RNS Number : 3661K
SVG Capital PLC
18 December 2008
THIS ANNOUNCEMENT, INCLUDING THE APPENDICES (TOGETHER, THE "ANNOUNCEMENT"), IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, NEW ZEALAND, SWITZERLAND OR ANY OTHER JURISDICTION
IN WHICH THE SAME WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES IN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, NEW
ZEALAND, SWITZERLAND OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
SVG Capital plc
("SVG Capital" or the "Company")
Reduction of uncalled commitments
Partially underwritten Rights Issue and Placing to raise approximately £200 million
18 December 2008
SVG Capital today announces a significant reduction in its uncalled commitments and a partially underwritten Rights Issue and Placing to
raise approximately £200 million.
Nicholas Ferguson, Chairman of SVG Capital said: "This comprehensive package of measures will provide our shareholders with increased
certainty against very turbulent market conditions. By raising this additional capital, increasing the borrowing headroom under our
financial covenants and capping our commitment to Permira IV, we will transform our balance sheet and put ourselves in a strong position to
steer through these uncertain times."
Highlights
* 1 for 1 Rights Issue and Placing to raise approximately £200 million
* The Rights Issue and Placing in combination allow for existing shareholders to participate in a pre-emptive offering as well as
for institutional investors to further participate in a non pre-emptive placing and also provides SVG Capital with the opportunity to
attract new shareholders
* Additional capital will further strengthen the Company's balance sheet in challenging market conditions and enhance SVG Capital's
financial flexibility to take advantage of investment opportunities emerging from the current market volatility
* In light of the current market environment, SVG Capital is taking a provision of 40 per cent. against the valuation of its
investment portfolio at 30 June 2008 which would result in an adjusted NAV per Ordinary Share at 30 November 2008 of 431 pence (including an
unaudited Directors' valuation of 37 pence per Ordinary Share for SVG Advisers)
* SVG Capital has elected to cap its original commitment to Permira IV at 60 per cent., resulting in a reduction of total uncalled
commitments of £796.3 million to £343.8 million (calculated by reference to foreign exchange rates as at 30 November 2008)
* To provide SVG Capital with further financial flexibility, covenants have been renegotiated with senior lenders
* Issue price of 100 pence per Ordinary Share represents a discount of 45.1 per cent. to the Closing Price on 17 December 2008, the
last business day prior to the date of this Announcement, a 25.2 per cent. discount to the theoretical ex-rights price of 134 pence based on
that Closing Price and a 49 per cent discount to adjusted post issue NAV
* Shareholders holding 48 per cent. of issued Ordinary Shares have given irrevocable undertakings or firm interest to take up their
entitlements in full under the Rights Issue and indicated their intention to vote in favour of all of the Resolutions being proposed at the
forthcoming EGM
* Directors will take up their entitlements to the Rights Issue in full
* JPMorgan Cazenove Limited ("JPMorgan Cazenove" or "JPMC") is acting as sole sponsor and bookrunner to the Rights Issue and
Placing. The Rights Issue is partially underwritten by J.P. Morgan Securities Ltd. ("JPMSL").
JPMorgan Cazenove and Key Capital Investment Management Limited ("Key Capital") are acting as joint financial advisers to the Rights
Issue and Placing
This summary should be read in conjunction with the full text of this Announcement.
There will be an analyst and shareholder meeting at 9.30am at JPMorgan Cazenove, 20 Moorgate, EC2R 6DA.
Contacts:
SVG Capital plc Tel: +44 (0) 20 7010 8925
Nicholas Ferguson, Chairman
Andrew Williams, Director
Lynn Fordham, Finance Director
Alice Kain, Investor Relations
JPMorgan Cazenove Tel: +44 (0) 20 7588 2828
(Sole Sponsor and bookrunner and joint financial
adviser to the Rights Issue and Placing)
Ian Hannam
Conor Hillery
Neil Haycock
Key Capital Tel: +353 1 638 3838
(Joint financial adviser to the Rights Issue and
Placing)
Conor Killeen
Marlow Gereluk
Maitland Tel: +44 (0) 20 7379 5151
Neil Bennett
Anthony Silverman
George Hudson
GENERAL
This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty express or implied, is
or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by either JPMorgan Cazenove or JPMSL
(together, the "Banks") or by any of their affiliates or agents, or by Key Capital, as to or in relation to, the accuracy or completeness of
this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers,
and any liability therefor is expressly disclaimed.
This Announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Ordinary Shares
referred to in this Announcement in connection with the Rights Issue or Placing except on the basis of information to be contained in the
prospectus which is expected to be published in the first week in January 2009 by SVG Capital in connection with the proposed Rights Issue
and Placing. Copies of the prospectus will, following publication, be available from the Company's registered office.
Each of the Banks, which are authorised and regulated in the UK by the FSA, is acting for SVG Capital and no-one else in connection with
the Rights Issue and Placing and will not regard any other person as a client in relation to the Rights Issue and Placing and will not be
responsible to anyone other than SVG Capital for providing protections afforded to their respective clients or for providing advice in
relation to the Rights Issue and Placing or in relation to the contents of this Announcement or for any other transaction, arrangement or
matters referred to in this Announcement.
Key Capital, which is authorised by the Financial Regulator in Ireland and regulated by the Financial Services Authority for the conduct
of investment business in the UK, is acting for SVG Capital and no one else in connection with the Rights Issue and Placing, will not regard
any other person as a client in relation to the Rights Issue and Placing and will not be responsible to anyone other than SVG Capital for
providing protections afforded to its respective clients or for providing advice in relation to the Rights Issue and Placing or in relation
to any other transaction, arrangement or matters referred to in this Announcement.
The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been and will not be
registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States and may not be
offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States or to, or
for the account or benefit of, United States Persons except pursuant to an applicable exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction
of the United States. There will be no public offer of the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares in the United
States. In addition, no Qualifying Shareholder with a registered address in the United States or that is or is acting for the account or
benefit of a United States Person may exercise the Nil Paid Rights or Fully Paid Rights or acquire the New Ordinary Shares directly from the Company or its agents, unless such Qualifying
Shareholder, and any United States Person for whose account or benefit such Qualifying Shareholder is acting, is a qualified purchaser (as
defined in section 2(a)(51) of the Investment Company Act).
This Announcement is for information only and does not constitute an offer or invitation to acquire or dispose of any securities or
investment advice in any jurisdiction. Past performance is no guide to future performance and persons needing advice should consult an
independent financial adviser.
The distribution of this Announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No
action has been taken by the Company, Key Capital or either of the Banks that would permit an offering of such shares or possession or
distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for
that purpose is required. Persons into whose possession this Announcement comes are required by the Company, Key Capital and each of the
Banks to inform themselves about, and to observe, any such restrictions.
This Announcement is not for distribution directly or indirectly in or into the United States of America (including its territories and
possession, any State of the United States and the District of Columbia), Canada, Australia, Japan, New Zealand, Switzerland or any
jurisdiction into which the same would be unlawful. This Announcement does not constitute an offer to sell or issue or the solicitation of
an offer to buy or acquire shares in the capital of SVG Capital in the United States, Canada, Australia, Japan, New Zealand, Switzerland or
any jurisdiction in which such an offer or solicitation is unlawful and should not be relied upon in connection with any decision to acquire
the Placing Shares or other securities in the capital of the Company. The Placing Shares have not been and will not be registered under the
Securities Act or under the laws of any State of the United States and may not be offered or sold, directly or indirectly, within the United
States, or to or for the account or benefit of United States Persons, absent registration or an exemption from registration.
In member states of the European Economic Area ("EEA") which have implemented the Prospectus Directive (each a "Relevant Member State"),
this Announcement is only addressed to and directed at persons who are 'qualified investors' within the meaning of Article 2(1)(e) of the
Prospectus Directive ("Qualified Investors"). Any person in the EEA who initially acquires any securities in the Placing or to whom any
offer of securities is made will be deemed to have acknowledged and agreed that they are such a Qualified Investor.
In the case of any securities acquired by a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive,
such financial intermediary will also be deemed to have represented, acknowledged and agreed that the securities acquired by it in the
Placing have not been acquired on a non-discretionary basis on behalf of, nor have they have been acquired with a view to their offer or
resale to, persons in circumstances which may give rise to an offer of securities to the public other than their offer or resale in a
Relevant Member State to Qualified Investors or in circumstances in which the prior consent of JPMorgan Cazenove has been obtained to each
such proposed offer or resale.
In the United Kingdom, this Announcement is addressed only to: (a) Qualified Investors who are persons (i) who have professional
experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Order") or (ii) falling within Article 49(2)(a) to (d) (high net worth
companies, incorporated associations, etc.) of the Order; and (b) other persons to whom it may otherwise lawfully be communicated (such
persons together being referred to in this Announcement and the appendices thereto as "Relevant Persons").
The Prospectus is expected to be published in early 2009. The Prospectus will give further details of the Rights Issue and Placing and
will contain a notice of the EGM of the Company, which is expected to be held in the last week of January 2009. The Prospectus will give
further details of the New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights to be offered pursuant to the Rights Issue and
Placing and the Company's business. The Prospectus will, however, be for information only and will not constitute an offer or invitation to
acquire or dispose of any securities or investment advice in any jurisdiction in relation to or in connection with the Placing.
Certain statements in this announcement are forward-looking statements which are based on the Company's expectations, intentions and
projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements
are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties that could cause actual
results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking
statement. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward looking
statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company
undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events
or otherwise. The information contained in this announcement is subject to change without notice and neither the Company, Key Capital or either of the Banks assumes any responsibility or obligation to
update publicly or review any of the forward-looking statements contained herein.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. Any
indication in this Announcement of the price at which the Ordinary Shares of the Company have been bought or sold in the past cannot be
relied upon as a guide to future performance. No statement in this Announcement is intended to be a profit forecast and no statement in this
Announcement should be interpreted to mean that the NAV per Ordinary Share at the end of the half year or current financial year would
necessarily match or exceed the historical published NAV per Ordinary Share for any previous half year or full financial year periods. There
is no guarantee that the market price of the Ordinary Shares will fully reflect the NAV per Ordinary Share.
APPENDICES
Appendix I contains a summary expected timetable for the Rights Issue and Placing
Appendix II contains the terms and conditions of the Placing
Appendix III contains the definitions of certain terms used in this Announcement
SVG CAPITAL
Reduction of uncalled commitments
Partially underwritten Rights Issue and Placing to raise approximately £200 million
SVG Capital, the private equity investor and fund management business, today announces its proposed Rights Issue and Placing.
