Ntl (NASDAQ:NTLI)
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NTL Incorporated:
-- NTL Incorporated ("ntl") and the Independent Board of Virgin
Mobile Holdings (UK) plc ("Virgin Mobile") are pleased to
announce that each of the pre-conditions set out in the
pre-conditional possible offer announcement made on 16 January
2006 has been satisfied or waived and that they have reached
agreement on the terms of a recommended cash offer to be made
by ntl Investment Holdings Limited (the "Cash Offeror"), a
wholly owned subsidiary of ntl, with a recommended share
alternative offer to be made by ntl, and a recommended share
and cash alternative offer to be made by ntl and the Cash
Offeror, to acquire the entire issued and to be issued share
capital of Virgin Mobile (the "Offer"). The Offer will be
implemented by way of a scheme of arrangement under section
425 of the Companies Act 1985, as amended.
-- Pursuant to the terms of the Offer, Virgin Mobile Shareholders
can elect for:
(1) the Cash Offer of 372 pence in cash per Scheme Share held; or
(2) the Share Offer of 0.23245 ntl Shares per Scheme Share held,
valued at 389 pence per Scheme Share based on ntl's closing
price and the US$/GBP exchange rate at 3 April 2006; or
(3) the Share and Cash Offer by ntl and the Cash Offeror of
0.18596 ntl Shares and 67 pence in cash per Scheme Share held,
valued at 311 pence per Scheme Share based on ntl's closing
price and the US$/GBP exchange rate at 3 April 2006 plus 67
pence in cash.
-- The above terms have been restated from those set out in ntl's
announcement of a potential offer for Virgin Mobile on 16
January 2006 as a result of the subsequent closing of the
merger of ntl and Telewest and the consequent change in the
identity of the ultimate parent company of the ntl Group. This
has required the number of ntl shares to be offered for each
Virgin Mobile Share under the Share Offer and the Share and
Cash Offer to be adjusted as set out in this announcement.
-- The Cash Offer values the existing issued share capital of
Virgin Mobile at approximately GBP 962.4 million.
-- The Cash Offer represents a premium of 19.6 per cent. to the
Virgin Mobile Share price on 2 December 2005, the last
business day prior to the commencement of the offer period;
premia of 18.9 per cent., 26.2 per cent. and 47.9 per cent. to
the average Virgin Mobile Share price over the one, three and
twelve month periods prior to 5 December 2005, respectively;
and a 86.0 per cent. premium to Virgin Mobile's IPO offer
price on 21 July 2004 when it was listed on the London Stock
Exchange.
-- ntl has entered into a 30-year exclusive brand licence with
Virgin Enterprises Limited for the use of the Virgin brand for
ntl's consumer business.
-- Closely following the merger of ntl and Telewest to create the
UK's leading triple-play cable provider, ntl's combination
with Virgin Mobile and the proposed re-branding of its
combined consumer businesses with the Virgin brand represents
an important milestone in ntl's history.
-- ntl believes that the combination with Virgin Mobile and the
re-branding of its combined consumer operations with the
Virgin brand will deliver wide-ranging strategic and financial
benefits to shareholders. In particular, ntl believes that the
transactions will:
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-- help transform it from the UK's leading triple-play cable
provider into a national entertainment and communications
company, harnessing the powerful Virgin consumer champion
brand;
-- enhance ntl as a scale competitor in the UK, enabling ntl
to compete more effectively with the large incumbents in
the UK telecommunications market. In addition, the
extension of ntl's product suite to include mobility will,
ntl believes, provide a strong platform for innovation and
development of converged products, such as converged fixed
and mobile telephony devices, and video and voice
services;
-- appeal to existing and new consumers by offering a wide
range of high quality communications services from a
single provider, with the unique flavour and customer
focus of the Virgin brand;
-- allow it to extend its expertise in bundling and
cross-selling communications products to mobile telephony;
and
-- provide potential for revenue synergies by:
-- increasing penetration and reducing customer churn by
providing an appealing product suite under the Virgin
brand; and
-- increasing average revenue per user through the
effective cross-selling of mobile services into
customer homes serviced by ntl, and triple-play
services to Virgin Mobile subscribers.
*T
-- ntl believes that the Offer will not materially affect its
current leverage. Other potential benefits anticipated include
savings on some of the re-branding costs it may have incurred
had it re-branded under a newly created brand, and the use of
certain existing capital allowances to offset Virgin Mobile
taxable income.
-- Virgin Mobile will retain its existing brand and will continue
to be based in the UK.
-- Virgin Mobile's operating business will continue to be led by
members of Virgin Mobile's current management team, and it is
intended that a marketing director from Virgin will join ntl,
bringing Virgin's brand expertise to the ntl management team.
-- The Independent Board, who have been so advised by Morgan
Stanley & Co. Limited, consider the terms of the Cash Offer,
the Share Offer and the Share and Cash Offer to be fair and
reasonable. In providing advice to the Independent Board,
Morgan Stanley & Co. Limited has taken into account the
commercial assessments of the Independent Board.
-- The Independent Board has indicated to ntl that it intends
unanimously to recommend that Virgin Mobile Shareholders vote
in favour of the Scheme at the appropriate meetings, as the
Independent Directors have undertaken to do in respect of all
their own beneficial holdings of 1,338,534 Virgin Mobile
Shares, representing as at the date of this announcement, in
aggregate, approximately 0.52 per cent. of the existing issued
share capital of Virgin Mobile.
-- Virgin Mobile Shareholders considering making an election for
the Share Offer or for the Share and Cash Offer are referred
to the investment considerations which will be set out in the
Scheme Document. The decision as to whether Virgin Mobile
Shareholders make an election for the Share Offer or for the
Share and Cash Offer will depend on their individual
circumstances. If Virgin Mobile Shareholders are in any doubt
as to the action they should take, they should seek their own
financial advice from an independent financial adviser.
-- ntl and the Cash Offeror have received irrevocable
undertakings to vote in favour of a scheme of arrangement to
implement the Offer from Virgin Mobile Shareholders
representing approximately 72.0 per cent. of the existing
issued share capital of Virgin Mobile. The Virgin Group which,
taken together, holds approximately 71.2 per cent. of the
existing issued share capital of Virgin Mobile, has
undertaken, irrespective of whether any higher competing bid
is made, to vote in favour of a scheme of arrangement to
implement the Offer and to elect in full for the Cash and
Share Offer.
Commenting on the Offer, James Mooney, Executive Chairman of ntl,
said:
"We are delighted to announce the recommended Offer and the brand
licensing with Virgin today, which not only delivers mobile capability
to our product bundle but also gives us access to a leading consumer
brand. It truly is a step-change transaction not only for ntl but for
the media sector as an whole in the UK.
Central to today's announcement is our strong belief that offering
a quad-play underpins true media convergence, and offering high
quality communications services will, we believe, appeal to existing
subscribers of the enlarged business as well as new customers. There
is a natural appeal for mobile, telephony, broadband and television
content and ntl is now truly unique in its mass market product
offering."
Commenting on the Offer, Charles Gurassa, Chairman of Virgin
Mobile, said:
"After careful consideration, the Independent Directors of Virgin
Mobile intend to recommend ntl's Offer to shareholders. This Offer
reflects the strong operational and financial performance of Virgin
Mobile and represents an excellent opportunity for Virgin Mobile
shareholders to realise the significant increase in shareholder value
since flotation. We believe this Offer is in the best interests of
Virgin Mobile's shareholders, customers and employees."
A conference call and webcast for analysts and investors regarding
the Offer will be held today at 2 p.m. UK time/ 9 a.m. Eastern
Standard Time (UK: +44 20 7365 8426, US: +1 617 597 5341, participant
code: ntl). The presentation can also be accessed live via webcast on
ntl's website, www.ntl.com/investors. The teleconference replay will
be available for one week beginning approximately two hours after the
end of the call and will be available until Tuesday, 11 April 2006.
The dial-in replay number for the US is: +1 617 801 6888 and the
international dial-in replay number is: +44 (0) 207 365 8427,
participant code: 98450630.
A press conference will be held today at 12 p.m. UK time at the
offices of Buchanan Communications, 45 Moorfields, EC2Y 9AE.
This summary should be read in conjunction with the full text of
the attached announcement. The Offer will be subject to the conditions
set out in Appendix I to this announcement and the full conditions and
further terms which will be set out in the Scheme Document expected to
be issued in due course.
Appendix II contains the sources and bases of information used in
this announcement.
Appendix III contains further details on the Implementation
Agreement.
Appendix IV contains the definitions of certain expressions used
in this announcement.
Goldman Sachs International, which is authorised and regulated in
the United Kingdom by the Financial Services Authority, is acting
exclusively for ntl and the Cash Offeror and no one else in connection
with the Offer and will not be responsible to anyone other than ntl
and the Cash Offeror for providing the protections afforded to its
customers or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
Morgan Stanley & Co. Limited is acting exclusively for Virgin
Mobile and no one else in connection with the Offer and will not be
responsible to anyone other than Virgin Mobile for providing the
protections afforded to its clients or for providing advice in
relation to the Offer or any matter or arrangement referred to herein.
