ISA International PLC
10 August 2001
ISA INTERNATIONAL PLC
('ISA' OR THE 'COMPANY')
Agreement of Strategic Alliance with Daisytek
* The board of ISA, the international distributor of
electronic office supplies, announces that it has reached
agreement on the terms of a Strategic Alliance with Daisytek
International Corporation ('Daisytek'), a wholesale
distributor of computer and office supplies and provider of
marketing and demand generation services based in the US.
* Daisytek will, subject to approval by Shareholders,
invest up to £10.0 million in ISA - £8.0 million in
Convertible Preference Shares with a Warrant to invest a
further £2.0 million at Daisytek's discretion.
* The Strategic Alliance with Daisytek will address both
the financial needs of ISA and its requirement to have
strong global partnerships with vendors and to service
global customers.
* The terms of the Strategic Alliance are such that the
Board has concluded that, if the Proposals are implemented,
the Company cannot maintain its Listing and therefore, if
the Investment by Daisytek is completed, the Ordinary Shares
will be de-listed from the Official List and the Company
will make application for the admission of the Ordinary
Shares to trading on AIM.
* The Convertible Preference Shares will mature on the
fifth anniversary of their issue and are convertible at any
time during their 5 year term at the option of Daisytek into
Ordinary Shares representing 50 per cent. plus one share of
the Company's issued share capital as enlarged by the
conversion, subject to dilution by the exercise of certain
share options. The Takeover Panel has agreed, subject to
the Resolution being passed on a poll by ISA Shareholders,
to waive the requirement for Daisytek to make a general
offer to Shareholders under Rule 9 of the City Code. The
conversion is equivalent to a subscription price of
approximately 13 pence per Ordinary Share.
* In addition to its Investment, the Board of Daisytek
has indicated that it may be willing to advance up to £5
million of credit facilities to ISA for investment purposes,
subject to negotiation and execution of a legally binding
agreement on commercial arm's length terms.
* Shareholder approval is also sought to allow the Board
to amend the terms of Existing Share Option Schemes, the
performance targets of which are considered to no longer
provide a meaningful incentive, and to allow the grant of
new options to the senior management of ISA.
* ISA has received irrevocable undertakings to vote in
favour of the Resolution from Shareholders holding, in
aggregate, approximately 51.1 per cent. of the issued
ordinary share capital of ISA.
David Heap, Chairman, commented: 'I am delighted to announce
this alliance with Daisytek which will bring significant
strategic benefits to the Group. Daisytek's complementary
skills and international presence will assist ISA in
building strong global partnerships with vendors and
servicing global customers.'
Enquiries:
ISA International Plc 01274 306 787
Mike Murphy, Chief Financial Officer
KPMG Corporate Finance 0121 232 3000
Maura Dunne
Square Mile BSMG Worldwide 020 7601 1000
Louise Robson / Susanne Walker
Introduction
On 30 April 2001, ISA announced that it had signed Heads of
Agreement with a strategic, global trade partner who was
proposing to make a cash investment of up to £10 million in
ISA. The Board announces that it has reached agreement on
the terms of a Strategic Alliance with Daisytek
International Corporation, a wholesale distributor of
computer and office supplies and provider of marketing and
demand generation services based in the US.
The Strategic Alliance with Daisytek will address both the
financial needs of ISA and its requirement to have strong
global partnerships with vendors and to service global
customers.
The terms of the Strategic Alliance are such that the Board
has concluded that, if the Proposals are implemented, the
Company cannot maintain its Listing and therefore, if the
Investment by Daisytek is completed, the Ordinary Shares
will be de-listed from the Official List and the Company
will make application for the admission of the Ordinary
Shares to trading on AIM.