INTRODUCTION
The Company today announces that it proposes to undertake the Rights Issue and Placing in relation to which JPMorgan Cazenove will act
as sole sponsor and bookrunner. The Company is proposing to raise approximately £60-70 million pursuant to the Placing and up to £139
million pursuant to the Rights Issue, in each case before expenses, amounting to approximately £200 million (before expenses) in total.
Under the Placing, which is described further below, the Company proposes to issue 60-70 million Placing Shares at 100 pence per Ordinary
Share. Under the Rights Issue, which is also described further below, the Directors propose to offer New Ordinary Shares at 100 pence per
Ordinary Share to all Qualifying Shareholders on the basis of 1 New Ordinary Share for every 1 Existing Ordinary Share that each Qualifying
Shareholder holds at the close of business on the Record Date.
In effect, the issue price of the Placing Shares and the Rights Issue Price represent a 45.1 per cent. discount to the Closing Price of
an Existing Ordinary Share of 182 pence on 17 December 2008 (being the latest practicable date prior to the publication of this
Announcement). The purpose of this Announcement is to provide details of the Rights Issue and Placing and to explain why the Directors
consider the Rights Issue and Placing and the Resolutions to be proposed at the Extraordinary General Meeting to be in the best interests of
the Company and Shareholders as a whole.
The Rights Issue and Placing are conditional, inter alia, upon the Shareholders authorising the increase in the Company's share capital,
authorising the Directors to allot and issue the New Ordinary Shares and approving the Placing. The notice of the Extraordinary General
Meeting will be set out in the Prospectus.
BACKGROUND
Since its listing in May 1996, SVG Capital's consolidated net assets have grown from £186.5 million to £1.12 billion as at 30 June 2008
and it has reported a compound growth rate in consolidated net assets per Ordinary Share of 13.0 per cent. per annum (including the
Directors' unaudited valuation of SVG Advisers as at 31 December 2007) to 30 June 2008. This significant growth in NAV per Ordinary Share
has been achieved principally through investment in private equity via limited partnership funds, the majority of which are managed or
advised by Permira, a leading international private equity specialist. The unaudited NAV per Ordinary Share as at 30 June 2008 was 847.8
pence, including the Directors' unaudited valuation of SVG Advisers as at 31 December 2007.
Since its listing, SVG Capital has committed over £3.0 billion to private equity funds and, as at 30 November 2008, the Company's
uncalled commitments (excluding warehoused commitments of £95.7 million) were £1.21 billion, of which 84 per cent. was committed to Permira
Funds and SVG Permira Products. Commitments to private equity funds are mainly drawn down over the investment period of the fund, which
typically ranges between four to six years. In order to effectively manage the Company's investment portfolio and mitigate the historical
negative impact of cash drag on returns, SVG Capital has consistently operated a policy whereby the Company has committed in excess of its
asset base to private equity funds, recycling distributions from its underlying portfolio of companies into new investments as they have
been called for. This policy has been supported by cash balances and cash equivalents, the Revolving Credit Facility, the Bonds and the
Notes. As at 30 November 2008, the Group had available cash balances and cash equivalents of £193.7 million (including treasury bills of EUR57.4 million (£47.4 million) held in escrow for the benefit of
SVG Diamond Holdings Limited pending an expected Call from SVG Diamond Holdings Limited in December 2008) and a EUR750.0 million (£620.6
million) Revolving Credit Facility that was undrawn (calculated by reference to foreign exchange rates as at 30 November 2008). The
availability of the Revolving Credit Facility depends upon compliance with, and the terms of the Notes contain, various financial covenants.
The Company has issued £120.0 million of Bonds and £314.9 million of Notes (calculated by reference to foreign exchange rates as at 30
November 2008 and before allowing for unamortized costs to redemption).
Recognising the changed environment resulting from the credit and economic slowdown, during the first half of 2008, the Company raised
£222.4 million (before allowing for unamortized costs to redemption) through the sale of a secondary portfolio of fund interests at a small
premium to the 31 December 2007 net asset value and the issue of the Bonds to further strengthen its balance sheet. However, the pace of the
market and economic deterioration since the end of September has been unprecedented and the Board has reviewed the Company's financing
strategy and the structure of its balance sheet in the light of a radically changed environment.
Through the Company's holdings in 16 private equity funds, the majority of which are focused on management buy-out/ins, SVG Capital has
an exposure to 115 underlying portfolio companies, of which the 20 largest represent 92 per cent. of the Gross Investment Portfolio by value
as at 30 June 2008. One of the features of management buy-out/in transactions is the use of leverage in the underlying companies. Therefore,
in reviewing the Company's financing strategy and structure of the balance sheet, the Board is conscious of the pressure which additional
leverage in the Company can bring to the asset value of the Company, especially in the context of the current economic climate and the
volatility in financial markets, both of which are likely to have a negative impact on asset valuations and distributions from the
investment portfolio.
Accordingly, the Directors believe that it is in the best interests of Shareholders to strengthen the capital resources of the Company
and reduce the effective leverage in SVG Capital's balance sheet. The net proceeds of the Rights Issue and Placing will provide the Company
with more financial flexibility in the context of the current economic environment and volatility in financial markets. In addition, the
Company has decided to participate in the Permira IV Reorganisation as described in more detail below whereby it will cap its exposure to
Permira IV by reducing its capital commitment. The Company has also made certain amendments to its debt facilities, thereby increasing its
borrowing headroom as described in more detail below.
REASONS FOR THE RIGHTS ISSUE AND PLACING AND USE OF PROCEEDS
The Directors believe that the Rights Issue and Placing will have the following principal benefits:
- the net proceeds will strengthen the Company's balance sheet and working capital position in the context of the current economic
environment and volatility in financial markets; and
- the increased flexibility which the net proceeds will provide should permit the Company to take advantage of opportunities emerging
from current market environment.
DEVELOPMENTS REGARDING PERMIRA IV
Historically, early distributions back from private equity funds have meant that investors' maximum net exposure to a fund has typically
been lower than the amount committed. Accordingly, in an effort to reach target asset allocations many of the traditional investors in
private equity have run over-commitment strategies. However, the dramatic fall in public markets over the last 12 to 18 months, together
with a slower rate of distributions from funds, has resulted in a number of the traditional investors in private equity exceeding their
target allocation to private equity as an asset class, which has in turn resulted in many private equity investors seeking portfolio
liquidity in the secondary markets in an effort to reduce allocations. As a result, pricing in these markets has become less favourable for
such investors.
Cognisant of this, Permira has had conversations with many of their investors around the world, including the Company, about the impact
the developments in public and private markets have had on investors and their allocations to private equity. Permira subsequently made
proposals to investors in Permira IV which were noted in the Company's announcement of 5 December 2008. Permira and the investors in Permira
IV have consented to the amendment of the terms of Permira IV which has allowed investors to elect to cap their exposure to Permira IV by
limiting all or part of their capital commitments to the fund to 60 per cent. of their original commitments (the "Permira IV
Reorganisation").
As at 30 November 2008, capital commitments made by all investors to Permira IV were 51.6 per cent. drawn down and, for those investors
which have chosen to cap their exposure to Permira IV, the remaining 8.4 per cent. of their capital commitments will be used only to fund
any follow-on investments on the existing portfolio and to discharge certain other obligations as described below.
Following a detailed review by the Directors, and in light of the dramatic change in the financial markets and the current economic
outlook and volatility in financial markets, the Board has elected to cap its original commitment to Permira IV at 60 per cent. In line with
the Board's policies for management of conflicts of interest and, as a result of the conflicts of interest arising, inter alia, from his
position at Permira, Damon Buffini has not participated in the Board's decision in respect of this election. This election and the effect of
the Permira IV Reorganisation is equivalent to reducing the Company's direct commitment to Permira IV by 40 per cent. from the Effective
Date compared to the position as at 30 June 2008. This will result in the Company's total uncalled commitments (excluding warehoused
commitments which were £95.7 million as at 30 November 2008) reducing to £343.8 million at the Effective Date or 30.7 per cent. of
Shareholders' funds as at 30 June 2008. In the current market environment, the Board believes that this significant reduction in uncalled commitments is in the best interests of Shareholders and will allow
the Company to further strengthen the balance sheet.
The terms of the Permira IV Reorganisation require that 25 per cent. of all future distributions to which the relevant investors would
otherwise have become entitled, arising from those investments made by Permira IV pursuant to Calls made prior to the Effective Date (and
excluding proceeds arising from follow-on investments as described below) will be transferred from those investors which elect to limit
their commitments to Permira IV, to those investors which do not choose to do so. Since the Company has elected to cap its direct commitment
to Permira IV, this means that the Company will suffer a reduction in distributions in respect of its direct interests in Permira IV. In
addition, the Company, like other investors electing to limit their commitments, will remain liable to pay Calls up to the uncalled amount
of its capped commitment to Permira IV to fund management fees in respect of Permira IV, as well as to pay certain costs, expenses and
indemnity obligations in relation to the fund (which shall be calculated as if its commitment had not been capped), and to participate in follow-on investments with respect to investments held by
Permira IV at the Effective Date.
Following the Effective Date, the Company will not be entitled to vote or participate in fund consents in relation to those Permira IV
limited partnership interests in respect of which the Company has elected to cap its capital commitments. The Company holds interests in SVG
Sapphire IV, P1234 and P25 which are all SVG Permira Products and, therefore, are themselves invested in Permira IV. SVG Sapphire IV has
independently decided to reduce its commitment to Permira IV under the Permira IV Reorganisation by 22 per cent. compared to the position as
at 30 June 2008. The Company's uncalled commitment to SVG Sapphire IV of £4.6 million is nonetheless expected to be called over the next
three years. P1234 has independently decided not to cap its commitment to Permira IV and the Company also expects that its uncalled
commitment to P1234 will be called over the next three years. P25 has independently decided to reduce its commitment to Permira IV under the
Permira IV Reorganisation by 40 per cent. compared to the position as at 30 June 2008. The Company's uncalled commitment to P25 of £15.6 million is nonetheless expected to be called over the next
two years. From the Effective Date therefore, SVG Sapphire IV, P1234 and P25 will be subject to the same consequences as other investors, as
noted above, to the extent they have capped, or not capped, their capital commitments to Permira IV. These matters will have an indirect
effect on the Company.
AMENDMENTS TO DEBT FACILITIES
The Company has also amended some of its debt facilities. Following the amendments to the loan to value financial covenant in the
Revolving Credit Facility, the total commitments of the Revolving Credit Facility were reduced to EUR550 million with immediate effect. In
addition, pursuant to the amendments made to the loan to value covenants in both of the NPAs, the Company agreed to prepay at par (such
prepayment to be made without any make-whole or modified make-whole amount, but with accrued interest up to the date of prepayment), on a
pro rata basis, 26.7 per cent. of the sum of the aggregate outstanding principal amount of the Notes on or before 6 January 2009. The
Company has also amended the loan to value financial covenants in its Revolving Credit Facility and in each of the NPAs, giving the Company
greater borrowing headroom.