Investec Bank (UK) Limited is acting exclusively for Virgin Mobile
and no one else in connection with the Offer and will not be
responsible to anyone other than Virgin Mobile for providing the
protections afforded to its clients or for providing advice in
relation to the Offer or any matter or arrangement referred to herein.
JP Morgan Cazenove is acting exclusively for Virgin Mobile and no
one else in connection with the Offer and will not be responsible to
anyone other than Virgin Mobile for providing the protections afforded
to its clients or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
Further Information on the Offer
The availability of the Offer to Virgin Mobile Shareholders who
are not resident in the United Kingdom and the United States may be
affected by the laws of relevant jurisdictions. Virgin Mobile
Shareholders who are not resident in the United Kingdom or the United
States will need to inform themselves about and observe any applicable
requirements.
Any securities that are offered pursuant to the Offer described in
this announcement have not been and will not be registered under the
applicable securities laws of Australia, Canada or Japan. Accordingly,
any such securities may not be offered, sold or delivered, directly or
indirectly, in or into Australia, Canada or Japan except pursuant to
exemptions from applicable requirements of such jurisdictions.
The Offer will be subject to the applicable rules and regulations
of the UKLA, the London Stock Exchange and the City Code. In addition,
the Offer will be subject to the applicable requirements of the United
States federal and state securities laws and the applicable rules and
regulations of NASDAQ (except to the extent exempt from such
requirements).
Virgin Mobile Shareholders should read any prospectus that may be
filed by ntl with the SEC, because any such prospectus will contain
important information. Investors may obtain a free copy of any
prospectus, if and when it becomes available, and other documents
filed by ntl with the SEC, at the SEC's website at http://www.sec.gov.
Free copies of any prospectus, if and when it becomes available, may
be obtained by directing a request to ntl Incorporated, 9098 Third
Avenue, Suite 2863, New York, New York 10022, Attention: Investor
Relations. If the Offer proceeds by way of scheme of arrangement,
however, it is anticipated that no prospectus would be required
because the transaction would be exempt from registration under the US
Securities Act of 1933, as amended, pursuant to section 3(a)(10)
thereof, in which case this fact will be disclosed in the scheme
document sent to all Virgin Mobile Shareholders.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, or the solicitation of any
vote or approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of such jurisdiction.
City Code
Under the provisions of Rule 8.3 of the City Code, if any person
is, or becomes, "interested" (directly or indirectly) in 1 per cent.
or more of any class of "relevant securities" of ntl, the Cash Offeror
or of Virgin Mobile, all "dealings" in any "relevant securities" of
that company (including by means of an option in respect of, or a
derivative referenced to, any such "relevant securities") must be
publicly disclosed by no later than 3.30 p.m. (London time) on the
Business Day following the date of the relevant transaction. This
requirement will continue until the date on which the Offer becomes,
or is declared, unconditional as to acceptances, lapses or is
otherwise withdrawn or on which the "offer period" otherwise ends. If
two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest" in
"relevant securities" of ntl, the Cash Offeror or Virgin Mobile, they
will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in
"relevant securities" of ntl, the Cash Offeror or of Virgin Mobile by
ntl, the Cash Offeror or Virgin Mobile, or by any of their respective
"associates", must be disclosed by no later than 12.00 noon (London
time) on the Business Day following the date of the relevant
transaction. A disclosure table, giving details of the companies in
whose "relevant securities" "dealings" should be disclosed, and the
number of such securities in issue, can be found on the Panel's
website at www.thetakeoverpanel.org.uk. "Interests in securities"
arise, in summary, when a person has long economic exposure, whether
conditional or absolute, to changes in price of securities. In
particular, a person will be treated as having an "interest" by virtue
of the ownership or control of securities, or by virtue of any option
in respect of, or derivative referenced to, securities. Terms in
quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not
you are required to disclose a "dealing" under Rule 8, you should
consult the Panel.
Forward Looking Statements
Certain statements in this document regarding the proposed
transaction between ntl and Virgin Mobile, the expected timetable for
completing the transaction, future financial and operating results,
benefits and synergies of the transaction, future opportunities for
the combined company and products and any other statements regarding
Virgin Mobile's or ntl's future expectations, beliefs, goals or
prospects constitute forward-looking statements as that term is
defined in the U.S. Private Securities Litigation Reform Act of 1995.
When used in this document, the words "believe", "anticipate",
"should", "intend", "plan", "will", "expects", "estimates",
"projects", "positioned", "strategy", and similar expressions or
statements that are not historical facts, in each case as they relate
to ntl and Virgin Mobile, the management of either such company or the
proposed transaction, are intended to identify those expressions or
statements as forward-looking statements. In addition to the risks and
uncertainties noted in this document, there are certain factors, risks
and uncertainties that could cause actual results to differ materially
from those anticipated by some of the statements made, many of which
are beyond the control of ntl and Virgin Mobile. These include: (1)
the failure to obtain and retain expected synergies from the
integration of legacy ntl and legacy Telewest Global and the proposed
transaction, (2) rates of success in executing, managing and
integrating key acquisitions, including the integration of legacy ntl
and legacy Telewest Global and the proposed acquisition, (3) the
ability to achieve business plans for the combined company, (4) the
ability to manage and maintain key customer relationships, (5) delays
in obtaining, or adverse conditions contained in, any regulatory or
third-party approvals in connection with the proposed acquisition, (6)
availability and cost of capital, (7) the ability to manage
regulatory, tax and legal matters, and to resolve pending matters
within current estimates, (8) other similar factors, and (9) the risk
factors summarized and explained in the 2005 Form 10-K for NTL
Holdings Inc. (fka NTL Incorporated). For additional information
concerning factors that could cause actual results to materially
differ from those projected herein, please refer to ntl's and NTL
Holdings Inc.'s most recent Form 10-K, 10-Q and 8-K reports.
RECOMMENDED OFFERS BY NTL FOR VIRGIN MOBILE
1. Introduction
NTL Incorporated ("ntl") and the Independent Board of Virgin
Mobile Holdings (UK) plc ("Virgin Mobile") are pleased to announce
that each of the pre-conditions set out in the pre-conditional
possible offer announcement made on 16 January 2006 has been satisfied
or waived and that they have reached agreement on the terms of a
recommended cash offer to be made by ntl Investment Holdings Limited
(the "Cash Offeror"), a wholly owned subsidiary of ntl, with a
recommended share alternative offer to be made by ntl, and a
recommended share and cash alternative offer to be made by ntl and the
Cash Offeror, to acquire the entire issued and to be issued share
capital of Virgin Mobile. The Offer will be implemented by way of a
scheme of arrangement under section 425 of the Companies Act 1985, as
amended.
2. Outline Terms and Conditions of the Offer
Under the Offer, which is subject to the conditions referred to in
paragraph 11 and set out in Appendix I to this announcement, and
subject to the further terms and conditions to be set out in the
Scheme Document, Scheme Shareholders will be able to elect to accept
the following alternative offers:
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(a) Under the Cash Offer:
for each Scheme Share held 372p in cash
(b) Under the Share Offer:
for each Scheme Share held 0.23245 ntl Shares
(c) Under the Share and Cash Offer:
for each Scheme Share held 0.18596 ntl Shares plus 67p
in cash
*T
The above terms have been restated from those set out in ntl 's
announcement of a potential offer for Virgin Mobile on 16 January 2006
as a result of the subsequent closing of the merger of ntl and
Telewest and the consequent change in the identity of the ultimate
parent company of the ntl Group. This has required the number of ntl
shares to be offered for each Virgin Mobile Share under the Share
Offer and the Share and Cash Offer to be adjusted as set out in this
announcement.
3. The Cash Offer
The Cash Offer represents a premium of 19.6 per cent. to the
Virgin Mobile Share price on 2 December 2005, the last business day
prior to the commencement of the offer period; premia of 18.9 per
cent., 26.2 per cent. and 47.9 per cent. to the average Virgin Mobile
Share price over the one, three and twelve month periods prior to 5
December 2005, respectively; and a 86.0 per cent. premium to Virgin
Mobile's IPO offer price on 21 July 2004 when it was listed on the
London Stock Exchange.
The Cash Offer values the entire issued share capital of Virgin
Mobile at approximately GBP 962.4 million.
4. The Share Offer
As an alternative offer to the Cash Offer, Scheme Shareholders
(other than certain Overseas Shareholders) may elect to receive ntl
Shares to be offered by ntl, on the basis of 0.23245 ntl Shares for
each Scheme Share held.
ntl Shares are quoted and tradable on the NASDAQ National Market.
Applications will be made for the new ntl Shares to be quoted on the
NASDAQ National Market.
The Share Offer is valued at 389 pence per Scheme Share based on
ntl's closing price and the US$/GBP exchange rate at 3 April 2006.
5. The Share and Cash Offer
As an alternative to both the Cash Offer and the Share Offer, ntl
and the Cash Offeror are also making the Share and Cash Offer, which
will enable Scheme Shareholders (other than certain Overseas
Shareholders) to elect to receive ntl Shares and cash, to be offered
by ntl and the Cash Offeror on the basis of 0.18596 ntl Shares and 67
pence in cash for each Scheme Share held.
ntl Shares are quoted and tradable on the NASDAQ National Market.