Background to and reasons for the Investment
As outlined in the Company's Annual Report and Accounts for
the year ended 31 December 2000 adopted by Shareholders at
the Annual General Meeting on 26 June 2001, 2000 was a year
of contrasting financial performance for ISA: record profits
in the UK and Ireland were offset by significant losses
incurred in Continental Europe. The European outsourced
logistics partner, who commenced operations in October 1999,
failed to attain customer service performance or financial
controls satisfactory to ISA. The contract was therefore
terminated in September 2000 and logistics was re-
established as an ISA core competence in both Germany and
France. The consequential impact of the European logistics
failure was that Group turnover only grew by 3 per cent. to
£296.8 million (1999 continuing operations: £288.0 million)
whilst operating losses, excluding non-recurring costs and
before share of associates, of £0.6 million were recorded
(1999 continuing operations: £2.2 million operating profit).
One-off costs directly attributable to the outsourced
European logistics contract amounted to £7.2 million (total
non-recurring items: £7.7 million).
The impact of the non-recurring losses arising from the
problems of the outsourced logistics in Europe has increased
the net debt of the Group by £3.5 million to £25.8 million
at 31 December 2000. Shareholders' funds reduced to £12.7
million giving net gearing of 203 per cent. Net debt has
increased significantly since year end due to an uplift in
the level of business combined with seasonal working capital
requirements. The Board sought an equity injection to
improve the Group's balance sheet and to enable ISA to
continue to grow and seize commercial opportunities as and
when they arise. After detailed consideration of a number of
alternatives, the Board has reached agreement with Daisytek,
subject to Shareholder approval, on the terms of an £8.0
million investment in ISA with a Warrant to invest a further
£2.0 million at Daisytek's discretion.
Whilst the total possible investment by Daisytek is the same
as that announced in the preliminary announcement of results
on 30 April 2001, it has been necessary to change the terms
on which the Investment is to be made, details of which are
set out below.
Information on Daisytek
Daisytek is a wholesale distributor of computer and office
supplies and professional tape products, in addition to
providing marketing and demand generation services.
Daisytek sells its products and services in the US, Canada,
Australia, Mexico and South America. Daisytek distributes
more than 17,000 name-brand computer and office supplies
products and over 2,800 professional tape products from
numerous manufacturers. Daisytek is headquartered in Allen,
Texas and is quoted on NASDAQ with a market capitalisation
of US$236.5 million at 31 July 2001.
Rationale for the Strategic Alliance
ISA is a distributor, primarily of electronic office
supplies, servicing direct, wholesale and retail channels.
The ISA Directors believe that large multi-national
corporations are seeking to derive the benefits provided by
global supply arrangements. This trend is well established
within the office supplies market.
Daisytek's strategy is to become a leading, global wholesale
distributor of information technology supplies and
consumables, office supplies and products and aftermarket
microcomputer peripherals and accessories. Daisytek is
striving to develop global relationships with its customers
and with the key product manufacturers with which it
partners.
The Strategic Alliance with ISA enables Daisytek to extend
its presence into the United Kingdom and Europe, which
represents one of the largest and most important markets in
which Daisytek does not currently do business.
The Strategic Alliance is intended to benefit both ISA and
Daisytek by realising strategic benefits in five primary
areas: vendor relationships, customer relationships,
information technology development, global sourcing and
employee development. Both companies seek to develop global
relationships with their key vendors. In addition to
realising the combined product management, product
purchasing and vendor programme benefits from Daisytek's and
ISA's common vendors, Daisytek and ISA believe the
opportunity to develop customised programmes to help
implement the vendors' global strategies may provide
substantial long-term opportunities for both companies. ISA
and Daisytek are building businesses with an intense focus
on customer service delivery. The capacity to service
customers globally and to share best practices and best-in-
class technology tools of both organisations to continuously
enhance customers satisfaction levels, is an important
objective of the Strategic Alliance. In addition, ISA and
Daisytek intend to encourage the exchange of experienced
employees, not only to facilitate the realisation of the
benefits of the Strategic Alliance, but also to challenge
and develop each company's most talented individuals.
