TIDMUMP
RNS Number : 9384V
UTV Software Communications Ltd
20 July 2009
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY JURISDICTION WHERE TO DO
SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION
20 July 2009 (London)
RECOMMENDED PROPOSAL
by
UTV Software Communications Limited ("UTV")
to issue New UTV Shares to the holders of the entire issued and to be issued
share capital of UMP Plc ("UMP") not already owned by UTV
Summary
* Further to the announcement made by UMP on 18 May 2009 that it was in
discussions with its parent, UTV, in relation to a potential offer for UMP, the
board of UTV and the Independent UMP Directors are pleased to announce that they
have reached agreement on the terms of a recommended Proposal pursuant to which:
*
* the holders of the UMP Shares not already owned by UTV (representing
approximately 23.18 per cent. of the entire issued ordinary share capital of
UMP) will, for every 3.75 UMP Shares, receive 1 New UTV Share;
* all the assets and business of UMP will be transferred to UTV; and
* UMP will be dissolved (without winding up).
* The Proposal values the entire issued ordinary share capital of UMP at
approximately US$194.74 million and each UMP Share at US$1.87 based on the
Indian Closing Price of Rs.341.45 per UTV Share on 17 July 2009, being the last
Business Day prior to this announcement. The Proposal represents a premium of
approximately:
* 91.8 per cent. to the closing middle market price of US$0.975 per UMP Share on
17 July 2009, being the last Business Day prior to this announcement; and
* 107.8 per cent. to the closing middle market price of US$0.90 per UMP Share on
15 May 2009, being the last Business Day prior to the announcement by UMP that
it was in discussions with its parent, UTV, in relation to a potential offer for
UMP.
* It is intended that the Proposal will be implemented by way of a scheme of
arrangement between UMP and the Independent UMP Shareholders under section 157
of the Isle of Man Companies Act. The Scheme requires the approval of the
Independent UMP Shareholders and the sanction of the Court.
* In order to facilitate the intended tax neutral treatment of the Proposal (so
that the issue of the New UTV Shares in consideration of the effective transfer
of the UMP Shares held by the Independent UMP Shareholders should not be
regarded as a taxable event in India), the implementation of the Proposal will
also require a scheme of arrangement between UTV, the UTV Shareholders and the
UTV Creditors under sections 391 to 394 (read with section 78 and sections 100
to 103) of the Indian Companies Act which will require the approval of the UTV
Shareholders and (if required by the Indian Court) both classes of the UTV
Creditors (being the UTV Secured Creditors and the UTV Unsecured Creditors),
together with the sanction of the Indian Court. If the Proposal had been
implemented without the Indian Scheme, it is likely that the New UTV Shares
would have been subject to a one year lock-in period.
* The Scheme will be conditional upon, amongst other things, obtaining certain
regulatory approvals in India and the Indian Scheme (so far as it relates to
UMP) becoming effective.
* It is intended that there will also be a merger of UTV(Mauritius) (UMP's
subsidiary) into UTV pursuant to the Indian Scheme and a scheme of arrangement
under Mauritius law between UTV(Mauritius), the UTV(Mauritius) shareholders, the
UTV(Mauritius) creditors, UTV and its shareholders and creditors under sections
261 to 264 of (and paragraph 4 of Part II of the Fourteenth Schedule to) the
Mauritius Companies Act, which is expected to be effective immediately upon the
Scheme and the Indian Scheme becoming effective (when UTV(Mauritius) becomes a
wholly owned subsidiary of UTV). However, neither the Scheme nor the Proposal is
conditional upon, or in any way dependent on, the Mauritius Scheme becoming
effective.
* UTV is a media company based in Mumbai, India. Since it began as a television
content company in 1990, UTV has developed into a global integrated
entertainment content production and distribution company with five business
streams: television (content production and airtime sales), movies (production
and distribution), broadcasting, interactive (gaming) and new media. It is an
established corporate entity in Indian movie-making and has numerous formal
relationships with leading players in the international media industry,
including TWDC(SEA), a wholly owned subsidiary of The Walt Disney Company.
TWDC(SEA) currently owns 59.94 per cent. of the UTV Shares although, pursuant to
the Shareholders' Agreement entered into by TWDC(SEA), the Promoter Group and
UTV on 16 February 2008, TWDC(SEA) is not permitted to exercise voting rights in
excess of 12,752,500 UTV Shares (which currently represent 48.21 per cent. of
the votes entitled to be cast at a general meeting of UTV), until November 2012.
* UTV is listed on the Bombay Stock Exchange and the National Stock Exchange with
a market capitalisation of approximately Rs.11.68 billion (approximately
US$239.80 million) based on the Indian Closing Price of UTV Shares on 17 July
2009, being the last Business Day prior to this announcement. For the financial
year ended 31 March 2009, UTV had total consolidated revenues of Rs.6,768.45
million (approximately US$145.70 million) and net profit after tax after
minority interest of Rs.356.28 million (approximately US$7.67 million).
* UMP Plc, formerly UTV Motion Pictures Plc, is a holding company (for
UTV(Mauritius)) incorporated in the Isle of Man. UMP's ordinary shares (being
the UMP Shares) were admitted to trading on AIM on 2 July 2007. Approximately
76.82 per cent. of the issued capital of UMP is owned by UTV.
* UTV(Mauritius) is engaged in the media and entertainment industry with
operations in the production and distribution of Indian, Hollywood and animation
movies in many jurisdictions around the world. The issued share capital of
UTV(Mauritius) comprises 80,200,000 ordinary shares of US$0.05 each, 80,000,000
(99.75 per cent.) of which are held by UMP and the remainder of which are held
by UTV.
* The Independent UMP Directors (which excludes Rohinton Screwvala, who is the
Chairman and Managing Director of UTV and Siddharth Roy Kapur, who is the Chief
Executive Offer of UTV's Motion Pictures division, and who have therefore taken
no part in the decision by the Independent UMP Directors to recommend the
Proposal), who have been so advised by Jefferies, consider the terms of the
Proposal to be fair and reasonable. In providing their advice, Jefferies has
taken into account the commercial assessments of the Independent UMP Directors.
Accordingly, the Independent UMP Directors intend unanimously to recommend that
the Independent UMP Shareholders vote in favour of the Scheme at the Court
Meeting as they intend to do in respect of their entire beneficial holdings of
UMP Shares, comprising, in aggregate, 100,288 UMP Shares, representing
approximately 0.42 per cent. of the UMP Shares held by the Independent UMP
Shareholders.
* UTV has also received irrevocable undertakings from TWDC(SEA) and the Promoter
Group to vote in favour of the Indian Scheme and the resolution to be proposed
to UTV Shareholders at the Indian Court Meeting in respect of a total of
20,722,980 UTV Shares representing, in aggregate, 60.60 per cent. of the UTV
Shares and, as a result of the voting restriction in the Shareholders' Agreement
and UTV's Articles of Association, 78.35 per cent. of the votes entitled to be
cast at the Indian Court Meeting.
Cancellation of trading on AIM
If the Scheme becomes effective, the Company will be dissolved. Application will
be made to the London Stock Exchange for the cancellation of the UMP Shares from
admission to trading on AIM on or around the Effective Date. A further
announcement regarding the precise date of the cancellation will be made in due
course. On the date of cancellation, share certificates in respect of the UMP
Shares will cease to be valid and entitlements to UMP Shares held within the
CREST system will be cancelled.
Anticipated timetable of principal events
The expected timetable differs from the standard timetable under the City Code
on Takeovers and Mergers due to the specific nature of the Proposal. A summary
of the indicative timetable is set out below.
+--------------------------------------------------------+---------------------+
| Event | Date |
+--------------------------------------------------------+---------------------+
| Following this announcement, applications made to the | mid July 2009 |
| Indian Stock Exchanges | |
+--------------------------------------------------------+---------------------+
| Consents received | end August 2009 |
| from the Indian | |
| Stock Exchanges | |
| and then: | |
| - applications | |
| made to FIPB and | |
| RBI | |
| - applications | |
| made to the Isle | |
| of Man and Indian | |
| courts for | |
| directions | |
| hearings | |
+--------------------------------------------------------+---------------------+
| Scheme Document posted to the Independent UMP | mid September 2009 |
| Shareholders convening the Court Meeting | |
+--------------------------------------------------------+---------------------+
| Indian Scheme Document posted to the UTV Shareholders | mid September 2009 |
| and the UTV Creditors convening the Indian Court | |
| Meeting | |
+--------------------------------------------------------+---------------------+
| Court meetings of the Independent UMP Shareholders, | mid October 2009 |
| the UTV Shareholders and (if required) the UTV | |
| Creditors | |
+--------------------------------------------------------+---------------------+
| FIPB and RBI consents received (note that there is no | end November 2009 |
| prescribed time limit within which FIPB and RBI are | |
| required to respond) | |
+--------------------------------------------------------+---------------------+
| Court Hearing to sanction the Scheme | early December 2009 |
+--------------------------------------------------------+---------------------+
| Court Order registered with the Isle of Man Companies | mid December 2009 |
| Registry | |
+--------------------------------------------------------+---------------------+
| Indian Court Hearing to sanction the Indian Scheme | mid January 2010 |
+--------------------------------------------------------+---------------------+
| Effective Date of both schemes: | mid February 2010 |
| Indian Court Order registered with the Indian | |
| Registrar of Companies | |
| UTV allots New UTV Shares to the Independent UMP | |
| Shareholders and the UMP business and assets are | |
| transferred to UTV | |
| Cancellation of UMP's AIM admission | |
| UMP dissolved | |
| Mauritius Scheme becomes effective and the business | |
| and assets of UTV(Mauritius) are transferred to UTV | |
+--------------------------------------------------------+---------------------+
| Listing of New UTV Shares on BSE/NSE effective | end February 2010 |
+--------------------------------------------------------+---------------------+
These dates are indicative only and will depend on, amongst other things, the
approvals of the Indian Stock Exchanges, the FIPB and the RBI, as well as the
Indian Court process to sanction the Indian Scheme which, so far as it relates
to UMP, is a Condition of the Scheme).
Commenting on the Proposal, Mr Rohinton Screwvala, Chairman and Managing
Director of UTV, said:
"I am pleased we have come to an agreement on this Proposal and that the
Independent UMP Directors have unanimously resolved to recommend it. The
Proposal provides substantially greater liquidity for the Independent UMP
Shareholders and access to enhanced prospects as part of the wider UTV Group."