Applications will be made for the new ntl Shares to be quoted on the
NASDAQ National Market.
The Share and Cash Offer is valued at 311 pence per Scheme Share
based on ntl's closing price and the US$/GBP exchange rate at 3 April
2006 plus 67 pence in cash.
6. Irrevocable undertakings to accept the Offer
In aggregate, ntl and the Cash Offeror have received irrevocable
undertakings to vote in favour of the Scheme (or accept the Offer, if
it is restructured as a Takeover Offer) from Virgin Mobile
Shareholders representing approximately 72.0 per cent. of the existing
issued capital of Virgin Mobile.
The Virgin Group which, taken together, holds Virgin Mobile Shares
representing approximately 71.2 per cent. of the existing issued
ordinary share capital of Virgin Mobile, has irrevocably undertaken,
irrespective of whether any higher competing bid is made, to vote its
holding in favour of the Scheme or to accept a Takeover Offer (in the
event of the Offer being restructured as a Takeover Offer). In the
event that the Offer is restructured as a Takeover Offer, ntl has
agreed with Virgin that such Takeover Offer will be on identical terms
save always that such Takeover Offer will be conditional on receiving
at least 70 per cent. acceptances. Virgin has elected to accept the
Share and Cash Offer in respect of all its Scheme Shares.
The irrevocable undertakings received from the Independent Board
are in respect of their (and their connected persons') respective
entire holdings of Virgin Mobile Shares, amounting in aggregate to
1,338,534 Virgin Mobile Shares, representing approximately 0.52 per
cent. of Virgin Mobile's existing issued ordinary share capital.
7. Brand Licence
ntl and Virgin Enterprises have also entered into a trade mark
licence agreement (the "Brand Licence"), licensing to ntl the use of
certain Virgin trade marks within the United Kingdom and Ireland. The
Brand Licence is an exclusive licence, covering a number of aspects of
ntl's consumer business, including the provision of communications
services (such as internet, television, and fixed line telephony), the
acquisition and branding of sports, movie and other premium television
content, the acquisition and exploitation of sports media rights, and
the branding and sale of related communications equipment (such as
set-top boxes and cable modems). If ntl acquires Virgin Mobile, the
Brand Licence will also replace the existing brand licensing
arrangements between Virgin Mobile and Virgin. The Brand Licence also
permits ntl to rename its ultimate public holding company with a name
that includes the Virgin name. The Brand Licence is for a 30 year
period, although ntl may terminate it at the end of the tenth year of
that period on one year's notice. The Brand Licence is subject to
early termination by ntl in certain circumstances, including (subject
to the making of certain payments) on a change of control of ntl.
Under the Brand Licence, ntl will pay Virgin Enterprises a royalty of
0.25 per cent. of relevant consumer revenues (which would have been
approximately GBP 9 million based on 2005 revenues (including
Virgin.net and Virgin Mobile)), which royalty is subject to a minimum
annual payment of GBP 8.5 million. ntl expects to commence the
proposed re-branding within 12 months of the Brand Licence becoming
unconditional.
In connection with the Brand Licence, Virgin Enterprises will have
the right to propose a nominee to serve as a director of ntl, and will
also have the right to nominate a senior marketing executive
(reporting to the Chief Executive Officer, Chief Operating Officer, or
senior person in charge of ntl's consumer division) as a ntl employee.
In addition, Sir Richard Branson has also agreed to support ntl's
promotional activities.
The Brand Licence is conditional upon the passing of an ordinary
resolution of the Independent Virgin Mobile Shareholders (which
requires a vote, to be held on a poll, in favour, of more than 50 per
cent. of the votes cast by Independent Virgin Mobile Shareholders) to
approve the Brand Licence. The Independent Board intends unanimously
to recommend that the Independent Virgin Mobile Shareholders vote in
favour of the resolution to approve the Brand Licence.
The terms of the Brand Licence are considered by Morgan Stanley,
Virgin Mobile's financial adviser, to represent an arm's length
commercially negotiated agreement and therefore are considered to be
fair and reasonable. In forming this view, Morgan Stanley has taken
into account the commercial assessments of the Independent Board.
Further details of the Brand Licence will be set out in the Scheme
Document.
8. Background to and reasons for the Offer
Closely following the merger of ntl and Telewest to create the
UK's leading triple-play cable provider, ntl's combination with Virgin
Mobile together with the proposed re-branding of its combined consumer
business with the Virgin brand represents an important milestone in
ntl's history. ntl believes that the combination and re-branding will
deliver wide-ranging strategic and financial benefits to its
shareholders. It enhances ntl as a scale competitor in the UK
telecommunications industry, enabling it to become the first market
participant offering an integrated quad-play product suite, combining
ntl's network, products and triple-play experience together with
Virgin Mobile's national mobile business, creating a national
communications and entertainment company.
Furthermore, the re-branding of ntl's consumer business with the
Virgin brand will bring Virgin's strong brand into more than 5.1
million UK homes and, ntl believes, will provide strong consumer
appeal for a wide range of high quality communications services
available from a single provider under a single consumer champion
brand.
Strengthening of ntl's competitiveness
The competitive landscape in European and UK telecommunications
has recently been undergoing substantial change, with the recent
consolidation of various market participants and the convergence of
telecommunications platforms and technologies. The recent merger of
ntl and Telewest provides ntl with competitive scale and an access
network passing more than half of UK homes, plus a strong platform on
which to base brand and product extension. ntl believes that the
mobile product of Virgin Mobile and the Virgin brand would enable ntl
to extend its portfolio to compete more effectively with the large
incumbents.
Following the merger between ntl and Telewest, ntl is the largest
provider of consumer broadband, the second largest provider of fixed
telephony, the second largest provider of pay TV and the third largest
provider of multi-channel TV, and, after the acquisition of Virgin
Mobile, would be the fifth largest provider of mobile telephony (in
each case, by number of subscribers).
Furthermore, the extension of ntl's product suite to include
mobility will, ntl believes, provide a strong platform for the
innovation and development of converged products, such as converged
fixed and mobile telephony devices, and video and voice services.
Brand with strong consumer appeal
ntl believes that the Virgin brand would bring it a strong
consumer appeal, positioning and customer focus to a quad-play
offering. It would allow ntl to utilise Virgin's brand expertise and
consumer focus and should help increase customer loyalty and appeal.
The Virgin brand is the most admired brand in the UK (HPI Research
2005) and Virgin is the 27th most respected company in the world (FT
2005) (in each case, as at the time of the relevant surveys).
First quad-play in the UK provides growth prospects
ntl believes that, following a combination with Virgin Mobile, it
will be able to extend its expertise in bundling and cross-selling
communications products to mobile telephony. It would create the UK's
first communications quad-play proposition. ntl's customer base of
over 5.1 million cable homes would be enhanced by Virgin Mobile's more
than 4.3 million active mobile subscribers. In aggregate, the combined
ntl and Virgin Mobile group would have 14.6 million RGUs (based on ntl
and Telewest RGUs and Virgin Mobile active subscribers as reported as
at 31 December 2005). The bundling of four communications products
into one integrated offering to ntl's and Virgin Mobile's customers
should create a strong competitive proposition, enabling ntl to
deliver greater value for money to customers.
Significant value creation opportunities
ntl believes that a combination with Virgin Mobile would create
the potential for revenue synergies by:
-- increasing penetration and reducing customer churn by
providing an appealing product suite under the Virgin brand;
and
-- increasing ARPU through the effective cross-selling of mobile
services into customer homes serviced by ntl, and triple-play
services to Virgin Mobile subscribers.
Financial impact on ntl
As referred to above, ntl expects to generate certain revenue
synergies over the medium-term.
Other potential benefits anticipated include the savings that ntl
believes would be derived from the re-branding of all of ntl's
consumer operations with the Virgin brand. Pursuant to the Brand
Licence, ntl would have the ability to access one of the most powerful
and customer-friendly brands in the UK, without some of the
re-branding costs it may have incurred had it re-branded with a new
brand. ntl also expects to benefit from Virgin Mobile's high street
presence (which includes over 100 "stores within stores" in Virgin
Megastores and WH Smith stores, through which it intends to sell other
ntl products).
In addition, ntl plans to consolidate Virgin Mobile into its group
for UK corporation tax purposes, enabling it to use certain existing
capital allowances to offset Virgin Mobile taxable income.
Combination with Virgin Mobile
The ongoing process of integrating ntl's legacy business with the
business of Telewest was designed to enable ntl also to absorb Virgin
Mobile, were it be to acquired. In the immediate future, ntl does not
intend fully to integrate Virgin Mobile into ntl's operations. ntl
management's priority would continue to be the integration of ntl's
legacy cable businesses operations with those of Telewest, and the
exploitation of the benefits of the merger of ntl and Telewest. It is
intended that Virgin Mobile management would report to the Chief
Operating Officer of ntl.
