RNS Number:1040Y
FCX International PLC
3 July 2002
Not for release or publication in or into the United
States of America, Canada, Australia, South Africa or
Japan.
FCX INTERNATIONAL PLC
("FCX" or "the Company")
Recommendation from the Independent Directors
in response to the
Mandatory Offer and the Tender Offer
SUMMARY
On 20 June 2002, Altium Capital Limited ("Altium")
announced the Mandatory Offer to acquire all of FCX's
Shares at a price of 280p. On 28 June 2002, JO Hambro
Capital Management Limited ("JOHCM") announced the Tender
Offer to acquire 2,500,000 FCX Shares at 282p per share.
Shareholders now have three choices in respect of all or
part of their shareholding:
1. to accept the Mandatory Offer of 280p per FCX share;
2. to tender their FCX Shares to JOHCM; or
3. to do nothing.
In reaching a decision, Shareholders should bear the
following in mind:
* the Mandatory Offer provides the only opportunity
available for Shareholders generally to realise their
shareholding in full at 280p per FCX Share;
* 280p represents a premium of more than 59 per cent.
over the closing price of 176p per FCX Share on 2 January
2002, the first dealing day of the year, and a premium of
more than 38 per cent. over the closing price of 202p per
FCX Share on 28 January 2002, the last dealing day prior
to the announcement that an approach had been made to the
Company;
* Altium has confirmed that the Mandatory Offer is a
final offer which cannot be further increased;
* the Mandatory Offer may lapse if insufficient
acceptances are received;
* the Tender Offer may deliver a premium over the
Mandatory Offer of 2p per FCX Share for part of your
shareholding but Shareholders who tender shares may lose
the ability to realise the balance of their shareholding
under the Mandatory Offer;
* Shareholders who do not sell all their FCX Shares
may find that they retain shares in a company where a
stalemate exists between two substantial shareholders in
respect of decision making and strategic direction;
* JOHCM has given no indication of how, or over what
length of time, further value might be extracted for the
benefit of Shareholders. Without certainty as to the
future ownership of the Company, relationships with
suppliers and customers are likely to be damaged; and
* JOHCM was, for a number of months, involved in a
takeover approach for FCX. The initial approach was at
an indicative offer price of 225p per FCX Share which
your Independent Directors rejected. JOHCM eventually
offered an indicative price of 260p per FCX Share but was
unable to demonstrate certainty of funding at that price
within a timeframe acceptable to the Independent
Directors.
The Independent Directors unanimously recommend that
Shareholders do not accept the Tender Offer.
The Independent Directors continue to unanimously
recommend Shareholders to accept the Mandatory Offer of
280p per FCX Share for all of your shareholding, as they
have done in respect of approximately 1.09 per cent. of
FCX's existing issued share capital.
The above summary must be read in conjunction with the
full text of the following announcement from which it is
derived. Shareholders should not rely solely on the above
summary. A circular dated 2 July 2002 containing the
announcement has been sent to FCX Shareholders.
For further information, please contact:
KPMG Corporate Finance
Nicholas Fry/Richard Brown 020 7311 1000
PricewaterhouseCoopers
Simon Boadle/Mark Butler 020 7583 5000
Weber Shandwick Square Mile (for FCX International plc)
Richard Hews/Rachel Taylor 020 7950 2800
3 July 2002
Not for release or publication in or into the United
States of America, Canada, Australia, South Africa or
Japan.
FCX INTERNATIONAL PLC
("FCX" or "the Company")
Recommendation from the Independent Directors
in response to the
Mandatory Offer and the Tender Offer
The Independent Directors of FCX today respond to the
most recent announcements of a Mandatory Offer by Altium
Capital Limited ("Altium") on behalf of XCF Investments
Limited ("XCF") for the entire issued share capital of
FCX made on 20 June 2002 and the Tender Offer by Strand
Partners Limited ("Strand") on behalf of JO Hambro
Capital Management Limited ("JOHCM") to acquire
approximately 13.79 per cent. of the issued share capital
of FCX made on 28 June 2002.