The loan to value financial covenant in both of the NPAs will be reset to the pre-amendment position on the first to occur of certain
conditions and by 1 July 2011 at the latest. One such condition is the Company electing for the loan to value financial covenant to be reset
to the pre-amendment position. Until the loan to value financial covenant is reset, the Company has agreed under both NPAs that it shall not
declare or pay any cash special dividends or effect any buyback of its ordinary shares other than such transactions as are required to
maintain the Company's status as an investment trust or to comply with any law or regulation to which the Company is subject. Furthermore,
the Company is able to offer to prepay the Notes at a price not less than par.
In light of the amendments to the loan to value financial covenants in the Revolving Credit Facility and in both of the NPAs, the
Company has agreed to pay one-off amendment fees to the agent for the account of each lender to the Revolving Credit Facility and to the
holders of the Notes under both NPAs. Further, the Company has agreed an increase to the commitment fee and margin under the Revolving
Credit Facility and an increase to the interest payments under both of the NPAs.
DIVIDEND POLICY
The Directors expect that any returns for Shareholders will derive primarily from the capital appreciation of Ordinary Shares rather
than from the dividends paid on the Ordinary Shares.
In order to comply with the current conditions for approval as an investment trust, SVG Capital is prohibited by the Articles from
distributing as dividends any capital surpluses arising from the realisation of its investments. Accordingly, any dividends paid by SVG
Capital will be funded out of its revenue account. It is intended that SVG Capital will make sufficient dividend payments to ensure that it
is able to meet the current conditions for approval as an investment trust for tax purposes.
In the absence of unforeseen circumstances, the Directors would expect to distribute any dividends to Shareholders in accordance with
this policy each year. On 9 May 2008, SVG Capital paid a final dividend for the 12 months ended 31 December 2007 of 6.5 pence per Ordinary
Share.
INVESTMENT PORTFOLIO REVIEW, MATERIAL DEVELOPMENTS AND PROSPECTS
Since June 2008, the global economic environment has deteriorated and, whilst the Company considers that many of the portfolio companies
were trading satisfactorily in the six month period to 30 June 2008, a number of the portfolio companies representing the Company's more
material investments have recently indicated that they are beginning to experience the impact of the global economic slowdown. This,
together with the significant decline in public company comparable earnings multiples and our long-standing practice of valuing companies
according to the IPEVC Guidelines, is likely to have an adverse impact on the valuation of the Company's portfolio at the year end which is
expected to be announced via a Regulatory Information Service in March 2009. Current market conditions continue to influence the level of
Calls, which the Company expects to be subdued for the next 12 months. The environment has influenced exit opportunities and, in the absence
of a meaningful recovery in the markets, the Company does not expect a significant level of distributions from the portfolio in the next 18 months.
As at 30 June 2008, 13.8 per cent. of the Company's total investment portfolio (by value) was valued on a quoted basis and as at 30
November 2008 these portfolio companies were valued at £67.4 million, which represents a £98.3 million decrease to the valuation as at 30
June 2008. Since June 2008, the following underlying portfolio companies have made trading announcements: Hugo Boss (part of the Valentino
Fashion Group), Freescale, ProSiebenSat.1 Media, Provimi, Gala Coral and Galaxy. In addition, the sale of Jet Aviation was completed in
November 2008.
It is not possible for the Board to estimate accurately what the NAV per Ordinary Share will be as at 31 December 2008 because, amongst
other things, the valuation of the unquoted portfolio will be calculated using public company comparable earnings multiples (as at 31
December 2008) and the Board may also apply an illiquidity discount before finally valuing an underlying portfolio company. However in the
context of the Rights Issue and Placing, the deterioration in the global economic environment and the dramatic fall in public markets since
June 2008, with the FTSE World Index (sterling adjusted) falling by 18.3 per cent. to 30 November 2008 (source: Bloomberg) and given the
leverage in the underlying portfolio of companies, the Board has decided that it is prudent to take a 40 per cent. provision to the June
2008 valuation of the investment portfolio, including those unquoted companies in the portfolio that are valued by reference to comparable
public companies. Allowing for this provision, including the negative movement in the share prices of the quoted companies in the portfolio, the Company's adjusted NAV per Ordinary Share as at 30
November 2008 would be 431p (including the Directors' unaudited valuation of SVG Advisers of 37p per Ordinary Share as at 30 November 2008).
This should not, however, be construed as an interim valuation, nor has the valuation been independently audited and the actual NAV per
Ordinary Share as at 31 December 2008 may vary materially from such amount. It should be noted that, in arriving at the provision, the
Company has been consistent in its application of its accounting policies with respect to the valuation of its unquoted portfolio. In the
absence of specific portfolio company information indicating a material impairment in the valuation, investments that have been held for
less than 12 months have been valued at cost.
In connection with the Permira IV Reorganisation, as a result of the Board's election to cap the Company's commitment, the Board has
decided to apply a further 25 per cent. write-down to the valuation of the Company's interest in Permira IV as at 31 December 2008. While it
is impossible to predict the amount of such write-down, based on the adjusted NAV per Ordinary Share as at 30 November 2008, this would
represent a further write-down of £129 million (90 pence per Ordinary Share).
In line with the Board's policies for management of conflicts of interest and as a result of the conflicts of interest arising, inter
alia, from his position at Permira, Damon Buffini has not participated in the decision of the Board in respect of the write-down to the
valuation of interests in Permira IV. Damon Buffini has not been asked by the Board to provide, and has not provided, any information in
respect of any portfolio valuations, nor has he carried out or been asked to carry out any investigation or diligence in respect of
portfolio valuations.
Given the timing of the launch of Permira IV in September 2006, a number of the underlying portfolio companies have been held by Permira
IV for less than two years and are in the early stages of value creation. As the portfolio matures and if markets improve and the portfolio
companies' value creation initiatives are successful, the Company would expect to see the benefits from these developments translating into
positive returns for the Company as an investor in Permira IV.
It is important to note that the actual NAV per Ordinary Share, and the actual write-down in the value of the Company's interest in
Permira IV, as at 31 December 2008 may vary materially from the above adjusted NAV per Ordinary Share and Permira IV write-down amount and
will be dependent, amongst other factors, on the share prices of any quoted companies in the portfolio, public company comparable earnings
multiples, the maintainable earnings and net debt position of the underlying portfolio companies and movements in relevant markets as at 31
December 2008. Investments that are valued at cost may be subject to revaluation at 31 December 2008 and the impact of this revaluation
could be material. The Company has not undertaken a formal revaluation of its investments and does not possess information regarding the net
debt or operating performance of the underlying portfolio companies which may materially affect the statement of adjusted NAV per Ordinary
Share and Permira IV write-down amount. To the extent any such information may have been publicly announced by the underlying portfolio company in question, and relate to future earnings
downgrades (but not otherwise), the Company has used such information in determining the statement of adjusted NAV per Ordinary Share and
Permira IV write-down amount as stated in this section of the Announcement, which should not be construed as an interim valuation and has
not been prepared in accordance with IFRS using applicable IPEVC Guidelines. SVG Capital's underlying portfolio of companies will be
revalued as at 31 December 2008 in accordance with IFRS using applicable IPEVC Guidelines. The NAV per Ordinary Share of the Company as at
31 December 2008 is expected to be announced in March 2009.
RELATIONSHIP WITH PERMIRA
As at 30 June 2008, Permira Funds and SVG Permira Products represented over 81.8 per cent. of the Company's total investment portfolio.
Following the Permira IV Reorganisation, SVG Capital will remain one of the largest investors in Permira Funds.
FUTURE INVESTMENT STRATEGY
To date, the Company has followed a strategy of over-commitment which has been supported by bank lines, Bonds and Notes. However, in the
current turbulent market environment the Board believes that it is in the best interests of Shareholders to strengthen the capital resources
of the Company and reduce the effective leverage in the balance sheet in the short-term. The Board has taken steps to do so, through
reductions in callable commitments, re-setting certain covenants in some of the Company's debt facilities, and the Rights Issue and
Placing.
Over 80 per cent. of the Company's total investment portfolio is invested in Permira Funds and SVG Permira Products. Looking forward,
the Company will continue to have exposure to investments made by Permira Funds, both through its existing holdings in Permira Funds and
indirectly through its holdings in SVG Permira Products, and to new investments made by Permira IV in the future through the Company's
holdings in SVG Sapphire IV and P1234.
As markets stabilise, and sales again occur in the portfolio, the Board will consider the Company's future commitments to private
equity. As economies change, the role of private equity changes. Private equity's focus is on operational change, corporate improvement and,
where possible, growth opportunities. Its focus on long-term investment and on effective management, and its ability to adapt quickly to
market change, means that private equity should be well positioned to take advantage of the new economic realities.
At different points in the economic cycle, new investment opportunities present themselves. Private equity fund investments, both
primary and secondary, will provide the Company's principal opportunity for access to the private equity market. We are not currently
anticipating significant distributions in the next 18 months, nor are we anticipating making new fund commitments. By the end of April 2009,
the Board and the Company will have completed a strategic review of the business, and will consult with shareholders, with the objective of
improving share price performance and liquidity.
The Company will continue to build its successful business of SVG Advisers by focusing on the products which match the Company's skills
to the new market realities. In the near term, this will mean providing access to the secondary market. As at 30 June 2008, SVG Advisers
managed or advised a total of EUR4.4 billion of funds and commitments (including the Company's investments in and commitments to SVG
Products) of which over EUR3.0 billion was committed to diversified investments in over 100 different private equity funds.
SVG Capital was established to provide access to private equity for a wide range of investors including smaller institutions and private
investors. A listed vehicle should provide liquidity over the short-term as well as delivering superior returns over the long-term as
private equity investments mature. Further, the structure of a London-listed investment company which is an approved investment trust under
section 842 of the Income and Corporation Taxes Act 1988 ensures a high degree of tax efficiency. Taken in combination, these features mean
that as a vehicle, SVG Capital's Ordinary Shares should trade at or near NAV per Ordinary Share; indeed for much of the Company's history,
the Company's Ordinary Shares have traded at a premium to NAV per Ordinary Share. The Company's Ordinary Shares are now trading at a
significant discount to NAV per Ordinary Share. It is the objective of the Board to examine practical opportunities to eliminate this
discount.
THE PLACING
The Placing enables the Company to attract new subscribing Shareholders at a price identical to that being offered to existing
Shareholders. New Shareholders make their investment commitments on the basis that the Company offers the prospect of material capital
appreciation over the investment cycle.