T-Mobile
T-Mobile, Virgin Mobile's network provider, has indicated that it
is supportive of the Offer.
9. Background and reasons for the Recommendation of the Offer
Virgin Mobile listed on the London Stock Exchange on 21 July 2004,
four and a half years after launching its customer offer. At the time
of the IPO, Virgin Mobile laid out its plan to grow the business.
Since listing, Virgin Mobile has delivered against this strategy,
producing sector leading revenue growth by: leveraging the Virgin
Mobile brand; maintaining a differentiated approach to market through
innovation; and having the most satisfied customers in the sector.
Virgin Mobile's robust operational and financial results have been
reflected in the strong share price performance since IPO.
On 5 December 2005 the Virgin Mobile Board confirmed that it had
received an approach from ntl regarding a possible offer for Virgin
Mobile. The Virgin Group representative on the Virgin Mobile Board
absented himself from the Virgin Mobile Board, and further
deliberations continued among the Independent Board members. After
careful consideration, the Independent Board determined that ntl's
potential cash offer of 323p materially undervalued Virgin Mobile and
unanimously rejected this proposal.
In early January 2006 ntl re-approached the Independent Board.
After detailed negotiations, the terms of a revised potential offer
were finalised. In a joint announcement on 16 January 2006, Virgin
Mobile and ntl notified the market of discussions in respect of a
potential cash offer of 372p, with share alternative offers. These
discussions have resulted in a firm intention to make the Offer now
being announced.
The Independent Board believes that the revised Offer from ntl
fairly reflects the value of Virgin Mobile and the future potential of
the business, and accordingly the Independent Board intends
unanimously to recommend this Offer.
10. Financing the Offer
The transaction will be financed by a combination of cash and ntl
Shares. If all Independent Virgin Mobile Shareholders accept the Cash
Offer, ntl will require approximately GBP 290.5 million to satisfy
acceptances of the Cash Offer (assuming that all holders of options
under the Virgin Mobile Share Option Schemes receive cash
consideration), and approximately GBP 123.4 million to satisfy full
acceptance of the cash element of the Share and Cash Offer by Virgin
Group in respect of its approximately 71.2 per cent. shareholding of
the current issued share capital of Virgin Mobile. This would result
in a total cash consideration of approximately GBP 414.0 million. To
satisfy acceptance of the share element of the Share and Cash Offer by
Virgin, ntl will also issue approximately 34.3 million ntl Shares to
the Virgin Group. As a result, on a successful completion of the
Offer, Virgin Group will own approximately 10.1 to 10.6 per cent. of
then current issued share capital of ntl, depending on the elections
made by Independent Virgin Mobile Shareholders.
ntl will also refinance the existing Virgin Mobile indebtedness,
which was approximately GBP 192.7 million as at 30 September 2005.
ntl believes that the Offer will not materially affect its current
leverage. The cash consideration will be financed by a combination of
existing cash and incremental GBP 475 million financing commitments
from the existing ntl banking syndicate (comprised of an additional
GBP 175 million of borrowings under the 5-year amortizing term loan
facility entered into in connection with the acquisition of Telewest,
and a GBP 300 million 6 1/2-year bullet repayment facility).
Following completion on 3 March 2006 of the merger of ntl and
Telewest, on 3 March 2006 Standard & Poors confirmed its previously
stated credit rating for ntl, being a B+ corporate credit rating with
positive outlook. Standard & Poors also stated on that date that this
confirmation also encompasses its assessment of the anticipated
acquisition of Virgin Mobile by ntl, which it considered to be neutral
for the combined company's credit profile in the short term.
On 27 March 2006 Moody's upgraded ntl's corporate family rating
from B1 to Ba3 with stable outlook. Moody's stated that, whilst it
expected the integration of ntl and Telewest to pose significant
organisational challenges, it recognised the potential benefits that
could result from an acquisition of Virgin Mobile, in terms of
increased customer reach and increased product offering, as well as
the use of the Virgin brand.
11. Structure of the Proposals
Introduction
The Scheme involves applications by Virgin Mobile to the Court to
sanction the Scheme and then to confirm the cancellation of the Scheme
Shares, in consideration for which Scheme Shareholders on the register
of members at the Scheme Record Time will receive cash, ntl Shares or
ntl Shares and cash, depending on their elections on the basis set out
in paragraphs 2 to 5 above. The cancellation and the subsequent issue
of new Virgin Mobile shares to members of the ntl Group provided for
in the Scheme will result in Virgin Mobile becoming a wholly-owned
subsidiary company in the ntl Group.
The Meetings
Before the Court's approval can be sought, the Scheme of
Arrangement will require approval by Scheme Shareholders at a Court
Meeting and the passing of a special resolution by Virgin Mobile
Shareholders to implement the Scheme at an Extraordinary General
Meeting. In addition, the Scheme is conditional upon the approval of
the Brand Licence by a majority of the Independent Virgin Mobile
Shareholders who vote for the purposes Rule 16 of the City Code.
The Court Meeting will be held at the direction of the Court to
seek the approval of the Scheme Shareholders to the Scheme. The
approval required at the Court Meeting is a majority in number of the
Scheme Shareholders who vote, representing three fourths or more in
value of the votes cast, either in person or by proxy, at the Court
Meeting.
In addition, an Extraordinary General Meeting will be held for the
purpose of considering and, if thought fit, passing a special
resolution (which requires a vote in favour of not less than 75 per
cent. of the votes cast) to approve:
(i) the Scheme;
(ii) the reduction of capital and the issue of new Virgin Mobile
Shares to members of the ntl Group provided for in the Scheme;
and
(iii) amendments to the articles of association of Virgin Mobile
(such changes to be conditional on the Scheme becoming
effective) in accordance with the Scheme and as described
below.
The Extraordinary General Meeting will also consider, and if
thought fit, pass an ordinary resolution of the Independent Virgin
Mobile Shareholders (which requires a vote, to be held on a poll, in
favour, of more than 50 per cent. of the votes cast by Independent
Virgin Mobile Shareholders) to approve the Brand Licence.
Conditions to the Offer
The Conditions to the Offer are set out in Appendix I to this
document. As currently structured, the Offer is conditional, inter
alia, upon:
-- the Scheme becoming effective by not later than 15 August 2006
or such later date as Virgin Mobile, ntl and the Cash Offeror
may agree in writing (and, if appropriate, the Court may
approve) failing which the Scheme will lapse;
-- the approval by a majority in number representing three
fourths or more in value of the holders of Scheme Shares,
present and voting, either in person or by proxy, at the Court
Meeting;
-- the passing of the special (and any other) resolution required
to implement the Scheme as set out in the notice of
Extraordinary General Meeting at the Extraordinary General
Meeting;
-- the passing of the ordinary resolution by the Independent
Virgin Mobile Shareholders to approve the Brand Licence.
Approval of the Brand Licence is required by the Panel and the
resolution will be passed if a simple majority of the
Independent Virgin Mobile Shareholders voting, in person or by
proxy, on a poll, vote in favour of it;
-- the sanction of the Scheme (without modification or with
modification(s) agreed by Virgin Mobile and ntl) and the
subsequent confirmation of the reduction of capital involved
therein, in each case, by the Court and an office copy of the
Court order and the minute of such reduction attached thereto
being delivered for registration to the Registrar of Companies
of England and Wales and, in relation to the reduction of
capital, being registered by him; and
-- the Conditions which are not otherwise identified above being
satisfied or waived.
Once the necessary approvals from Virgin Mobile Shareholders have
been obtained and the other Conditions have been satisfied or (where
applicable) waived, the Scheme and associated reduction of capital
will become effective following sanction by the Court upon delivery to
and, in the case of the associated reduction of capital, registration
of the Court Order by the Registrar of Companies in England and Wales.
Once effective, the Scheme will be binding on all Scheme
Shareholders, including those who did not vote, or who voted against
it, at the Meetings or who could not be traced.
It is also proposed that, following the Effective Date, Virgin
Mobile's listing on the Official List will be cancelled and Virgin
Mobile will be re-registered as a private company under the relevant
provisions of the Companies Act.
12. Anticipated timetable
Virgin Mobile anticipates that it will post the Scheme Document
within the next 28 days; that the Court Meeting and Extraordinary
General Meeting will take place during May 2006; and that, subject to
the Scheme becoming unconditional and effective, the Effective Date
will occur in late June 2006.
13. Management and employees
ntl confirms that it intends to safeguard the existing contractual
and statutory employment rights, including pension rights, of the
existing employees of the Virgin Mobile Group.
14. Virgin Mobile Share Option Schemes
At the same time as, or as soon as practicable following, the
publication of the Scheme Document, explanatory letters will be sent
to the participants in the Virgin Mobile Share Option Schemes
explaining the effect of the Scheme on them and, where applicable,
their right to exercise share options or to receive shares under
awards.
It is proposed to amend the articles of association of Virgin
Mobile at the Extraordinary General Meeting to provide that, if the
Scheme becomes effective, any Virgin Mobile Share issued after the
Hearing Date will automatically (and immediately following issue) be
transferred to a member of the ntl Group in exchange for the Offer
Price in cash on the same basis as under the Scheme. Consequently,
participants in the Virgin Mobile Share Option Schemes who exercise
any options or receive shares under awards after the Scheme becomes
effective will receive cash consideration in the same manner as Scheme
Shareholders who elect for the Cash Offer under the Scheme.