Terms used in this announcement which are defined in the
Offer Document dated 29 May 2002 and the Mandatory Offer
Document dated 25 June 2002 shall have the same meanings
herein unless the context requires otherwise.
Background
On 20 June 2002, Altium, on behalf of XCF, agreed to
purchase 2,244,421 FCX Shares at 280p per FCX Share, as a
result of which XCF had acquired or agreed to acquire
7,221,432 FCX Shares representing approximately 39.84 per
cent. of FCX's issued share capital. Accordingly, and in
order to comply with the provisions of Rule 9 of the City
Code, the terms and conditions of the Amended Offer were
altered to become a mandatory cash offer (the "Mandatory
Offer").
In aggregate, XCF Investments has now contracted to
acquire or has acquired or has received acceptances in
respect of 8,200,972 FCX Shares representing
approximately 45.24 per cent. of FCX's issued share
capital.
On behalf of XCF, Altium has confirmed that the Mandatory
Offer is a final offer for all of your FCX Shares at 280p
in cash per FCX Share (valuing the existing issued share
capital of FCX at approximately £50.75 million), which
cannot be further increased. The Mandatory Offer will
become unconditional if and when XCF owns or has received
acceptances of the Mandatory Offer in respect of 50 per
cent. or more of the FCX Shares to which the Mandatory
Offer relates.
On 28 June 2002, Strand, on behalf of JOHCM, announced a
tender offer to acquire 2,500,000 FCX Shares, equivalent
to 13.79 per cent. of the issued share capital of FCX, at
a price of 282p in cash per FCX Share (the "Tender
Offer"). Currently JOHCM holds 10.95 per cent of FCX's
issued share capital. JOHCM has stated that it will not
make a general offer to acquire all of the FCX Shares.
The Tender Offer will lapse unless tenders in respect of
more than 1 per cent. of the FCX Shares in issue are
received.
The last time and date by which acceptances can be
received under the Tender Offer is 3.00 p.m. on Monday, 8
July 2002. The Mandatory Offer must remain open until
3.00 p.m. on Tuesday, 9 July 2002 (the "Closing Date").
There is no certainty that it will remain open after that
time; however, if the Mandatory Offer becomes or is
declared unconditional by the Closing Date the Mandatory
Offer must, under the terms of the City Code, remain open
for acceptances for a further 14 days.
Considerations for Shareholders
The Independent Directors consider that Shareholders
should be aware of the points set out below before taking
any action:
* the Mandatory Offer is a final offer for all your
FCX Shares at 280p per share and provides the only
opportunity available for Shareholders generally to
realise their shareholding in full at that price;
* 280p represents a premium of more than 59 per cent.
over to the closing price of 176p per FCX Share on 2
January 2002, the first dealing day of the year, and a
premium of more than 38 per cent. over the closing price
of 202p per FCX Share on 28 January 2002, the last
dealing day prior to the announcement that an approach
had been made to the company;
* the Mandatory Offer will lapse if XCF is unable to
increase its interest in FCX Shares to 50 per cent. of
FCX's issued share capital either by acquiring FCX Shares
or receiving acceptances for a further 4.76 per cent. of
FCX's issued share capital. In that case XCF will own
approximately 40 per cent. of FCX, JOHCM will own
approximately 25 per cent. of FCX (assuming the Tender
Offer is fully taken up) and other Shareholders will own
approximately 35 per cent. of FCX. No party will control
FCX and a "stalemate" in respect of decision taking and
strategic direction is likely to exist, which would
create uncertainty as to the future of the business with
customers, suppliers and shareholders and have a
corresponding effect on the value of FCX Shares;
* in relation to the Tender Offer, if JOHCM and XCF do
not tender their FCX Shares, Shareholders can only be
certain of selling approximately 31 per cent. of their
holdings in the Tender Offer (assuming that they tender
at least this percentage of their holdings). Acceptances
of the Tender Offer above that level will depend upon the
extent to which other Shareholders do not tender their
FCX Shares;
* the result of the Tender Offer will be announced at
8.00 a.m. on Tuesday 9 July 2002. Shareholders who have
tendered their shares will only be notified of the number
of their FCX Shares accepted in the Tender Offer at that
time. The Mandatory Offer closes at 3.00 p.m. on Tuesday
9 July 2002 (unless the Closing Date is extended). If
the Closing Date is not extended, the Independent
Directors believe that Shareholders who have tendered FCX
Shares which are not accepted by JOHCM in the Tender
Offer are unlikely to be able, in the time available, to
deliver valid acceptances to the Mandatory Offer in
respect of such FCX Shares; and
* if Shareholders are successful in disposing of
approximately 31 per cent. of their Shareholding in the
Tender Offer and the balance of their Shareholding in the
Mandatory Offer, they will achieve an average price of
approximately 280.7p per FCX Share (a premium of only
0.7p per FCX Share compared with the Mandatory Offer
price); this should be set against the timing risk noted
above and the uncertainties attaching to the Company's
future set out below.