Commenting on the Proposal, Andrew Carnegie, an independent non-executive
director of UMP, said:
"The Independent UMP Directors have considered this Proposal very carefully. We
believe that the Proposal offers the Independent UMP Shareholders a fair
premium, together with the prospect of enhanced trading liquidity through
holding shares in UTV. It also provides the Independent UMP Shareholders with
the opportunity to participate in the much wider operations of UTV (comprising
television, interactive, broadcasting and new media) as well as retaining their
interests in the existing UMP movie production business. Consequently, and after
careful consideration of the Proposal, the Independent UMP Directors have
resolved unanimously to recommend the Proposal to the Independent UMP
Shareholders."
This summary should be read in conjunction with the full text of the attached
announcement (including the Appendices). Certain terms used in this summary are
defined in Appendix IV to the attached announcement.
Enquiries:
+--------------------------------------+--------------------------------------+
| UTV | Telephone: +91 22 4098 1505 |
| Amit Banka | |
| | |
+--------------------------------------+--------------------------------------+
| Merrill Lynch | Telephone: +44 (0) 20 7628 1000 |
| (Financial Adviser to UTV) | |
| Noah Bulkin | |
| Anya Weaving | |
| Andrew R. Chen | |
| | |
+--------------------------------------+--------------------------------------+
| UMP | Telephone: + 44 (0) 20 7630 7042 |
| Andrew Carnegie | |
| Peter Vanderpump | |
| | |
+--------------------------------------+--------------------------------------+
| Jefferies International Limited | Telephone: +44 (0) 20 7029 8000 |
| (Financial Adviser to UMP) | |
| Julian Culhane | |
| Sarah McNicholas | |
| | |
+--------------------------------------+--------------------------------------+
| Grant Thornton | Telephone: +44 (0) 20 7383 5100 |
| (Nominated Adviser to UMP) | |
| Fiona Owen | |
| Robert Beenstock | |
+--------------------------------------+--------------------------------------+
Merrill Lynch (a subsidiary of Bank of America Corporation) is acting
exclusively for UTV and no one else in connection with the Proposal and will not
be responsible to anyone other than UTV for providing the protections afforded
to clients of Merrill Lynch or for providing advice in relation to the Proposal
or any other matters referred to in this announcement.
Jefferies International Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for UMP and
no one else in connection with the Proposal and other matters referred to in
this announcement and accordingly will not be responsible to anyone other than
UMP for providing the protections afforded to the clients of Jefferies
International Limited nor for providing advice in relation to the Proposal or
any other matter referred to in this announcement.
Forward looking statements
This announcement contains statements about UTV and UMP that are or may be
forward looking statements. All statements other than statements of historical
facts included in this announcement may be forward looking statements. Without
limitation, any statements preceded or followed by or that include the words
"targets", "plans", "believes", "expects", "aims", "intends", "will", "should",
"may", "anticipates", "estimates", "synergies", "cost savings", "projects",
"strategy", or words or terms of similar substance or the negative thereof, are
forward looking statements. Forward looking statements include statements
relating to the following: (i) the expected timetable for completing the
Proposal, future capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend policy, losses
and future prospects of UTV, UMP or the Merged Group; (ii) business and
management strategies and the expansion and growth of UTV's, UMP's or the Merged
Group's operations and potential synergies resulting from the Proposal; and
(iii) the effects of government regulation on UTV's, UMP's or the Merged Group's
business.
These forward looking statements are not guarantees of future performance. They
have not been reviewed by the auditors of UTV or UMP. These forward looking
statements involve known and unknown risks, uncertainties and other factors
which may cause them to differ from the actual results, performance or
achievements expressed or implied by such forward looking statements. These
forward looking statements are based on numerous assumptions regarding the
present and future business strategies of such persons and the environment in
which each will operate in the future. All subsequent oral or written forward
looking statements attributable to UTV or UMP or any of their respective
members, directors, officers or employees or any persons acting on their behalf
are expressly qualified in their entirety by the cautionary statement above. All
forward looking statements included in this announcement are based on
information available to UTV and UMP on the date hereof. Investors should not
place undue reliance on such forward looking statements, and UTV and UMP
undertake no obligation to publicly update or revise any forward looking
statements.
No statement in this announcement is intended to constitute a profit forecast
for any period.
Dealing disclosure requirements
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 UTV or of UMP, 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 Scheme becomes effective or 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 UTV or UMP, 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 UTV or of UMP by UTV or UMP, 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 Takeover 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 the 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 in this section "Dealing disclosure requirements" are
defined in the City Code, which can also be found on the Takeover 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 Takeover Panel.
Distribution of this announcement and other matters
The distribution of this announcement and the accompanying documents in
jurisdictions other than the United Kingdom may be restricted by law and
therefore persons into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to comply with the
restrictions may constitute a violation of the securities laws of any such
jurisdiction.
This announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities or a solicitation of an offer to buy any securities
pursuant to this announcement or otherwise in any jurisdiction in which such
offer or solicitation is unlawful. This announcement has been prepared in
connection with a proposal in relation to a scheme of arrangement pursuant to,
and for the purpose of, complying with the law of the Isle of Man and the City
Code and information disclosed may not be the same as that which would have been
prepared in accordance with laws of jurisdictions outside the Isle of Man or the
United Kingdom. Nothing in this announcement should be relied upon for any other
purpose.
The statements contained herein are made as at the date of this announcement,
unless some other time is specified in relation to them, and the issue of this
announcement shall not give rise to any implication that there has been no
change in the facts set forth herein since that date.
No person has been authorised to make any representations on behalf of UMP or
UTV concerning the Proposal or the Scheme which are inconsistent with the
statements contained herein and any such representations, if made, may not be
relied upon as having been so authorised.
This announcement does not constitute a prospectus or prospectus equivalent
document.
No person should construe the contents of this announcement as legal, financial
or tax advice and each person who receives this announcement should consult
their own advisers in connection with the matters contained herein.
This announcement is not an offer for sale of securities in the United States.
The New UTV Shares to be issued in connection with the Proposal, have not been,
and will not be, registered under the Securities Act or under any relevant
securities laws of any state or other jurisdiction of the United States, nor
have clearances been, nor will they be, obtained from the securities commission
or similar authority of any province or territory of Canada and no prospectus
has been, or will be, filed with, such commission or authority or any securities
law of any province or territory of Canada nor has a prospectus in relation to
the New UTV Shares been, nor will one be, lodged with, or registered by, the
Australian Securities and Investments Commission, nor have any steps been taken,
nor will any steps be taken, to enable the New UTV Shares to be offered in
compliance with applicable securities laws of Japan. Accordingly, unless an
exemption under relevant securities laws is available, the New UTV Shares may
not be offered, sold, resold or delivered, directly or indirectly, in, into or
from the United States, Canada, Australia or Japan or any other jurisdiction in
which an offer of the New UTV Shares would constitute a violation of relevant
laws or require registration of the New UTV Shares, or to or for the account or
benefit of any person located in the United States, Canada, Australia or Japan.
Unless otherwise determined by UTV and UMP and permitted by applicable law and
regulation, copies of this announcement and any other documents related to the
Proposal or the Scheme are not being, and must not be, mailed or otherwise
forwarded, distributed or sent in or into the United States, Canada, Australia
or Japan. All persons receiving this announcement (including, without
limitation, custodians, nominees and trustees) should observe these restrictions
and any applicable legal or regulatory requirements of their jurisdiction and
must not mail or otherwise forward, send or distribute this announcement in,
into or from the United States, Canada, Australia or Japan.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY JURISDICTION WHERE TO DO
SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION
20 July 2009 (London)
RECOMMENDED PROPOSAL
by
UTV Software Communications Limited ("UTV")
to issue New UTV Shares to the holders of the entire issued and to be issued
share capital of UMP Plc ("UMP") not already owned by UTV
1. Introduction
Further to the announcement made by UMP on 18 May 2009 that it was in
discussions with its parent, UTV, in relation to a potential offer for UMP, the
board of UTV and the Independent UMP Directors are pleased to announce that they
have reached agreement on the terms of a recommended Proposal pursuant to which:
* the holders of the UMP Shares not already owned by UTV (representing
approximately 23.18 per cent. of the entire issued ordinary share capital of
UMP) will, for every 3.75 of UMP Shares held, receive 1 New UTV Share;
* all the assets and business of UMP will be transferred to UTV; and
* UMP will be dissolved (without winding up).
2. Responsibility for considering the Proposal
A committee comprising the Independent UMP Directors has been established in
relation to the Proposal because Rohinton Screwvala, Chairman and non-executive
Director of UMP, is also the Chairman and Managing Director of UTV, and
Siddharth Roy Kapur, non-executive Director of UMP, is also the Chief Executive
Officer of UTV's Motion Pictures division. Rohinton Screwvala and Siddharth Roy
Kapur have therefore taken no part in the decision by the Independent UMP
Directors to recommend the Proposal.
3. UTV as a shareholder in UMP
On the admission to trading on AIM of the UMP Shares on 2 July 2007, UTV owned
80,000,000 UMP Shares, representing approximately 76.82 per cent. of the issued
share capital of UMP. UTV has not bought or sold any UMP Shares since that date
and its current holding of 80,000,000 UMP Shares continues to represent
approximately 76.82 per cent. of the issued share capital of UMP. UTV will not
be entitled to vote the UMP Shares it owns at the Court Meeting but UTV will
undertake to the Court to be bound by the Scheme.
4. The Proposal
Under the Proposal, which will be subject to the Conditions and further terms
set out in Appendix I to this announcement and the full terms and conditions to
be set out in the Scheme Document, the Independent UMP Shareholders will receive
the following consideration:
1 New UTV Share for every 3.75 UMP Shares
The Proposal values the entire issued ordinary share capital of UMP at
approximately US$194.74 million and each UMP Share at US$1.87 based on the
Indian Closing Price of Rs.341.45 per UTV Share on 17 July 2009, being the last
Business Day prior to this announcement. The Proposal represents a premium of
approximately:
* 91.8 per cent. to the closing middle market price of US$0.975 per UMP Share on
17 July, being the last Business Day prior to this announcement; and
* 107.8 per cent. to the closing middle market price of US$0.90 per UMP Share on
15 May 2009, being the last Business Day prior to the announcement by UMP that
it was in discussions with its parent, UTV, in relation to a potential offer for
UMP.
It is intended that the Proposal will be implemented by way of a scheme of
arrangement between UMP and the Independent UMP Shareholders under section 157
of the Isle of Man Companies Act. The Scheme requires the approval of the
Independent UMP Shareholders and the sanction of the Court.