Further details of these proposals will be set out in the letters
to the participants in the Virgin Mobile Share Option Schemes.
15. Information on ntl
ntl is the UK's second largest communications company and leading
triple play service provider with a cable footprint covering more than
50 per cent. of UK households. Following its merger with Telewest, ntl
has more than 5.1 million residential customers and is the largest
provider of residential broadband services in the UK with 2.8 million
subscribers, the second largest pay TV provider (and the third largest
provider of multi-channel TV) with 3.3 million subscribers and also
the second largest fixed telephony provider with 4.3 million
subscribers.
ntl's services are delivered through its wholly-owned local access
communications network passing approximately 12.4 million homes in the
UK. The design and capability of its network provides ntl with the
ability to offer triple-play bundled services and a broad portfolio of
reliable, competitive communications solutions to business customers.
ntl provides services to two categories of customers (residential
customers and business customers) as follows:
-- Consumer: internet, telephone and cable television services to
residential customers in the UK; and
-- Business: internet, data and voice services to large
businesses, public sector organisations and small and
medium-sized enterprises, or SMEs, communications transport
services, and wholesale internet access solutions to internet
service providers, or ISPs.
ntl's combined legacy ntl and Telewest local access networks,
which do not overlap, provide a strong platform allowing for product
differentiation and innovation and the delivery of unique packages of
service offerings. ntl now has the benefit of a much larger cable
network (following its merger with Telewest) and, together with
Telewest's content division, a strong position in the multi-channel TV
marketplace.
16. Information on Virgin Mobile
Virgin Mobile is the UK's largest mobile virtual network operator
("MVNO") with more than 4.3 million customers. Virgin Mobile launched
its operations in November 1999 and provides a broad range of mobile
communications services to its customers.
At launch, Virgin Mobile's addressable market encompassed all of
the pre-pay market and in May 2005 it expanded to include the consumer
contract market with the launch of Virgin Mobile Pay Monthly. In a
short space of time, Virgin Mobile has built up a distribution network
of over 16,000 outlets connecting customers and over 100,000 outlets
selling airtime. It utilises the value of the Virgin brand by putting
dedicated Virgin Mobile "stores within stores" inside over 100 Virgin
Megastores and WH Smith stores nationally.
Virgin Mobile's successful business philosophy is centred around
five key strengths: a strong brand; a low capital investment business
model; a differentiated approach to the market; an award-winning
customer service; and a strong management team.
Virgin Mobile benefits from the strength of the Virgin brand that
has assisted the growth and level of Virgin Mobile's brand recognition
within the UK. The Virgin Mobile brand is reflected in the company's
entrepreneurial culture, customer proposition and differentiated
approach to the market. Virgin Mobile believes it has good value
tariffs which are easy to understand and a wide range of the latest
handsets, and that it rewards customer loyalty.
As an MVNO, Virgin Mobile has modest capital investment
requirements when compared to its peers, which results in exceptional
returns on capital. Capital investments are primarily made to support
growth, operational efficiencies and the customer proposition. Virgin
Mobile currently operates under its non-exclusive, minimum ten year
term Telecommunications Supply Agreement with T-Mobile, signed in
January 2004, and has recently entered into an agreement with BT
Movio, a division of BT plc, to offer mobile TV to customers using the
UK's Digital One DAB broadcast network.
Virgin Mobile differentiates its approach to the market by
challenging market convention, being customer focused and offering a
simple and compelling customer proposition. Its products and brand are
backed up by the best customer service in the industry. It has won
numerous awards for its dedication to customer care, is consistently
highly rated in customer satisfaction surveys and has rates of
customer churn below the industry average.
Since launch in 1999, Virgin Mobile has been led by strong
management, consisting of highly experienced individuals with proven
track record. This team was instrumental in developing and
implementing a customer-oriented business, which has delivered rapid
growth and strong financial results.
Virgin Mobile's interim unaudited results for the period to 30
September 2005 (prepared in accordance with IFRS) were announced on 17
November 2005. These showed a turnover for the period of GBP 274.6
million (2004: GBP 256.7 million), service revenues of GBP 250.8
million (2004: GBP 230.7 million), operating profit of GBP 45.5
million (2004: GBP 35.7 million), EBITDA (excluding one-off items) of
GBP 54.0 million (2004: GBP 55.6 million), and basic EPS of 10.8 pence
(2004: 7.8 pence). Net debt as at 30 September 2005 was GBP 192.7
million (2004: GBP 264.1 million). Under Virgin Mobile's current
accounting policies, subscriber acquisition costs ("SACs") for
contract customers are recognized over the length of the contract. If
contract SACs had been expensed in full upon connection, ntl estimates
that operating profit and EBITDA for the period to 30 September 2005
would have been reduced by approximately GBP 16 million.
For the 12 month period to 30 September 2005, Virgin Mobile's
turnover was GBP 539 million, EBITDA excluding one-off items (a Virgin
Mobile non-GAAP financial measure derived from financial statements
prepared in IFRS) was GBP 99 million, and purchase of fixed assets GBP
11 million (in each case, for the last twelve months to 30 September
2005, calculated by subtracting the reported results for the six
months to 30 September 2004 from the reported results for the year to
31 March 2005 and adding the reported results for the six months to 30
September 2005).
Virgin Mobile's key performance indicators for the three months to
31 December 2005 were announced on 1 February 2006. These showed Q3
service revenues up 20.3% year on year (H1 FY06: 8.7%, excluding Ofcom
termination rate cut - H1FY06: 17.9%), total active customers
increased 12% to 4,346,000 (Q3 FY 05: 3,879,000), rising 12 month
rolling ARPU of GBP 123 (H1 FY06: GBP 121) and strong customer growth
with 193,000 net active additions (Q3 FY05: 276,000).
17. Interests in Virgin Mobile Shares
Save for the irrevocable undertakings referred to in paragraph 6
above, neither the Cash Offeror nor ntl nor any of their directors
nor, so far as the directors of the Cash Offeror or ntl are aware, any
person acting in concert with the Cash Offeror or ntl for the purposes
of the Offer, owns or controls or holds any option to purchase, or has
any arrangement in relation to Virgin Mobile Shares or securities
convertible or exchangeable into Virgin Mobile Shares or options
(including traded options) in respect of, or has entered into any
derivative referenced to, any such shares. For these purposes,
"arrangement" includes any indemnity or option arrangement, any
agreement or understanding, formal or informal, of whatever nature,
relating to Virgin Mobile Shares which may be an inducement to deal or
refrain from dealing in such shares.
18. Inducement fee
In the Implementation Agreement, Virgin Mobile has agreed with the
Cash Offeror and ntl that it will not enter into any inducement fee
arrangements with any person in connection with an approach to Virgin
Mobile or a proposal or offer to acquire shares in the capital of
Virgin Mobile. No inducement fee arrangement has been agreed with the
Cash Offeror or ntl.
19. Implementation Agreement
ntl, the Cash Offeror, and Virgin Mobile have entered into an
implementation agreement regarding the implementation of the Scheme
(or, if applicable, a Takeover Offer) and the conduct of the business
of Virgin Mobile in the period up to the Effective Date (or, if
applicable, the date on which the Offer becomes or is declared
unconditional in all respects).
ntl can terminate the Implementation Agreement if Virgin Mobile
breaches certain covenants contained in the Implementation Agreement.
Further details of the Implementation Agreement are set out in
Appendix III.
20. Investment Agreement
In connection with the possible issue of ntl Shares to members of
the Virgin Group pursuant to the Offer, a member of the Virgin Group
and Sir Richard Branson have entered into an investment agreement
dated 3 April 2006, that will become effective on the Effective Date.
The Investment Agreement places restrictions on the extent to
which the relevant Virgin Group holders of ntl Shares will be able to
dispose of those ntl Shares during an 18 month period from the
Effective Date, with those restrictions relaxing on the following
basis during that period (cumulatively, but including any prior sales
by them of ntl Shares):
(i) 12.5 per cent. of their initial holding after three months;
(ii) 25 per cent. of their initial holding after six months;
(iii) 37.5 per cent. of their initial holding after nine months;
(iv) 50 per cent. of their initial holding after twelve months;
(v) 75 per cent. of their initial holding after fifteen months;
(vi) 100 per cent. of their initial holding after eighteen months
(i.e. at this point their ntl Shares become freely
transferable).