Under the Placing, the Company proposes to raise approximately £60-70 million (before expenses) by issuing 60-70 million New Ordinary
Shares as Placing Shares at 100 pence per Ordinary Share. JPMorgan Cazenove, acting as an agent of the Company, will accordingly enter into
the Placing Letters with the Placees.
The Placing Letters will be conditional on the Resolutions being passed at the Extraordinary General Meeting and Placing Admission
having occurred within a given period. Certain additional information regarding the Resolutions which are necessary in the context of the
Placing is set out below, under the heading "Extraordinary General Meeting".
The terms and conditions of the Placing are set out in Appendix II to this Announcement.
PRINCIPAL TERMS OF THE RIGHTS ISSUE
Subject to the Resolutions being passed, the Directors propose to offer New Ordinary Shares by way of rights to all Qualifying
Shareholders, payable in full on acceptance. The number of New Ordinary Shares to be issued for each Existing Ordinary Share will be 1 for 1
and the price of each New Ordinary Share will be 100 pence.
The issue price of 100 pence per Ordinary Share represents a discount of 45.1 per cent. to the Closing Price on 17 December 2008, the
last business day prior to the date of this Announcement. If a Qualifying Shareholder does not take up any of his entitlement to New
Ordinary Shares, his proportionate shareholding will be diluted by up to 60 per cent., excluding, for the avoidance of doubt, any dilution
caused by the conversion of any Bonds, the price for such conversion being subject to adjustments as a result of the Rights Issue and
Placing. However, if a Qualifying Shareholder takes up his rights in full, he will, following completion of the Rights Issue and subject to
the treatment of fractions, but excluding dilution caused by the Placing, have the same proportional voting rights and entitlement to
distributions as he had on the Record Date.
Entitlements to New Ordinary Shares will be rounded down to the nearest whole number and fractional entitlements will not be allotted to
Qualifying Shareholders. Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as separate holdings
for the purposes of calculating entitlements under the Rights Issue.
The Nil Paid Rights or Fully Paid Rights represented by a Provisional Allotment Letter may be converted into uncertificated form, that
is, deposited into CREST (whether such conversion arises as a result of a renunciation of those rights or otherwise). Similarly, Nil Paid
Rights or Fully Paid Rights held in CREST may be converted into certificated form, that is, withdrawn from CREST.
The Rights Issue is conditional, inter alia, on:
* the Resolutions being passed at the Extraordinary General Meeting;
* Admission becoming effective by not later than a time to be specified on the Dealing Day immediately after the date of the
Extraordinary General Meeting (the date of which will be set out in the Prospectus), or such later time and/or date as the Company and
JPMorgan Cazenove (for itself and on behalf of JPMSL) may agree; and
* the Placing Agreement becoming unconditional in all respects in respect of the Rights Issue and not having been terminated in
accordance with its terms prior to Admission.
Prior to Admission, JPMorgan Cazenove (for itself and on behalf of JPMSL) may terminate the Placing Agreement in certain circumstances.
After Admission, however, the Placing Agreement will not be subject to any right of termination (including in respect of any statutory
withdrawal rights) other than, prior to Placing Admission, in respect of the Placing.
Application will be made to the UKLA 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. The date on which Admission will become effective and that dealings in the New Ordinary Shares, nil paid, will
commence on the London Stock Exchange and the date on which dealings in the New Ordinary Shares, fully paid, will commence on the London
Stock Exchange will be announced shortly before the Prospectus is published.
The Rights Issue is expected to result in the issue of up to 139,000,000 New Ordinary Shares (representing approximately 41 per cent. of
the expected Enlarged Share Capital). The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with, and
will carry the same voting and dividend rights as, the Existing Ordinary Shares. The New Ordinary Shares will also be capable of being held
in certificated form.
The offer by way of rights to Qualifying Shareholders who have no registered address within the UK (other than those with registered
addresses in the United States, Switzerland, New Zealand or any of the Excluded Territories or any other jurisdiction outside the UK in
which it would be unlawful to make an offer) will (provided the Resolutions are passed and the Rights Issue otherwise becomes unconditional)
be made by the Company in the same manner in which the offer is made to Qualifying Shareholders with a registered address within the UK. In
addition, in accordance with section 90(5) of the Act, the offer by way of rights to Qualifying Shareholders who have no registered address
within the UK and who have not given the Company an address within the UK for the service of notices will (provided the Resolutions are
passed and the Rights Issue otherwise becomes unconditional) be made by the Company publishing a notice in the London Gazette on the
Business Day following the date on which the Provisional Allotment Letters are dispatched, stating where copies of the Prospectus may be inspected or, in certain circumstances, obtained on personal
application, by or on behalf of such Qualifying Shareholders.
The taxation consequences for Shareholders of the Rights Issue will depend upon the jurisdiction in which the relevant Shareholders are
resident for tax purposes. If Shareholders are in any doubt as to their tax position, they should consult their own independent professional
adviser immediately.
Details of further terms and conditions of the Rights Issue, including the procedure for acceptance and payment, the procedure in
respect of rights not taken up and information on how Overseas Shareholders can participate in the Rights Issue will be set out in the
Prospectus and, where relevant, will also be set out in the Provisional Allotment Letter.
EXTRAORDINARY GENERAL MEETING
A notice convening the EGM of the Company will be set out in the Prospectus and will also set out the time, date and location of such
EGM. The EGM will be convened for the purposes of considering and, if thought fit, passing the Resolutions. The full text of the Resolutions
will be set out in the notice, which will form part of the Prospectus. The Resolutions to be proposed are seeking, inter alia, approval to:
* increase the authorised share capital of the Company in connection with the Rights Issue and Placing;
* issue the Placing Shares to the Placees for cash at a price of 100 pence per Placing Share and otherwise on the terms set out in
Appendix II to this Announcement;
* issue the Placing Shares to those Shareholders which are Related Parties and to pay a commitment commission to those Shareholders
which are Related Parties and who have irrevocably undertaken to subscribe for all the Rights Issue Shares to which they are entitled, as
explained more fully below;
* authorise the Directors, pursuant to section 80 of the Act, to exercise all the powers of the Company to allot relevant securities
(as defined in section 80(2) of the Act) in connection with the Rights Issue and Placing; and
* empower the Directors, pursuant to section 95 of the Act, to allot equity securities (within the meaning of section 94 of the Act)
for cash, as if sub-section (1) of section 89 of the Act did not apply to any such allotment, in connection with the Placing and subject to
certain limits. If passed, this Resolution will generally disapply statutory pre-emption rights under section 89 of the Act in respect of
the Placing;
provided that, in the case of sub-paragraphs (D) and (E) above, such authority shall expire (unless renewed, varied or revoked by the
Company in general meeting) on the date being 15 months from the passing of such Resolution or, if earlier, at the conclusion of the next
annual general meeting of the Company to be held following the passing of such Resolution, save that the Company may before such expiry make
an offer or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant
securities in pursuance of such offer or agreement as if this authority had not expired and provided further that this authority shall be in
addition to and without prejudice to any other authorities in force to allot relevant securities conferred on the Directors.
The purpose of the Resolution summarised in paragraph (B) above is to approve the Placing generally. This Resolution is required under
the Listing Rules because the Placing Price represents a discount of greater than 10 per cent. to the middle market price of the Existing
Ordinary Shares at the time of announcement of the Rights Issue and Placing and, in addition, is below the NAV per Ordinary Share.
The purpose of the Resolutions summarised in paragraph (C) above, is to approve the issue of the Placing Shares to those parties
participating in the Placing who are each Related Parties under the Listing Rules by virtue of their substantial holdings of Existing
Ordinary Shares (or otherwise), and to approve the payment of a commitment commission to those Shareholders which are Related Parties and
who have irrevocably undertaken to subscribe for all the Rights Issue Shares to which they are entitled. Under the Listing Rules,
Shareholder approval is required as a condition to the subscription of Placing Shares by these Shareholders. Each such Shareholder is
precluded, under the Listing Rules, from voting on the particular resolution relating to it. Such Shareholders have undertaken to abstain,
and, in relevant cases, to take reasonable steps to ensure that their associates will abstain, from voting on such Resolution at the
Extraordinary General Meeting.
SHAREHOLDERS INTENTIONS
Shareholders, which in aggregate hold 48 per cent. of the Existing Ordinary Shares, have irrevocably undertaken or provided firm
commitments to take up in full their rights to subscribe for the New Ordinary Shares under the Rights Issue. These irrevocable undertakings
are conditional on the Resolutions being passed at the Extraordinary General Meeting and Admission becoming effective by mid to late
February. Further details regarding these irrevocable undertakings, including the conditions to which they are subject, will be summarised
in the Prospectus, which is expected to be published in early January 2009.
EFFECT OF THE RESOLUTIONS NOT BEING PASSED
If the Resolutions are not passed at the Extraordinary General Meeting, the Rights Issue and Placing will not proceed. In such
circumstances, the benefits described above would not be realised. In particular, the Directors may need to consider strengthening the
Company's balance sheet by alternative methods, including asset sales, or changing the investment strategy of the Company including the
over-commitment policy. Furthermore, volatility in the asset value of the Company would not, in the absence of alternative proposals being
implemented, be likely to be reduced.
RECOMMENDATION
The Board, which has received financial advice in relation to the Rights Issue and Placing from each of JPMorgan Cazenove and Key
Capital, considers that the terms of the Rights Issue and Placing are fair and reasonable. In providing their advice to the Board, each of
JPMorgan Cazenove and Key Capital has placed reliance upon the Directors' commercial assessments of the Rights Issue and Placing.
The Board considers the terms of the Rights Issue and Placing and the passing of the Resolutions to be in the best interests of the
Shareholders as a whole.
Accordingly, the Board intends to recommend unanimously that Shareholders vote in favour of each of the Resolutions to be proposed at
the Extraordinary General Meeting, as those Directors who are Shareholders intend to do in respect of their own beneficial holdings of
Existing Ordinary Shares.
Those Directors who are Shareholders intend to take up in full their rights to subscribe for New Ordinary Shares under the Rights
Issue.
APPENDIX I - EXPECTED TIMETABLE FOR THE RIGHTS ISSUE AND PLACING
The expected timetable for the Rights Issue and Placing is as follows. Please notes that each of the times and dates shown are subject
to change by the Company and JPMorgan Cazenove (on behalf of itself and JPMSL). All references to time are to London, UK time.