In order to facilitate the intended tax neutral treatment of the Proposal (so
that the issue of the New UTV Shares in consideration of the effective transfer
of the UMP Shares held by the Independent UMP Shareholders should not be
regarded as a taxable event in India), the implementation of the Proposal will
also require a scheme of arrangement between UTV, the UTV Shareholders and the
UTV Creditors under sections 391 to 394 (read with section 78 and sections 100
to 103) of the Indian Companies Act which will require the approval of the UTV
Shareholders and (if required by the Indian Court) both classes of the UTV
Creditors (being the UTV Secured Creditors and the UTV Unsecured Creditors),
together with the sanction of the Indian Court. If the Proposal had been
implemented without the Indian Scheme, it is likely that the New UTV Shares
would have been subject to a one year lock-in period.
The Scheme will be conditional upon, amongst other things, obtaining certain
regulatory approvals in India and the Indian Scheme (so far as it relates to
UMP) becoming effective.
5. Background to and reasons for the Proposal
UTV's movie business, comprising its equity investment in UMP and its
distribution networks across various platforms, is currently the most
significant contributor to its overall revenues and profitability, and this is
expected to continue for the foreseeable future. UTV is currently the sole
provider to UTV(Mauritius) of a US$64 million working capital debt facility,
which is committed until March 2010 and repayable on twelve months' notice from
either party. The growth of the movie production business is likely to require
substantial future funding and UTV is of the view that it is much more likely
that funding will be available through the Indian equity markets having regard
to the relative lack of liquidity in trading of the UMP Shares on AIM. In view
of the ongoing working capital funding requirements of the movie production
business (and the fact that UTV is the most likely source of funding for UMP),
UTV considers that it would be preferable to have full ownership of the business
and to seek investment as a single integrated movie business.
Whilst the intellectual property in movies is held in UTV(Mauritius),
distribution (for the US, the UK and India) is already carried out by members of
the UTV Group. Accordingly, UTV is of the view that the management of the movie
business and the exploitation of its intellectual property rights would be
enhanced if they were centralised in India.
Finally, UTV considers that the implementation of the Proposal will reduce the
exposure of its movie business to the foreign exchange risk arising from UMP
accounting and funding in US dollars but (amongst other things) incurring its
costs in relation to procuring services from India, save time and costs
resulting from maintaining an additional public quotation and simplify
compliance with legal, regulatory and fiscal requirements across multiple
jurisdictions.
6. Recommendation
The Independent UMP Directors, who have been so advised by Jefferies, consider
the terms of the Proposal to be fair and reasonable. In providing its advice,
Jefferies has taken into account the commercial assessments of the Independent
UMP Directors. Accordingly, the Independent UMP Directors intend unanimously to
recommend that the Independent UMP Shareholders vote in favour of the Scheme at
the Court Meeting as they intend to do in respect of their entire beneficial
holdings of UMP Shares, amounting in aggregate to 100,288 UMP Shares,
representing approximately 0.42 per cent. of the UMP Shares held by the
Independent UMP Shareholders.
7. Background to and reasons for the recommendation
In deciding to recommend the Proposal, the Independent UMP Directors have taken
into account a number of factors, including those summarised below.
* Enhanced trading liquidity: The Independent UMP Directors believe that the
Independent UMP Shareholders who choose to hold the New UTV Shares issued to
them in dematerialised form should benefit from the substantially greater
liquidity of the UTV Shares on the Indian Stock Exchanges. In the ninety days
ending on 17 July 2009, being the last Business Day prior to this announcement,
UMP's liquidity has been approximately US$12,061 in value of UMP Shares traded
per day and with trading occurring only on 11.11 per cent. of the available
trading days. UTV's liquidity over the same period has been approximately
US$1,296,240 in value of UTV Shares traded per day and with trading occurring on
100 per cent. of the available trading days. The New UTV Shares, provided that
they are held in a Demat Account (see paragraph 16 below), will be fully
tradable on the Indian Stock Exchanges upon the granting of admission to listing
and trading by the Indian Stock Exchanges. UTV has undertaken to use its best
endeavours to procure that the New UTV Shares are admitted to listing and (in
relation to New UTV Shares to be held in dematerialised form) to trading on the
Indian Stock Exchanges.
* Improved funding prospects: The UMP Group is currently funded by means of an
ongoing working capital facility provided by UTV to UMP's subsidiary,
UTV(Mauritius), which is committed until March 2010 and repayable on twelve
months' notice by either party. As part of the Merged Group, the Independent UMP
Directors believe that the movie business should have improved access to the
larger financial resources of UTV, assisting the achievement of its expansion
and future working capital needs.
* Reduced asset risk: The Proposal provides increased diversity for the
Independent UMP Shareholders as part of the Merged Group that holds a wider
portfolio of media interests in many jurisdictions around the world. In
particular, the Independent UMP Directors believe that the Independent UMP
Shareholders should benefit from exposure to the entire array of UTV's
businesses which include interactive (gaming), broadcasting, television (content
production and airtime sales) and new media.
* Fair premium: On 17 July 2009, being the last Business Day prior to this
announcement, the Proposal values each UMP Share at approximately US$1.87, a
premium of approximately 91.8 per cent. to the closing middle market price of
US$0.975 per UMP Share on 17 July 2009 based on the Indian Closing Price of
Rs.341.45 per UTV Share on 17 July 2009. In considering the level of the
premium, the Independent UMP Directors have taken into account that the Proposal
does not represent an offer for a controlling stake in UMP and have also
considered the availability of alternative options for the Independent UMP
Shareholders.
Additionally, the Independent UMP Directors believe that the Independent UMP
Shareholders will benefit from the elimination of the time and costs associated
with maintaining a quotation of a subsidiary on a public market.
The Independent UMP Directors note the long duration of the expected timetable
for the implementation of the Proposal and have taken this into account in their
consideration of the Proposal. The Independent UMP Shareholders should refer to
the risk factors related to the Proposal referred to in paragraph 12 below; such
risk factors have been taken into account by the Independent UMP Directors.
The Independent UMP Directors consider that the Independent UMP Shareholders are
being afforded a valuable opportunity, at an exchange ratio for their UMP Shares
which the Independent UMP Directors (who have been so advised by Jefferies)
consider to be fair and reasonable, to move their shareholding from that of a
subsidiary whose shares are admitted to trading on AIM to that of a parent
company with a broader income stream and asset base, whose share trading on the
Indian Stock Exchanges is much more liquid. In providing its advice, Jefferies
has taken into account the commercial assessments of the Independent UMP
Directors.
Accordingly, the Independent UMP Directors intend unanimously to recommend that
the Independent UMP Shareholders vote in favour of the Scheme at the Court
Meeting that will be convened in due course.
8. Information on UMP
UMP Plc, formerly UTV Motion Pictures Plc, is a holding company for
UTV(Mauritius) and was incorporated in the Isle of Man under company number
000687V. UMP's ordinary shares (being the UMP Shares) were admitted to trading
on AIM on 2 July 2007 in conjunction with a placing of 24,137,931 UMP Shares at
a price of US$2.90 per UMP Share. UMP has a market capitalisation of
approximately US$101.53 million based on the closing price of UMP Shares of
US$0.975 on 17 July 2009, being the last Business Day prior to the date of this
announcement. Approximately 76.82 per cent. of the issued share capital of UMP
is already owned by UTV.
The issued share capital of UTV(Mauritius) comprises 80,200,000 ordinary shares
of US$0.05 each, 80,000,000 (99.75 per cent.) of which are held by UMP and the
remainder of which are held by UTV.
UTV(Mauritius) is engaged in the media and entertainment industry with
operations in the production and exploitation of Indian, Hollywood and animation
movies in many jurisdictions around the world. The main activities of
UTV(Mauritius) involve (a) the production (or co-production) of Hindi movies,
Indian regional language movies, Hollywood movies and animation (international
and Indian) movies and (b) the distribution of these movies (and movies acquired
from third parties) through various networks and across several platforms,
including Indian and international theatrical, Indian and international home
video, television, video on demand, direct to home broadcasts, the internet and
others (including Indian and international new media and in-movies advertising
and merchandising).
UTV(Mauritius) uses the distribution channels operated by UTV in India, and by
its subsidiaries in the US and the UK, and uses third party distributors in
several other territories (primarily in Asia, Australia and parts of Europe and
Africa). Hollywood movies co-produced by UTV(Mauritius) are distributed by
recognised US media distributors, primarily in the US domestic market.
For the financial year ended 31 March 2009, UMP had total revenues of US$35.13
million and net profit after tax of US$10.99 million.
9. Information on UTV
UTV is a media company based in Mumbai, India. Since it began as a television
content company in 1990, UTV has developed into a global integrated
entertainment content production and distribution company with five business
streams: television (content production and airtime sales), movies (production
and distribution), broadcasting, interactive (gaming) and new media. UTV is the
only integrated media company in India deriving its revenues from multiple
streams; from TV content to movies to broadcasting to games to digital and new
media.
The UTV Shares are listed on the Bombay Stock Exchange and the National Stock
Exchange with a current market capitalisation of approximately Rs.11.68 billion
(approximately US$239.80 million) based on the Indian Closing Price of UTV
Shares on 17 July 2009, being the last Business Day before the date of this
announcement. For the financial year ended 31 March 2009, UTV had total
consolidated revenues of Rs.6,768.45 million (approximately $145.70 million) and
consolidated net profit after tax after minority interest of Rs.356.28 million
(approximately $7.67 million).
The growth of UTV has been noticed by strategic and financial investors with
numerous external investments having been received since its inception,
including by Newscorp, Warburg Pincus and Mitsui & Co. of Japan. UTV completed
its initial public offering in March 2005, which raised Rs.585 million and was
twenty-six times oversubscribed. In 2006, TWDC(SEA) made its first strategic
investment into UTV which was followed by an additional investment in February
2008. TWDC(SEA) currently holds 59.94 per cent. of UTV's current issued share
capital although, pursuant to the Shareholders' Agreement, it may not exercise
voting rights in excess of 12,752,500 UTV Shares (which currently represent
48.21 per cent. of the votes entitled to be cast at a general meeting of UTV),
until November 2012.
The UTV Group has a well diversified business model spanning five distinct
categories:
-Television involves the production of content and the sale of commercial air
time to advertisers on networks throughout India. UTV has broadcast multiple
programmes on 26 channels in 19 countries in seven languages and has a library
of over 5,000 hours of programming. UTV also sells air time on Sun Network,
India's largest regional network, across its four channels: Sun TV, Surya TV,
Udaya and Gemini.
