Offer for Compco Holdings plc

RNS Number:2312M
City & General Securities Limited
12 June 2003

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES



                                                                   June 12, 2003


          CITY & GENERAL SECURITIES LIMITED ("CITY & GENERAL SECURITIES")
          ______________________________________________________________

             RECOMMENDED CASH OFFER FOR COMPCO HOLDINGS PLC ("COMPCO")




The boards of City & General Securities and Compco announce that they have
reached agreement on the terms of a recommended cash offer to be made by Merrill
Lynch, on behalf of City & General Securities, for the entire issued and to be
issued share capital of Compco.



The Offer will be 393 pence in cash for each Compco Share which values the
entire issued and to be issued share capital of Compco at approximately #147.2
million.



The Offer represents:



*         a premium of approximately 68.3 per cent. to the closing middle market
price of 233.5 pence per Compco Share on May 6, 2003, being the last business
day prior to the announcement that the Compco Board had received an approach
which may or may not lead to an offer being made for Compco; and



*         a discount of approximately 8.0 per cent. to the Adjusted Net Asset
Value per Compco Share of 427 pence as at March 25, 2003.



City & General Securities has received irrevocable undertakings to accept or
procure acceptance of the Offer from all of the directors of Compco and certain
persons connected with them holding Compco Shares and undertakings or a letter
of intent from certain other Compco Shareholders in respect of a total of
19,388,097 Compco Shares, representing approximately 51.9 per cent. of the
existing issued share capital of Compco.



It will be a term of the Offer that, whilst the Offer remains open for
acceptance, or if the Offer becomes or is declared unconditional in all
respects, the proposed dividend of 7 pence per Compco Share in respect of the
year ended March 25, 2003 will not be paid to Compco Shareholders.



City & General Securities is a recently formed company which was incorporated
specifically for the purpose of making the Offer.  Upon the Offer becoming or
being declared unconditional in all respects, City & General Securities will be
owned by City & General Group, a member of Marcol, and Uberior, a wholly-owned
subsidiary of Bank of Scotland.  Marcol has a variety of property and property
related interests which include the Industrial Securities Group, the City &
General group of companies, the CGIS Group and the Mango Hotels companies.



The directors of Compco, who are being advised by Credit Lyonnais Securities,
will be unanimously recommending the Offer.



Commenting on the Offer, Mark Steinberg, a director of City & General
Securities, said:



"Compco's attractive portfolio of assets is a good strategic fit with Marcol's
existing businesses and lends itself well to our active management approach.
The Offer enables shareholders in Compco to realise their investment at a
significant premium in cash immediately."



Kenneth Rubens, Chairman of Compco, said:



"The board of Compco is pleased to recommend the Offer to Compco Shareholders.
The Central London office market, where Compco's portfolio is concentrated, is
continuing to experience weakness, with an increasing supply of available space
and falling rent levels.  Although the board of Compco is confident as to the
long term prospects for Compco's investments, the timing and extent of any
recovery in the key London office markets is uncertain.  The Offer provides
Compco Shareholders with an immediate and certain realisation of their
investment at a significant share price premium."



Compco has today separately announced its preliminary statement of audited
annual results for the year ended March 25, 2003.



The conditions of the Offer are set out in Appendix I to the attached
announcement.



Appendix III to the attached announcement contains the definitions of certain
expressions used in this summary and the attached announcement.



This summary should be read in conjunction with, and is subject to the full text
of, the attached announcement.



Enquiries:


CITY & GENERAL SECURITIES                              Telephone: [phone]
Mark Steinberg

MERRILL LYNCH                                          Telephone: [phone]
Bob Wigley
Simon Fraser

TULCHAN                                                Telephone: [phone]
Andrew Grant
David Trenchard

COMPCO                                                 Telephone: [phone]
Robert Nadler, Joint Chief Executive
Nigel Ross, Joint Chief Executive

CREDIT LYONNAIS SECURITIES                             Telephone: [phone]
Robert Finlay
Marc Milmo

BINNS & CO                                             Telephone: [phone]
Paul Vann
Emma McCaffrey



This summary and the attached announcement do not constitute an offer or an
invitation to purchase or subscribe for any securities.