The net proceeds of the Investment, estimated to be £7.0
million net of expenses, will be used to reduce ISA's
indebtedness. A pro forma statement of net assets it set
out in the Circular.
Principal terms of the Strategic Alliance
The Strategic Alliance provides for Daisytek to invest
£8,000,000 in Convertible Preference Shares in ISA. The
Convertible Preference Shares will mature on the fifth
anniversary of their issue and are convertible at any time
during their five year term at the option of Daisytek into
ordinary shares of ISA representing 50 per cent. plus one
share of the Company's issued share capital as enlarged by
the conversion of the Convertible Preference Shares, subject
to dilution by certain share options which may have been
exercised as described below. The conversion is equivalent
to a subscription price per Ordinary Share of approximately
13 pence, compared with approximately 16 pence envisaged at
the time of the announcement on 30 April 2001.
ISA presently has a total of 7,658,519 Ordinary Shares under
option under the Existing Share Option Schemes. It has been
agreed that Daisytek will not have its percentage
shareholding, either on or following conversion, reduced by
the exercise of 3,794,519 of these share options and on
exercise of these options after conversion, Daisytek will be
entitled to receive an equal number of ISA Shares by way of
bonus issue. Daisytek's percentage shareholding, either on
or following conversion, will be reduced by the exercise of
all other share options granted with Daisytek's agreement,
including those described below in the section headed 'New
Option Grants'.
Following amendment of the Existing Share Option Schemes in
accordance with the Proposals, ISA may grant under option a
maximum of 20 per cent. of its issued share capital from
time to time. Upon the Resolution being approved and
becoming unconditional, ISA will have authority to grant
18,794,826 Ordinary Shares under option. Assuming
conversion of the Convertible Preference Shares, ISA could
grant a further 4,716,533 Ordinary Shares under option,
which if granted without the agreement of Daisytek, would
enable Daisytek to receive, on exercise of these options, an
equal number of Ordinary Shares by way of bonus issue.
Daisytek could therefore receive a maximum of 8,511,052
Ordinary Shares by way of bonus issue (inclusive of the
3,794,519 bonus shares referred to above) under the terms of
the Proposals.
On completion of the Subscription and Shareholders'
Agreement, ISA will issue a deed of warrant to Daisytek
under which Daisytek may, at its option, subscribe for up to
15,384,615 Ordinary Shares for an aggregate subscription
price of £2,000,000, equivalent to 13 pence per Ordinary
Share.
The Convertible Preference Shares carry a variable annual
coupon of 3 per cent. over 3 month LIBOR, payable quarterly,
and can be redeemed early at the option of ISA after the
third year on payment of a 10 per cent redemption premium.
Daisytek has confirmed that, if it converts the Convertible
Preference Shares into ISA Shares, its current intention is
that the business of the Group would be continued in
substantially the same manner as at present under the
control of the ISA Directors and that the existing rights,
including pension rights, of employees of the Group will be
fully safeguarded.
In addition to its Investment, the Board of Daisytek has
indicated that it may be willing to advance up to £5 million
of credit facilities to ISA for investment purposes, subject
to negotiation and execution of a legally binding agreement
on commercial arm's length terms.
ISA and Daisytek have entered into a Subscription and
Shareholders' Agreement which supplements the terms of the
Convertible Preference Shares and under which, inter alia,
Daisytek has the right to appoint two non-executive
directors to the board of ISA (although it is not Daisytek's
current intention to do so). ISA has taken out policies of
insurance in relation to the warranties and undertakings
given by ISA in the Subscription and Shareholders'
Agreement. Further details of the terms of the Convertible
Preference Shares, the Warrant, the Subscription and
Shareholders' Agreement, the Insurance Policies and the
Proposed Line of Credit are set out in the Circular.