-Movies is focused on the production of Indian, Hollywood and animated films and
the distribution of such films across various platforms. UTV has more than a
decade of experience in movie production having produced / co-produced Bollywood
movie blockbusters such as Chalte Chalte, Fiza, Swades, Lakshya and Rang De
Basanti and Hollywood movies, including The Namesake and The Happening.
-Gaming includes video game development, publishing and global distribution
across mobile, online and console platforms. UTV has acquired majority stakes in
three gaming companies - Ignition (console gaming), which has aggregated and
empowered some of the best global talent to create cutting edge high-end console
game content; Indiagames (mobile gaming), which has a significant market share
in India; and Truegames, which is a US?based start?up company which is
developing games for the online platform.
-Broadcasting involves the marketing and broadcasting of a diverse set of
television channels in India. UTV has strategically focussed on specialty genre
channels which are available on cable and satellite distribution.
-New Media is a horizon business for the company which attempts to converge
UTV's content development and creative capabilities to mobile and internet
platforms. This segment specifically targets a youth audience in domains such as
business, finance, entertainment (TV, films and music), gadgets and technology.
10. Current trading and outlook of UTV
On 10 July 2009, UTV released its audited results for the year ended 31 March
2009, which included the following financial highlights on a consolidated basis:
- operating revenues for the year reported growth of 53 per cent. to Rs.6,768
million from Rs.4,424 million;
- net profit after tax after minority interest for the year was Rs.356
million;
- segmental revenue contribution for the year as follows: Movies 45 per
cent., Television 21 per cent., Games Content 18 per cent., Broadcasting 13 per
cent. and New Media 3 per cent.;
- consolidated debt at 31 March 2009 of Rs.4,700 million and consolidated
cash and cash equivalents of Rs.1,220 million; and
- total capital employed in operations of Rs.18,572 million.
UTV considers itself to be well positioned to post a revenue growth of
40-50
per cent. for the financial year ended 31 March 2010 and to emerge relatively
unaffected by the current economic downturn on account of its low dependence on
advertising revenues; its well diversified business portfolio; its spread across
various geographies; its established synergies with global partners and
strategic investors; and its continuing evaluation of opportunities across its
different divisions.
UTV's revenue mix from different segments is expected to remain broadly the same
in the short term with a gradually increasing contribution from the gaming and
broadcasting segment. The motion pictures segment is expected to record good
growth with a larger slate both in terms of number of releases and the size of
the movies. However, margins may be under pressure due to the slowdown in TV
rights and the emergence of a new syndication model. As UTV is a growth company,
a number of its divisions, namely the broadcasting, new media and gaming
verticals, are currently in "investment" mode and at various stages of growth.
It is likely, therefore, that UTV will require further financing if capital
requirements vary from its current plans. Any additional equity financing may be
dilutive to UTV shareholders, and debt financing may involve restrictions on
financing and operating activities. However, UTV is constantly exploring
financing options in both debt and equity at various subsidiary levels, which
would include raising capital through the co-production of movies and games and
the granting of minority investments in subsidiaries to financial and/or
strategic partners.
UTV is considering investing up to 49 per cent., subject to an independent
valuation report and regulatory approvals, into an Indian special purpose
vehicle that would own and control the Indian Business News Channel, UTVi which
is currently owned by the Chairman and Managing Director of UTV, Rohinton
Screwvala and other affiliates, who would own the remaining 51 per cent. in the
special purpose vehicle.
11. Plans for UMP
Upon the Scheme becoming effective in accordance with its terms and the New UTV
Shares being issued to the Independent UMP Shareholders pursuant to the Scheme
and the Indian Scheme, all UMP's assets and business will be transferred to UTV
and UMP will be dissolved without a winding up.
UTV expects that the operational business of UMP will continue to be conducted
in a manner broadly similar to that in which it is presently conducted,
including in relation to places of business and deployment of fixed assets,
notwithstanding the benefits of the Proposal relating to enhanced management of
the movie business and the exploitation of its intellectual property rights
resulting from centralisation in India. As with any business, changes will be
made as necessary from time to time following a review of the Merged Group's
operations, financial condition and performance.
12. Structure of the Proposal
The Scheme
The Proposal will be implemented, subject to the satisfaction or (in certain
cases) waiver of the Conditions, by means of a Court sanctioned scheme of
arrangement between UMP and the Independent UMP Shareholders under section 157
of the Isle of Man Companies Act.
The implementation of the Proposal will also require a scheme of arrangement
between UTV, the UTV Shareholders and the UTV Creditors under sections 391 to
394 (read with section 78 and sections 100 to 103) of the Indian Companies Act.
The Scheme will be conditional on, amongst other things, the Indian Scheme (so
far as it relates to UMP) becoming effective.
It is intended that there will also be a merger of UTV(Mauritius) into UTV
pursuant to the Indian Scheme and a scheme of arrangement under Mauritius law,
to be effective immediately upon the Scheme and the Indian Scheme becoming
effective (when UTV(Mauritius) is a wholly owned subsidiary of UTV).
Purpose
The purpose of the Scheme is to enable UTV to acquire full ownership and control
of the movie business now owned by UTV(Mauritius), UMP's subsidiary. Any
liabilities of UMP will be satisfied by UMP prior to the effective date of the
Scheme. To become effective, the Scheme will require, amongst other things, the
approval of a majority in number of the Independent UMP Shareholders present and
voting in person or by proxy at the Court Meeting, representing not less than 75
per cent. in value of the UMP Shares held by such Independent UMP Shareholders,
together with the sanction of the Court. The Scheme will only become effective
in accordance with its terms upon delivery to the Registrar of Companies of a
copy of the Court Order (which must be effected within seven days of the Court
Hearing) and all Conditions being satisfied or (in certain cases) waived,
including the Indian Scheme (so far as it relates to UMP) becoming effective.
Upon the Scheme becoming effective, it will be binding on all of the Independent
UMP Shareholders irrespective of whether or not they attended or voted (or how
they voted) at the Court Meeting.
Upon the Scheme becoming effective in accordance with its terms, the New UTV
Shares will be issued to the Independent UMP Shareholders 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 thereto,
including the right to receive and retain all dividends and other distributions
declared or paid by reference to a record date falling after the Effective Date.
The Indian Scheme
The terms of the Indian Scheme will be consistent with those of the Scheme and
those of the Mauritius Scheme subject to the specific requirements of each
jurisdiction and the inter-conditionality between the schemes, and must be
approved by a majority in number representing 75 per cent. in value of the UTV
Shareholders and (if not dispensed with by the Indian Court) UTV Creditors, in
each case present and voting at the Indian Court Meeting. The Indian Scheme will
also require the sanction of the Indian Court. The Indian Scheme (so far as it
relates to UMP) will be conditional on, amongst other things, the completion of
all regulatory and procedural formalities in the Isle of Man (which will include
the Scheme being sanctioned by the Court), whereupon the transfer of the
business and assets of UMP shall be deemed to be effective as of 1 April 2007.
As part of the Indian Court process, SSPA & CO. (Chartered Accountants) and BDO
Haribhakti Consulting Pvt. Ltd. have provided an Exchange Ratio Valuation Report
and (as required by the listing agreements between UTV and the Indian Stock
Exchanges) Collins Stewart has provided a Fairness Opinion. The Exchange Ratio
Valuation Report will be submitted to the Indian Court, together with the
Fairness Opinion. The Fairness Opinion will also be available for inspection by
the UTV Shareholders at the Indian Court Meeting.
Mauritius Scheme
It is intended that there will also be a merger of UTV(Mauritius) into UTV
pursuant to the Indian Scheme and a scheme of arrangement under Mauritius law
between UTV(Mauritius), the UTV(Mauritius) shareholders and the UTV(Mauritius)
creditors, UTV and its shareholders and creditors under sections 261 to 264 of
(and paragraph 4 of Part II of the Fourteenth Schedule to) the Mauritius
Companies Act, which is expected to become effective immediately upon the Scheme
and the Indian Scheme becoming effective (when UTV(Mauritius) becomes a wholly
owned subsidiary of UTV). The Mauritius Scheme will be deemed to be effective as
of 1 April 2007. It is to be noted that neither the Scheme nor the Proposal is
conditional upon, or in any way dependent on, the Mauritius Scheme becoming
effective.
Terms and Conditions
The Proposal will be on the terms and subject to the Conditions set out in this
announcement and to be set out in the Scheme Document, including the obtaining
of relevant regulatory approvals, the approval of the Scheme by the Independent
UMP Shareholders, the sanction of the Scheme by the Court and the Indian Scheme
(so far as it relates to UMP) becoming effective.
In view of the long timetable for the Proposal, it is a requirement of the
Implementation Agreement that, if the Independent UMP Directors withdraw,
qualify or modify their recommendation of the Proposal at any time after the
Court Meeting and prior to the time of the Indian Court Hearing, another meeting
of the Independent UMP Shareholders must be convened to afford them the
opportunity to vote again on the Proposal. It is a Condition of the Scheme that,
at any such meeting, the Independent UMP Shareholders vote in favour of a
resolution to continue with the Scheme.
Similarly, in order to facilitate the intended tax neutral treatment of the
Scheme (so that the issue of the New UTV Shares in consideration of the
effective transfer of UMP Shares by the Independent UMP Shareholders should not
be regarded as a taxable event in India), as at the Scheme Record Time, not more
than 25 per cent. (by value) of the UMP Shares held by the Independent UMP
Shareholders may be held by persons located in jurisdictions where the delivery
of New UTV Shares to such persons pursuant to the Proposal would or may infringe
the laws of that jurisdiction (each a "Relevant Jurisdiction") or the laws or
regulations of India or would or may require UMP or UTV to obtain or observe any
governmental or other consent or any registration, filing or other formality
(including ongoing requirements) with which UMP or UTV is unable to comply or
which UMP or UTV regards as unduly onerous. Further information regarding
Overseas Shareholders is set out in paragraph 21 below.
The Scheme Document will include full details of the Scheme, as well as a
summary of the Indian Scheme and the Mauritius Scheme, together with notice of
the Court Meeting and the expected timetable.
Admission of New UTV Shares to listing and trading
UTV will apply for the New UTV Shares to be admitted to listing and trading on
the Indian Stock Exchanges. It is expected that the New UTV Shares will be
listed on the Indian Stock Exchanges within fourteen days of the Scheme becoming
effective and that New UTV Shares issued in dematerialised form (but not New UTV
Shares in certificated form) will be admitted to trading on the Indian Stock
Exchanges at the same time. The listing, and the (where appropriate) admission
to trading, of the New UTV Shares is not something that can be guaranteed by
UTV, however, and such listing and admission is not a Condition of the Scheme
(or of the Indian Scheme). It is possible, therefore, that the Scheme could
become effective and the Independent UMP Shareholders will receive New UTV
Shares but that either (i) such shares will not subsequently be admitted to
listing or trading at all or (ii) the admission of such shares to listing and
trading will be delayed. In order to reduce such risks, UTV has undertaken to
use its best endeavours to procure that the New UTV Shares are admitted to
listing and (where applicable) trading on the Indian Stock Exchanges.