The Offer will not be made, directly or indirectly, in or into Australia,
Canada, Japan or the United States.  Accordingly, copies of this announcement
are not being, and must not be, mailed or otherwise distributed or sent in, into
or from Australia, Canada, Japan or the United States.  The availability of the
Offer to Compco Shareholders who are not resident in the United Kingdom may be
affected by the laws of relevant jurisdictions.  Compco Shareholders who are not
resident in the United Kingdom should inform themselves about and observe any
applicable requirements.



Merrill Lynch is acting exclusively for City & General Securities and no-one
else in connection with the Offer and will not be responsible to anyone other
than City & General Securities for providing the protections afforded to clients
of Merrill Lynch or for providing advice in relation to the Offer.



Credit Lyonnais Securities, which is regulated in the United Kingdom by the
Financial Services Authority in respect of regulated activities, is acting
exclusively for Compco and no-one else in connection with the Offer and will not
be responsible to anyone other than Compco for providing the protections
afforded to clients of Credit Lyonnais Securities or for providing advice in
relation to the Offer.




NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES



                                                                   June 12, 2003


          CITY & GENERAL SECURITIES LIMITED ("CITY & GENERAL SECURITIES")
          ______________________________________________________________

             RECOMMENDED CASH OFFER FOR COMPCO HOLDINGS PLC ("COMPCO")




1.         Introduction



The boards of City & General Securities and Compco announce that they have
reached agreement on the terms of a recommended cash offer to be made by Merrill
Lynch, on behalf of City & General Securities, for the entire issued and to be
issued share capital of Compco.



City & General Securities is a recently formed company which was incorporated
specifically for the purpose of making the Offer.  Upon the Offer becoming or
being declared unconditional in all respects, City & General Securities will be
owned by City & General Group, a member of Marcol, and Uberior, a wholly-owned
subsidiary of Bank of Scotland.  Marcol has a variety of property and property
related interests which include the Industrial Securities Group, the City &
General group of companies, the CGIS Group and the Mango Hotels companies.



2.         The Offer



The Offer, which will be subject to the conditions and further terms set out in
Appendix I to this announcement and to the conditions and further terms to be
set out in the Offer Document and the Form of Acceptance, will be made on the
following basis:


for each Compco Share                                          393 pence in cash



The Offer values the entire issued and to be issued share capital of Compco at
approximately #147.2 million.



The Offer represents:



*         a premium of approximately 68.3 per cent. to the closing middle market
price of 233.5 pence per Compco Share on May 6, 2003, being the last business
day prior to the announcement that the Compco Board had received an approach
which may or may not lead to an offer being made for Compco; and



*         a discount of approximately 8.0 per cent. to the Adjusted Net Asset
Value per Compco Share of 427 pence as at March 25, 2003.



Compco Shares will be acquired by City & General Securities fully paid and free
from all liens, equitable interests, charges, encumbrances, pre-emption rights
and other third party interests and rights of whatsoever nature and together
with all rights now or hereafter attaching thereto, including the right to
receive and retain all dividends and other distributions declared, made or paid
on or after the date of this announcement, including the proposed dividend of 7
pence per Compco Share referred to in Compco's preliminary statement of audited
annual results for the year ended March 25, 2003.  Accordingly, whilst the Offer
remains open for acceptance, or if the Offer becomes or is declared
unconditional in all respects, such dividend will not be paid to Compco
Shareholders.



3.         Recommendation



The directors of Compco, who have been so advised by Credit Lyonnais Securities,
financial adviser to Compco, consider the terms of the Offer to be fair and
reasonable.  In providing such advice, Credit Lyonnais Securities has taken into
account the commercial assessments of the directors of Compco.



The directors of Compco will recommend that Compco Shareholders accept the
Offer, as those directors and certain persons connected with them holding Compco
Shares have irrevocably undertaken to do in respect of their own registered and
beneficial holdings, representing, in aggregate, 9,089,220 Compco Shares, being
approximately 24.3 per cent. of the existing issued share capital of Compco.



4.         Information on Compco



Compco is a United Kingdom based property investment, trading and development
company.  The strategy of the Compco Group has been to invest in properties
where management believe that they can add value through active management.
Compco's property portfolio is weighted towards the Central London office market
which, as at March 25, 2003, represented approximately 80 per cent. of Compco's
portfolio.  The Company's portfolio includes Thavies Inn House, London, Seymour
Mews House, London and Staple Inn, London, a 40 per cent. interest in Chelsea
Harbour (which includes the Chelsea Harbour Design Centre) as well as properties
in Salford Quays, Manchester and a 75 per cent. interest in The Frenson Estate
in Liverpool.  As at March 25, 2003, the value of Compco's property portfolio
totalled approximately #362.8 million.