18 December 2008 Announcement
First week of January 2009 Prospectus posted
Last week of January 2009 Extraordinary General Meeting
First week of February 2009 Closing and settlement of Placing
Last week of January to Subscription period for rights
mid-February 2009
End of February 2009 Closing and settlement of the Rights Issue
APPENDIX II - TERMS AND CONDITIONS OF THE PLACING
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA,
AUSTRALIA, JAPAN, NEW ZEALAND OR SWITZERLAND.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR
INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN RELEVANT MEMBER STATES WHO ARE QUALIFIED INVESTORS; AND (B) IN THE UNITED
KINGDOM, QUALIFIED INVESTORS WHO ARE RELEVANT PERSONS. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR
RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS
SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT
ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
Persons who are invited to and who choose to participate in the Placing, by making an oral or written offer to subscribe for Placing
Shares (each, a "Placee"), will be deemed to have read and understood this Announcement, including this Appendix, in its entirety and to be
making such offer on the terms and conditions contained herein, and to be providing the representations, warranties, acknowledgements, and
undertakings contained in this Appendix. In particular each such Placee represents, warrants and acknowledges that:
a. it is a Relevant Person (as defined above) and undertakes that it will
acquire, hold, manage or dispose of any Placing Shares that are allocated
to it for the purposes of its business;
b. in the case of a Relevant Person in a Relevant Member State, (i) it is a
Qualified Investor, and (ii) in the case of any Placing Shares acquired
by it as a financial intermediary, as that term is used in Article 3(2)
of the Prospectus Directive, (a) the Placing Shares acquired by it in the
Placing have not been acquired on behalf of, nor have they been acquired
with a view to their offer or resale to, persons in any Relevant Member
State other than Qualified Investors or in circumstances in which the
prior consent of the Banks has been given to the offer or resale, or (b)
where Placing Shares have been acquired by it on behalf of persons in any
Relevant Member State other than Qualified Investors, the offer of those
Placing Shares to it is not treated under the Prospectus Directive as
having been made to such persons;
c. it is outside the United States and is subscribing for the Placing Shares
in an "offshore transaction" (within the meaning of Regulation S under
the Securities Act); and
d. it is not (i) a US Person as defined in Rule 902 under the Securities Act
(a "US Person") or (ii) acquiring the Placing Shares for the account or
benefit of a US Person or (iii) acquiring the Placing Shares with a view
to the offer, sale, resale, transfer, delivery or distribution, directly
or indirectly, of any Placing Shares into the United States or to, or for
the account or benefit of, any US Person.
This Appendix and the Announcement of which it forms part does not constitute an offer to sell or issue or the solicitation of an offer
to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful including, without
limitation, the United States, Canada, Australia, Japan, New Zealand and Switzerland. This Announcement and the information contained herein
is not for publication or distribution, directly or indirectly, to persons in the United States, Canada, Australia, Japan, New Zealand or
Switzerland or in any jurisdiction in which such publication or distribution is unlawful. No public offer of securities of the Company is
being made in the United Kingdom, United States or elsewhere.
In particular, the Placing Shares referred to in this Appendix and the Announcement of which it forms part have not been and will not be
registered under the Securities Act or with any securities regulatory authority of any State or other jurisdiction of the United States, and
may not be offered, sold or transferred within or into the United States, or to or for the account or benefit of a US Person, except
pursuant to an exemption from, or as part of a transaction not subject to, the registration requirements of the Securities Act. The Placing
Shares are being offered and sold outside the United States in accordance with Regulation S under the Securities Act and other than to US
Persons. In addition, the Company has not been and will not be registered as an investment company under the United States Investment
Company Act of 1940, as amended, and is relying upon the exemption from registration set forth in section 3(c)(7) thereof.
The distribution of this Appendix, the Announcement of which it forms part and the Placing and/or issue of the Placing Shares in certain
jurisdictions may be restricted by law. No action has been taken by the Company, Key Capital or either Bank or any of their respective
affiliates that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or
publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose
possession this Announcement comes are required by the Company and the Banks to inform themselves about and to observe any such
restrictions.
The relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of
Canada; no prospectus has been lodged with or registered by, the Australian Securities and Investments Commission, the Japanese Ministry of
Finance, the New Zealand Securities Commission or the Swiss Federal Banking Commission; and the Placing Shares have not been, and nor will
they be, registered under or offered in compliance with the securities laws of any state, province or territory of Canada, Australia, Japan,
New Zealand or Switzerland. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable)
be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Canada, Australia, Japan, New Zealand or
Switzerland or any other jurisdiction outside the United Kingdom.
Each Placee, by participating in the Placing, agrees that it has neither received nor relied on any information, representation,
warranty or statement made by or on behalf of any of the Banks, Key Capital or the Company other than publicly available information and
neither the Banks, Key Capital, the Company or any person acting on such person's behalf nor any of their affiliates has or shall have any
liability for any Placee's decision to accept this invitation to participate in the Placing based on any other information, representation,
warranty or statement. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any State securities commission
or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the
Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of
this Appendix or the Announcement of which it forms part should seek appropriate advice before taking any action.
Details of the Placing Agreement and the Placing Shares
Each of the Banks has entered into a Placing Agreement (the "Placing Agreement") with the Company under which JPMC has, on the terms and
subject to the conditions set out therein and as agent for and on behalf of the Company, undertaken to use reasonable endeavours to procure
subscribers for the Placing Shares at the Placing Price. Subject to the terms and conditions of the Placing Agreement, in the event that
Placees cannot be procured for the entire amount of the Placing Shares or if a Placee has unconditionally agreed to subscribe for Placing
Shares pursuant to its Placing Letter but fails to make to payment therefor, JPMSL has agreed itself to subscribe for such Placing Shares at
the Issue Price.
The Placing Shares will, when issued and fully paid, be credited as fully paid and will rank pari passu in all respects with the
existing issued ordinary shares in the capital of the Company ("Ordinary Shares") including the right to receive all dividends and other
distributions declared, made or paid after the date of issue.
In this Appendix, unless the context otherwise requires, "Placee" means a person (including individuals, funds or others) by whom or on
whose behalf a commitment to subscribe for Placing Shares has been given.
Application for listing and admission to trading
Application will be made to the Financial Services Authority (the "FSA") for admission of the Placing Shares to the Official List of the
FSA (the "Official List") and to the London Stock Exchange plc for admission to trading of the Placing Shares on its market for listed
securities (together, "Placing Admission"). It is expected that Admission will become effective in the first week of February 2009 and that
dealings in the Placing Shares will commence at that time.
JPMorgan Cazenove will today commence the bookbuilding process in respect to the Placing (the "Bookbuild") to determine demand for
participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in,
the Placing.
JPMorgan Cazenove and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in
their absolute discretion, determine.
Participation in, and principal terms of, the Placing
1. JPMorgan Cazenove is arranging the Placing as sole bookrunner of the
Company.
2. Unless JPMorgan Cazenove, in its absolute discretion, agrees otherwise,
participation in the Placing will be available only to persons who may
lawfully be, and are, invited to participate by JPMorgan Cazenove and
who execute a placing letter with the Banks prior to Placing Admission
(the "Placing Letter"). Each of the Banks is entitled to enter bids in
the Bookbuild as principal.
3. To bid in the Bookbuild, and unless JPMorgan Cazenove at its absolute
discretion agrees otherwise, Placees shall communicate their bid by
telephone to their usual sales contact at JPMorgan Cazenove (provided
that they subsequently execute and return the Letter of Confirmation (as
defined below) no later than 5.00 p.m. on 18 December 2008). Each bid
should state the number of Placing Shares which the prospective Placee
wishes to subscribe for.
4. The Bookbuild is expected to close on or around 3.00 p.m. (GMT) on 18
December 2008 but may be closed earlier or later at the discretion of
JPMorgan Cazenove. JPMorgan Cazenove may, in agreement with the Company,
accept bids that are received after the Bookbuild has closed. The
Company and each of the Banks reserve the right to reduce or seek to
increase the amount to be raised pursuant to the Placing, in their
absolute discretion.
5. Each Placee's allocation will be confirmed to Placees orally, and a
Placing Letter in respect of such allocation will be sent to such
Placing, by JPMC following the closing of the Bookbuild. JPMC reserves
the right to reject or scale back bids from prospective Placees
following consultation with the Company. Upon receipt of a letter of
confirmation from a Placee by JPMC in the form set out in the schedule
to the Placing Letter (a "Letter of Confirmation"), JPMC's oral
confirmation to such Placee will constitute an irrevocable legally
binding commitment upon such person (who will at that point become a
Placee) in favour of each of the Banks and the Company, under which it
agrees to subscribe for the number of Placing Shares set out in its
Letter of Confirmation and allocated to it at the Placing Price on the
terms and conditions set out in this Appendix and in accordance with the
Company's Memorandum and Articles of Association. On the second
Business Day following (and subject to) the passing of the shareh
6. The Company will make a further announcement following the close of the
Bookbuild and on or prior to Placing Admission detailing the number of
Placing Shares to be issued and the aggregate amount of proceeds raised
by the Company under the Placing.
7. A bid in the Bookbuild orally communicated by telephone will be made on
the terms and subject to the conditions in this Announcement and, unless
JPMorgan Cazenove, in its absolute discretion, agrees otherwise, will be
legally binding on the Placee on behalf of which it is made and except
with JPMorgan Cazenove's consent will not be capable of variation or
revocation by the Placee after the time at which the Letter of
Confirmation is submitted. Each Placee will also have an immediate,
separate, irrevocable and binding obligation, owed to each of the Banks,
to pay to them (or as JPMC may direct) in cleared funds an amount equal
to the product of the Placing Price and the number of Placing Shares
such Placee has agreed to subscribe. Each Placee's obligations will be
owed to each of the Banks.
8. Except as required by law or regulation (including, in order to complete
disclosure in the Prospectus in relation to the Placee and its
associates as may be required by the Listing Rules and Prospectus
Rules), no press release or other announcement will be made by JPMorgan
Cazenove or the Company using the name of any Placee (or its agent), in
its capacity as Placee (or agent), other than with such Placee's prior
written consent.
9. Irrespective of the time at which a Placee's allocation pursuant to the
Placing is confirmed, settlement for all Placing Shares to be acquired
pursuant to the Placing will be required to be made at the same time, on
the basis explained below under "Registration and Settlement" and in
each Placee's Placing Letter.
10. All obligations under the Bookbuild and Placing will be subject to
fulfilment of the conditions referred to below under "Conditions of the
Placing" and to the Placing not being terminated on the basis referred
to below under "Right to terminate under the Placing Agreement".
11. By participating in the Bookbuild and executing a Letter of
Confirmation, each Placee will agree that its rights and obligations in
respect of the Placing will terminate only in the circumstances
described below and will not be capable of rescission or termination by
the Placee at any time on or after Placing Admission.
12. To the fullest extent permissible by law, neither the Banks nor any of
their affiliates shall have any liability to Placees (or to any other
person whether acting on behalf of a Placee or otherwise). In
particular, neither JPMC nor any of its affiliates shall have any
liability (including to the extent permissible by law, any fiduciary
duties) in respect of JPMC's conduct of the Bookbuild (including
acceptance or rejection of any bid) or of such alternative method of
effecting the Placing as JPMC and the Company may agree.
