last few months of 2008 and the prospect of a constrained trading environment in 2009 and beyond, the Board previously considered renegotiating the interest cover covenant both in the Group's banking facilities and in its private placement notes to give the Group increased headroom (as announced on 15 December 2008). The Board has concluded that, given the current conditions in the debt markets, any renegotiation is likely to result in significantly increased finance charges, not improve the available headroom under the financial covenant and cause the Group to incur material one-off fees. The Group is currently in compliance with its debt facilities and private placement notes and has appropriate headroom. The Board expects that, although new car sales are forecast to continue declining in 2009 and the first half of 2010, the Group's financial position will benefit from the expected resilience in the service and parts businesses, lower costs, lowered UK interest rates, the strengthening of many of the Group's key operational currencies against Sterling and careful working capital management. The Board therefore believes that it is in the interests of shareholders not to amend its current financing arrangements. Instead, the Group is planning to reduce its level of net debt using the proceeds of the Rights Issue. This should allow the Group to:

• reduce the Group's gearing;

• decrease the Group's total finance charges and costs otherwise payable on its existing finance facilities;

• provide the Group with increased headroom to the only financial covenant (adjusted interest cover) contained within its existing borrowing facilities;

• delay the Group's refinancing requirement to the end of 2012;

• better position the Group to gain market share during the current downturn and to take advantage of growth opportunities when the market recovers; and

• strengthen the Company's capital structure which will further differentiate Inchcape as OEMs focus on well-financed operators during industry rationalisation and consolidation.

Furthermore, if trading conditions continue to deteriorate beyond management's current expectations, the Board believes that the reduced levels of debt and finance charges will leave the Group in a better position to continue operating successfully for the duration of the economic downturn and to benefit from any recovery.

The Board therefore believes it is both appropriate and in the best interests of Shareholders as a whole to seek to raise net proceeds of approximately £232 million via the proposed Rights Issue.

Use of proceeds

The Board of Inchcape believes that it is important to strengthen the Group's current financial position and balance sheet through the Rights Issue to ensure that it is well positioned to manage the downturn and properly placed to take advantage of its strong market positions as markets recover and opportunities arise.

The Board therefore intends to use the net proceeds of the Rights Issue to reduce the Group's drawn borrowings under its existing revolving credit facilities (which will remain available to be re-drawn).

Key strengths of Inchcape's business model

The Board believes that the Group's business model and strategic positioning demonstrates a number of long-term competitive advantages that will help Inchcape to pursue future growth and, in particular, to benefit from a market recovery in both mature and emerging markets following the current downturn. These are factors which the Board believes are specific to, and key strengths of, the Inchcape business and include:

• its broad geographic spread with international operations holding scale positions and a presence across both mature and emerging markets; 

• its diversified multi-channel business operations, which include distribution, retail and VIR; 

• its long-standing relationships with multiple strong brand partners which outperform the market;

• diversified sources of revenue through sales of new and used vehicles, aftersales and the sale of third-party finance and insurance products; and

• its experienced and proactive management team, which has detailed knowledge of the automotive industry and local markets.

Update on current trading and prospects

Over the past twelve months, the global car industry has suffered an unprecedented and rapid downturn. This accelerated sharply in the second half of 2008 in the UK and was experienced in most of the Group's other markets during the fourth quarter of 2008. The prevailing conditions in the global financial markets have had a material impact on consumer confidence and credit availability, significantly affecting the demand for, and price levels of, new and used vehicles. Trading conditions remain extremely challenging and the Group's outlook will continue to be closely linked to global economic conditions. The difficulty in predicting the length of the global economic downturn means that forecasts as to the Group's results remain subject to continued uncertainty.  

The Group expects a very weak performance in the first half of the current financial year and for trading conditions to remain extremely challenging throughout 2009. Against the Group's revised expectations for January and February 2009, the actual trading outcome (which was substantially below that for the same record period in 2008) was slightly better than expected; the improvement was primarily in the Group's Singapore trading and stabilisation of UK used car margins. Currently, March order levels for the Group's UK operations are in line with our revised expectations. The actions we initiated to reduce overheads, working capital and uncommitted capital expenditure are improving the Group's performance and cash generation. The strengthening of many of the Group's key operational currencies against Sterling would have a beneficial impact on the potential full year trading outcome for 2009 were they to remain at current levels for the full year; the Group has put in place certain currency hedging arrangements to protect this upside. The Group will also benefit from the continued decline of LIBOR (given the primarily floating rate LIBOR nature of the Group's existing banking facilities). The Board is targeting achieving an acceptable trading outcome for 2009 (assisted by the Group's higher margin activities), notwithstanding the current unprecedented downturn in new car sales. 