Compco's preliminary statement of audited annual results for the year ended
March 25, 2003 was separately announced today reporting turnover of #28.3
million (2002: #25.8 million) and profit before tax of #15.9 million (2002:
#10.5 million).  As at March 25, 2003, the net assets of Compco were #169.7
million (2002: #182.2 million) representing a net asset value per Compco Share
of 454 pence (2002: 487 pence).



5.         Background to and reasons for the Offer



The board of City & General Securities believes that Compco represents an
attractive medium to long term investment opportunity in the UK real estate
sector due to its focus on central London located management intensive assets.
In the short term, it is City & General Securities' intention to continue the
business of Compco in broadly its current form.



Following completion of the Offer, City & General Securities will seek to apply
its own experience and property management skills and to work with the
management of Compco to undertake a thorough review of Compco's existing
property portfolio with a view to identifying opportunities to create additional
value.  As a result of this review, City & General Securities expects actively
to manage Compco's property portfolio over the medium to long term, through
disposals or otherwise, to realise maximum value as and when appropriate
opportunities arise.



The board of City & General Securities believes that the Offer, which will be
recommended by the Compco Board, provides an immediate and certain opportunity
for Compco Shareholders to realise their investment for cash at a significant
premium to the price of Compco Shares immediately prior to the announcement that
the Compco Board had received an approach which may or may not lead to an offer
being made for Compco.



6.         Irrevocable undertakings and intentions to accept the Offer



All the directors of Compco and certain persons connected with them holding
Compco Shares have irrevocably undertaken to accept or procure acceptance of the
Offer in respect of, in aggregate, 9,089,220 Compco Shares owned by them or in
which they are beneficially interested, representing approximately 24.3 per
cent. of the existing issued share capital of Compco.  These undertakings
continue to be binding even in the event of a competing offer being made for
Compco.



City & General Securities has received irrevocable undertakings to accept or
procure acceptance of the Offer from HSBC Republic Trust Company (Suisse) AG and
HSBC Republic Trust Company (BVI) Limited, and Rothschild Trust Guernsey
Limited, DN Allison and CP Ward in respect of, in aggregate, 1,261,624 Compco
Shares, representing approximately 3.4 per cent. of the existing issued share
capital of Compco.  These undertakings continue to be binding even in the event
of a competing offer being made for Compco.



City & General Securities has received undertakings to accept or procure
acceptance of the Offer from Trefick Limited and His Grace, The Duke of Bedford
in respect of, in aggregate, 3,832,146 Compco Shares, representing approximately
10.3 per cent. of the existing issued share capital of Compco.  These
undertakings will cease to be binding in the event of a competing offer being
made for Compco at a price at least 10 per cent. higher than the Offer or if the
Offer lapses or is withdrawn.



City & General Securities has received an undertaking to accept or procure
acceptance of the Offer from JP Morgan Fleming Asset Management in respect of
2,043,872 Compco Shares, representing approximately 5.5 per cent. of the
existing issued share capital of Compco.  This undertaking will cease to be
binding in the event of a competing offer being made for Compco at a price at
least 10 per cent. higher than the Offer or if the Offer lapses or is withdrawn
or has not become or been declared unconditional as to acceptances within 21
days of the first closing date of the Offer.



City & General Securities has received an undertaking to accept or procure
acceptance of the Offer from UBS Global Asset Management (UK) Limited in respect
of 1,397,935 Compco Shares, representing approximately 3.7 per cent. of the
existing issued share capital of Compco.  This undertaking will cease to be
binding in the event of a competing offer being made for Compco at a price at
least 5 per cent. higher than the Offer or if the Offer lapses or is withdrawn.



City & General Securities has also received a letter of intent to accept or
procure acceptance of the Offer from Aberforth Partners in respect of 1,763,300
Compco Shares, representing approximately 4.7 per cent. of the existing issued
share capital of Compco.



In aggregate, City & General Securities has therefore received either
undertakings or a letter of intent to accept or procure acceptance of the Offer
in respect of a total of 19,388,097 Compco Shares, representing approximately
51.9 per cent. of the existing issued share capital of Compco.