Dispensation from Rule 9 of the City Code
Under Rule 9 of the City Code, any person who acquires
shares which (taken together with any shares already held or
acquired by that person or by persons acting in concert with
him) amount to 30 per cent. or more of the voting rights of
a company to which the City Code applies, is normally
required to make a general offer to the shareholders of that
company to acquire their shares at the highest price paid by
that person or any person acting in concert with such a
person within the preceding 12 months.
If the Proposals become unconditional and Daisytek elects to
convert the Convertible Preference Shares into New ISA
Shares, the resulting ordinary shareholding of Daisytek in
ISA would, ignoring the exercise of certain share options
detailed above, represent 50 per cent. plus one share of the
enlarged issued ordinary share capital of ISA. Further, if
ISA is in default under the terms of the Convertible
Preference Shares, Daisytek will be entitled to vote 50 per
cent. plus one share of the votes cast at any shareholder
meeting of ISA. If Daisytek also exercises its option to
convert the Warrant, it will receive, in aggregate, a
further 15,384,615 New ISA Shares giving it a maximum
ordinary shareholding in ISA, assuming conversion of the
Convertible Preference Shares and that no options are
exercised, of 55.8 per cent. of the enlarged issued share
capital of ISA. However, the Takeover Panel has agreed,
subject to the Resolution set out in the notice of EGM in
the Circular being passed on a poll by ISA Shareholders, to
waive the requirement for Daisytek to make a general offer
to Shareholders under Rule 9 of the City Code.
This waiver is in respect of the issue of the Convertible
Preference Shares, any holding of New ISA Shares resulting
from the conversion of Convertible Preference Shares into
ISA Shares, the exercise of the Warrant to acquire ISA
Shares and if Daisytek is entitled to exercise its rights to
vote more than 50 per cent. of the votes which may be cast
at any shareholder meeting of ISA on the occurrence of an
Event of Default of the Convertible Preference Shares (as
defined in the Articles to be amended at the EGM).
Following the Proposals becoming unconditional, prior to
exercise of its rights to convert the Convertible Preference
Shares into New ISA Shares, Daisytek will be free to acquire
additional shares in ISA (whether by exercise of the Warrant
or otherwise), subject to the provisions of the City Code.
Assuming that Daisytek converts the Convertible Preference
Shares and exercises such proportion of the Warrant into New
ISA Shares as is necessary so that it holds in excess of 50
per cent. of the enlarged issued ordinary share capital of
ISA (as is envisaged by these Proposals), Shareholders
should note that Daisytek would then be able to further
increase its shareholding in the Company (either by exercise
of the Warrant if this is not done at the same time as
conversion of the Convertible Preference Shares or
otherwise) without incurring any further obligation to make
a general offer to Shareholders under Rule 9 of the City
Code.
New Option Grants
Following shareholder approval in June 2000, options were
granted under the Unapproved Share Option Scheme and the
Approved Share Option Scheme. The exercise of these were
made subject to challenging performance targets relating to
growth in earnings per share. The Board believes that these
targets and the fact that the exercise price is
significantly higher than the current share price of ISA
means that these options no longer provide a meaningful
incentive for future performance, particularly for a
management team which has been appointed to restore the
Group's performance. The rules of the Unapproved Share
Option Scheme and the Approved Share Option Scheme only
allow limited revision to these targets. Consequently
shareholder approval is being sought to allow the Board more
flexibility in setting conditions on the exercise of
options, which nonetheless will require sustained
improvement in the underlying financial performance of the
Group.
Currently, there are outstanding options over 7,658,519 ISA
Shares granted under the Existing Share Option Schemes. It
is the Board's intention to seek the surrender of options
over 3,864,000 ISA Shares, which will require the approval
of the option holder in each case. Bruce Robinson and Mike
Murphy, Chief Executive Officer and Chief Financial Officer
of ISA respectively, intend to surrender all options which
they currently hold, amounting to options over 1,750,000 ISA
Shares, and the Board will invite senior managers within the
Group to do the same.