Conditions of the Placing
Each of the Bank's obligations under the Placing Agreement in respect of the Placing Shares are conditional on, inter alia:
a. Placing Admission occurring not later than 8.00 a.m. (London time) on the
fourth Business Day after Admission or such later date as the Banks may
agree, but not being later than close of business on 18 March 2009;
b. the representations, warranties and undertakings on the part of the
Company contained in the Placing Agreement being true and accurate in all
respects and not misleading in any respect on and as of the date of the
Placing Agreement, the date of any supplementary prospectus issued in
accordance with the Placing Agreement (prior to Placing Admission) and on
the date of Placing Admission;
c. the Company not being in breach of any of its obligations under the
Placing Agreement or under the terms of the Placing at any time prior to
Placing Admission which either of the Banks, acting in good faith,
consider to be material; and
d. the Company having applied to Euroclear UK & Ireland Limited
("Euroclear") to admit the Placing Shares to the CREST System as
participating securities and no notification having been received from
Euroclear that such admission has been or is to be refused.
If: (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the
Banks by the respective time or date where specified (or such later time or date as the Banks may agree, being not later than the close of
business on 18 March 2009; or (ii) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and the
Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees
that no claim can be made by the Placee in respect thereof.
Each of the Banks may, at its absolute discretion and upon such terms as it thinks fit, waive compliance by the Company, or extend the
time and/or date for fulfilment by the Company, with the whole or any part of any of the Company's obligations in relation to the conditions
in the Placing Agreement, save that certain of the conditions, including the above condition relating to Placing Admission occurring, may
not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.
Neither the Banks nor the Company shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or
otherwise) in respect of any decision it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of
any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing
generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of either of the
Banks or the Company.
Right to terminate under the Placing Agreement
Each of the Banks may, at its absolute discretion, at any time before Admission, terminate the Placing Agreement by giving notice to the
Company if, inter alia:
a. there comes to the notice of the Banks, a breach by the Company of the
representations, warranties and undertakings or any other material
provision in the Placing Agreement; or
b. any statement contained in the Press Announcement or Presentation has
become or been discovered to be untrue, inaccurate or misleading in any
material respect; or
c. matters have arisen or have been discovered which would, if the Press
Announcement or Presentation were to be issued at that time, constitute a
material omission therefrom; or
d. there shall have occurred any act of terrorism, outbreak of hostilities,
declaration of emergency or martial law or other calamity or crisis or
event or any change or development involving a prospective change in
national or international political, financial, economic, monetary or
market conditions or currency exchange rates or controls which the Banks,
acting reasonably, are of the opinion is or will or may reasonably be
expected to be materially prejudicial to the Company or to the Placing or
to the acquisition of the Placing Shares under the Placing in accordance
with this Announcement and the Placing Letter by persons other than those
who are or may become obliged to underwrite the issue of the Placing
Shares; or
e. trading in any securities of the Company has been suspended or materially
limited by the London Stock Exchange or any exchange or over-the-counter
market, or minimum or maximum prices for trading in any securities of the
Company have been fixed, or maximum ranges for prices of Company
securities have been required, by any of said exchanges or by order of
any governmental authority, or a material disruption has occurred in
commercial banking or securities settlement or clearance services in the
United States or in Europe; or
f. an event has occurred or matter arisen on or after the date hereof and
before Placing Admission which if it had occurred or arisen before the
date hereof would have rendered any of the warranties contained in the
Placing Agreement untrue, inaccurate or misleading in any material
respect; or
g. any of the conditions specified in the Placing Agreement has not been
satisfied or waived by the Banks by the earlier of the date specified
therein (or such later time and/or the date as the Banks may agree, being
no later than close of business on 18 March 2009; or
h. there has been an actual material adverse change in, or any development
reasonably likely to involve a material adverse change in, the condition
(financial, operational or legal) or the earnings, management, business
affairs, solvency, credit rating or prospects of the Company or any other
Group Company, as applicable, whether or not arising in the ordinary
course of business, the ordinary shares of the Company; or
i. the application of the Company for Placing Admission is refused by the
FSA or the London Stock Exchange; or
j. a banking moratorium is declared by the United States or the United
Kingdom.
If the Placing Agreement is terminated in accordance with its terms, the rights and obligations of each Placee in respect of the Placing
as described in this Announcement shall cease and terminate at such time and no claim can be made by any Placee in respect thereof pursuant
to the Placing Letter or howsoever otherwise.
By participating in the Placing, Placees agree that the exercise by either of the Banks of any right of termination or other discretion
under the Placing Agreement shall be within the absolute discretion of the Banks and that it need not make any reference to Placees pursuant
to the Placing Letter or otherwise and that the Banks shall have no liability to Placees whatsoever in connection with any such exercise.
The Prospectus
A document comprising a prospectus prepared in accordance with the Prospectus Rules relating to the Company, the Rights Issue and the
Placing Shares which gives details, inter alia, of the Placing and a circular to Shareholders containing the notice of the EGM, is expected
to be published in the first week of January 2009.
Each Placee, by accepting a participation in the Placing and/or by sending its Letter of Confirmation to the Banks, agrees that the
content of this Announcement and a copy of the investor presentation dated 18 December 2008 (the "Presentation") is exclusively the
responsibility of the Company and confirms that it has neither received nor relied (nor will rely) on any other information, representation,
warranty, or statement made by or on behalf of the Company or either of the Banks or any other person and neither of the Banks nor the
Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information,
representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has
relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing.
Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN: GB0007892358) following Placing Admission will take place within the CREST
system. Settlement will be on a delivery versus payment basis. However, in the event of any difficulties or delays in admission of the
Placing Shares to CREST or the use of CREST in relation to the Placing, the Company and the Banks may agree that the Placing Shares should
be issued in certificated form. Each of the Banks reserves the right to require settlement for and delivery of the Placing Shares to Placees
by such other means that it deems necessary if delivery or settlement is not possible or practicable within the CREST system within the
timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will, two Business Days after the EGM, be sent a trade confirmation by JPMC (who
shall be conditionally allotted such Placing Shares by the Company as agent for the Placees upon such date) pursuant to its Placing Letter
stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to the Banks and
settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in
accordance with either the standing CREST or certificated settlement instructions that it has in place with JPMC.
It is expected that settlement between the Placees and JPMC will be on a T+3 basis (where T is the date that is two Business Days
following the EGM) unless otherwise notified by JPMC in accordance with the terms of the Placing Letter and the instructions set out in the
trade note or confirmation.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at
the rate of 2 percentage points above LIBOR as determined by JPMC.
Each Placee is deemed to agree that, if it does not comply with these obligations, the beneficial ownership of the Placing Shares
allocated to such Placee shall be transferred from such Placee to JPMSL and JPMC shall hold the legal title of such Placing Shares as agent
for JPMSL from the time of such Placee's default and accordingly the Banks may sell any or all of such Placing Shares. If the proceeds of
such Placing Shares are less than the aggregate amount owed by the relevant Placee plus any interest due, the relevant Placee will, however,
remain liable for the shortfall and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or
penalties) which may arise upon the sale of such Placing Shares by the Banks.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the commission payment instruction
form (appended to the Placing Letter) is completed by such custodian or settlement agent and returned to JPMC by 16 January 2009 and that
the trade confirmation is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is
contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from
any liability to UK stamp duty or UK stamp duty reserve tax.
Representations and Warranties
By participating in the Placing each Placee (and any person acting on such Placee's behalf) will give representations and warranties to
each of the Banks that it:
1. represents and warrants that it has read and understood this
Announcement, including the Appendix, and the Presentation in its
entirety;
2. acknowledges that no offering document or prospectus has been prepared
in connection with the Placing as at the date of this Announcement and
represents and warrants that it has not received a prospectus or other
offering document in connection therewith as at the date of this
Announcement;
3. acknowledges that neither of the Banks nor the Company nor any of their
affiliates nor any person acting on behalf of any of them has provided,
and will not provide it, with any material regarding the Placing Shares
or the Company other than this Announcement, the Presentation and (as
and when available and for information only) the Prospectus; nor has it
requested any of the Banks, the Company, any of their affiliates or any
person acting on behalf of any of them to provide it with any such
information;
4. represents and warrants that if it has received any confidential price
sensitive information about the Company in advance of the Placing, it
has not (a) dealt in the securities of the Company; (b) encouraged
another person to deal in the securities of the Company; or (c)
disclosed such information to any person, prior to the information being
made generally available.