The Independent UMP Shareholders should be aware that only New UTV Shares held
in dematerialised form can be traded on the Indian Stock Exchanges and, in order
to hold shares in dematerialised form, a Demat Account will need to be
established (as referred to in more detail in paragraph 16 below).
Timing
It is expected that the final hearing of the Indian Scheme will be heard within
thirty days of the final hearing of the Scheme and that the Scheme and the
Indian Scheme (and the Mauritius Scheme) will become effective on the same date.
An outline of the principal timetable milestones is set out below.
+---------------------------------------------------+---------------------+
| Event | Date |
+---------------------------------------------------+---------------------+
| Following this announcement applications made to | mid July 2009 |
| the Indian Stock Exchanges | |
+---------------------------------------------------+---------------------+
| Consents | end August 2009 |
| received from | |
| the Indian | |
| Stock | |
| Exchanges and | |
| then: | |
| ? | |
| applications | |
| made to FIPB | |
| and RBI | |
| ? | |
| applications | |
| made to the | |
| Isle of Man | |
| and Indian | |
| courts for | |
| directions | |
| hearings | |
+---------------------------------------------------+---------------------+
| Scheme Document posted to the Independent UMP | mid September 2009 |
| Shareholders convening the Court Meeting | |
+---------------------------------------------------+---------------------+
| Indian Scheme Document posted to the UTV | mid September 2009 |
| Shareholders and the UTV Creditors convening the | |
| Indian Court Meeting | |
+---------------------------------------------------+---------------------+
| Court meetings of the Independent UMP | mid October 2009 |
| Shareholders, the UTV Shareholders and (if | |
| required) the UTV Creditors | |
+---------------------------------------------------+---------------------+
| FIPB and RBI consents received (note that there | end November 2009 |
| is no prescribed time limit within which FIPB and | |
| RBI are required to respond) | |
+---------------------------------------------------+---------------------+
| Court Hearing to sanction the Scheme | early December 2009 |
+---------------------------------------------------+---------------------+
| Court Order registered with the Isle of Man | mid December 2009 |
| Companies Registry | |
+---------------------------------------------------+---------------------+
| Indian Court Hearing to sanction the Indian | mid January 2010 |
| Scheme | |
+---------------------------------------------------+---------------------+
| Effective Date of both schemes: | mid February 2010 |
| Indian Court Order registered with the Indian | |
| Registrar of Companies | |
| UTV allots New UTV Shares to the Independent UMP | |
| Shareholders and the UMP business and assets are | |
| transferred to UTV | |
| Cancellation of UMP's AIM admission | |
| UMP dissolved | |
| Mauritius Scheme becomes effective and the | |
| business and assets of UTV(Mauritius) are | |
| transferred to UTV | |
+---------------------------------------------------+---------------------+
| Listing of New UTV Shares on BSE/NSE effective | end February 2010 |
+---------------------------------------------------+---------------------+
These dates are indicative only and will depend on, amongst other things, the
approvals of the Indian Stock Exchanges, the FIPB and the RBI, as well as the
Indian Court process required to sanction the Indian Scheme (which, so far as it
relates to UMP, is a Condition of the Scheme).
Risk factors related to the Proposal
Lack of liquidity for the Independent UMP Shareholders who do not obtain a Demat
Account: In order to enjoy the anticipated benefit of holding more liquid shares
in UTV, the Independent UMP Shareholders will be required to open a Demat
Account in India. The Independent UMP Shareholders who do not correctly open a
Demat Account will be allotted New UTV Shares in the form of physical share
certificates and will not be entitled to trade in such New UTV Shares on the
Indian Stock Exchanges (although it should be possible for an Independent UMP
Shareholder to obtain a Demat Account, and then trade its New UTV Shares, at a
later stage).
The New UTV Shares will not be listed on the Bombay Stock Exchange or the
National Stock Exchange immediately after allotment: The listing, and the
admission to trading, of the New UTV Shares on the Indian Stock Exchanges is not
a condition of the Scheme (or of the Indian Scheme). Instead, and in accordance
with Indian Stock Exchange requirements and Indian practice, the order of the
Indian Court will be filed (so that the Scheme will become effective) prior to
the granting of permission for listing and admission to trading of the New UTV
Shares on the Indian Exchanges. It is possible, therefore, that the Scheme will
become effective and the Independent UMP Shareholders will receive New UTV
Shares but either that (i) such shares will not subsequently be admitted to
listing or trading at all or (ii) the admission of such shares to listing or
trading will be delayed. In order to reduce such risks, UTV has undertaken to
use its best endeavours to procure that the New UTV Shares are admitted to
listing and (where applicable) trading on the Indian Stock Exchanges as soon as
practicable and it is expected that such listing and admission to trading will
occur within fourteen days following the Effective Date. It is also a Condition
of the Scheme that, immediately before the Effective Date, no written
communication has been received from the Indian Stock Exchanges and no action
has been taken by UTV which could reasonably be expected to prejudice such
admission to listing and trading.
Lack of roll?over relief in respect of UK capital gains: The Proposal is
unlikely to qualify as a reconstruction for UK tax purposes. The Independent UMP
Shareholders are therefore likely to be treated as disposing of their UMP Shares
and roll over relief on chargeable gains may not be available. The disposal or
deemed disposal may give rise to a chargeable gain or an allowable loss for the
purposes of UK taxation of chargeable gains, depending on the Independent UMP
Shareholder's circumstances and subject to any available exemption or relief. In
addition, the issue of the New UTV Shares to the Independent UMP Shareholders
could be treated as a distribution and taxable as a dividend in their hands. On
the basis that the Independent UMP Shareholders are able to substantiate to HMRC
that the transaction is undertaken for genuine commercial reasons or in the
ordinary course of making or managing investments, and that enabling an income
tax advantage to be obtained is not the main or one of the main objects of the
transaction, the issue of the New UTV Shares to the Independent UMP Shareholders
should not be treated as a distribution and should not be taxable as a dividend
in their hands. The issue would be addressed on the taxpayers' self assessment
returns. Further details regarding the intended tax treatment of the Proposal
will be included in the Scheme Document that is to be posted to the Independent
UMP Shareholders in due course.
The Scheme will fail if the share register condition for tax neutral treatment
of the Proposal is not satisfied: One requirement for the tax neutral treatment
of the Proposal is that 75 per cent. in value of the Independent UMP
Shareholders on UMP's share register at the Scheme Record Time must become
shareholders of UTV. It is a Condition of the Scheme, therefore, that not more
than 25 per cent. of the Independent UMP Shareholders on UMP's share register at
the Scheme Record Time are in Relevant Jurisdictions. In view of this, there is
a risk that, even if the Scheme is approved and sanctioned, this 75 per cent.
requirement for tax neutral treatment might not be met and the Scheme will not
proceed. See paragraph 21 below regarding the steps that the Independent UMP
Directors may take to help ensure that this Condition is satisfied.
Tax neutrality of the Proposal under Indian income tax law: It is intended that
the Scheme will be compliant with the provisions of Section 2(1B) read with
provisions 47(vii) of the Indian Income-tax Act so that the Proposal should be
regarded as a tax neutral for Indian income tax purposes. The Indian Revenue
Authorities have the power to review any transaction, call for necessary
information and carry out independent analysis, should they determine that the
transaction is not tax neutral from an Indian income tax stand point. Further,
they may initiate proceedings to recover tax liability, if any, arising under
the transaction. Further details regarding the intended tax treatment of the
Proposal and the relevant information to be collated in relation to acquisition
of UMP Shares by Independent UMP Shareholders will be included in the Scheme
Document that is to be posted to Independent UMP Shareholders in due course.
Potential Indian tax risk for shareholders in a Relevant Jurisdiction whose New
UTV Shares are issued to a nominee: The Proposal provides for an arrangement
under which (i) New UTV Shares shall not be allotted and issued to the
Independent UMP Shareholders on UMP's share register at the Scheme Record Time
who are in a Relevant Jurisdiction but, instead, would be allotted and issued to
a nominee on their behalf appointed by UTV (the "Nominee") and (ii) the Nominee
would be required, as soon as practicable, to sell the New UTV Shares so
allotted and to account for the proceeds, net of applicable Indian taxes and
costs, to the relevant Independent UMP Shareholder. Although the Indian tax
analysis of this situation is not clear, it is likely that such Independent UMP
Shareholders would suffer a charge to tax in respect of the allotment and issue
of the New UTV Shares. Further details on the intended tax treatment of the
Proposal will be included in the Scheme Document that is to be posted to the
Independent UMP Shareholders in due course.
Length of timetable increases the risk that a material adverse event may occur
before the Scheme becomes effective:The expected timetable differs from the
standard timetable under the City Code and is also much longer than the normal
timetable for schemes of arrangement in the UK (which might reasonably be
expected not to extend over more than three months). The Proposal requires a
much longer timetable because of the Indian regulatory approvals required from
the Indian Stock Exchanges, the FIPB and the RBI, as well as the Indian Court
process required to sanction the Indian Scheme (which, so far as it relates to
UMP, is a Condition of the Scheme). The length of the expected timetable (being
over seven months but which could be longer) increases the possibility that some
form of material adverse event occurs with respect to UTV before the Scheme
becomes effective. The proposed Scheme also differs from a standard scheme of
arrangement in the UK in that the Court will be asked to sanction the Scheme at
a time when there are still a number of material Conditions to be satisfied,
including the requirement that the Indian Scheme (so far as it relates to UMP)
receive the sanction of the Indian Court.
To reflect the possibility of adverse facts or circumstances arising during the
long timetable of the Scheme (whether before or after the Court Hearing), a
number of the Conditions are expressed to apply until the Indian Court Hearing.
In addition, the Implementation Agreement provides a mechanism whereby the
Independent UMP Directors may withdraw, qualify or modify their recommendation
of the Proposal in the period between the Court Hearing to sanction the Scheme
and the Indian Court Hearing to sanction the Indian Scheme.
The Implementation Agreement provides that the Independent UMP Directors must
use their best endeavours to consult with UTV and the Panel before any such
withdrawal, modification or qualification of their recommendation of the
Proposal and it is acknowledged that, in such circumstances, the Independent UMP
Directors will not have regard to any matter which is short term in nature or
not material in the context of the Proposal as a whole. The Independent UMP
Directors may otherwise take account of any material adverse change in
circumstances which would have affected their decision to recommend the
Proposal.