In addition, it places certain restrictions on the conduct of
those holders, and Sir Richard Branson, such that those holders:
(i) would not be permitted to acquire more than 15 per cent., in
aggregate, of ntl's Shares (subject to certain exceptions and
ntl's shareholder rights plan);
(ii) would not be permitted to sell any ntl Shares to any person
or persons who would own, in aggregate, 1 per cent. of ntl's
entire issued share capital following any such sale or sales;
(iii) agree that they would exercise their voting rights pro rata
with the votes of other holders of ntl Shares, or in support
of any actions recommended by the board of directors of ntl in
respect of: any amendment of ntl's articles or bylaws; any
proposal that could facilitate a change of control of ntl; or
on any election of a director of ntl. Notwithstanding that,
those holders retain the right to vote against a business
combination transaction recommended by the board of ntl, and
to refuse to accept a recommended offer for their ntl Shares;
and
(iv) are restricted from: offering, proposing or seeking to enter
into business combination transactions; participating in the
solicitation of proxies; proposing shareholder proposals;
publicly opposing recommendations by the board of directors of
ntl; and engaging in related discussions with third parties,
making related public announcements, or assisting other
persons to do the same,
which restrictions all expire after ntl's 2008 annual
stockholders' meeting has taken place.
Furthermore, it contains registration rights under the US
Securities Exchange Act of 1933, as amended, in favour of the above
persons in respect of their holdings of ntl Shares.
The Investment Agreement is subject to early termination by ntl in
certain circumstances, including (subject to the making of certain
payments) on a change of control of ntl.
Further details of the Investment Agreement will be set out in the
Scheme Document.
21. Overseas Shareholders
The availability of the Offer to persons not resident in the
United Kingdom and the United States may be prohibited or affected by
the laws of the relevant jurisdictions. Such persons should inform
themselves about, and observe, any applicable requirements.
22. Recommendation
The Independent Board, who have been so advised by Morgan Stanley,
consider the terms of the Cash Offer, the Share Offer, and the Share
and Cash Offer, to be fair and reasonable. In providing advice to the
Independent Board, Morgan Stanley has taken into account the
commercial assessments of the Independent Board.
The Independent Board has indicated to ntl that it intends
unanimously to recommend that the Virgin Mobile Shareholders vote in
favour of the Scheme at the appropriate meetings, as the Independent
Directors have undertaken to do in respect of all their own beneficial
holdings of 1,338,534 Virgin Mobile Shares, representing as at the
date of this announcement, in aggregate, approximately 0.52 per cent
of the existing issued share capital of Virgin Mobile.
Virgin Mobile Shareholders considering making an election for the
Share Offer or for the Share and Cash Offer are referred to the
investment considerations which will be set out in the Scheme
Document. The decision as to whether Virgin Mobile Shareholders make
an election for the Share Offer or for the Share and Cash Offer will
depend on their individual circumstances. If Virgin Mobile
Shareholders are in any doubt as to the action they should take, they
should seek their own financial advice from an independent financial
adviser.
The Independent Board considers that the terms of the Brand
Licence represent an arm's length commercially negotiated agreement
and therefore are fair and reasonable.
Accordingly, the Independent Board has indicated to ntl that it
intends unanimously to recommend that the Independent Virgin
Shareholders vote in favour of the resolution to approve the Brand
Licence as they intend to do in respect of their own Virgin Mobile
Shares.
23. General
The acquisition of Virgin Mobile may be made by one or more new
companies in addition to ntl, or in substitution for the Cash Offeror
at ntl's sole discretion. Details of any such companies will be
included in the Scheme Document. References to the Cash Offeror in
this announcement should be construed accordingly.
The Scheme Document, forms of election to allow Virgin Mobile
Shareholders to elect to receive either of the Share Offer or the
Share and Cash Offer and proxy forms for the Meetings, will be sent to
Virgin Mobile Shareholders in due course. If Scheme Shareholders do
not elect, or do not validly elect for one of the Share Alternative
Offers, they will be deemed for the purposes of the Scheme to have
elected to receive the Cash Offer.
Fractional entitlements to ntl Shares will not be allotted or
issued pursuant to the Share Offer or the Share and Cash Offer and
will be disregarded.
ntl reserves the right to elect to implement the Offer by making a
Takeover Offer for the entire issued and to be issued share capital of
Virgin Mobile.
Prior to a Takeover Offer being made, the consent of the Panel
will be required and such alterations to the Offer will need to be
made as are necessary for the Takeover Offer to comply with the
provisions of the City Code, including those provisions relating to
the cash confirmation requirements of Rule 24.7.
A conference call and webcast for analysts and investors regarding
the Offer will be held today at 2 p.m. UK time/ 9 a.m. Eastern
Standard Time (UK: +44 20 7365 8426, US: +1 617 597 5341, participant
code: ntl). The presentation can also be accessed live via webcast on
ntl's website, www.ntl.com/investors. The teleconference replay will
be available for one week beginning approximately two hours after the
end of the call and will be available until Tuesday, 11 April 2006.
The dial-in replay number for the US is: +1 617 801 6888 and the
international dial-in replay number is: +44 (0) 207 365 8427,
participant code: 98450630.
A press conference will be held today at 12 p.m. UK time at the
offices of Buchanan Communications, 45 Moorfields, EC2Y 9AE.
This summary should be read in conjunction with the full text of
the attached announcement. The Offer will be subject to the conditions
set out in Appendix I to this announcement and the full conditions and
further terms which will be set out in the Scheme Document expected to
be issued shortly.
Appendix II contains the sources and bases of information used in
this announcement.
Appendix III contains further details on the Implementation
Agreement.
Appendix IV contains the definitions of certain expressions used
in this announcement.
Goldman Sachs International, which is authorised and regulated in
the United Kingdom by the Financial Services Authority, is acting
exclusively for ntl and the Cash Offeror and no one else in connection
with the Offer and will not be responsible to anyone other than ntl
and the Cash Offeror for providing the protections afforded to its
customers or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
Morgan Stanley & Co. Limited is acting exclusively for Virgin
Mobile and no one else in connection with the Offer and will not be
responsible to anyone other than Virgin Mobile for providing the
protections afforded to its clients or for providing advice in
relation to the Offer or any matter or arrangement referred to herein.
Investec Bank (UK) Limited is acting exclusively for Virgin Mobile
and no one else in connection with the Offer and will not be
responsible to anyone other than Virgin Mobile for providing the
protections afforded to its clients or for providing advice in
relation to the Offer or any matter or arrangement referred to herein.
JP Morgan Cazenove is acting exclusively for Virgin Mobile and no
one else in connection with the Offer and will not be responsible to
anyone other than Virgin Mobile for providing the protections afforded
to its clients or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
Further Information on the Offer
The availability of the Offer to Virgin Mobile Shareholders who
are not resident in the United Kingdom and the United States may be
affected by the laws of relevant jurisdictions. Virgin Mobile
Shareholders who are not resident in the United Kingdom or the United
States will need to inform themselves about and observe any applicable
requirements.
Any securities that are offered pursuant to the Offer described in
this announcement have not been and will not be registered under the
applicable securities laws of Australia, Canada or Japan. Accordingly,
any such securities may not be offered, sold or delivered, directly or
indirectly, in or into Australia, Canada or Japan except pursuant to
exemptions from applicable requirements of such jurisdictions.
The Offer will be subject to the applicable rules and regulations
of the UKLA, the London Stock Exchange and the City Code. In addition,
the Offer will be subject to the applicable requirements of the United
States federal and state securities laws and the applicable rules and
regulations of NASDAQ (except to the extent exempt from such
requirements).
Virgin Mobile Shareholders should read any prospectus that may be
filed by ntl with the SEC, because any such prospectus will contain
important information. Investors may obtain a free copy of any
prospectus, if and when it becomes available, and other documents
filed by ntl Incorporated with the SEC, at the SEC's website at
http://www.sec.gov. Free copies of any prospectus, if and when it
becomes available, may be obtained by directing a request to ntl
Incorporated, 9098 Third Avenue, Suite 2863, New York, New York 10022,
Attention: Investor Relations. If the offer proceeds by way of scheme
of arrangement, however, it is anticipated that no prospectus would be
required because the transaction would be exempt from registration
under the US Securities Act of 1933, as amended, pursuant to section
3(a)(10) thereof, in which case this fact will be disclosed in the
scheme document sent to all Virgin Mobile Shareholders.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, or the solicitation of any
vote or approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of such jurisdiction.
City Code
Under the provisions of Rule 8.3 of the City Code, if any person
is, or becomes, "interested" (directly or indirectly) in 1 per cent.
or more of any class of "relevant securities" of ntl, the Cash Offeror
or of Virgin Mobile, all "dealings" in any "relevant securities" of
that company (including by means of an option in respect of, or a
derivative referenced to, any such "relevant securities") must be
publicly disclosed by no later than 3.30 p.m. (London time) on the
Business Day following the date of the relevant transaction. This
requirement will continue until the date on which the offer becomes,
or is declared, unconditional as to acceptances, lapses or is
otherwise withdrawn or on which the "offer period" otherwise ends. If
two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest" in
"relevant securities" of ntl, the Cash Offeror or Virgin Mobile, they
will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in
"relevant securities" of ntl, the Cash Offeror or of Virgin Mobile by
ntl, the Cash Offeror, or Virgin Mobile, or by any of their respective
"associates", must be disclosed by no later than 12.00 noon (London
time) on the Business Day following the date of the relevant
transaction. A disclosure table, giving details of the companies in
whose "relevant securities" "dealings" should be disclosed, and the
number of such securities in issue, can be found on the Panel's
website at www.thetakeoverpanel.org.uk. "Interests in securities"
arise, in summary, when a person has long economic exposure, whether
conditional or absolute, to changes in price of securities. In
particular, a person will be treated as having an "interest" by virtue
of the ownership or control of securities, or by virtue of any option
in respect of, or derivative referenced to, securities. Terms in
quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not
you are required to disclose a "dealing" under Rule 8, you should
consult the Panel.
