CME Group Distributes Letter to NYMEX Class A Members
August 14 2008 - 1:19PM
PR Newswire (US)
CHICAGO, Aug. 14 /PRNewswire-FirstCall/ -- CME Group (NASDAQ:CME)
today sent the following letter to the Class A Members of the New
York Mercantile Exchange, Inc.: Dear NYMEX Class A Members: We have
enjoyed the opportunity to meet with a number of NYMEX members and
clearing members over the past two weeks to discuss the
enhancements included in our revised merger agreement. You should
have received proxy materials explaining these changes. We regret
that we will not have the opportunity to meet with each of you
individually prior to your August 18 special meeting. However, our
discussions with your fellow members have highlighted to us the
value of ensuring that you each have further insight into the
potential economic impact -- both long term and short term -- of
the revised transaction on your individual circumstances. 1. CME
Group will maintain a price differential in favor of NYMEX members
so long as CME or CBOT members have price preferences. 2. CME Group
will maintain a membership market and will limit the Class A
memberships to the current level of 816 memberships. We believe
that limiting the number of memberships with floor access and
trading and brokerage privileges, maintaining a membership fee
differential and adopting a more flexible membership eligibility
program should enhance the overall value of the NYMEX membership
you are retaining. 3. We also believe our business plan has created
significant membership value and opportunity. We have adopted
member pricing policies that incentivize high volume participants
and have promoted the benefits of that pricing to hedge funds,
proprietary trading shops and financial institutions. Approximately
60 hedge funds and 20 proprietary trading shops have joined CME as
either members or clearing members in the period following
demutualization and purchased a significant number of memberships.
The increased participation of these key market participants has
improved and deepened the liquidity of CME's current products and
benefited all users of our markets as well as increased demand for
CME memberships. At the time of our demutualization, the
combination of the CME membership and the embedded equity value was
worth $525,000. Currently, the value of the CME membership alone is
$1.2 million. While there are no guarantees, we believe this
successful approach would benefit the NYMEX product set as well. 4.
The $750,000 payment represents the fair value to extinguish
significant membership rights, including the 311(G) rights and
other trading rights and protections. This payment establishes
certainty and immediacy for an economic value that is currently
highly uncertain as to both its timing and its ultimate value. 5.
The $750,000 payment will not extinguish the NYMEX membership. Your
NYMEX membership will have rights in addition to the pricing
differential. Those rights include trading floor access -- to the
current trading floor facility for a number of years and to a
NY-based trading floor for as long as such floor satisfies basic
profitability tests, the right to sell or lease the Class A
membership, account based fees for NYMEX members, the right to
authorize three individuals with power of attorney to trade your
account at member rates, and protections against CME moving pits
from New York to Chicago over NYMEX member objections or until a
significant waiting period has passed. Some of these rights and
protections are specific to NYMEX members and not available to CME
or CBOT members. You should note that under current tax law we
would expect that in most cases you will receive capital gain or
loss when you sell your Class A membership in the future. As is
always the case, you should consult your tax advisor about the
consequences to you of that treatment. On a long-term strategic
basis, this deal is the best option to grow and develop NYMEX
markets into the future. This transaction will extend the benefits
of the CME Globex technology agreement in perpetuity, and it will
also allow NYMEX customers to use one point of contact from trade
matching through clearing. In short, CME Group is the best partner
for NYMEX. We are very excited about the prospect of adding dynamic
and successful NYMEX Class A members to our trading community. As
you consider your options for the August 18 vote, we hope you will
weigh both the short-term and long-term benefits to you. You may
submit your proxy by: Internet. You can vote over the Internet by
accessing the website at http://www.cesvote.com/ and following the
instructions on the website. Have your proxy card in hand when you
access the website because you will have to enter the control
number printed on your proxy card. Internet voting is available 24
hours a day. Telephone. You can vote by telephone by calling the
toll-free number (888) 693-8683 in the United States, Canada and
Puerto Rico on a touch-tone telephone. You will then be prompted to
enter the control number printed on your proxy card and follow
subsequent instructions. Telephone voting is available 24 hours a
day. If you vote your proxy over the Internet or by telephone, you
must do so before 6:00 A.M., New York time, on August 18th. Given
that the special meeting is only days away, do not mail in your
proxy card. If you mail in your proxy card, there is no guarantee
it will be received by the special meeting. If you need a proxy