Conditional on the passing of the Resolution, it is proposed
to grant new options over a maximum of 15,000,307 ISA
Shares. Of this number, options over a maximum of 3,864,000
ISA Shares will replace options which are surrendered and
options over a maximum of 3,702,500 ISA Shares will be new
options. The balance, representing options over a maximum
of 7,433,807 ISA Shares, will only be exercisable if
Daisytek elects to convert the Convertible Preference Shares
into New ISA Shares. The exercise of all new options will
be subject to the achievement of performance conditions set
by the Board. To the extent these options are granted under
the Unapproved Share Option Scheme, they will be granted
with an exercise price of 13 pence per ISA Share, which
equates to a subscription price per Ordinary Share on
conversion of the Convertible Preference Shares of
approximately 13 pence and is also the price per ISA Share
at which Daisytek may exercise the Warrant. Depending on
the market value of the Company's shares at the date of
grant, this price may be below market value. Options
granted under the Approved Share Option Scheme will have an
exercise price equal to the market value of ISA Shares at
the date of grant.
Daisytek has been impressed by the efforts of the present
management in difficult circumstances over a long and
sometimes arduous period. Daisytek views with optimism the
ability of the existing management to manage the future of
ISA and strongly believes that the proper incentivisation of
management is critical to the delivery of long-term
shareholder value. As a result Daisytek fully supports the
proposed amendments to the Unapproved Share Option Scheme
and the Approved Share Option Scheme as set out in this
Announcement and in the Circular.
The proposed grant of new options requires amendment to the
rules of the Unapproved Share Option Scheme and the Approved
Share Option Scheme and consequential amendment to the rules
of the ISA International plc Savings Related Share Option
Scheme and the ISA International plc Overseas Savings
Related Share Option Scheme. These are explained in the
Circular.
Dilution impact for existing Shareholders
If Daisytek converts the Convertible Preference Shares into
New ISA Shares and exercises its option to convert the
Warrant and if the maximum number of options over ISA Shares
following the Proposals are exercised (totalling 18,794,826,
being existing options not being surrendered of 3,794,519
and new options being granted of 15,000,307), existing
Shareholders will hold 37.8 per cent. of the enlarged issued
share capital of ISA.
Amendments to Articles of Association
The Articles of Association are proposed to be amended to
insert the rights relating to the Convertible Preference
Shares and certain consequential amendments as set out in
the Circular. The Articles of Association as proposed to be
amended will be available for inspection as set out in the
Circular.
Current trading, prospects and working capital
As noted in the Company's Annual Report and Accounts adopted
by Shareholders at the Annual General Meeting on 26 June
2001, the Group returned to an operating profit in the first
quarter of 2001, with record profits being achieved in the
UK and Ireland, Sweden and Norway producing good profits and
losses declining in Germany and France.
Volumes are currently showing good growth, although margins
have not been as strong, partly due to the cash constraints
under which the Group has been operating. The Board
considers that considerable progress has been made in
driving the European businesses back towards profitability,
although the margin recovery in Europe has been slower than
planned. Trading is also affected by seasonal trends, with
volumes normally lower in the second and third quarter in
Continental Europe. The Group expects to experience its
normal increased levels of demand in the final quarter of
the year.
ISA's associate Kaye is moving forward with the second stage
of its strategic plan which should result in significant
improvements in its distribution network, but which requires
investment in higher fixed costs during the transitional
period. Revenue is expected to be close to target for the
first six months of the current year although margins are
weaker than expected. The continuing Kaye investment
programme requires a refinancing of Kaye to ensure that the
benefits of the investment programme, and the consequential
impact on shareholder value, are maximised. ISA's decision
to participate in the Kaye refinancing, which is expected to
take place in the next few weeks, will depend on the size
and the terms of the refinancing and on its ability to fund
participation at that time. ISA's ability to fund
participation in the Kaye refinancing will be influenced by,
and may be dependent on, satisfactory finalisation of the
Proposed Line of Credit from Daisytek of up to £5 million.