Forward Looking Statements
Certain statements in this document regarding the proposed
transaction between ntl Incorporated and Virgin Mobile Holdings UK
plc, the expected timetable for completing the transaction, future
financial and operating results, benefits and synergies of the
transaction, future opportunities for the combined company and
products and any other statements regarding Virgin Mobile 's or ntl's
future expectations, beliefs, goals or prospects constitute
forward-looking statements as that term is defined in the U.S. Private
Securities Litigation Reform Act of 1995. When used in this document,
the words "believe", "anticipate", "should", "intend", "plan", "will",
"expects", "estimates", "projects", "positioned", "strategy", and
similar expressions or statements that are not historical facts, in
each case as they relate to ntl and Virgin Mobile, the management of
either such company or the proposed transaction, are intended to
identify those expressions or statements as forward-looking
statements. In addition to the risks and uncertainties noted in this
document, there are certain factors, risks and uncertainties that
could cause actual results to differ materially from those anticipated
by some of the statements made, many of which are beyond the control
of ntl and Virgin Mobile. These include: (1) the failure to obtain and
retain expected synergies from the integration of legacy ntl and
legacy Telewest Global and the proposed transaction, (2) rates of
success in executing, managing and integrating key acquisitions,
including the integration of legacy ntl and legacy Telewest Global and
the proposed acquisition, (3) the ability to achieve business plans
for the combined company, (4) the ability to manage and maintain key
customer relationships, (5) delays in obtaining, or adverse conditions
contained in, any regulatory or third-party approvals in connection
with the proposed acquisition, (6) availability and cost of capital,
(7) the ability to manage regulatory, tax and legal matters, and to
resolve pending matters within current estimates, (8) other similar
factors, and (9) the risk factors summarized and explained in the 2005
Form 10-K for NTL Holdings Inc. (fka NTL Incorporated). For additional
information concerning factors that could cause actual results to
materially differ from those projected herein, please refer to ntl's
and NTL holdings Inc.'s most recent Form 10-K, 10-Q and 8-K reports.
APPENDIX I
Conditions and Further Terms of the Offer
1. Conditions of the Offer
The Offer will be subject to the conditions set out herein and to
the further terms and conditions set out in the Scheme Document.
1.1 The Offer, if it is implemented by way of the Scheme, will be
conditional upon the Scheme becoming unconditional and
effective, subject to the City Code, by not later than 15
August 2006 or such later date as ntl, the Cash Offeror,
Virgin Mobile and the Court may agree in writing.
The Scheme will be conditional upon:
(a) approval by a majority in number representing three fourths or
more in value of the holders of Scheme Shares, present and
voting, either in person or by proxy, at the Court Meeting;
(b) any resolution required to implement the Scheme, amend Virgin
Mobile's articles of association, and set out in the notice of
Extraordinary General Meeting, being passed at the
Extraordinary General Meeting; and
(c) the sanction of the Scheme (without modification or with
modification(s) agreed by Virgin Mobile and ntl) and the
confirmation of any reduction of capital involved therein by
the Court and an office copy of the Court order and the minute
of such reduction attached thereto being delivered for
registration to the Registrar of Companies of England and
Wales and, in relation to the reduction of capital, being
registered by him.
1.2 The Offer will also be subject to the Office of Fair Trading
indicating in terms satisfactory to the Cash Offeror or ntl
that it does not intend to refer the proposed acquisition of
Virgin Mobile by the ntl Group to the Competition Commission
and, in the event that the Secretary of State serves an
intervention notice under section 42(2) of the Enterprise Act
2002, the Office of Fair Trading indicating in terms
satisfactory to the Cash Offeror or ntl that the Secretary of
State does not intend to refer the proposed acquisition of
Virgin Mobile by the ntl Group to the Competition Commission
and the expiry of a period of four weeks from the date on
which the reasoned decision of the Office of Fair Trading or
the Secretary of State, as the case may be, was published,
provided that the Registry of the Competition Appeal Tribunal
has confirmed that, as at 5.00 pm on the final day of the four
week period, no application under section 120 of the
Enterprise Act 2002 has been made for review of the decision.
1.3 The Offer will also be conditional on approval of the Brand
Licence by a simple majority of the Independent Virgin Mobile
Shareholders voting, in person or by proxy, on a poll.
The Cash Offeror and/or ntl reserves the right to waive condition
1.2 above in whole or part.
If ntl or a member of the ntl Group is required by the Panel to
make an offer for Virgin Mobile Shares under the provisions of Rule 9
of the Code, ntl or the relevant member of the ntl Group may make such
alterations to the conditions as are necessary to comply with the
provisions of that Rule, including (without limitation) an acceptance
condition of 70 per cent. of the Virgin Mobile Shares to which the
Takeover Offer relates.
If ntl or a member of the ntl Group elects to implement the Offer
by making a Takeover Offer for Virgin Mobile instead of or in
substitution for the Scheme, ntl or the relevant member of the ntl
Group may, with the consent of the Panel, make such alterations to the
conditions as are necessary to comply with the provisions of the Code.
The Offer will lapse if the Offer is referred to the Competition
Commission before the Effective Date.
The Offer and the Scheme will be governed by English law. The City
Code applies to the Offer.
2. Certain further terms of the Offer
(a) Virgin Mobile Shares will be acquired by the appropriate
members of the ntl Group fully paid and free from all liens,
equitable interests, charges, encumbrances and other third
party rights of any nature whatsoever and together with all
rights attaching to them, including the right to receive and
retain all dividends and distributions (if any) declared, made
or payable after the date of this announcement.
(b) The Offer will be on the terms and will be subject, inter
alia, to the conditions which are set out in paragraphs 1.1 to
1.3 of Appendix I and those terms which will be set out in the
Scheme Document and such further terms as may be required to
comply with the Listing Rules of the UK Listing Authority, the
obligations under the U.S. federal securities laws and the
regulations thereunder of the SEC and the provisions of the
City Code.
APPENDIX II
Bases of Calculation and Sources of Information
1. The value placed by the Offer on the existing issued share
capital, and other statements made by reference to the existing share
capital, of Virgin Mobile are based on 258,703,010 Virgin Mobile
Shares in issue, being the number of shares in issue publicly stated
by Virgin Mobile on 29 March 2006.
2. With the consent of the Panel, the provisions of Rule 24.2(g)
have been applied as if the current offer period for Virgin Mobile
commenced on 5 December 2005, notwithstanding the fact that the
initial offer period ceased on 8 December 2005 and the current offer
period commenced on 9 December 2005.
3. Unless otherwise stated, the financial information and other
information on Virgin Mobile included in this announcement has been
extracted or derived, without material adjustment, from the audited
consolidated financial statements, for the Virgin Mobile Group for the
years ended 31 March 2004 and 2005, and the interim unaudited
consolidated financial results for the Virgin Mobile Group for the six
months ended 30 September 2004 and 2005.
4. Unless otherwise stated, the financial information and other
information on Telewest, the Cash Offeror and ntl included in this
announcement has been extracted or derived, without material
adjustment, from the audited consolidated financial statements for the
ntl Group and Telewest for the year ended 31 December 2004 and 2005.
5. Unless otherwise stated, all historic share prices quoted for
Virgin Mobile Shares have been sourced from the Daily Official List
and represent closing middle market prices for Virgin Mobile Shares on
the relevant dates.
6. As at the close of business on 3 April 2006, Virgin Mobile had
in issue 258,703,010 ordinary shares of 10 pence each.
7. As at the close of business on 3 April 2006, ntl had in issue
288,115,064 shares of common stock of US$0.01 each.
8. As at the close of business on 3 April 2006, the Cash Offeror
had in issue 121,006 ordinary shares of GBP 0.001 each.
9. The US$/GBP exchange rate used in this announcement is the
Federal Reserve Bank of New York rate as at 12 p.m. New York time on 3
April 2006, being US$1.7389:GBP 1.
10. The ntl Share price used in this announcement is the closing
price as at 3 April 2006, being US$29.12.