Based on the Group's current expectations of total new car sales at a local market level and how these sales volumes will develop, as supported by forecasts in industry publications, the Board expects that new car sales will continue to decline further in 2009 and will not begin to recover until the second half of 2010.  

The Board has responded swiftly to the global economic downturn by initiating key actions in the early part of the second half of 2008, taking a prudent and proactive approach to minimise the impact of the downturn where factors were within the Group's control. These actions included implementing a significant cost-cutting programme in October 2008 including, following consultation, a reduction of over 2,000 employees, a Group wide salary freeze for 2009, a policy of no management bonuses for 2008 and a number of site closures. The Board initially expected this cost-cutting exercise to result in an annual saving of £50 million from 2009 onwards but this projection subsequently increased to £58 million at 2009 exchange rates.

The Group is focusing on five core business priorities: growing its market share while protecting margins, growing aftersales revenues, reducing costs, managing working capital and reducing uncommitted capital expenditure. The Group's focus on these priorities during the downturn is intended to better position the Group to be a financially stable distributor and retailer for its brand partners, to capitalise on opportunities during the downturn and to take advantage of improvements in the markets in which the Group operates, as and when they begin to recover.  

General economic factors driving a recovery

The Board believes that the recovery of the automotive industry will be largely dependent upon the recovery of the wider global economy and, in particular, consumer confidence. The recovery of both these factors may also be supported by the implementation of public spending programmes to stimulate growth, levels of employment and improved credit availability, facilitating car purchases.

Structural factors driving a recovery 

The Board also expects the timing of a recovery in the automotive industry to be facilitated, in part, by structural factors within the industry itself. For instance, the Board is of the view that a reduction in the current oversupply of vehicles by OEMs could lead to the potential for the Group to achieve improved margins and lower inventory funding costs. In mature markets, the Board believes that new car sales will grow as consumers replace ageing vehicles or seek to change to newer, more technologically advanced vehicle models which have lower usage costs or are more environmentally friendly. In emerging markets, the Board believes that the current low levels of car ownership across each market relative to mature markets shows that there is greater potential for the demand for new and used vehicles to increase and that the Group will be able to use its existing presence in those emerging markets to take advantage of any such increase in demand.

Share Capital Subdivision

The nominal value of the Existing Ordinary Shares exceeds the Issue Price. A company is not permitted to issue shares at a price which is less than their nominal value and, therefore, in order to effect the Rights Issue, it is proposed that each of the issued Existing Ordinary Shares of 25 pence be subdivided into one New Ordinary Share of 1 pence nominal value and one Deferred Share of 24 pence nominal value and that each authorised but unissued Existing Ordinary Share of 25 pence be subdivided into 25 New Ordinary Shares of 1 pence. This will result in 460,368,500 New Ordinary Shares and 460,368,500 Deferred Shares being in issue immediately following the Share Capital Subdivision. The Share Capital Subdivision requires certain approvals from Shareholders at the General Meeting.

Dividends and dividend policy

Given the significant downturn in the markets in which Inchcape operates and the background to and reasons for the Rights Issue, the Board does not consider it to be appropriate to recommend a final dividend for the year ended 31 December 2008. The Board does not currently expect to make or declare any dividend payments relating to the financial year ending 31 December 2009.

Principal terms of the Rights Issue 

The New Ordinary Shares will be offered by way of rights to all Qualifying Shareholders (other than, subject to certain exceptions, Qualifying Shareholders with a registered address in the United States or other Excluded Territories) on the following basis:

9 New Ordinary Shares at 6 pence per New Ordinary Share for every 1 Ordinary Share

held and registered in their name at close of business on the Record Date. The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the existing Ordinary Shares, including the right to all future dividends or other distributions made, paid or otherwise declared after the date of their issue.

The Rights Issue has been fully underwritten (on a several basis) in the Underwriting Proportions by the Joint Bookrunners and is conditional upon (amongst other things):

• the Resolution being passed at the General Meeting;

• Admission becoming effective by not later than 8.00 a.m. on 7 April 2009 (or such later time and/or date as the Company and Merrill Lynch (as global co-ordinator) agree, being not later than 16 April 2009); and

• the Underwriting Agreement otherwise becoming unconditional in all respects and not having been terminated in accordance with its terms prior to Admission. 