Stated intentions of JOHCM
JOHCM has stated in its announcement of 28 June 2002
that, following the Tender Offer, it will requisition an
extraordinary general meeting at which it will seek the
removal of the current directors of FCX (excluding Eddie
Price) and propose a new board, to whom it will make a
request that a strategic review of FCX is carried out.
As mentioned above, JOHCM has also stated that it will
not make a general offer for the Company.
Shareholders who wish to retain an interest in FCX should
consider the following factors when assessing the
intentions of JOHCM:
* there is no certainty that JOHCM will ultimately own
enough FCX Shares, or be able to persuade other
Shareholders to join it in obtaining enough votes, to
bring about the proposed changes to management and set in
motion a strategic review;
* JOHCM has not indicated how it would seek to protect
the value of your Company, which the Independent
Directors believe is likely to be damaged by the
uncertainty with respect to ownership, management and
strategic direction that would be created while a
strategic review is undertaken;
* JOHCM has given no indication of how, or over what
length of time, further value might be extracted for the
benefit of Shareholders, or how it will take into account
the risks involved (for example, uncertainty for
suppliers and customers) in undertaking a strategic
review and any material liabilities and costs that may
arise in implementing the results thereof; and
* JOHCM was, for a number of months, involved in a
takeover approach for FCX, initially providing financing
for a buyout in conjunction with the management team.
The initial approach was at an indicative offer price of
225p per FCX Share which your Independent Directors
rejected. JOHCM eventually offered an indicative price of
260p per FCX Share but that approach did not proceed as
JOHCM and its consortium were unable to provide certainty
as to its financing at that price in a timeframe
acceptable to the Independent Directors. The indicative
price of 260p per FCX Share offered by JOHCM now
contrasts with its opposition to the Mandatory Offer
price of 280p per FCX Share.
Conclusion
For the reasons set out above, the Independent Directors
consider that not accepting either offer carries
considerable risks.
Accepting the Tender Offer may deliver a premium over the
Mandatory Offer of 2p per FCX Share for part of your
shareholding but carries with it significant risk, as
Shareholders may lose the ability to realise the balance
of their shareholding under the Mandatory Offer.
Furthermore, the Mandatory Offer may lapse if sufficient
acceptances to the Mandatory Offer are not received.
Accepting the Mandatory Offer provides the only available
opportunity for Shareholders generally to realise fully
their Shareholding at 280p per FCX Share.
The Independent Directors, who have been so advised by
PricewaterhouseCoopers, consider the terms of the
Mandatory Offer to be fair and reasonable. The
Independent Directors have also been advised by KPMG
Corporate Finance which, as a consequence of the audit
relationship between KPMG Audit Plc and Alchemy Partners,
has not acted as the independent adviser, required by
Rule 3 of the City Code, for the purpose of the Tender
Offer. KPMG Corporate Finance also considers the terms
of the Mandatory Offer to be fair and reasonable.