7.         Information on City & General Securities, Marcol and Uberior



City & General Securities



City & General Securities is a recently formed company which was incorporated
specifically for the purpose of making the Offer.  Upon the Offer becoming or
being declared unconditional in all respects, City & General Securities will be
owned by City & General Group, a member of Marcol, and Uberior, a wholly-owned
subsidiary of Bank of Scotland.



The directors of City & General Securities are Terence Cole, Steven Collins and
Mark Steinberg.



Further information on City & General Securities will be included in the Offer
Document.



Marcol



Marcol comprises an association of companies which operate under the Marcol
brand and together have a variety of property and property related interests.



The principal companies and holdings within Marcol are:



*         Marcol Management Limited, which provides the professional services
required by the other Marcol companies, including surveying, project management,
accountancy and administration services;



*         the Industrial Securities Group, which specialises in all areas of the
industrial sector;



*         the City & General group of companies, which deal in most types of
commercial property for investment and/or development;



*         CGIS Group, a joint-venture with Bank of Scotland created out of the
acquisition of the former Burford Group plc, which invests in substantial
commercial properties;



*         a controlling shareholding in Mango Hotels, which owns hotels ranging
from budget through to three to four star deluxe; and



*         City & General Group, whose principal asset is its interest in City &
General Securities.



Uberior



Uberior is a wholly-owned subsidiary of Bank of Scotland, itself a wholly-owned
subsidiary of HBOS.  HBOS was formed from the merger of Bank of Scotland and
Halifax plc in September 2001.  As at June 11, 2003, the last dealing day before
this announcement, the market capitalisation of HBOS was approximately #30.2
billion.



The latest audited consolidated annual accounts for HBOS, in respect of the
financial year ended December 31, 2002, disclosed consolidated total assets of
#355,080 million (2001: #312,275 million), consolidated net assets of #15,908
million (2001: #13,870 million) and consolidated pre-tax profits on ordinary
activities (before exceptional items) of #3,062 million (2001: #3,007 million).



Uberior operates as a holding company for investments arranged by various
business divisions within Bank of Scotland's Corporate Banking division.  These
investments are made for Bank of Scotland's own account in a broad range of
business sectors.



Uberior's participation in this transaction was structured by Bank of Scotland's
Joint Ventures team, a part of Bank of Scotland's Corporate Banking division,
which is both an active investor and lender to the real estate market.  The
Joint Ventures team is engaged in the business of providing vertical funding
strips including senior debt, mezzanine debt and equity to asset backed sectors
such as commercial property, hotels and housebuilding.  Since its establishment
in 2000, the Bank of Scotland Joint Ventures team has completed nearly 90 joint
venture transactions and committed over #6 billion of funding to those
transactions.



8.         Financing of the Offer



City & General Securities will have a capital structure comprising equity and
debt.



In order to finance the cash consideration required under the Offer, pay fees
and expenses and meet other payments in connection with the Offer, City &
General Group and Uberior will invest equity in and provide shareholder loans to
City & General Securities.  Their shareholding interests in City & General
Securities will be 70.01 per cent. and 29.99 per cent. respectively.  CGIS
(No.2) Limited (which is part of Marcol and in which Uberior has a minority
interest) will make a loan to City & General Securities to fund part of the cash
consideration under the Offer.  City & General Securities has also put in place
term and revolving loan facilities arranged by Bank of Scotland to fund the
remainder of the cash consideration under the Offer and certain costs and
expenses relating to the Offer and, if required, to refinance Compco's existing
loan facilities.  These facilities may also be used to provide working capital
to Compco following completion of the Offer.  Further information on the
financing of the Offer will be included in the Offer Document.



9.         Compco Share Schemes



The Offer will extend to any Compco Shares which are unconditionally allotted or
otherwise issued pursuant to the exercise of existing options under the Compco
Share Schemes whilst the Offer remains open for acceptance (or before such
earlier date as City & General Securities may, subject to the City Code, decide,
not being earlier than the date on which the Offer becomes or is declared
unconditional as to acceptances or, if later, the first closing date of the
Offer).



To the extent that options under the Compco Share Schemes are not so exercised,
and if the Offer becomes or is declared unconditional in all respects,
appropriate proposals will be made to participants in the Compco Share Schemes
in due course.



