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Friday 27 June, 2003

Soldier Limited

Increased Offer for Hamleys

Soldier Limited
27 June 2003

Not for release, publication or distribution in, into or from the United States,
Canada, Australia or Japan

                        Recommended Increased Cash Offer

                                       by

                             KPMG Corporate Finance

                                  on behalf of

                          Soldier Limited ('Soldier')

                                      for

                            Hamleys plc ('Hamleys')

1.       Introduction

The board of Soldier and the Independent Directors of Hamleys announce that they
have reached agreement on the terms of a recommended increased cash offer, to be
made by KPMG Corporate Finance on behalf of Soldier, to acquire the entire
issued and to be issued ordinary share capital of Hamleys not otherwise
contracted to be acquired by Soldier.

Soldier is an English company established for the purpose of making the Original
Offer. Following the Increased Offer becoming or being declared unconditional in
all respects, Soldier will be ultimately controlled by Baugur, an international
retail group, with the Hamleys Management owning a minority interest.

2.       Background

On 17 June 2003, it was announced by the board of Soldier and the Independent
Directors of Hamleys that they had reached agreement on the terms of a
recommended cash offer at 205 pence per Hamleys Share. Following the
announcement on 20 June 2003 by ING Bank N.V., London Branch, on behalf of
Children's Stores Holdings Limited, of a possible counter-proposal, the board of
Soldier determined that a prolonged period of uncertainty over the future
ownership of Hamleys would undermine the operational performance of the
business. Accordingly, Soldier today announces an increased cash offer at 226
pence per Hamleys Share which will be recommended by the Independent 
Directors.


3.       The Increased Offer

The Increased Offer, which will, save as set out in this announcement or in the
Increased Offer Document or Revised Form of Acceptance, be subject to the
conditions and further terms set out in the Original Offer Document, will be
made on the following basis:

for each Hamleys Share                                        226 pence in cash

The Increased Offer will value the entire existing issued ordinary share capital
of Hamleys at approximately £52.2 million and will represent a premium of
approximately 78.7 per cent. to the closing middle market price of 126.5 pence
per Hamleys Share on 14 March 2003, the last business day prior to the
announcement regarding a possible management buy-out of Hamleys.

The Increased Offer will be kept open for at least 14 days following the date on
which the Increased Offer Document is posted to Hamleys Shareholders. Hamleys
Shareholders who have already accepted the Original Offer need take no further
action in order to receive the increased consideration payable under the
Increased Offer.

If the Increased Offer becomes or is declared unconditional in all respects, no
final dividend for the 52 week period ended 29 March 2003 will be paid to
Hamleys Shareholders. However, in the event that the Increased Offer lapses and
Hamleys remains an independent company, the board of Hamleys intends to declare
a first interim dividend for the current financial year of 5.1p, in addition to
the usual interim dividend.

4.       The Loan Note Alternative

As an alternative to all or part of the cash consideration which would otherwise
be receivable by them under the Increased Offer, Hamleys Shareholders (other
than certain overseas shareholders) who validly accept the Increased Offer will
be entitled to elect to receive Loan Notes to be issued by Soldier on the
following basis:

for each  £1 of cash consideration under the Increased Offer        £1 nominal
                                                                  of Loan Notes

The Loan Notes, which will be governed by English law, will be unsecured,
unsubordinated and issued credited as fully paid, in integral multiples of £1
nominal value. Any fractional entitlements (i.e. an entitlement of less than
£1) will be disregarded and the amount corresponding to such fractional
entitlement will be satisfied in cash. No application has been or will be made
for the Loan Notes to be listed, or dealt in, on any stock exchange. The Loan
Notes will be guaranteed as to principal only by The Royal Bank of Scotland plc.

The Loan Notes will bear interest at the rate of LIBOR less 0.5 per cent. LIBOR
will be as determined on the first day of an interest period (or if any such day
is not a business day, on the immediately preceding business day). Interest on
the Loan Notes (less any tax required by law to be deducted therefrom) will be
payable semi-annually in arrears on 31 March and 30 September (each being an
'Interest Payment Date') (or, if not a business day in any year, on the
immediately preceding business day). The first interest payment on the Loan
Notes, which will be made on 31 March 2004, will be in respect of the period
from (and including) the first date of issue of the Loan Notes up to (and
including) 31 March 2004.

The Loan Notes will be redeemable by a holder for cash at par (together with any
accrued but unpaid interest) on the first Interest Payment Date falling at least
twelve months after the date of first issue of the Loan Notes and thereafter at
the option of the holder on any Interest Payment Date prior to the third
anniversary of the first Interest Payment Date. The Loan Notes may be redeemed
by Soldier on or after the date falling twelve months from the date of first
issue of the Loan Notes if the total principal amount of all of the Loan Notes
outstanding at any time is equal to or less than £300,000. Unless previously
redeemed or purchased or cancelled, the Loan Notes will be redeemed in full at
par (together with any accrued but unpaid interest) on the third anniversary of
the first Interest Payment Date.

