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Thursday 03 July, 2003

Soldier Limited

Revised Increased Offer

Soldier Limited
03 July 2003

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

                          Revised Increased Cash Offer

                                       by

                             KPMG Corporate Finance

                                  on behalf of

                          Soldier Limited ('Soldier')

                                      for

                            Hamleys plc ('Hamleys')

1.       Introduction

The board of Soldier announces the terms of a revised 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 acquired
or contracted to be acquired by Soldier.

Soldier is an English company established for the purpose of making the Original
Offer. Following the Revised 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 to and reasons for the Revised Increased Offer

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. This was revised on 27
June 2003 when the board of Soldier announced a recommended increased cash offer
at 226 pence per Hamleys Share.

On 27 June 2003, the board of Children's Stores Holdings Limited ('Children's
Stores') announced a cash offer at 230 pence per Hamleys Share to be made by ING
Investment Banking. In response to the announcement by Children's Stores, the
Hamleys Management and Baugur have decided, through KPMG Corporate Finance on
behalf of Soldier, to revise their cash offer to 254 pence per Hamleys Share.
Hamleys Management and Baugur continue to believe that a prolonged period of
uncertainty over the future ownership of Hamleys would undermine the operational
performance of the business. The Hamleys Management, who have made a significant
contribution to the turnaround of Hamleys over the past two years, are delighted
with the level of support Soldier has received from Hamleys Shareholders to the
Revised Increased Offer, as set out below.

3.       The Revised Increased Offer

The Revised Increased Offer, which will, save as set out in this announcement or
in the Revised 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                                        254 pence in cash

The Revised Increased Offer will value the entire existing issued ordinary share
capital of Hamleys at approximately £58.7 million and will represent a premium
of approximately 100.8 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 Revised Increased Offer will represent a premium of approximately 10.4 per
cent. to the offer price of 230 pence per Hamleys Share under the cash offer
announced by Children's Stores.

The Revised Increased Offer will also represent a premium of approximately 9.0
per cent. to the closing middle market price of 233 pence per Hamleys Share on 1
July 2003, the last business day prior to this announcement.

The Revised Increased Offer will be kept open for at least 14 days following the
date on which the Revised 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 Revised Increased Offer.

If the Revised 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 Revised Increased
Offer lapses and Hamleys remains an independent company, the board of Hamleys
has stated an intention 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 Revised Increased Offer, Hamleys Shareholders
(other than certain overseas shareholders) who validly accept the Revised
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 Revised 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 Revised Increased Offer
becoming or being declared unconditional in all respects. It will also be
conditional upon valid elections having been received prior to the Revised
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 Revised Increased Offer. The
Loan Note Alternative will remain open for 14 days following the Revised
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.       Acquisition of shares, acceptances and undertakings to accept the
Revised Increased Offer

A Holding S.A., a subsidiary of Baugur and a party acting in concert with
Soldier, has purchased 561,600 Hamleys Shares, representing approximately 2.4
per cent. of the entire existing issued ordinary share capital of Hamleys, at a
price of 254 pence per Hamleys Share. Additionally, A Holding S.A. has entered
into an agreement to purchase Hamleys Shares which is conditional only on this
announcement being made, in respect of, in aggregate, 1,969,664 Hamleys Shares,
representing approximately 8.5 per cent. of the entire existing issued ordinary
share capital of Hamleys, at a price of 254 pence per Hamleys Share.

As at 3.00 p.m. on 2 July 2003, valid acceptances of the Original Offer had been
received in respect of, in aggregate, 392,026 Hamleys Shares, representing
approximately 1.7 per cent. of the entire existing issued ordinary share capital
of Hamleys. This total includes a valid acceptance 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.

Soldier has received irrevocable undertakings to accept (or to take steps within
the undertaker's power to cause acceptance of) the Revised Increased Offer from
certain Hamleys Shareholders in respect of, in aggregate, 2,845,175 Hamleys
Shares, representing approximately 12.3 per cent. of the entire existing issued
ordinary share capital of Hamleys. Of these, irrevocable undertakings in respect
of 1,752,175 Hamleys Shares will cease to be binding in the event that a higher
competing offer is made which, including any future dividend paid by Hamleys, is
equal to or greater than 267 pence in cash per Hamleys Share.  Irrevocable
undertakings in respect of 1,093,000 Hamleys Shares will cease to be binding in
the event that any higher competing offer is made.