5. acknowledges that the content of this Announcement and the Presentation
is exclusively the responsibility of the Company and that neither the
Banks, Key Capital nor any of their respective affiliates nor any person
acting on their behalf has or shall have any liability for any
information, representation or statement contained in this Announcement
or the Presentation or any information previously published by or on
behalf of the Company and will not be liable for any Placee's decision
to participate in the Placing based on any information, representation
or statement contained in this Announcement and the Presentation or
otherwise. Each Placee further represents, warrants and agrees that the
only information on which it is entitled to rely and on which such
Placee has relied in committing itself to acquire the Placing Shares is
contained in this Announcement and the Presentation and any information
previously published by the Company by notification to a Regulatory
Information Service, such information bein
6. acknowledges that neither the Banks nor Key Capital nor any person
acting on behalf of them nor any of their affiliates has or shall have
any liability for any publicly available or filed information or any
representation relating to the Company, provided that nothing in this
paragraph excludes the liability of any person for fraudulent
misrepresentation made by that person;
7. acknowledges that it is not, and at the time the Placing Shares are
acquired will not be a resident of Australia, Canada or Japan and each
of it and the beneficial owner of the Placing Shares is, and at the time
the Placing Shares are acquired will: (i) not be in the United States,
or (ii) be acquiring the Placing Shares in an "offshore transaction" in
accordance with Rule 903 or Rule 904 of Regulation S under the
Securities Act, and that the Placing Shares have not been and will not
be registered under the securities legislation of the United States,
Australia, Canada, Japan, New Zealand or Switzerland and, subject to
certain exceptions, may not be offered, sold, taken up, renounced or
delivered or transferred, directly or indirectly, within those
jurisdictions;
8. acknowledges that the Placing Shares have not been and will not be
registered under the Securities Act or with any State or other
jurisdiction of the United States, nor approved or disapproved by the US
Securities and Exchange Commission, any State securities commission in
the United States or any other United States regulatory authority, and
agrees not to reoffer, resell, pledge or otherwise transfer the Placing
Shares except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act;
9. is not (i) in the United States or (ii) a US Person or (iii) acquiring
the Placing Shares for the account or benefit of a US Person or (iv)
acquiring the Placing Shares with a view to the offer, sale, resale,
transfer, delivery or distribution, directly or indirectly, of any
Placing Shares into the United States or to, or for the account or
benefit of, any US Person;
10. represents and warrants that it is not a "benefit plan investor" (within
the meaning of the US Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), or other employee benefit plan subject to any US
federal, state, local or other law or regulation that is substantially
similar to the prohibited transaction provisions of Section 406 of ERISA
or Section 4975 of the US Internal Revenue Code of 1986, as amended, and
that it will not sell or otherwise transfer any Placing Shares or any
interest therein unless the transferee makes or is deemed to make the
representations and warranties set forth in this paragraph, and the
purchaser acknowledges and agrees that any purported transfer of Placing
Shares or any interest therein that does not comply with this section
paragraph will not be effective and will not be recognised by the
Company;
11. unless otherwise specifically agreed with the Banks, represents and
warrants that it is not, and at the time the Placing Shares are acquired
that it will be, the beneficial owner of such Placing Shares, or that
the beneficial owner of such Placing Shares is not a resident of
Australia, Canada, Japan, New Zealand or Switzerland;
12. acknowledges that the Placing Shares have not been and will not be
registered under the securities legislation of Australia, Canada, Japan,
New Zealand or Switzerland and, subject to certain exceptions, may not
be offered, sold, taken up, renounced or delivered or transferred,
directly or indirectly, within those jurisdictions;
13. represents and warrants that the issue to it, or the person specified by
it for registration as holder, of Placing Shares will not give rise to a
liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986
(depositary receipts and clearance services) and that the Placing Shares
are not being acquired in connection with arrangements to issue
depositary receipts or to transfer Placing Shares into a clearance
system;
14. if it is in the United Kingdom, represents and warrants that it has
complied with its obligations in connection with money laundering and
terrorist financing under the Proceeds of Crime Act 2002, the Terrorism
Act 2003 and the Money Laundering Regulations 1993, 2003 and 2007 and
the Money Laundering Sourcebook of the Financial Services Authority (the
"Regulations") and, if making payment on behalf of a third party, that
satisfactory evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations;
15. represents and warrants that it falls within section 86(7) of the
Financial Services and Markets Act 2000 ("FSMA") or Article 2(1)(e) of
the Prospectus Directive, being a qualified investor, and within Article
19 and/or 49 of the Order and undertakes that it will acquire, hold,
manage or dispose of any of the Placing Shares that are allocated to it
for the purposes of its business;
16. if a financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, represents and warrants that the Placing Shares
purchased by it in the Placing will not be acquired on a
non-discretionary basis on behalf of, nor will they be acquired with a
view to their offer or resale to, persons in a Relevant Member State
other than qualified investors, or in circumstances in which the prior
consent of the Banks has been given to the offer or resale;
17. represents and warrants that it has not offered or sold and, prior to
Placing Admission, will not offer or sell any Placing Shares to persons
in the United Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(as principal or agent) for the purposes of their business or otherwise
in circumstances which have not resulted and which will not result in an
offer to the public in the United Kingdom within the meaning of section
85(1) of the FSMA;
18. represents and warrants that it has not offered or sold and will not
offer or sell any Placing Shares to persons in the EEA prior to Placing
Admission except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their business or otherwise in
circumstances which have not resulted in and which will not result in an
offer to the public in any Relevant Member State;
19. represents and warrants that it has only communicated or caused to be
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the
meaning of section 21 of the FSMA) relating to the Placing Shares in
circumstances in which section 21(1) of the FSMA does not require
approval of the communication by an authorised person;
20. represents and warrants that it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the Placing Shares in, from or otherwise involving, the
United Kingdom;
21. represents and warrants that it and any person acting on its behalf is
entitled to subscribe for and/or acquire the Placing Shares under the
laws of all relevant jurisdictions which apply to it and that it has
fully observed such laws and obtained all such governmental and other
guarantees, permits, authorisations, approvals and consents which may be
required thereafter and complied with all necessary formalities and that
it has not taken any action or omitted to take any action which will or
may result in either of the Banks, the Company or any of their
respective directors, officers, agents, employees or advisers acting in
breach of the legal or regulatory requirements of any jurisdiction in
connection with the Placing;
22. represents and warrants that it is not acting in concert (within the
meaning given in the City Code on Takeovers and Mergers) with any other
Placee or any other person in relation to the Company;
23. represents and warrants that it has all necessary capacity and has
obtained all necessary consents, permits, authorisations, approvals and
authorities to enable it to commit to this participation in the Placing
and to perform its obligations in relation thereto (including, without
limitation, in the case of any person on whose behalf it is acting, all
necessary consents and authorities to agree to the terms set out or
referred to in this Announcement) and will honour such obligations;
24. undertakes that it (and any person acting on its behalf) will make
payment for the Placing Shares allocated to it in accordance with this
Announcement at the due time and on the date set out herein, failing
which such Placee's beneficial ownership of the relevant Placing Shares
shall be transferred to JPMSL and JPMC shall hold the legal title to the
relevant Placing Shares as agent for JPMSL and accordingly such Placing
Shares may be placed with other subscribers or sold as JPMSL may in its
absolute discretion determine and without liability to such Placee;
25. acknowledges that neither the Banks, nor any of their affiliates, nor
any person acting on behalf of any of them, is making any
recommendations to it, advising it regarding the suitability of any
transactions it may enter into in connection with the Placees and that
participation in the Placing is on the basis that it is not and will not
be a client of any of the Banks and that each of the Banks has no
fiduciary duties or other duties or responsibilities to it for providing
the protections afforded to its clients or customers or for providing
advice in relation to the Placing nor in respect of any representations,
warranties, undertakings or indemnities contained in the Placing
Agreement nor for the exercise or performance of any of its rights and
obligations thereunder including any rights to waive or vary any
conditions or exercise any termination right;
26. undertakes that the person who it specifies for registration as holder
of the Placing Shares will be (i) itself or (ii) its nominee, as the
case may be. Neither the Banks nor the Company will be responsible for
any liability to UK stamp duty or UK stamp duty reserve tax resulting
from a failure to observe this requirement. Each Placee and any person
acting on behalf of such Placee agrees to participate in the Placing and
agrees to indemnify the Company and each of the Banks on an after-tax
basis in respect of the same on the basis that the Placing Shares will
be allotted to the CREST stock account of JPMC who will, on Placing
Admission, hold them as nominee on behalf of such Placee until
settlement in accordance with this Appendix and its standing settlement
instructions;
27. acknowledges that any agreements entered into by it pursuant to these
terms and conditions, including any non-contractual obligations arising
out of or in connection with these terms and conditions, shall be
governed by and construed in accordance with the laws of England and
Wales and it submits (on behalf of itself and on behalf of any person on
whose behalf it is acting) to the exclusive jurisdiction of the English
courts as regards any claim, dispute or matter arising out of any such
contract or non-contractual obligation, except that enforcement
proceedings in respect of the obligation to make payment for the Placing
Shares (together with any interest chargeable thereon) may be taken by
the Company or any of the Banks in any jurisdiction in which the
relevant Placee is incorporated or in which any of its securities have a
quotation on a recognised stock exchange;
28. agrees that the Company, the Banks and their respective affiliates and
others will rely upon the truth and accuracy of the foregoing
representations, warranties, acknowledgements and undertakings which are
given to each of the Banks on its own behalf and on behalf of the
Company and are irrevocable;
29. acknowledges that time shall be of the essence as regards obligations
pursuant to this Announcement; and
30. agrees to indemnify on an after-tax basis and hold the Company, each of
the Banks and their respective affiliates harmless, on an after-tax
basis, from any and all costs, claims, liabilities, losses and expenses
(including legal fees and expenses) arising out of or in connection with
any breach of the representations, warranties, acknowledgements,
agreements and undertakings in this Appendix and further agrees that the
provisions of this Appendix shall survive after completion of the
Placing.
The above representations, warranties and undertakings are incorporated by reference into the Placing Letter and in the event of any
inconsistency between the representations, warranties and undertakings set out in this Appendix and those set out in the Placing Letter, the
representations, warranties and undertakings set out herein shall take precedence and prevail.
The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free
of UK stamp duty and UK stamp duty reserve tax depends on the settlement relating only to subscription by it and/or such person direct from
the Company or from JPMC (as nominee or agent for the Placees) for the Placing Shares in question. Such agreement assumes that the Placing
Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a
clearance service. If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, UK stamp duty
or UK stamp duty reserve tax may be payable, for which neither the Company nor any of the Banks will be responsible. If this is the case,
the relevant Placee should seek its own advice and notify the Banks accordingly.
In addition, Placees should note that they will be liable for any UK stamp duty and UK stamp duty reserve tax and all other stamp,
issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating
thereto) payable outside the UK by them or any other person on the subscription by them of any Placing Shares or the agreement by them to
subscribe for any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that neither of the Banks owes any fiduciary or other duties to
any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that either Bank or any of their affiliates may, at
its absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with JPMC, any money held in an account with JPMC on behalf of the
Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations
of the FSA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money
rules; as a consequence, this money will not be segregated from JPMC's money in accordance with the client money rules and will be used by
JPMC in the course of its own business; and the Placee will rank only as a general creditor of JPMC.
All times and dates in this Announcement may be subject to amendment. For the avoidance of doubt, the commitments, representations,
warranties and undertakings of any Placee under the Placing are not conditional on any of the expected dates in this Announcement actually
being achieved. JPMC shall notify the Placees and any person acting on behalf of the Placees of any changes pursuant to and in accordance
with the terms of the Placing Letter.