A maximum of £5 million in nominal value of Loan Notes is available to be issued
under the Loan Note Alternative. To the extent that valid elections for the Loan
Note Alternative exceed the maximum amount of Loan Notes available, such
elections will be scaled back pro rata, as nearly as practicable, according to
the number of Hamleys Shares for which a Loan Note election has been made.

The Loan Note Alternative will be conditional on the Increased Offer becoming or
being declared unconditional in all respects. It will also be conditional upon
valid elections having been received prior to the Increased Offer becoming or
being declared unconditional in all respects for at least £500,000 in nominal
value of Loan Notes. If insufficient elections are received, Hamleys
Shareholders electing for the Loan Note Alternative will receive cash in
accordance with the terms of the Increased Offer. The Loan Note Alternative will
remain open for 14 days following the Increased Offer becoming or being declared
unconditional in all respects after which time it will be closed. It is intended
that Soldier will issue the Loan Notes on terms such that they will be
non-qualifying corporate bonds for individual Hamleys Shareholders.

A summary of the principal terms of the Loan Notes is set out in Appendix II to
the Original Offer Document.

5.       Undertakings to accept the Increased Offer

Soldier has received irrevocable undertakings to accept (or to take steps within
the undertaker's power to cause acceptance of) the Increased Offer from each of
the Independent Directors in respect of their entire beneficial holdings of
Hamleys Shares comprising, in aggregate, 62,250 Hamleys Shares, representing
approximately 0.3 per cent. of the entire existing issued ordinary share capital
of Hamleys. These irrevocable undertakings will lapse only in the event of the
Increased Offer lapsing or being withdrawn.

As at 3.00 pm on 26 June 2003, valid acceptances of the Original Offer had been
received in respect of, in aggregate, 99,965 Hamleys Shares, representing
approximately 0.4 per cent. of the entire existing issued ordinary share capital
of Hamleys. This total includes valid acceptances received from an Independent
Director in respect of, 40,500 Hamleys Shares, representing approximately 0.2
per cent. of the entire existing issued ordinary share capital of Hamleys.

In addition, Soldier has entered into the Hamleys Management Share Exchange
Agreement (which has been amended by a supplemental agreement dated 27 June
2003), the terms of which include a conditional agreement by Soldier to acquire
all of Hamleys Management's Hamleys Shares currently in issue, together with the
Hamleys Shares to be issued to them upon exercise of options granted to them
under the Hamleys plc Unapproved Executive Share Option Scheme. The Hamleys
Management's Hamleys Shares which are the subject of the Hamleys Management
Share Exchange Agreement (as amended) will be acquired outside the terms of the
Increased Offer. The Hamleys Management Share Exchange Agreement is conditional
upon the Increased Offer becoming or being declared unconditional in all
respects and Soldier legally and beneficially holding more than 25 per cent. of
Hamleys' entire issued ordinary share capital. As a result of these
arrangements, Soldier has conditionally contracted to acquire, in aggregate,
36,585 Hamleys Shares from Hamleys Management, representing approximately 0.2
per cent. of Hamleys' entire existing issued ordinary share capital, together
with a further 439,741 Hamleys Shares upon exercise of certain options held
under the Hamleys plc Unapproved Executive Share Option Scheme.

Accordingly, Soldier has received acceptances of, or undertakings to accept (or
to take steps within the undertaker's power to cause acceptance of) the
Increased Offer in respect of, or has conditionally contracted to acquire, in
aggregate, 198,800 Hamleys Shares currently in issue, representing approximately
0.9 per cent. of Hamleys' entire existing issued ordinary share capital. In
addition, Soldier has conditionally contracted to acquire 439,741 Hamleys Shares
upon exercise of certain options under the Hamleys plc Unapproved Executive
Share Option Scheme.

6.       Hamleys Management Arrangements

The continued commitment of the Hamleys Management was important to Baugur's
decision to proceed with the Original Offer. Terms were therefore agreed with
the Hamleys Management to enable them to have a continuing financial involvement
in the Hamleys business following the Original Offer becoming or being declared
unconditional in all respects.

In connection with the Increased Offer, the Hamleys Management Arrangements have
now been amended and the revised arrangements are detailed below.