The Issue Price of 6 pence per New Ordinary Share represents an 88.2 per cent. discount to the Closing Price of an Existing Ordinary Share of 50.75 pence on 18 March 2009 (being the latest practicable date before the publication of the Prospectus). If a Qualifying Shareholder does not take up the offer of New Ordinary Shares in full, his/her proportionate shareholding will be diluted by 90.0 per cent. In setting the Issue Price, the Directors have considered the price at which the New Ordinary Shares need to be offered to investors to ensure the success of the Rights Issue and raise very significant equity compared with the current market capitalisation of the Company. The Directors believe that both the Issue Price and the discount are appropriate. 

The Rights Issue is expected to raise net proceeds of approximately £232 million.

It is expected that Admission will occur and that dealing in the New Ordinary Shares (nil paid) will commence on the London Stock Exchange at 8.00 a.m. on 7 April 2009.

Further details of the terms and conditions of the Rights Issue are set out in Part IV (Terms and Conditions of the Rights Issue) of the Prospectus.

Summary expected timetable

	2009
Prospectus published	7.00 a.m. on 19 March
Record Date for entitlement under the Rights Issue	Close of business on 1 April
General Meeting	9.00 a.m. on 6 April
Dealings in New Ordinary Shares, nil paid, commence on the London Stock Exchange	8.00 a.m. on 7 April
Existing Ordinary Shares marked 'ex' by the London Stock Exchange	8.00 a.m. on 7 April
Nil Paid Rights credited to stock accounts in CREST	8.00 a.m. on 7 April
Nil Paid Rights and Fully Paid Rights enabled in CREST	By 8.00 a.m. on 7 April
Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters	11.00 a.m. on 23 April

IMPORTANT NOTICE

The defined terms set out in the Appendix apply in this announcement. Unless otherwise stated references to time contained in this announcement are to UK time. This announcement has been issued by and is the sole responsibility of Inchcape plc.

A copy of the Prospectus when published will be available from the registered office of the Company and on the Company's website at www.inchcape.com provided that the Prospectus will not be available (whether through the website or otherwise) to Shareholders in Excluded Territories and, subject to certain exceptions, the United States. The Prospectus will give further details of the New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights being offered pursuant to the Rights Issue.

This announcement is an advertisement and does not constitute a prospectus. Investors should not base any decision to purchase, otherwise acquire or subscribe for, sell or otherwise dispose of any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of the information contained in or incorporated by reference into the Prospectus.

Merrill Lynch International, HSBC, RBS Hoare Govett and Investec are acting for the Company and for no one else in connection with the Rights Issue and will not be responsible to anyone (whether or not a recipient of this announcement) other than the Company for providing the protections afforded to their respective clients or for providing advice in connection with the Rights Issue or any other matter referred to in this announcement.

Each of Dresdner Kleinwort and Greenhill, who are authorised and regulated by the Financial Services Authority, is acting for Inchcape and no one else in connection with the Rights Issue and will not be responsible to anyone other than Inchcape for providing the protections afforded to their client or for providing advice in relation to the Rights Issue of any other matter referred to in this announcement. 

Apart from the responsibilities and liabilities, if any, which may be imposed on any of Merrill Lynch, Dresdner Kleinwort, HSBC, RBS Hoare Govett, Investec and Greenhill by FSMA, none of Merrill Lynch, Dresdner Kleinwort, HSBC, RBS Hoare Govett, Investec and Greenhill accept any responsibility whatsoever, and they make no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by any of them, or on behalf of them, in connection with the Company, the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares or the Rights Issue and nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future. Each of Merrill Lynch International, Dresdner Kleinwort, HSBC, RBS Hoare Govett, Investec and Greenhill accordingly disclaims to the fullest extent permitted by law all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which any of them might otherwise have in respect of this announcement or any such statement.

This announcement is for information purposes only and does not constitute or form part of any offer or invitation to purchase, otherwise acquire or subscribe for, sell or otherwise dispose of or issue, or any solicitation of any offer to purchase, otherwise acquire or subscribe for, sell or otherwise dispose of or issue Nil Paid Rights, Fully Paid Rights or New Ordinary Shares or to take up any entitlements to Nil Paid Rights in any jurisdiction in which such an offer or solicitation is unlawful.