APPENDIX III - DEFINED TERMS USED IN THIS ANNOUNCEMENT
"2006 Act" the Companies Act 2006
"Act" the Companies Act 1985, as amended
"Admission" the admission of the New Ordinary Shares provisionally
allotted pursuant to the Rights Issue (nil paid) to the
Official List and the admission of such shares (nil paid)
to trading on the market for listed securities of the
London Stock Exchange becoming effective, and references
to "Admission becoming effective" means its becoming
effective in accordance with LR3.2.7G of the Listing Rules
and paragraph 2.1 of the Admission and Disclosure
Standards published by the London Stock Exchange
"Articles" the articles of association of the Company from time to
time
"Australia" the Commonwealth of Australia, its territories and
possessions
"Bonds" the £120 million 8.25 per cent. convertible bonds issued
by the Company with a maturity of 2016
"Business Day" any day (other than Saturday or Sunday or a bank holiday)
on which banks are generally open in London for normal
banking business
"Call" any contractual demand made by funds or SVG Products to
investors from time to time to satisfy part or all of the
outstanding unpaid capital committed by such investors in
relation to their holdings
"Canada" Canada, its provinces and territories and all areas under
its jurisdiction and political subsidiaries thereof
"Carried Interest" the allocation of a portion of gains to individuals
connected with the fund derived from particular holdings
of up to 20 per cent. of profits arising in the fund, or
calculated in accordance with the terms of the relevant
fund
"CCSO" The CREST Courier and Sorting Office established by
Euroclear to facilitate, amongst other things, the deposit
and withdrawal of securities
"certificated" or not in not in uncertificated form
uncertificated form
"certificated form"
"Closing Price" the closing, middle market quotation of an Existing
Ordinary Share, as published in the Daily Official List
"Company" SVG Capital plc
"CREST" the relevant system (as defined in the CREST Regulations)
for paperless settlement of share transfers and the
holding of shares in uncertificated form in respect of
which Euroclear is the operator (as defined in the CREST
Regulations)
"Daily Official List" the daily official list of the London Stock Exchange
"Directors" or "Board" means the members of the board of directors of the Company
from time to time
"Effective Date" the effective date of the documentation implementing the
Permira IV Reorganisation
"Enlarged Share Capital" the ordinary share capital of the Company following
Admission
"EU" the European Union first established by the treaty made at
Maastricht on 7 February 1992
"Excluded Territory" or Canada, Japan and Australia and any other jurisdiction
"Excluded Territories" where the extension or availability of the Rights Issue
(and any other transaction contemplated thereby) would
breach any applicable law or regulation
"Existing Ordinary Shares" the Ordinary Shares in issue at the date of this
Announcement
"Extraordinary General the extraordinary general meeting of the Company which is
Meeting" or "EGM" expected to be convened in the last week of January 2009
(the notice convening such meeting to be contained in the
prospectus)
"FSA" the Financial Services Authority
"FSMA" the Financial Services and Markets Act 2000, as amended
"Fully Paid Rights" rights to acquire New Ordinary Shares, fully paid
"Gross Investment Portfolio" the Company's interest in the PE Portfolio before a
deduction for Carried Interest and excluding the net
current assets and liabilities of the relevant fund
"Group" the Company, its subsidiaries and its subsidiary
undertakings from time to time including for these
purposes, The Platinum Trust
"IFRS" the International Financial Reporting Standards maintained
by the International Accounting Standards Board (IASB) and
which are in force from time to time, as adopted by the EU
"Investment Company Act" the United States Investment Company Act of 1940, as
amended
"IPEVC Guidelines" the International Private Equity and Venture Capital
Guidelines
"Japan" Japan, its cities, prefectures, territories and
possessions
"JPMorgan Cazenove" or "JPMC" JPMorgan Cazenove Limited of 20 Moorgate, London EC2R 6DA
"JPMSL" J.P. Morgan Securities Ltd., 125 London Wall, London, EC2Y
5AJ
"Key Capital" Key Capital Investment Management Limited of Huguenot
House, St. Stephen's Green, Dublin 2, Republic of Ireland
"Listing Rules" the listing rules of the UK Listing Authority made in
accordance with section 73A of FSMA, as amended from time
to time
"London Stock Exchange" London Stock Exchange plc or its successor
"NAV per Ordinary Share" net asset value per Ordinary Share
"net IRRs" the internal rates of return earned by the underlying
private equity funds, in which the Company held (or holds)
interests, on equity invested after deduction for costs,
expenses and Carried Interest
"New Ordinary Shares" the new Ordinary Shares to be issued by the Company in
accordance with the Rights Issue and Placing
"Nil Paid Rights" rights to acquire the New Ordinary Shares, nil paid
"NPAs" the note purchase agreements dated 18 July 2006 and 2
August 2007 made between the Company and the purchasers
listed in the respective note purchase agreements
"Notes" seven series of private placement notes issued by the
Company with a maturity of 2013 - 2015
"Official List" the list maintained by the UKLA pursuant to Part VI of
FSMA
"Operating Agreement" the agreement entered into between SVG Capital and Permira
Holdings, and the agreement entered into between SVG
Capital and certain other Permira Entities, in each case
on 21 March 2005
"Ordinary Shares" the ordinary shares of 100 pence each in the capital of
the Company
"Overseas Shareholders" 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
"PE Portfolio" the Permira Funds, Asia Pacific Trust, Asia Pacific Fund
II, Schroder Ventures Asia, Pacific Fund, The Japan Fund
IV, Schroder Canadian, Buy-Out Fund II, SV Investments
Fund I, SV Life Sciences Fund III, SV Life Sciences IV, SV
Investments Fund I and the SVG Permira Products
"Permira" or "Permira the international network of entities providing
Entities" management, advisory or consultancy services to, or
conducting the business of designing, managing or
advising, private equity and other funds or products under
the overall business name of "Permira"
"Permira IV" the Permira Fund of that name established in 2006
"Permira IV Reorganisation" has the meaning given under the paragraph of this
announcement entitled "Developments regarding Permira IV"
"Permira Capital" Permira Capital Limited, a company registered in Guernsey
with registered number 42908
"Permira Funds" those private equity funds or products designed, managed
or advised by any Permira Entity from time to time in
respect of which equity funding is obtained, or to be
obtained, in whole or in part, from persons other than
Permira Entities (ignoring for this purpose certain
preferential investors), excluding PDM CLO I
"Permira Holdings" Permira Holdings Limited, a company registered in Guernsey
with registered number 40432
"Permira Product" any fund or product (excluding Permira Funds but
including, for the avoidance of doubt, debt or mezzanine
funds) designed, managed or advised by any Permira Entity
from time to time in respect of which equity funding is
obtained, or to be obtained, in whole or in part, from
persons other than Permira Entities (ignoring for this
purpose certain preferential investors)
"Placees" those persons which have agreed to subscribe Placing
Shares
"Placing" the placing of New Ordinary Shares as described in this
Announcement and the Appendices thereto
"Placing Admission" the admission of the Placing Shares to the Official List
and the admission of such shares to trading on the market
for listing securities of the London Stock Exchange
becoming effective, and references to "Placing Admission
becoming effective" means its becoming effective in
accordance with LR3.2.7G of the Listing Rules and
paragraph 2.1 of the Admission and Disclosure Standards
published by the London Stock Exchange
"Placing Agreement" the rights issue and placing agreement dated 18 December
2008 between the Company, JPMorgan Cazenove and JPMSL
"Placing Price" 100 pence per Placing Share
"Placing Shares" the New Ordinary Shares which are the subject of the
Placing
"Plan" the SVG Capital 2007 Performance Share Plan
"Prospectus" a combined circular to Shareholders containing both the
notice of the EGM and the prospectus relating to the
Rights Issue and Placing, which is expected to be
dispatched in the first week of January 2009
"Prospectus Directive" Directive 2003/71/EC and includes any relevant
implementing measures in each Member State of the European
Economic Area that has implemented Directive 2003/71/EC
"Prospectus Rules" the prospectus rules of the UK Listing Authority made in
accordance with section 73A of FSMA, as amended from time
to time
"Provisional Allotment Letter" the renounceable provisional allotment letter to be issued
or "PAL" to Qualifying non-CREST Shareholders by the Company in
respect of the Nil Paid Rights pursuant to the Rights
Issue
"Qualifying CREST Qualifying Shareholders whose Ordinary Shares on the
Shareholders" register of members of the Company at the close of
business on the Record Date are in certificated form
"Qualifying non-CREST Qualifying Shareholders whose Ordinary Shares on the
Shareholders" register of members of the Company at the close of
business on the Record Date are in uncertificated form
"Qualifying Shareholders" Holders of Ordinary Shares on the register of members of
the Company at the close of business on the Record Date
"Record Date" the date, which is expected to be in the last week of
January 2009, on which Shareholders are required to be on
the register of members of the Company (at the close of
business) in order to participate in the Rights Issue
"Regulatory Information a regulatory information service that is approved by the
Service" FSA and that is on the list of regulatory information
service providers maintained by the FSA
"Related Party" has the meaning given in chapter 11 of the Listing Rules
"Resolutions" the resolutions summarised in this announcement and to be
set out in the notice of Extraordinary General Meeting at
the end of the Prospectus
"Revolving Credit Facility" the EUR750 million multicurrency revolving facility
agreement made between, among others, SVG Capital, The
Bank of Scotland plc and The Royal Bank of Scotland plc
dated 10 March 2006, as amended from time to time
"Rights Issue" the proposed 1 for 1 rights issue by the Company to
existing Shareholders at 100 pence per Share, which has
been announced simultaneously with the Placing
"Rights Issue Price" 100 pence per New Ordinary Share
"Rights Issue Shares" the New Ordinary Shares to be issued by the Company under
the Rights Issue
"SEC" the US Securities and Exchange Commission
"Securities Act" the United States Securities Act of 1933, as amended
"Shareholder" a holder of Existing Ordinary Shares
"SVG Advisers" SVG Advisers Limited, SVG Managers Limited, SVG Investment
Managers Limited, SVG North America, Inc., SVG Advisers,
Inc. and SVG Advisers (Singapore) Pte. Limited
"SVG Capital" SVG Capital plc
"SVG Investment Managers SVG Investment Managers Limited, a wholly owned subsidiary
Limited" of the Company
"SVG Managers Limited" SVG Managers Limited, a wholly owned subsidiary of the
Company
"SVG North America, Inc." SVG North America, Inc., a wholly owned subsidiary of the
Company
"SVG Permira Products" those SVG Products which have made capital contributions
and commitments solely to Permira Funds, being, at the
date of this Announcement, the products known as P123,
P1234, P25 and SVG Sapphire IV
"SVG Product" * any private equity fund or product;
* any structured fund or product;
* or any other fund or product for quoted or unquoted
investment (including, without limitation, any fund of
funds), in each case managed or advised by any member of
the Group from time to time for so long as a member of the
Group is the adviser thereto or manager thereof
"UK Listing Authority" or the FSA acting in its capacity as the competent authority
"UKLA" for the purposes of Part VI of FSMA and in exercise of its
functions in respect of the admission of securities to the
Official List otherwise than in accordance with Part VI of
FSMA
"uncertificated" a share or other security recorded on the relevant
or"uncertificated form" 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
"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland,
its territories and dependencies
"United States" or "US" the United States of America, its territories and
possessions, any state of the United States of America and
the District of Columbia
"United States Person" a natural person resident in the United States, a
corporation or partnership or organised or incorporated
under the laws of the United States, any estate of which
any executor or administrator is a "US Person" within the
meaning of Rule 902(k) under the Securities Act, any trust
of which any trustee is a "US person" within the meaning
of Rule 902(k) under the Securities Act, or any other
person, entity, trust or estate included within the
definition of "US person" in Rule 902(k) under the
Securities Act or determined to be resident in the United
States for purposes of the Investment Company Act
This information is provided by RNS
The company news service from the London Stock Exchange
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