In the event that the Independent Directors do withdraw, qualify or modify their
recommendation of the Proposal following the Court Hearing to sanction the
Scheme, the Implementation Agreement provides that they may nonetheless convene,
or be required by UTV to convene, a further extraordinary general meeting of the
Independent UMP Shareholders to consider a resolution to approve the Scheme in
the light of the circumstances which have led to the withdrawal, qualification
or modification of the recommendation. If any such extraordinary general meeting
is convened, it is a Condition of the Scheme becoming effective that the
resolution to approve the Scheme is passed on a poll by a majority in number
representing three-quarters in value of the Independent UMP Shareholders present
and voting at such meeting.
Further information on the Implementation Agreement is set out in paragraph 18
below.
Possibility of dilution before the Scheme becomes effective: It is a Condition
of the Scheme that UTV does not effect a rights issue involving the issue of UTV
Shares if it features (a) a discount of 10 per cent. or more to the prevailing
market price and (b) a record date prior to the Effective Date (being the date
on which the New UTV Shares would be issued to the Independent UMP
Shareholders). The Scheme does not contain any Condition, however, which could
be invoked if UTV effects a rights issue at a discount of less than 10 per cent.
to the prevailing market price or issues shares on the basis of a placing or
other form of non-preemptive issue. Any such further issuance of UTV Shares
would dilute the Independent UMP Shareholders' holdings of New UTV Shares below
their anticipated levels and could be at a more advantageous price.
Controlling influence of TWDC(SEA) and the Promoter Group: Independent UMP
Shareholders are already a minority of UMP compared to the majority holding of
UTV. Under the Proposal, Independent UMP Shareholders will become shareholders
of UTV and will constitute a minority in relation to both the Promoter Group and
TWDC(SEA). Further information on TWDC(SEA) and its relationship with UTV and
the Promoter Group is set out in paragraph 13 below.
13. TWDC(SEA)
TWDC(SEA) became a shareholder in UTV on 6 September 2006 when it acquired
3,400,000 UTV Shares representing 14.85 per cent. of the issued UTV share
capital. In February 2008, TWDC(SEA), the Promoter Group and UTV entered into
the Subscription Agreement, pursuant to which TWDC(SEA) agreed to subscribe for
a further 9,352,500 UTV Shares and the Promoter Group was granted the Promoter
Group Warrants (providing for the right of the Promoter Group to subscribe for
4,532,000 UTV Shares), and the Shareholders' Agreement. As a result of
TWDC(SEA)'s subscription of the 9,352,500 UTV Shares pursuant to the
Subscription Agreement, TWDC(SEA) became obliged under the SEBI Regulations to
make an Open Offer to the public shareholders of UTV to acquire up to 7,745,494
existing UTV Shares, representing 20 per cent. of UTV's issued share capital
(assuming exercise in full of the Promoter Warrants).
At present the Promoter Group holds 7,970,480 UTV Shares, representing 23.31 per
cent. of UTV's issued share capital (31.47 per cent. on a fully diluted basis)
and TWDC(SEA) holds 20,497,994 UTV Shares, representing 59.94 per cent. of UTV's
issued share capital (51.60 per cent. on a fully diluted basis). After taking
into account the impact of the voting restriction in the Shareholders' Agreement
(referred to below), the Promoter Group and TWDC(SEA) are currently able to
exercise 30.13 per cent. and 48.21 per cent., respectively, of the votes
entitled to be cast at a general meeting of UTV (based on UTV's issued share
capital on the date of this announcement). The Promoter Group also continues to
hold the Promoter Group Warrants (which are taken into account in determining
the above figures on a fully diluted basis).
Shareholders' Agreement
In the Shareholders' Agreement TWDC(SEA) has agreed that, during a standstill
period ending in November 2012, it will not acquire UTV Shares in excess of
12,752,500 UTV Shares, representing 32.10 per cent. of the current issued equity
share capital of UTV (on a fully diluted basis) and will not (save in certain
limited circumstances) exercise voting rights in excess of these 12,752,500 UTV
Shares. During the same period, the Promoter Group is entitled to acquire from
TWDC(SEA) all the shares tendered to TWDC(SEA) in the Open Offer but may not
(subject to limited exceptions) acquire more than 40 per cent. of the fully
diluted share capital of UTV or exercise in excess of 40 per cent. of the voting
rights. After the standstill period, TWDC(SEA) may not acquire any additional
UTV Shares without the consent of the Promoter Group and (save in certain
limited circumstances) TWDC(SEA)'s share ownership or voting rights cannot
exceed 50 per cent.
The Shareholders' Agreement also provides that the UTV board is to comprise
twelve directors, three of which are to be appointed by the Promoter Group,
three are to be appointed by TWDC(SEA) and the other six directors are to be
independent directors.
TWDC(SEA) has been granted veto rights over major corporate matters, including
the commencement or acquisition of any business (outside the UTV movie, gaming,
new media or the broadcasting businesses) involving cumulative funding in excess
of US$10 million, the acquisition or sale of any other business for a
consideration in excess of US$30 million, investments of US$30 million
(including in new movies and games) and investments in certain broadcasting
services in specified countries. The Promoter Group has independent veto rights
over the same matters.
The restrictions in the Shareholders' Agreement summarised above are also
reflected in UTV's articles of association.
TWDC(SEA)'s Broadcasting Investment
UTV's broadcasting business comprises a 75 per cent. shareholding in UTV Global
Broadcasting Limited, which has two wholly owned subsidiaries, Genx
Entertainment Limited and UTV Entertainment Television Limited. Pursuant to
agreements entered into at the same time as the Subscription Agreement and the
Shareholders' Agreement, TWDC(SEA) acquired a direct 15 per cent. equity
shareholding in UGBL, together with warrants to subscribe for further shares in
UGBL which, on exercise, would result in TWDC(SEA) holding a maximum of 37.5 per
cent. of the issued share capital of UGBL. The other ten per cent. of the share
capital of UGBL is held by Unilazer and, pursuant to an agreement between UTV
and Unilazer dated 28 March 2009, UTV has agreed to acquire such shareholding
from Unilazer, subject to satisfaction of specified conditions, including
receipt of necessary regulatory approvals.
The Proposal
In order to procure TWDC(SEA)'s support for the Proposal, UTV has given certain
undertakings to TWDC(SEA) in relation to the Proposal, including an undertaking
that it will not during the five years following the Scheme becoming effective
dispose of any interest in the businesses carried on by UMP or UTV(Mauritius)
(other than to a direct wholly owned subsidiary).
14. Irrevocable undertakings
The Independent UMP Directors have irrevocably undertaken to vote in favour of
the Scheme at the Court Meeting in respect of their entire beneficial holdings
of UMP Shares, amounting in aggregate to 100,288 UMP Shares, representing
approximately 0.42 per cent. of the UMP Shares held by the Independent UMP
Shareholders.
UTV has also received irrevocable undertakings from TWDC(SEA) and the Promoter
Group to vote in favour of the Indian Scheme and the resolution of UTV
Shareholders at the Indian Court Meeting in respect of a total of 20,722,980 UTV
Shares representing, in aggregate, 60.60 per cent. of the UTV Shares and, as a
result of the voting restriction in the Shareholders' Agreement and UTV's
articles of association, 78.35 per cent. of the votes entitled to be cast at the
Indian Court Meeting.
Further details of the irrevocable undertakings are shown in Appendix III to
this announcement.
15. Management and employees
UTV has given assurances to the Independent UMP Directors that the existing
employment rights, including pension rights and the relevant employment
contracts, of the management and employee of UTV(Mauritius) (if any) will be
fully safeguarded upon the Proposal becoming effective.
To reflect the considerable amount of additional unforeseen work carried out by
the Independent UMP Directors in considering and assisting with the
implementation of the Proposal, the Board (excluding the Independent UMP
Directors) has agreed that each of the Independent UMP Directors would receive a
payment equivalent to twelve months' fees under their current letter of
appointment on 15 June 2009 and a further fee of GBP4,000 per month until the
earlier of the expiry of four months from 15 June 2009 and the lapse or
withdrawal of the Proposal.
Upon the Scheme becoming effective in accordance with its terms, UMP will be
dissolved and the Independent UMP Directors will have no further role in the
Merged Group.
16. New UTV Shares
On issue, the New UTV Shares will comprise 15.84 per cent. (assuming no exercise
of any rights to subscribe for or to convert into UTV Shares) or 13.94 per cent.
(on a fully diluted basis) of the UTV Shares. Although TWDC(SEA) currently holds
59.94 per cent. of the UTV Shares (and would hold 50.45 per cent. on
implementation of the Proposal assuming no exercise of warrants and options),
pursuant to the Shareholders' Agreement (and as reflected in UTV's Articles of
Association) TWDC(SEA) is able to vote in respect of only 12,752,500 of the UTV
Shares, currently representing 48.21 per cent. of the votes entitled to be cast
at a general meeting of UTV (based on UTV's issued share capital at the date of
this announcement), until November 2012.
A table summarising the UTV shareholding structure is set out below.
+--------------+------------+---------+------------+----------+--------------+------------+
| | Current Position | Shareholding after | Enlarged UTV Share |
| | | issue of New UTV | Capital (i.e |
| | | Shares to | shareholdings after |
| | | Independent UMP | conversion/issue of |
| | | Shareholders | warrants, ESOP and New |
| | | | UTV Shares to Independent |
| | | | UMP Shareholders) |
+--------------+----------------------+-----------------------+---------------------------+
|Shareholding | No. of | % | No. of | % Stake | No. of | % Stake |
| | Shares | Stake | Shares | | Shares | |
+--------------+------------+---------+------------+----------+--------------+------------+
| Promoter | 7,970,480 | 23.31% | 7,970,480 | 19.62% | 7,970,480 | 17.27% |
| Group | | | | | | |
+--------------+------------+---------+------------+----------+--------------+------------+
| Promoter | - | - | - | - | 4,532,000 | 9.82% |
| Group | | | | | | |
| Warrants | | | | | | |
+--------------+------------+---------+------------+----------+--------------+------------+
| TWDC(SEA) | 12,752,500 | 37.29% | 12,752,500 | 31.39% | 12,752,500 | 27.62% |
| - Voting | | | | | | |
+--------------+------------+---------+------------+----------+--------------+------------+
| TWDC(SEA) | 7,745,494 | 22.65% | 7,745,494 | 19.06% | 7,745,494 | 16.78% |
| - Non | | | | | | |
| Voting | | | | | | |
+--------------+------------+---------+------------+----------+--------------+------------+
| Public | 5,726,994 | 16.75% | 5,726,994 | 14.09% | 5,726,994 | 12.41% |
+--------------+------------+---------+------------+----------+--------------+------------+
| New UTV | - | - | 6,436,782 | 15.84%* | 6,436,782 | 13.94%* |
| Shares | | | | | | |
+--------------+------------+---------+------------+----------+--------------+------------+
| ESOPs | - | - | - | - | 1,000,000 | 2.17% |
| | | | | | | |
+--------------+------------+---------+------------+----------+--------------+------------+
| Total | 34,195,468 | 100.00% | 40,632,250 | 100.00% | 46,164,250 | 100.00% |
+--------------+------------+---------+------------+----------+--------------+------------+
* Note: Pursuant to the Shareholders' Agreement, until November 2012, TWDC(SEA)
is permitted to vote only up to 12,752,500 UTV Shares. After the Effective Date,
until November 2012, TWDC(SEA) will not be able to vote on 7,745,494 UTV Shares
and the effective voting rights of the Independent UMP Shareholders (as holders
of New UTV Shares) will be 19.57 per cent. (assuming no exercise or conversion
of warrants or options) or 16.75 per cent. (on a fully diluted basis) of the UTV
share capital.