Hamleys Management have agreed to subscribe in cash for further ordinary shares
in Corporal, at £1 per share, prior to the Increased Offer becoming or being
declared unconditional in all respects. The aggregate value of the subscription
to be made by Hamleys Management is £72,099. In addition, the Hamleys Management
have entered into the Hamleys Management Share Exchange Agreement (as amended)
with Soldier and Corporal whereby they have agreed, conditional upon the
Increased Offer becoming or being declared unconditional in all respects and
Soldier legally and beneficially holding more than 25 per cent. of Hamleys'
entire issued ordinary share capital, to sell to Soldier their existing issued
Hamleys Shares in consideration for cash and Soldier issuing to them shares in
Soldier. Hamleys Management's shares in Soldier will then be immediately
exchanged for ordinary shares of an equivalent value in Corporal. The Hamleys
Management have also undertaken to Soldier and Corporal to exercise the options
granted to them under the Hamleys plc Unapproved Executive Share Option Scheme
following the Increased Offer becoming or being declared unconditional in all
respects and to sell the Hamleys Shares issued pursuant to such exercise to
Soldier in consideration for the payment by Soldier of 226 pence per Hamleys
Share, the same price per share to be offered to Hamleys Shareholders under the
Increased Offer.

It is intended that further ordinary shares in Corporal, representing in
aggregate up to 1.1 per cent. of Corporal's issued ordinary share capital (as
enlarged by the issue of such shares), will be offered to senior management of
Hamleys (other than the Hamleys Management) at a price per Corporal share to be
determined after the Increased Offer has become or been declared unconditional
in all respects. It has not yet been determined to whom these shares will be
offered. To the extent that they are not offered or the offer is not taken up,
they will be offered to the Hamleys Management or to such other persons as the
Hamleys Management may decide.

Following completion of the arrangements contemplated by the Hamleys Management
Share Exchange Agreement (as amended), Baugur's subscription for shares in
Corporal required to partly finance the Increased Offer and the proposed offer
of shares to senior management of Hamleys (other than the Hamleys Management) as
described above, the Hamleys Management and other senior managers of Hamleys
will hold in aggregate 9 per cent. of the then issued ordinary share capital of
Corporal. They will be able to increase their percentage shareholdings in
Corporal to a maximum aggregate percentage of 22 per cent. if certain
performance targets are met.

Each of the Hamleys Management has entered into a new service agreement with
Corporal, conditional upon the Increased Offer becoming or being declared
unconditional in all respects. If the condition is satisfied, the new service
agreements will replace their existing service agreements with Hamleys and its
subsidiaries. The remuneration and benefits payable under these new service
agreements will reflect the increased responsibility of certain members of the
Hamleys Management following the Increased Offer becoming or being declared
unconditional in all respects.

Further details of the Hamleys Management Arrangements (as amended in connection
with the Increased Offer) will be contained in the Increased Offer Document.

Close Brothers considers the terms of the Hamleys Management Arrangements (as so
amended) to be fair and reasonable so far as other Hamleys Shareholders are
concerned.

7.       Recommendation of the Independent Directors

The Independent Directors, who have been so advised by Close Brothers, consider
the terms of the Increased Offer to be fair and reasonable. In providing advice
to the Independent Directors, Close Brothers has taken into account the
commercial assessments of the Independent Directors.

Accordingly, the Independent Directors will unanimously recommend in the
Increased Offer Document that Hamleys Shareholders accept the Increased Offer,
as they have irrevocably undertaken to do (or to take steps within their power
to cause acceptance of the Increased Offer) in respect of their own beneficial
holdings amounting to, in aggregate, 62,250 Hamleys Shares, which represent
approximately 0.3 per cent. of the existing issued share capital of Hamleys.

8.       Hamleys Share Schemes

The Increased Offer will extend to any Hamleys Shares which are unconditionally
allotted or issued whilst the Increased Offer remains open for acceptance (or by
such earlier date as Soldier may, subject to the Code or with the consent of the
Panel, determine) as a result of the exercise of options granted under the
Hamleys Share Schemes.

In the event that the Increased Offer becomes or is declared unconditional in
all respects, Soldier will make appropriate proposals to option holders under
the Hamleys Share Schemes, to the extent that their options granted under the
Hamleys Share Schemes have not been exercised.

9.       Information on financing

The maximum cash consideration payable by Soldier under the terms of the
Increased Offer (including Hamleys Shares capable of being issued pursuant to
the exercise of options under the Hamleys Share Schemes) will be approximately
£52.6 million. This will be funded from debt and mezzanine facilities arranged
by The Royal Bank of Scotland plc and Islandsbanki hf. respectively with the
balance funded by way of equity subscriptions by Baugur and the Hamleys
Management.

Further information in relation to the financing of the Increased Offer will be
set out in the Increased Offer Document.