The Board has assumed that ISA's participation in the Kaye
refinancing will require additional financial resources to
be made available to ISA over and above the Investment.
Net debt has increased significantly from the £25.8 million
reported at 31 December 2000 due to the uplift in the level
of business combined with the usual seasonal working capital
requirements described above. Increased interest charges
resulting from the higher levels of debt are also being
incurred. In the opinion of the Directors, taking into
account the net proceeds of the Investment, the Group's
existing cash resources and available bank facilities, the
Group has sufficient working capital for its present
requirements, that is for at least the next 12 months from
the date of this Announcement. Without the benefit of the
Investment, however, the Group's borrowing requirements are
likely to exceed available facilities for the majority of
the next year.
In the event that the Resolution is not approved by
Shareholders at the EGM, the ability of the Group to
continue trading would be severely jeopardised. The Group
would need to negotiate immediate additional debt or other
financing facilities. If these additional facilities were
not forthcoming, the Group would have to pursue other
alternatives, such as disposal of all or part of the Group
and significant rationalisation of its business operations
which, if unsuccessful, could result in the Company ceasing
to trade.
Subject to receipt of the Investment, the Directors believe
that ISA is well placed to capitalise on the growing
electronic office supplies market and the continuing
recovery of the Group's Continental European businesses. The
Group aims to achieve an attractive return on sales in the
medium term and the Board expects that the Group will
benefit from the proceeds of the Investment by the ability
to pursue additional commercial opportunities.
Proposed cancellation of the Listing and application for
admission to trading on AIM
The Board has examined a number of alternative sources of
finance for the Group and believes that the Proposals agreed
with Daisytek are in the best interests of the Company and
its Shareholders. The terms of the Investment by Daisytek
contain provisions which, whilst required by Daisytek as a
precondition of investing in ISA, would breach or
potentially breach certain of the provisions of the Listing
Rules. The most notable of these breaches would be as
follows:
* Listing Rule 3.6 requires ISA to be an 'independent'
company. Certain of the restrictions which would be
exercisable by Daisytek as the holder of the Convertible
Preference Shares (which are described in the Circular) are
of a nature such that the Board is concerned that it could
not be regarded as acting independently from Daisytek for
the purpose of this Listing Rule;
* Daisytek on conversion of the Convertible Preference
Shares would be a 'controlling shareholder' of ISA for the
purposes of Rule 3.13 of Listing Rules;
* Conversion of the Convertible Preference Shares and
exercise of the Warrant would be likely to result in a
breach of the requirement of Listing Rule 3.18 that,
generally, 25 per cent. or more of the listed share capital
of the Company must be in public hands;
* The issue of the Warrant would breach Listing Rule 3.23
which provides that the issue of warrants or options must be
limited to not more than 20 per cent. of the issued equity
share capital of the Company.
The Board also believes that the costs of maintaining a
Listing and the heavy burden of regulation to which a listed
company is subject now outweigh the benefit to the Company
of a Listing, having regard to the Company's present
financial position and market capitalisation. However, the
Board believes that it is in the best interests of
Shareholders for there to be a continued market for their
ISA Shares and for these reasons the Board has decided,
subject to the Proposals being implemented, to cancel the
Company's Listing and to make application for the Company's
Ordinary Shares to be admitted to trading on AIM. If the
Proposals are not approved at the EGM, or are not
implemented for any other reason, then the Group will retain
its Listing.
Shareholders should note that if the Proposals are
implemented but admission to trading is refused by AIM, the
Company's Ordinary Shares would then not be traded on any
stock exchange or market.
The admission of the Ordinary Shares to trading on AIM will
not affect the way in which Shareholders buy or sell
Ordinary Shares. However, the Board is aware that
circumstances which may apply to certain Shareholders may
prohibit them from investing in AIM traded shares. The
shares of a company quoted on AIM cannot be held in Personal
Equity Plans or Individual Savings Accounts. Such
Shareholders are advised to review their position in this
respect as soon as possible.