card/control number to vote your Class A membership, you should
contact: D.F. King & Co., Inc. 48 Wall Street, 22nd Floor New
York, New York 10005 (800) 758-5378 (toll-free) or (212) 269-5550
(call collect) Very truly yours, Terry Duffy Craig Donohue
Executive Chairman Chief Executive Officer Additional Information
Forward Looking Statements This letter may contain forward-looking
information regarding CME Group Inc. ("CME Group") and NYMEX
Holdings, Inc. ("NYMEX Holdings") and the combined company after
the completion of the merger that are intended to be covered by the
safe harbor for "forward-looking statements" provided by the
Private Securities Litigation Reform Act of 1995. These statements
include, but are not limited to, the benefits of the business
combination transaction involving CME Group and NYMEX Holdings,
including future financial and operating results, the new company's
plans, objectives, expectations and intentions and other statements
that are not historical facts. Such statements are based on current
beliefs, expectations, forecasts and assumptions of CME Group's and
NYMEX Holdings' management which are subject to risks and
uncertainties which could cause actual outcomes and result to
differ materially from these statements. Other risks and
uncertainties relating to the proposed transaction include, but are
not limited to the satisfaction of conditions to closing; including
receipt of shareholder, antitrust, regulatory and other approvals
on the proposed terms and schedule; the proposed transaction may
not be consummated on the proposed terms and schedule; uncertainty
of the expected financial performance of CME Group following
completion of the proposed transaction; CME Group may not be able
to achieve the expected cost savings, synergies and other strategic
benefits as a result of the proposed transaction or may take longer
to achieve the cost savings, synergies and benefits than expected;
the integration of NYMEX Holdings with CME Group's operations may
not be successful or may be materially delayed or may be more
costly or difficult than expected; general industry and market
conditions; general domestic and international economic conditions;
and governmental laws and regulations affecting domestic and
foreign operations. For more information regarding other related
risks, see Item 1A of CME Group's Annual Report on Form 10-K for
the fiscal year ended December 31, 2007 and Item 1A of NYMEX's
Annual Report on Form 10-K for the fiscal year ended December 31,
2007 and additional updates to these risks contained in our
Quarterly reports. Copies of said 10-Ks and 10-Qs are available
online at http://www.sec.gov/ or on request from the applicable
company. You should not place undue reliance on forward-looking
statements, which speak only as of the date of this letter. Except
for any obligation to disclose material information under the
Federal securities laws, CME Group and NYMEX Holdings undertake no
obligation to release publicly any revisions to any forward-looking
statements to reflect events or circumstances after the date of
this letter. Important Merger Information In connection with the
merger transaction involving CME Group and NYMEX Holdings, CME
Group has filed a registration statement on Form S-4 with the
Securities and Exchange Commission ("SEC") on July 21, 2008
containing a definitive joint proxy statement/prospectus, as
supplemented. This letter is not a substitute for the definitive
joint proxy statement/prospectus, as supplemented, or any other
documents CME Group and NYMEX Holdings have filed or will file with
the SEC. Investors and security holders are urged to read the
definitive joint proxy statement/prospectus, as supplemented, and
any other relevant documents filed or to be filed by CME Group or
NYMEX Holdings because they contain or will contain important
information about the proposed transaction. The definitive
prospectus/proxy statement, as supplemented, and other documents
filed or to be filed by CME Group with the SEC are or will be
available free of charge at the SEC's Web site (
http://www.sec.gov/ ) or from CME Group Inc., Attention:
Shareholder Relations, 20 S. Wacker Drive, Chicago, Illinois 60606
, (312) 930-1000 or NYMEX Holdings, Inc., Attention: Investor
Relations, at One North End Avenue, World Financial Center, New
York, New York 10282, (212) 299-2000. CME Group and NYMEX Holdings
and their respective directors, executive officers and other
members of management and employees may be deemed to be
participants in the solicitation of proxies from CME Group and
NYMEX Holdings shareholders in respect of the proposed transaction.
Information regarding CME Group and NYMEX Holdings' directors and
executive officers is available in their respective proxy
statements for their 2008 annual meeting of stockholders.
Additional information regarding the interests of such potential
participants is included in the joint proxy statement/prospectus
and the other relevant documents filed with the SEC when they
become available. This document shall not constitute an offer to
sell or the solicitation of an offer to buy any securities, 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 any such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended. CME-G DATASOURCE: CME Group
CONTACT: Media, Anita Liskey, +1-312-466-4613, or Allan Schoenberg,
+1-312-930-8189, both at , or Investors, John Peschier,
+1-312-930-8491, all of CME Group Web site: http://www.cme.com/
Copyright