The New UTV Shares will have identical rights to, and rank pari passu with, the
existing UTV Shares and will be fungible with, and form a single class with,
such shares.
None of the existing UTV Shares nor any of the New UTV Shares (to be issued
pursuant to the Proposal) have been or will be registered under the Securities
Act and will be subject to customary restrictions in respect of transfers into
the United States.
Under Indian law there may be certain restrictions on foreign residents
(including residents of Pakistan and Bangladesh) holding UTV Shares.
As explained in paragraph 21 below, the board of UMP proposes to take steps to
prevent persons in Relevant Jurisdictions from becoming shareholders in UMP.
The Independent UMP Shareholders who appear in the register of members of UMP as
at the Scheme Record Time will be eligible for the New UTV Shares in accordance
with their holding of UMP Shares as at that time.
Ordinarily, trading on the Indian Stock Exchanges can happen only in
dematerialised format. The Independent UMP Shareholders who wish to receive
shares in dematerialised form will be required to forward to UTV the details of
their Permanent Account Number and the details of their Demat Account in India.
Details of how to obtain a Permanent Account Number and a Demat Account will be
contained in the Scheme Document.
The UTV Shares constitute the only class of issued shares in UTV.
17. Changes to accounting policy and creation of Business Restructuring
Reserve Account
As part of the Indian Scheme (so far as it relates to UTV(Mauritius) and the
Mauritius Scheme, UTV is proposing a reduction of capital by writing off certain
assets and offsetting certain expenses against the "Securities Premium Account"
up to the extent of the balance available in the Securities Premium Account
which, as at 31 March 2009, was Rs.8,781.07 million. The quantum of this
reduction will be proposed to the Board of Directors of UTV by the management of
UTV on or after the Effective Date and determined by the Board of Directors of
UTV on or after such date. The quantum of this reduction is not expected to use
the entire balance of the Securities Premium Account.
Accordingly, in terms of the Indian Companies Act and other applicable
provisions (if any), upon the Indian Scheme (so far as it relates to
UTV(Mauritius)) and the Mauritius Scheme becoming effective, the Securities
Premium Account of UTV will be reorganised from the Effective Date and an
amount, as approved by the Board of Directors of UTV, will be credited to a new
account called the "Business Restructuring Reserve Account" from the Securities
Premium Account.
The newly created Business Restructuring Reserve Account will be available
towards, amongst other things, the write off by UTV of (i) the expenses incurred
in relation to the implementation of the Scheme and (ii) the reduction in value
of assets of UTV(Mauritius) that will vest in UTV (pursuant to the Indian Scheme
and the Mauritius Scheme), as a result of changes in accounting policies that
will be applied with effect from the appointed date in the Indian Scheme (being
1 April 2007).
As and when the board of directors of UTV determines that a part or the balance
remaining in the Business Restructuring Reserve Account is no longer required
for writing off by UTV of any expenses or reductions in value, a part or the
balance (as determined by the board of directors of UTV) will be transferred to
the General Reserve account. This transfer can occur at any point in the future
at the discretion of the board of directors of UTV.
18. Implementation Agreement
UTV and UMP have entered into an Implementation Agreement which contains,
amongst other things: (i) certain limited warranties given to UMP by UTV; (ii)
certain undertakings by UMP (including in relation to the carrying on of its
businesses (in particular, that it will not dispose of the whole or any part of
the business and assets of the UMP Group other than in the ordinary course of
business or pursuant to the Scheme); (iii) certain undertakings by UTV
(including in relation to notifying UMP of certain matters in connection with
its business); and (iv) certain undertakings by both parties regarding the
implementation of the Scheme, the Indian Scheme and the Mauritius Scheme,
including endeavouring to implement the Scheme in accordance with the timetable
referred to in paragraph 12 above and endeavouring to achieve satisfaction of
the Conditions which relate to such party or which are within its control.
UTV and UMP have agreed that the timetable for the Proposal shall be amended up
to 30 June 2010 to such extent as may be reasonably necessary to reflect any
delay in satisfying the Conditions, in particular as regards the approvals
required from the FIPB and the RBI.
In view of the long timetable for the Proposal (as referred to in paragraph 12
above), there are also provisions recognising the Independent UMP Directors'
ability to withdraw, qualify or modify their recommendation of the Proposal
prior to the Indian Court Hearing based on the good faith exercise of their
fiduciary duties or their obligations under the Code. The Implementation
Agreement provides that, in such circumstances, UTV may request UMP to convene
and hold a meeting of the Independent UMP Shareholders to determine whether or
not the Proposal should proceed (notwithstanding the circumstances giving rise
to such withdrawal, qualification or modification of the recommendation) and it
is a Condition of the Scheme that at any such meeting a resolution to proceed
with the Scheme is passed on a poll by a majority in number representing
three-quarters in value of the Independent UMP Shareholders present and voting
in person or proxy at such meeting.
As referred to in paragraph 12 above, the application for admission to listing
and trading of the New UTV Shares will be made after the Scheme and the Indian
Scheme have become effective, and such admission is not a condition of either
scheme. Under the Implementation Agreement, UTV undertakes to use its best
endeavours to procure that the New UTV Shares are admitted to listing and (if
appropriate) trading on the Indian Stock Exchanges. As UMP will dissolve
pursuant to the Scheme upon the Scheme becoming effective, the Independent UMP
Directors are parties to the Implementation Agreement solely for the purposes of
having the right to enforce this undertaking against UTV after the Scheme
becomes effective; the Implementation Agreement also provides that the benefit
of this undertaking given by UTV may be directly enforced by the holders of the
New UTV Shares from time to time.
The Implementation Agreement may be terminated in certain circumstances,
including: (a) if such termination is agreed in writing at any time by UMP and
UTV prior to the Effective Date; (b) if the Scheme Document is not posted by 1
December 2009 (or such later date as the parties may agree); (c) if the board of
UTV withdraws the Indian Scheme; (d) if at any time TWDC(SEA) or any member of
the Promoter Group indicates that it does not intend to comply with the
irrevocable undertakings which it has given to vote in favour of the Indian
Scheme; (e) if there are certain material breaches of the Implementation
Agreement; or (f) if the Scheme has not become effective in accordance with its
terms by 30 June 2010.
The Independent UMP Directors are entitled to exercise all of UMP's rights under
the Implementation Agreement and shall have full authority on behalf of UMP to
negotiate, litigate and settle any claim arising out of such rights.
Further information in respect of the Implementation Agreement will be set out
in the Scheme Document.
19. Cancellation of trading of UMP Shares on AIM
If the Scheme becomes effective, the Company will be dissolved. Application will
be made to the London Stock Exchange for the cancellation of the UMP Shares from
admission to trading on AIM on or around the Effective Date. On the date of
cancellation, share certificates in respect of the UMP Shares will cease to be
valid and entitlements to UMP Shares held within the CREST system will be
cancelled.
20. Disclosure of interests in UMP
As at the date of this announcement, UTV owns or is otherwise interested in
80,000,000 UMP Shares, representing approximately 76.82 per cent. of the
existing issued share capital of UMP.
Save as stated above in this paragraph 20, neither UTV nor any of its directors
nor, so far as UTV is aware, any party acting in concert with UTV, has any
interest in, or right to subscribe for, any UMP Shares or securities convertible
or exchangeable into UMP Shares, nor does any such person have any short
position (whether conditional or absolute and whether in money or otherwise)
including short positions under derivatives or arrangements in relation to any
UMP Shares or securities convertible or exchangeable into UMP Shares. For these
purposes, "arrangement" includes any indemnity or option arrangement or any
agreement or understanding, formal or informal, of whatever nature, relating to
UMP Shares or securities convertible or exchangeable into UMP Shares which may
be an inducement to deal or refrain from dealing in such securities.
21. Overseas Shareholders
The implications of the Scheme and the Proposal for Overseas Shareholders may be
affected by the laws of the jurisdictions in which they are resident, ordinarily
resident or of which they are a citizen. Overseas Shareholders should inform
themselves about and observe any applicable legal requirements. Overseas
Shareholders should also consult their own legal and tax advisers with respect
to the legal and tax consequences of the Proposal.
One of the requirements of the intended tax neutral treatment of the Proposal
(from an Indian tax perspective), is that the Independent UMP Shareholders to
whom New UTV Shares are issued on the Scheme becoming effective must represent
at least 75 per cent. (by value) of the Independent UMP Shareholders at the
Scheme Record Time. The ability to achieve the intended tax neutral treatment of
the Proposal will be materially prejudiced, therefore, if, between the date of
this announcement and the Scheme Record Time, UMP Shares are transferred to
persons located in a Relevant Jurisdiction.
As a result of this, the satisfaction of the 75 per cent. requirement is a
Condition of the Scheme and (as contemplated by Articles 38.1 and 38.2 of UMP's
Articles), between the date of this announcement and the Scheme Record Time, the
Independent UMP Directors intend to take all reasonable steps to prevent the
transfer of UMP Shares to a shareholder located in a Relevant Jurisdiction. Such
steps may include the Independent UMP Directors determining from time to time to
exercise the right in Article 40 of UMP's Articles to close the Register for
such period (not exceeding thirty days) as they may consider reasonably
necessary.