Soldier has also received irrevocable undertakings to accept (or to take steps
within the undertaker's power to cause acceptance of) the Revised 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 (an acceptance in respect of 40,500 of these
shares has already been received, as described above). These irrevocable
undertakings will lapse only in the event of the Revised Increased Offer lapsing
or being withdrawn.

In addition, Soldier has entered into the Hamleys Management Share Exchange
Agreement (which was 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
Revised Increased Offer. The Hamleys Management Share Exchange Agreement is
conditional upon the Revised 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 and its concert parties have acquired or conditionally
contracted to acquire, received acceptances of, or undertakings to accept (or to
take steps within the undertaker's power to cause acceptance of) the Revised
Increased Offer in respect of, in aggregate, 5,826,800 Hamleys Shares currently
in issue, representing approximately 25.2 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.

The Hamleys Management Share Exchange Agreement remains unchanged since its
earlier amendment in connection with the announcement of a recommended increased
cash offer by KPMG Corporate Finance on behalf of Soldier on 27 June 2003 and
the arrangements under the amended Hamleys Management Share Exchange Agreement
are detailed below. Close Brothers confirmed that they considered the terms of
the Hamleys Management Arrangements to be fair and reasonable so far as other
Hamleys Shareholders were concerned in the Original Offer Document and also in
the announcement made on behalf of Soldier on 27 June 2003 of the recommended
increased cash offer. The Close Brothers opinion in relation to the Hamleys
Management Arrangements will be contained in the Revised Increased Offer
Document.

Hamleys Management have agreed to subscribe in cash for further ordinary shares
in Corporal, at £1 per share, prior to the Revised Increased Offer becoming or
being declared unconditional in all respects. The aggregate value of the
subscription to be made by Hamleys Management is £65,015. 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 Revised 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 Revised 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 254 pence per Hamleys Share, the same price per share to
be offered to Hamleys Shareholders under the Revised Increased Offer.

It is intended that further ordinary shares in Corporal, representing in
aggregate up to 1.3 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 Revised 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 Revised 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 Revised 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 Revised Increased Offer becoming or
being declared unconditional in all respects.

Further details of the Hamleys Management Arrangements will be contained in the
Revised Increased Offer Document.

7.       Hamleys Share Schemes

The Revised Increased Offer will extend to any Hamleys Shares which are
unconditionally allotted or issued whilst the Revised 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 Revised 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.

8.       Information on financing

The maximum cash consideration payable by Soldier under the terms of the Revised
Increased Offer (including Hamleys Shares capable of being issued pursuant to
the exercise of options under the Hamleys Share Schemes) will be approximately
£59.1 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 Revised Increased Offer
will be set out in the Revised Increased Offer Document.

9.       Terms and conditions

Save for the Revised Increased Offer for each Hamleys Share of 254 pence in cash
and the Revised Increased Offer being kept open for at least 14 days following
the date on which the Revised Increased Offer Document referred to below is
posted, the Revised 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 Revised Increased Offer is a revision of the Original Offer.

The availability of the Revised 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 Revised 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 Revised
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 Revised 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 Revised Increased
Offer by persons in any such jurisdiction.

10.      Revised Increased Offer Document

The Revised 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.

11.      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:



'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 Increased Offer'              the revised increased cash offer (including the Loan Note Alternative) 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 acquired or contracted to be acquired by Soldier on the terms and
                                       subject to the conditions to be set out in the Revised Increased Offer
                                       Document and the Revised Form of Acceptance including, where the context
                                       permits or requires, any subsequent revision, variation, extension or
                                       renewal thereof

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

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


Commenting on the Revised Increased Offer, Jon Asgeir Johannesson, chief
executive of Baugur, said:

'The acquisition of Hamleys is an important step in Baugur's international
strategy and we are looking forward to working with the Hamleys Management team
to continue the successful development of the business. We regard the
acquisition of Hamleys, with its excellent brand and reputation, as a
significant opportunity to strengthen our UK retail interests. The Revised
Increased Offer, at a premium of 10.4 per cent. to the Children's Stores offer
price, provides Hamleys Shareholders with an excellent opportunity to realise
the value of their investment in Hamleys at a higher price than has previously
been offered.'


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



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
Revised 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 Revised 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.


                     This information is provided by RNS
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