10.     Terms and conditions

Save for the Increased Offer for each Hamleys Share of 226 pence in cash and the
Increased Offer being kept open for at least 14 days following the date on which
the Increased Offer Document referred to below is posted, the Increased Offer is
on the same terms and subject to the same conditions as set out in the Original
Offer Document and the Form of Acceptance. The Increased Offer is a revision of
the Original Offer.

The availability of the Increased Offer to persons not resident in the UK may be
affected by the laws of the relevant jurisdiction. Persons who are not resident
in the UK should obtain advice and observe any applicable requirements.

The Increased Offer will not be made, directly or indirectly, in or into, or by
use of the mails, or by any means or instrumentality (including, without
limitation, facsimile transmission, electronic mail, telex or telephone) of
interstate or foreign commerce, or of any facility of a national securities
exchange, of the United States, Canada, Australia or Japan, and the Increased
Offer will not be capable of acceptance by any such means, instrumentality or
facility from within the United States, Canada, Australia or Japan. Accordingly,
copies of this announcement and any other documents related to the Increased
Offer are not being, and must not be, mailed or otherwise distributed or sent in
or into the United States, Canada, Australia or Japan and persons receiving such
documents (including custodians, nominees and trustees) must not distribute or
send them in, into or from such jurisdictions as doing so may make invalid any
purported acceptance of the Increased Offer by persons in any such jurisdiction.

11.      Increased Offer Document

The Increased Offer Document and the Revised Form of Acceptance will be
despatched to Hamleys Shareholders and (for information only) to participants in
the Hamleys Share Schemes as soon as is practicable.

12.      Definitions

The definitions set out in the Original Offer Document, together with those set
out below, shall apply to this announcement as set out below:



'Increased Offer'                    the recommended increased cash offer to be made by KPMG Corporate Finance on
                                     behalf of Soldier to acquire the entire issued and to be issued ordinary
                                     share capital of Hamleys not otherwise contracted to be acquired by Soldier
                                     on the terms and subject to the conditions to be set out in the Increased
                                     Offer Document and the Revised Form of Acceptance including, where the
                                     context permits or requires, any subsequent revision, variation, extension or
                                     renewal thereof

'Increased Offer Document'           the formal Increased Offer document to be sent to Hamleys Shareholders (and,
                                     for information only, to participants of the Hamleys Share Schemes) in
                                     connection with the Increased Offer

'Original Offer'                     the recommended cash offer (including the Loan Note Alternative) made by KPMG
                                     Corporate Finance on behalf of Soldier on 19 June 2003 to acquire the entire
                                     issued and to be issued ordinary share capital of Hamleys not otherwise
                                     contracted to be acquired by Soldier on the terms and subject to the
                                     conditions set out in the Original Offer Document and the Form of Acceptance
                                     including, where the context permits or requires, any subsequent revision,
                                     variation, extension or renewal thereof

'Original Offer Document'            the formal Original Offer document sent to Hamleys Shareholders (and, for
                                     information only, to participants of the Hamleys Share Schemes) on 19 June
                                     2003 in connection with the Original Offer

'Revised Form of Acceptance'         the form of acceptance, authority and election relating to the Increased
                                     Offer to accompany the Increased Offer Document


Enquiries:

Gavin Anderson & Company (PR adviser to Baugur)                                                 Tel: 020 7554 1400
Neil Bennett
Halldor Larusson


Soldier                                                                                         Tel: 020 7479 7313
John Watkinson

KPMG Corporate Finance (financial adviser to Soldier)                                           Tel: 020 7311 1000
David McCorquodale
Michael McDonagh

Brunswick (PR adviser to Hamleys)                                                               Tel: 020 7404 5959
Rebecca Blackwood
Melissa McVeigh

Hamleys                                                                                         Tel: 020 7479 7316
Simon Burke (executive chairman and Independent Director)

Close Brothers (financial adviser to Hamleys)                                                   Tel: 020 7655 3100
Richard Grainger
Christopher Lewey



This announcement does not constitute an offer for, or solicitation of an offer
to buy, any securities.

KPMG Corporate Finance, a division of KPMG LLP which is authorised in the United
Kingdom by the Financial Services Authority for investment business activities,
is acting exclusively for Soldier as financial adviser in relation to the
Increased Offer and is not acting for any other person in relation to such
offer. KPMG Corporate Finance will not be responsible to anyone other than
Soldier for providing the protections afforded to its clients or for providing
advice in relation to the contents of this announcement or any transaction or
arrangement referred to herein.

Close Brothers, which is authorised in the United Kingdom by the Financial
Services Authority for investment business activities, is acting exclusively for
Hamleys as financial adviser in relation to the Increased Offer and is not
acting for any other person in relation to such offer. Close Brothers will not
be responsible to anyone other than Hamleys for providing the protections
afforded to its clients or for providing advice in relation to the contents of
this announcement or any transaction or arrangement referred to herein.






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