This announcement does not constitute an offer for sale of securities of the Company in the United States, Australia, Canada, Japan, New Zealand the Republic of South Africa, Singapore or Switzerland. The Nil Paid Rights, the Fully Paid Rights and the New Ordinary Shares issued in connection with the Rights Issue have not been and will not be registered under the U.S. Securities Act or under the securities legislation of any state or territory or jurisdiction of the United States, and may not be offered, or sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in the United States except pursuant to an exemption from registration under the Securities Act and in compliance with state securities laws. This announcement does not constitute an offering circular or prospectus in connection with an offering of securities of the Company. Investors must neither accept any offer for, nor acquire, any securities to which this announcement refers, unless they do so on the basis of the information contained in the Prospectus published by the Company. This announcement does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for, any securities and cannot be relied upon for any investment contract or decision.

There will be no public offer of the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares to be issued pursuant to the Rights Issue, in the United States. Neither this announcement (including and any materials distributed in connection with this announcement) nor any part or copy of it may be transmitted into the United States territories or possessions or distributed, directly or indirectly, in the United States, its territories or possessions. Neither this announcement nor any copy of it may be taken or transmitted into the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa, Singapore or Switzerland or any other such jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. Any failure to comply with this restriction may constitute a violation of the securities laws of the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa, Singapore or Switzerland. The distribution of this announcement in other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. The Ordinary Shares (including Existing Ordinary Shares and New Ordinary Shares) have not been and will not be registered under the applicable securities laws of the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa, Singapore or Switzerland and, subject to certain exemptions, may not be offered or sold within the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa, Singapore or Switzerland.

Neither the content of Inchcape's website nor any website accessible by hyperlinks on Inchcape's website is incorporated in, or forms part of, this announcement.

This announcement contains or incorporates by reference statements which are 'forward-looking statements' within the meaning of the US federal securities laws or otherwise. Forward-looking statements can be identified by words such as 'believes', 'estimates', 'anticipates', 'expects', 'intends', 'may', 'will', 'plans' and other words of similar meaning in connection with a discussion of future operating or financial performance. These may include, among others, statements relating to:

• the Group's plans or objectives for future operations, strategy, products or financial performance;

• the impact of an economic downturn on growth in particular regions;

• the Board's views on the duration of the current economic downturn and the timing and likelihood of a recovery of the general economy and a resulting recovery in the automotive industry; 

• the Group's indebtedness;

• anticipated uses of cash; and

• the expected outcome of contingencies, including litigation and pension liabilities.

The forward-looking statements in this announcement are made based upon the Company's expectations and beliefs concerning future events impacting the Group and therefore involve a number of known and unknown risks and uncertainties including, without limitation, the risks and uncertainties in the section of the Prospectus entitled 'Risk Factors', because they relate to events and depend on circumstances that may or may not occur in the future. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which it will operate, which may prove not to be accurate. The Company cautions that these forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in these forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials. No reliance may be placed, for any purposes whatsoever, on the information contained in this announcement or on its completeness (including, without limitation, on the fairness, accuracy, completeness of the information or opinions contained herein) and this announcement should not be considered a recommendation by the Company, Merrill Lynch, HSBC, RBS Hoare Govett, Dresdner Kleinwort, Investec and Greenhill or any of their respective directors, officers, employees, advisers or any of their respective affiliates in relation to any purchase of or subscription for securities. No representation or warranty, express or implied, is given by or on behalf of the Company, Merrill Lynch, HSBC, RBS Hoare Govett, Dresdner Kleinwort, Investec and Greenhill or any of their respective directors, officers, employees, advisers or any of their respective affiliates, or any other person, as to the accuracy, fairness or sufficiency or completeness of the information or opinions or beliefs contained in this announcement (or any part hereof). None of the information contained in this announcement has been independently verified or approved by Merrill Lynch, HSBC, RBS Hoare Govett, Dresdner Kleinwort, Investec and Greenhill or any other person. Recipients of this announcement and/or the Prospectus should conduct their own investigation, evaluation and analysis of the business, data and property described in this announcement and/or, if and when published, in the Prospectus. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement.

DEFINITIONS

In this announcement the following expressions have the following meaning unless the context otherwise requires:

'Admission'	admission of the New Ordinary Shares to the Official List and to trading on the main market for listed securities of the London Stock Exchange;
'Board'	the board of directors of the Company from time to time;
'certificated' or 'in certificated form'	a share or other security which is not in uncertificated form (that is, not in CREST);
'Closing Price'	the closing, middle market quotation of an Existing Ordinary Share, as published in the Daily Official List;
'CREST'	the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CREST Regulations operated by Euroclear UK;
'Daily Official List'	the daily official list of the London Stock Exchange;
'Deferred Shares'	the deferred shares of 24 pence each in the Company created pursuant to the Share Capital Subdivision;
'Director'	a director of the Company;
'Dresdner Kleinwort'	Dresdner Kleinwort Limited, a company registered in England and Wales under registered number 00551334, whose registered office is at 30 Gresham Street, London, EC2V 7PG;
'Excluded Territories'	Australia, Canada, Japan, Singapore, South Africa, Switzerland and any other jurisdiction where the extension or availability of the Rights Issue (and any other transaction contemplated thereby) would breach any applicable law;
'Existing Ordinary Shares'	the ordinary shares of 25 pence each in the capital of the Company at the date of the Prospectus;
'FSMA'	the Financial Services and Markets Act 2000, as amended;
'Fully Paid Rights'	rights to acquire New Ordinary Shares, fully paid;
'General Meeting'	the general meeting of the Company to be convened pursuant to the notice set out at the end of the Prospectus (including any adjournment thereof);
'Greenhill'	Greenhill & Co. International LLP, a limited liability partnership registered in England and Wales under registered number C332045, whose registered office is at Lansdowne House, 57 Berkeley Square, London W1J 6ER;
'HSBC'	HSBC Bank plc, a company incorporated in England and Wales, with registered number 00014259 and registered office 8 Canada Square, London, E14 5HQ;
'Investec'	Investec Bank plc, a company registered in England and Wales with registered number 00489604, whose registered office is at 2 Gresham Street, London, EC2V 7QP;
'Issue Price'	6 pence per New Ordinary Share;
'Joint Bookrunners'	HSBC, Merrill Lynch and RBS Hoare Govett;
'London Stock Exchange'	London Stock Exchange plc or its successor(s);
'Merrill Lynch' or 'Merrill Lynch International'	Merrill Lynch International, a company registered in England and Wales under registered number 02312079, whose registered office is 2 King Edward Street, London, EC1A 1HQ and a subsidiary of Bank of America Merrill Lynch;
'New Ordinary Shares'	the ordinary shares of 1 pence each in the capital of the Company to be issued by the Company pursuant to the Share Capital Subdivision and/or the Rights Issue as the context requires.;
'Notice of General Meeting'	the notice of general meeting set out at the end of the Prospectus;
'Nil Paid Rights'	rights to acquire New Ordinary Shares, nil paid;
'Official List'	the official list of the UK Listing Authority;
'Ordinary Shares'	Existing Ordinary Shares and/or New Ordinary Shares, as the context requires;
'Overseas Shareholder'	holders of ordinary shares with registered addresses outside the UK or who are citizens of, incorporated in, registered in or otherwise resident in, countries outside the UK;
'Pounds Sterling' or '£'	the lawful currency of the United Kingdom;
'Provisional Allotment Letter'	the provisional allotment letter issued to Qualifying Non-CREST Shareholders;
'Qualifying Non-CREST Shareholders'	Qualifying Shareholders holding Ordinary Shares in certificated form;
'Qualifying Shareholders'	holders of Existing Ordinary Shares on the register of members of the Company on the Record Date;
'RBS Hoare Govett'	RBS Hoare Govett Limited, a company incorporated in England and Wales with registered number 02026375 and registered office at 250 Bishopsgate, London, EC2M 4AA;
'Record Date'	in respect of the Rights Issue, close of business in London on 1 April 2009;
'Rights Issue'	the offer by way of rights to Qualifying Shareholders to acquire New Ordinary Shares, on the terms and conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders only, the Provisional Allotment Letter;
'Resolution'	the special resolution to be proposed at the General Meeting as set out in the Notice of General Meeting;
'Share Capital Subdivision'	the proposed reorganisation of the authorised and issued share capital of the Company;
'Shareholder(s)'	holder(s) of Ordinary Shares;
'UK Listing Authority'	the Financial Services Authority acting in its capacity as the competent authority for the purposes of FSMA;
'uncertificated' or 'in uncertificated form'	a share or other security recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
'Underwriting Agreement'	the conditional underwriting agreement dated 19 March 2009 between the Company and the Joint Bookrunners relating to the Rights Issue;
'Underwriting Proportions'	60 per cent. in the case of Merrill Lynch and 20 per cent. each in the case of each of HSBC and RBS Hoare Govett;
'United Kingdom' or 'UK'	the United Kingdom of Great Britain and Northern Ireland;
'United States' or 'US'	the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
'US Securities Act'	the United States Securities Act of 1933, as amended; and
'VIR'	Virtually Integrated Retail, where the Group operates all retail outlets for a brand partner in a market as well as being the distributor for that brand partner.

 

END

 

 

ARIUKOSRKRROARR