If the Proposals are implemented, the Listing will be
cancelled on 10 September 2001. It is expected that the
entire issued Ordinary Share capital of the Company will be
admitted to trading on AIM on 10 September 2001.
Extraordinary General Meeting
A notice to Shareholders convening an Extraordinary General
Meeting of the Company, to be held at the Company's offices
at 66/70 Vicar Lane, Bradford, West Yorkshire BD1 5AG at
9.00am on 3 September 2001, is included in the Circular
which has been sent to Shareholders today.
In addition to the conditions contained in the Subscription
and Shareholders' Agreement summarised in the Circular, the
Proposals are conditional upon the approval by Shareholders
of the Resolution which provides for:
* the granting of a waiver from the obligation of
Daisytek to make a Rule 9 offer under the City Code;
* an increase in the authorised share capital of ISA;
* the granting of authority to the ISA Directors to allot
the Convertible Preference Shares and to issue the Warrant
to Daisytek and to make further issues of Ordinary Shares
and/or Convertible Preference Shares as may be necessary to
implement the mechanisms for conversion or redemption of the
Convertible Preference Shares, and to do so without regard
to pre-emption requirements and to capitalise the Company's
reserves to pay up such shares;
* the amendment of the Articles of Association of ISA to
insert the rights relating to the Convertible Preference
Shares and certain consequential amendments; and
* the amendment of the Unapproved Share Option Scheme and
the Approved Share Option Scheme to revise the performance
targets applicable to those schemes, to allow the grant of
new options on the terms described above and consequential
amendment to the rules of the ISA International plc Savings
Related Share Option Scheme and the ISA International plc
Overseas Savings Related Share Option Scheme.
General
Further information relating to the Strategic Alliance, the
Proposals, the Resolution and the proposed cancellation of
Listing and application for admission to trading on AIM,
together with a recommendation from the Board, is contained
in the Circular which will be sent to Shareholders today.
The appendix to this Announcement contains the definitions
of terms used in this Announcement.
The ISA Directors accept responsibility for the information
contained in this Announcement other than that relating to
Daisytek, the Daisytek Directors and members of their
immediate families, related trusts and persons connected
with them (for which the Daisytek Directors take
responsibility in accordance with the paragraph below). To
the best of the knowledge and belief of the ISA Directors
(who have taken all reasonable care to ensure that such is
the case) the information contained in this Announcement 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 Daisytek Directors accept responsibility for the
information contained in this Announcement relating to
Daisytek, the directors of Daisytek and members of their
immediate families, related trusts and persons connected
with them. To the best of the knowledge and belief of the
Daisytek Directors (who have taken all reasonable care to
ensure that such is the case) the information contained in
this Announcement for which they are responsible is in
accordance with the facts and does not omit anything likely
to affect the import of such information.
KPMG Corporate Finance is acting for ISA and no one else in
connection with the Proposals and will not be responsible to
anyone other than ISA for providing the protections afforded
to clients of KPMG Corporate Finance or for providing advice
in relation to the Proposals or in relation to the contents
of this Announcement or any transaction or arrangement
referred to herein. KPMG Corporate Finance is a division of
KPMG which is authorised by the Institute of Chartered
Accountants in England and Wales to carry on investment
business.