APPENDIX III
Implementation Agreement
Under the Implementation Agreement:
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(a) Virgin Mobile, ntl and the Cash Offeror have given each other
certain undertakings regarding implementation of the Scheme
(or, if applicable, a takeover offer);
(b) Virgin Mobile, ntl and the Cash Offeror have agreed to
co-operate with each other towards satisfaction of the
Conditions;
(c) Virgin Mobile has agreed to the following provisions, breach
of which will be regarded as material and thereby giving ntl
the right to terminate the Implementation Agreement:
(i) to carry on the business of Virgin Mobile in the
ordinary course and not undertake any material
commitment or enter into or amend any material
contract otherwise than in the ordinary course;
(ii) not to amend or agree to amend the TSA other than
pursuant to the Amendment Agreement;
(iii) not to solicit an alternative offer for Virgin
Mobile and to promptly inform ntl and the Cash
Offeror of any such approach by a third party; and
(iv) not to take any action which is prejudicial to the
successful outcome of the Scheme; and
(d) Virgin Mobile has agreed that if the Scheme does not become
effective for any reason, including, for example, if the
requisite resolutions to approve the Scheme are not passed or
if the Court fails to sanction the Scheme, it will take or
cause to take all actions necessary to implement the Offer as
a Takeover Offer including providing Virgin Mobile's
recommendation to the implementation of the Offer as a
Takeover Offer pursuant to the note on Rules 35.1 and 35.2 of
the City Code.
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APPENDIX IV
Definitions
The following definitions apply throughout this announcement
unless the context otherwise requires:
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"Amendment Agreement" means the amendment agreement between Virgin
Mobile Telecoms Limited and T-Mobile (UK)
Limited dated on or about the date of this
announcement in respect of the amendment of
certain provisions of the TSA;
"ARPU" means average revenue per user;
"associated undertaking" has the meaning given to it in Section 20 of
Schedule 4A to the Companies Act;
"Australia" means the Commonwealth of Australia, its
territories and possessions;
"Brand Licence" means the trade mark licence agreement in
respect of the Virgin brand executed by
Virgin Enterprises and ntl on 3 April 2006;
"Business Day" means a day (other than Saturday or Sunday)
on which banks are generally open for
business in the City of London;
"Canada" means Canada, its provinces and territories
and all areas subject to its jurisdiction
and any political sub-division of such
territories and areas;
"Cash Offer" means the recommended cash offer at the
Offer Price made to Scheme Shareholders by
the Cash Offeror (or such other member of
the ntl Group who shall be specified);
"City Code" means the City Code on Takeovers and
Mergers;
"Closing Price" means the middle market price of a Virgin
Mobile Share at the close of business on
the day to which such price relates,
derived from the Daily Official List for
that day;
"Companies Act" means the Companies Act 1985 (as amended);
"Conditions" means the conditions of the Offer set out in
Appendix I to this Announcement and any
other conditions which are agreed in
writing by the parties;
"Court" means the High Court of Justice in England
and Wales;
"Court Meeting" means the meeting of the Scheme Shareholders
(and any adjournment thereof) to be
convened by order of the Court pursuant to
section 425 of the Companies Act to
consider and, if thought fit, approve the
Scheme (with or without amendment);
"Court Order" means the order of the Court sanctioning the
Scheme under section 425 of the Companies
Act and confirming the reduction of share
capital which forms part of it under
section 137 of the Companies Act;
"Daily Official List" means the daily official list of the London
Stock Exchange;
"Effective Date" means the date on which the Scheme becomes
effective in accordance with its terms;
"Extraordinary General means the extraordinary general meeting (or
Meeting" any adjournment thereof) of the Virgin
Mobile Shareholders to be convened in
connection with the Scheme, expected to be
held as soon as the preceding Court Meeting
shall have been concluded or adjourned;
"Financial Services means the Financial Services Authority of
Authority" the UK in its capacity as the competent
authority for the purposes of Part VI of
FSMA and in the exercise of its functions
in respect of admission to the Official
List otherwise than in accordance with Part
VI of FSMA;
"FSMA" means the Financial Services and Markets Act
2000 (as amended);
"Hearing" means the hearing or hearings by the Court
of the petition to sanction the Scheme
and/or confirm the associated reduction of
capital and/or grant the Court Order (as
the case may be);
"Hearing Date" means the date of the commencement of the
Hearing;
"Implementation means the implementation agreement between
Agreement" Virgin Mobile, the Cash Offeror and ntl
dated 3 April 2006;
"Independent Board" means the directors of Virgin Mobile
excluding Gordon McCallum, who is the
representative of Virgin, Virgin Mobile's
majority shareholder and who has absented
himself from discussions in relation to the
Offer;
"Independent Virgin means the Virgin Mobile Shareholders
Mobile Shareholders" excluding the Virgin Group;
"Investment Agreement" means the investment agreement between a
member of the Virgin Group, Sir Richard
Branson, and ntl, dated 3 April 2006;
"Listing Rules" means the listing rules of the Financial
Services Authority;
"London Stock Exchange" means London Stock Exchange plc;
"Meetings" means the Court Meeting and/or the
Extraordinary General Meeting, as the case
may be;
"Morgan Stanley" means Morgan Stanley & Co. Limited;
"NASDAQ National Market" means the national association of securities
dealers, automated quotation system
national market;
"ntl Group" means ntl, its holding companies and its
subsidiary undertakings;
"ntl Shares" means ntl common stock of $0.01 per share
which is quoted on Nasdaq;
"new ntl Shares" means new ntl Shares issued to Scheme
Shareholders who elect to receive ntl
Shares pursuant to the Share Offer or the
Share and Cash Offer;
"Offer" means the Cash Offer, the Share Offer, and
the Share and Cash Offer to acquire the
Scheme Shares as detailed in this
Announcement and, where the context
requires, any subsequent revision,
variation, extension or renewal thereof;
"Offer Price" means the cash offer price of 372 pence per
Scheme Share;
"Official List" means the official list of the Financial
Services Authority;
"Overseas Shareholders" means Virgin Mobile shareholders whose
registered addresses are outside the UK and
the United States or who are citizens or
residents of countries other than the UK
and the United States;
"GBP " means pounds sterling;
"Panel" means The Panel on Takeovers and Mergers;
"quad-play" means fixed line telephony, broadband
internet, television and mobile telephony;
"RGUs" means revenue generating units;
"Scheme Document" means the document proposed to be despatched
by Virgin Mobile to Virgin Mobile
Shareholders containing and setting out the
terms and conditions of the Offer and
certain information about Virgin Mobile,
ntl and the Cash Offeror and containing the
Scheme and notices of the Meetings;
"Scheme" or "Scheme of means the proposed scheme of arrangement
Arrangement" under section 425 of the Companies Act
between Virgin Mobile and the holders of
Scheme Shares, with or subject to any
modification, addition or condition
approved or imposed by the Court;
"Scheme Record Time" means the time and date to be specified in
the Scheme Document;
"Scheme Shareholders" means the holders of Scheme Shares;
"Scheme Shares" means Virgin Mobile Shares in issue on the
date of this announcement together with any
further Virgin Mobile Shares:
(a) issued after the date of this
announcement and prior to the Voting
Record Time; and
(b) (if any) issued on or after the Voting
Record Time and prior to 6:00 p.m. on
the day before the Hearing Date either
on terms that the original or any
subsequent holders thereof shall be
bound by the Scheme or in respect of
which the holders thereof shall have
agreed to be bound by the Scheme;
"SEC" means the U.S. Securities Exchange
Commission;
"Securities Act" means the United States Securities Act of
1933 (as amended);
"Share Alternative means the Share and Cash Offer and/or the
Offers" Share Offer;
"Share and Cash Offer" means the recommended offer of 0.18596 ntl
Shares plus 67 pence in cash per Scheme
Share held to made by ntl and the Cash
Offeror (or such other member(s) of the ntl
Group who shall be specified);
"Share Offer" means the recommended offer of 0.23245 ntl
Shares per Scheme Share held to made by
ntl;
"subsidiary" or having the meanings given to them by the
"subsidiary undertaking" Companies Act;
"Takeover Offer" means the implementation of the Offer by
means of a takeover offer under the City
Code;
"Telewest" means Telewest Global, Inc.;
"T-Mobile" means T-Mobile (UK) Limited;
"triple-play" means fixed line telephony, broadband
internet, and television;
"TSA" means the telecommunications supply
agreement between Virgin Mobile Telecoms
Limited and T-Mobile dated 29 January 2004;
"UKLA" means the United Kingdom Listing Authority;
"United Kingdom" or "UK" means the United Kingdom of Great Britain
and Northern Ireland;
"United States" or "US" means the United States of America
(including the States and the District of
Columbia), its territories, its possessions
and other areas subject to its
jurisdiction;
"US Person" means a US person as defined in Regulation S
under the Securities Act;
"US$" "USD" or "$" means United States dollars;
"Voting Record Time" means the time and date to be specified in
the Scheme Document;
"Virgin Enterprises" means Virgin Enterprises Limited;
"Virgin Group" means Virgin Group Investments Limited and
its subsidiary undertakings and affiliates;
"Virgin Mobile Board" means the full board of directors of Virgin
Mobile;
"Virgin Mobile Group" means Virgin Mobile and its subsidiary
undertakings;
"Virgin Mobile Share means (i) the Discretionary Share Option
Option Schemes" Plan; (ii) the Share Incentive Plan; (iii)
the Savings Related Share Option Plan; (iv)
the Performance Share Plan; and (v) the
Pre-IPO Plan;
"Virgin Mobile means the holders of Virgin Mobile Shares;
Shareholders" and
"Virgin Mobile Shares" means the ordinary shares of 10p each in
Virgin Mobile.
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