10.       Management and employees



City & General Securities has confirmed to the directors of Compco that, in the
event of the Offer becoming or being declared unconditional in all respects, the
existing employment rights, including pension rights, of all employees of the
Compco Group will be fully safeguarded.



Upon the Offer becoming or being declared unconditional in all respects, all of
the directors of Compco will resign as directors of Compco and, except for the
Chairman Kenneth Rubens who was due to retire at Compco's forthcoming annual
general meeting, will receive compensation payments in accordance with their
contractual entitlements.  At the same time, Robert Nadler will become a
consultant for a subsidiary of Compco.



11.       Inducement fee



Compco has agreed to pay City & General Securities approximately #1.47 million
(being one per cent. of the fully diluted value of the Offer) in the event that:



(i)                  the recommendation of the directors of Compco is withdrawn
or modified in a manner which is adverse to the likelihood of the Offer becoming
or being declared unconditional in all respects; or



(ii)                prior to the latest date on which the Offer can be declared
unconditional in all respects, a competing offer is announced by a third party
and is either recommended by the directors of Compco or subsequently becomes
unconditional in all respects; or



(iii)               Compco materially breaches certain undertakings it has given
concerning the non-solicitation of other offers for Compco.



12.       Disclosure of interests in Compco



Save for the irrevocable undertakings referred to above and the Compco Shares
represented thereby, neither City & General Securities nor any of the directors
of City & General Securities nor, so far as City & General Securities is aware,
any party acting in concert with City & General Securities, owns or controls any
Compco Shares or holds any options to purchase Compco Shares or has any
arrangement in relation to Compco Shares or any securities convertible or
exchangeable into Compco Shares or options in respect of Compco Shares or has
entered into any derivative referenced to securities of Compco which is
outstanding. For these purposes, "arrangement" includes any indemnity or option
arrangement, any agreement or understanding, formal or informal, of whatever
nature, relating to Compco Shares, which may be an inducement to deal or refrain
from dealing in such shares.  In view of the requirement for confidentiality,
City & General Securities has not made any enquiries in this respect of certain
parties who may be deemed by the Panel to be acting in concert with it for the
purposes of the Offer.



13.       General



The formal Offer Document setting out the details of the Offer and the Form of
Acceptance will be posted to Compco Shareholders as soon as practicable.



If the Offer becomes or is declared unconditional in all respects and sufficient
acceptances are received, City & General Securities intends to apply the
provisions of sections 428 to 430F (inclusive) of the Companies Act to acquire
compulsorily any outstanding Compco Shares not acquired or agreed to be acquired
pursuant to the Offer or otherwise.



It is City & General Securities' intention that, following the Offer becoming or
being declared unconditional in all respects, subject to any applicable
requirements of the UK Listing Authority, City & General Securities will apply
for cancellation, respectively, of the trading in Compco Shares on the London
Stock Exchange's market for listed securities and the listing of Compco Shares
from the Official List of the UK Listing Authority.  Such cancellation will take
effect no earlier than 20 business days after the Offer becomes or is declared
unconditional in all respects.  De-listing would significantly reduce the
liquidity and marketability of any Compco Shares not assented to the Offer.



This announcement does not constitute an offer or invitation to purchase or
subscribe for any securities.



The Offer will not be made, directly or indirectly, in or into Australia,
Canada, Japan or the United States.  Accordingly, copies of this announcement
are not being, and must not be, mailed or otherwise distributed or sent in, into
or from Australia, Canada, Japan or the United States.  The availability of the
Offer to Compco Shareholders who are not resident in the United Kingdom may be
affected by the laws of relevant jurisdictions.  Compco Shareholders who are not
resident in the United Kingdom should inform themselves about and observe any
applicable requirements.



Merrill Lynch is acting exclusively for City & General Securities and no-one
else in connection with the Offer and will not be responsible to anyone other
than City & General Securities for providing the protections afforded to clients
of Merrill Lynch or for providing advice in relation to the Offer.



Credit Lyonnais Securities, which is regulated in the United Kingdom by the
Financial Services Authority in respect of regulated activities, is acting
exclusively for Compco and no-one else in connection with the Offer and will not
be responsible to anyone other than Compco for providing the protections
afforded to clients of Credit Lyonnais Securities or for providing advice in
relation to the Offer.



Appendix III to this announcement contains the definitions of certain
expressions used in this announcement.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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