Enquiries:
ISA International Plc 01274 306 787
Mike Murphy, Chief Financial Officer
KPMG Corporate Finance 0121 232 3000
Maura Dunne
Square Mile BSMG Worldwide 020 7601 1000
Louise Robson / Susanne Walker
APPENDIX
DEFINITIONS
The following definitions apply throughout this
Announcement, unless the context otherwise requires:
'AIM' Alternative Investment Market of London
Stock Exchange
'Announcement' this press release issued today on the
Regulatory News Service by the board of
ISA
'Approved Share The ISA International plc 1999 Company
Option Scheme' Share Option Scheme
'Articles of the articles of association of ISA
Association'
'Board', the directors of ISA
'Directors' or
'ISA Directors'
'Chisa' Chisa, LLC a substantial shareholder of
ISA
'Circular' the circular which has been sent to
Shareholders today which provides details
of the Proposals and which convenes an
Extraordinary General Meeting at which
the Shareholders will be asked to
consider and their approval sought for
the Proposals
'City Code' the City Code on Takeovers and Mergers
'Convertible the 80,000,000 new variable rate
Preference convertible cumulative redeemable
Shares' preference shares 2006 of 10p each in the
capital of ISA of which 8,000,000 are
proposed to be issued to Daisytek
'Daisytek' Daisytek International Corporation, a
company incorporated in the US, or where
the context admits the holder(s) for the
time being of the Convertible Preference
Shares
'Daisytek the directors of Daisytek
Directors' or
'Board of
Daisytek'
'Existing Share together, The ISA International plc No. 4
Option Schemes' Share Option Scheme, The ISA
International plc 1999 Company Share
Option Scheme, The ISA International plc
Unapproved Share Option Scheme, The ISA
International plc Savings Related Share
Option Scheme and The ISA International
plc Overseas Savings Related Share Option
Scheme
'Extraordinary the extraordinary general meeting of ISA
General Meeting' convened for 3 September 2001 (including
or 'EGM' any adjournment thereof), notice of which
is set out in the Circular
'Insurance the policies of insurance to be purchased
Policies' by ISA the terms of which are described
in the Circular
'Investment' the investment in the Convertible
Preference Shares to be made by Daisytek
as described in this Announcement and in
the Circular
'ISA' or ISA International plc
'Company'
'ISA Group' or ISA International plc and its
'Group' subsidiaries
'ISA Shares' or ordinary shares of 5p each in the capital
'Ordinary Shares' of ISA
'Kaye' Kaye Office Supplies Limited, a 47.1 per
cent. associate of ISA
'LIBOR' London Inter-Bank Offered Rate
'Listing' the listing of the Ordinary Shares on the
Official List
'Listing Rules' the listing rules of the UK Listing
Authority
'Mr Heap' David A Heap, a director and substantial
shareholder of ISA
'NASDAQ' the National Association of Securities
Dealers Automated Quotation System in the
US
'New ISA Shares' the new ISA Shares which may arise on
conversion of the Convertible Preference
Shares and/or the exercise of the Warrant
'Proposals' the Strategic Alliance and the other
proposals to which the Resolution relates
as described in this Announcement and in
the Circular
'Proposed Line of the proposed £5 million of credit
Credit' facilities which Daisytek has indicated
it may be willing to provide to ISA as
described in the Circular
'Resolution' the resolution to be proposed at the
Extraordinary General Meeting and
described in this Announcement and in the
Circular
'Shareholders' the holders of ISA Shares
'Strategic the future co-operation and trading
Alliance' arrangements proposed to be implemented
between Daisytek and ISA, the Investment,
the issue by ISA to Daisytek of the
Warrant and the entering into of the
Subscription and Shareholders' Agreement
as described in this Announcement and in
the Circular
'Subscription and the agreement between Daisytek, ISA, Mr
Shareholders' Heap and Chisa, dated 9 August 2001
Agreement' relating to the Strategic Alliance
described in this Announcement and in the
Circular
'Takeover Panel' the Panel on Takeovers and Mergers
'Unapproved Share the ISA International plc 1999 Unapproved
Option Scheme' Share Option Scheme
'UK Listing the Financial Services Authority as the
Authority' competent authority for listing in the
United Kingdom under Part IV of the
Financial Services Act 1986
'US' United States of America
'Warrant' the deed of warrant proposed to be issued
to Daisytek by ISA described in this
Announcement and in the Circular