In providing advice to the Independent Directors,
PricewaterhouseCoopers and KPMG Corporate Finance have
taken into account the commercial assessment of the
Independent Directors.
Recommendation
The Independent Directors unanimously recommend that
Shareholders do not accept the Tender Offer.
The Independent Directors continue to unanimously
recommend FCX Shareholders to accept the Mandatory Offer
of 280p per FCX Share for all of your shareholding, as
they have done in respect of their own beneficial
shareholdings of, in aggregate, 197,315 FCX Shares,
representing approximately 1.09 per cent. of FCX's
existing issued share capital.
Previous acceptors of the Offer
If you have already accepted the Offer or the Amended
Offer, you will obtain the benefit of, and be deemed to
have accepted, the Mandatory Offer. You need take no
further action (assuming your Form of Acceptance was
valid and complete in all respects).
Action to be taken to accept the Mandatory Offer
Your attention is drawn to paragraph 7 of the letter from
Altium on page 6 of the Mandatory Offer Document posted
to FCX Shareholders on 25 June 2002, paragraph 9 of the
letter from Altium on pages 7 to 13 of the Amended Offer
Document posted to Shareholders on 19 June 2002 and
Appendix 1 to the Offer Document and the Form of
Acceptance which accompanied the Offer Document, which
together set out the procedure for accepting the
Mandatory Offer.
If you wish to accept the Mandatory Offer, the Form of
Acceptance (a further copy of which was enclosed with the
Mandatory Offer Document) should be completed in
accordance with the instructions therein and returned,
whether or not your FCX Shares are in CREST, to Lloyds
TSB Registrars, The Causeway, Worthing, West Sussex BN99
6DA, so as to be received as soon as possible and, in any
event, by no later than 3.00 p.m. on 9 July 2002. If you
are in any doubt as to the procedure for acceptance or if
you require further copies of the Offer Document, the
Mandatory Offer Document and/or the Form of Acceptance,
please contact Lloyds TSB Registrars by telephone on 0870
600 0673.
Save as disclosed in this announcement and in the Amended
Offer Document dated 19 June 2002, the Independent
Directors are not aware of any material change in the
information for which they were responsible published in
the Offer Document dated 29 May 2002.
Note: Basis of calculation
FCX Shares Percentage
Shares in issue 18,127,560 100%
XCF controlled FCX Shares 8,200,972 45.24%
JOHCM controlled FCX Shares 1,984,921 10.95%
FCX Shares not controlled by XCF
or JOHCM 7,941,667 43.81%
Tender Offer for 2,500,000 13.79%
Tender Offer as a percentage of FCX Shares not controlled
by XCF or JOHCM
2,500,000/7,941,667 = 31.48%
Shareholders can only be certain of selling approximately
31% of their holdings in the Tender Offer (assuming that
they tender at least this percentage of their holdings
and JOHCM and XCF do not tender their FCX Shares).
The contents of this announcement have been approved for
the purposes of Section 21 of the Financial Services and
Markets Act 2000 by KPMG Corporate Finance. KPMG
Corporate Finance is a division of KPMG LLP which is
authorised by the Financial Services Authority for
investment business activities. The address of KPMG
Corporate Finance is 8 Salisbury Square, London, EC4Y
8BB.
KPMG Corporate Finance is acting for FCX as financial
adviser in relation to the Mandatory Offer and is not
acting for any other person in relation to such Offer.
KPMG Corporate Finance will not be responsible to anyone
other than the Company for providing the protections
afforded to its client or for providing advice in
relation to the contents of this announcement or any
Offer or arrangement referred to herein.
PricewaterhouseCoopers, which is regulated by the
Financial Services Authority, is acting exclusively for
FCX and no one else in connection with the Mandatory
Offer and will not be responsible to anyone other than
FCX for providing the protection afforded to clients of
PricewaterhouseCoopers or for providing advice in
relation to the Offer, the contents of this announcement
or any other matters referred to herein.
This information is provided by RNS
The company news service from the London Stock Exchange
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