The Proposal also provides for an arrangement under which (i) New UTV Shares
would not be allotted and issued to Independent UMP Shareholders on UMP's share
register at the Scheme Record Time who are in a Relevant Jurisdiction but,
instead, would be allotted and issued to a Nominee on their behalf appointed by
UTV and (ii) the Nominee would be required, as soon as practicable, to sell the
New UTV Shares so allotted and to account for the proceeds, net of applicable
taxes, to the relevant Independent UMP Shareholder. Overseas Shareholders should
note the risk factor in relation to this arrangement referred to in paragraph 12
above.
Further details in relation to Overseas Shareholders will be contained in the
Scheme Document.
22. General
The Proposal and the Scheme will be subject to the Conditions set out in
Appendix I. Appendix II contains the bases and sources of certain information
contained in this announcement. Details of the irrevocable undertakings are set
out in Appendix III. The definitions of certain terms used in this announcement
are set out in Appendix IV.
Enquiries:
+--------------------------------------+--------------------------------------+
| UTV | Telephone: +91 22 4098 1505 |
| Amit Banka | |
| | |
+--------------------------------------+--------------------------------------+
| Merrill Lynch | Telephone: +44 (0) 20 7628 1000 |
| (Financial Adviser to UTV) | |
| Noah Bulkin | |
| Anya Weaving | |
| Andrew R. Chen | |
| | |
+--------------------------------------+--------------------------------------+
| UMP | Telephone: + 44 (0) 20 7630 7042 |
| Andrew Carnegie | |
| Peter Vanderpump | |
| | |
+--------------------------------------+--------------------------------------+
| Jefferies International Limited | Telephone: +44 (0) 20 7029 8000 |
| (Financial Adviser to UMP) | |
| Julian Culhane | |
| Sarah McNicholas | |
| | |
+--------------------------------------+--------------------------------------+
| Grant Thornton | Telephone: +44 (0) 20 7383 5100 |
| (Nominated Adviser to UMP) | |
| Fiona Owen | |
| Robert Beenstock | |
+--------------------------------------+--------------------------------------+
Merrill Lynch (a subsidiary of Bank of America Corporation) is acting
exclusively for UTV and no one else in connection with the Proposal and will not
be responsible to anyone other than UTV for providing the protections afforded
to clients of Merrill Lynch or for providing advice in relation to the Proposal
or any other matters referred to in this announcement.
Jefferies International Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for UMP and
no one else in connection with the Proposal and other matters referred to in
this announcement and accordingly will not be responsible to anyone other than
UMP for providing the protections afforded to the clients of Jefferies
International Limited nor for providing advice in relation to the Proposal or
any other matter referred to in this announcement.
Forward looking statements
This announcement contains statements about UTV and UMP that are or may be
forward looking statements. All statements other than statements of historical
facts included in this announcement may be forward looking statements. Without
limitation, any statements preceded or followed by or that include the words
"targets", "plans", "believes", "expects", "aims", "intends", "will", "should",
"may", "anticipates", "estimates", "synergies", "cost savings", "projects",
"strategy", or words or terms of similar substance or the negative thereof, are
forward looking statements. Forward looking statements include statements
relating to the following: (i) the expected timetable for completing the
Proposal, future capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend policy, losses
and future prospects of UTV, UMP or the Merged Group; (ii) business and
management strategies and the expansion and growth of UTV's, UMP's or the Merged
Group's operations and potential synergies resulting from the Proposal; and
(iii) the effects of government regulation on UTV's, UMP's or the Merged Group's
business.
These forward looking statements are not guarantees of future performance. They
have not been reviewed by the auditors of UTV or UMP. These forward looking
statements involve known and unknown risks, uncertainties and other factors
which may cause them to differ from the actual results, performance or
achievements expressed or implied by such forward looking statements. These
forward looking statements are based on numerous assumptions regarding the
present and future business strategies of such persons and the environment in
which each will operate in the future. All subsequent oral or written forward
looking statements attributable to UTV or UMP or any of their respective
members, directors, officers or employees or any persons acting on their behalf
are expressly qualified in their entirety by the cautionary statement above. All
forward looking statements included in this announcement are based on
information available to UTV and UMP on the date hereof. Investors should not
place undue reliance on such forward looking statements, and UTV and UMP
undertake no obligation to publicly update or revise any forward looking
statements.
No statement in this announcement is intended to constitute a profit forecast
for any period.
Dealing disclosure requirements
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 UTV or of UMP, 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 Scheme becomes effective or 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 UTV or UMP, 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 UTV or of UMP by UTV or UMP, 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 Takeover 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 the 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 in this section "Dealing disclosure requirements" are
defined in the City Code, which can also be found on the Takeover 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 Takeover Panel.
Distribution of this announcement and other matters
The distribution of this announcement and the accompanying documents in
jurisdictions other than the United Kingdom may be restricted by law and
therefore persons into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to comply with the
restrictions may constitute a violation of the securities laws of any such
jurisdiction.
This announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities or a solicitation of an offer to buy any securities
pursuant to this announcement or otherwise in any jurisdiction in which such
offer or solicitation is unlawful. This announcement has been prepared in
connection with a proposal in relation to a scheme of arrangement pursuant to,
and for the purpose of, complying with the laws of the Isle of Man and the City
Code and information disclosed may not be the same as that which would have been
prepared in accordance with laws of jurisdictions outside the Isle of Man and
the United Kingdom. Nothing in this announcement should be relied upon for any
other purpose.
The statements contained herein are made as at the date of this announcement,
unless some other time is specified in relation to them, and the issue of this
announcement shall not give rise to any implication that there has been no
change in the facts set forth herein since that date.
No person has been authorised to make any representations on behalf of UMP or
UTV concerning the Proposal or the Scheme which are inconsistent with the
statements contained herein and any such representations, if made, may not be
relied upon as having been so authorised.
This announcement does not constitute a prospectus or prospectus equivalent
document.
No person should construe the contents of this announcement as legal, financial
or tax advice and each person who receives this announcement should consult
their own advisers in connection with the matters contained herein.
This announcement is not offer for sale of securities in the United States. The
New UTV Shares to be issued in connection with the Proposal, have not been, and
will not be, registered under the Securities Act or under any relevant
securities laws of any state or other jurisdiction of the United States, nor
have clearances been, nor will they be, obtained from the securities commission
or similar authority of any province or territory of Canada and no prospectus
has been, or will be, filed with, such commission or authority or any securities
law of any province or territory of Canada nor has a prospectus in relation to
the New UTV Shares been, nor will one be, lodged with, or registered by, the
Australian Securities and Investments Commission, nor have any steps been taken,
nor will any steps be taken, to enable the New UTV Shares to be offered in
compliance with applicable securities laws of Japan. Accordingly, unless an
exemption under relevant securities laws is available, the UTV Shares may not be
offered, sold, resold or delivered, directly or indirectly, in, into or from the
United States, Canada, Australia or Japan or any other jurisdiction in which an
offer of UTV Shares would constitute a violation of relevant laws or require
registration of the New UTV Shares, or to or for the account or benefit of any
person located in the United States, Canada, Australia or Japan.
Unless otherwise determined by UTV and UMP and permitted by applicable law and
regulation, copies of this announcement and any other documents related to the
Proposal or the Scheme are not being, and must not be, mailed or otherwise
forwarded, distributed or sent in or into the United States, Canada, Australia
or Japan. All persons receiving this announcement (including, without
limitation, custodians, nominees and trustees) should observe these restrictions
and any applicable legal or regulatory requirements of their jurisdiction and
must not mail or otherwise forward, send or distribute this announcement in,
into or from the United States, Canada, Australia or Japan.
APPENDIX I
CONDITIONS AND CERTAIN FURTHER TERMS
OF THE SCHEME AND THE
PROPOSAL
1. Steps required for the Scheme to take effect
The Proposal is conditional upon the Scheme becoming effective in accordance
with its terms by not later than 30 June 2010 or such later date (if any) as UMP
and UTV may agree and the Court and the Panel may allow.
The Scheme will not take effect under the Isle of Man Companies Act unless:
(a) it is approved by a majority in number representing 75 per cent. or
more in value of the Independent UMP Shareholders present and voting, either in
person or by proxy, at the Court Meeting;
(b) it is sanctioned (with or without modification, on terms reasonably
acceptable to UMP and UTV) by the Court; and
(c) a certified copy of the Court Order, together with a copy of the
Scheme and all documents required to be annexed to the Scheme (if any), are
delivered for registration to the Isle of Man Companies Registry.
UMP and UTV have agreed that, save as agreed between them, the necessary actions
to make the Scheme effective under the Isle of Man Companies Act (as referred to
in paragraphs (a) to (c), inclusive, above):
(i) will not be taken unless Conditions 2(b) and (c) (as referred to in
paragraph 2 below) have been satisfied or UMP has agreed to defer such
satisfaction to a later time (being not later than the time of the Indian Court
Hearing); and
(ii) will only be taken if UTV and/or UMP (as appropriate) has not
invoked nor notified the Panel that it intends to invoke (in each case with the
consent of the Panel) Conditions (j) to (q) (inclusive) (as referred to in
paragraph 2 below).
2. Conditions of the Scheme
The Scheme will not become effective in accordance with its terms unless the
following Conditions have been satisfied or waived:
(a) the approval by the Indian Stock Exchanges of the Indian Scheme
pursuant to clause 24(f) of the listing agreement entered into by UTV with the
Indian Stock Exchanges (with any conditions imposed by the Indian Stock
Exchanges being satisfactory to both UTV and UMP, acting reasonably);
(b) the approval by the FIPB (with any conditions imposed by the FIPB
being satisfactory to both UTV and UMP, acting reasonably) of the issue of the
New UTV Shares to the Independent UMP Shareholders in consideration of the
transfer of all the assets and business of UMP (a non-news-broadcasting company)
under the Indian Scheme (if not satisfied prior to the Court hearing as referred
to in paragraph 1 above);
(c) the approval by the RBI (with any conditions imposed by the RBI being
satisfactory to both UTV and UMP, acting reasonably) of the issue of the New UTV
Shares to the Independent UMP Shareholders in consideration of the transfer of
all the assets and business of UMP under the Indian Scheme (if not satisfied
prior to the Court hearing as referred to in paragraph 1 above);
(d) the approval of the Indian Scheme by a majority in number
representing 75 per cent. or more in value of the UTV Shareholders and (to the
extent required by the Indian Court) each class of UTV Creditors (being the UTV
Secured Creditors and the UTV Unsecured Creditors) present and voting, either in
person or by proxy, at the Indian Court Meeting;
(e) the sanction (with or without modification, on terms reasonably
acceptable to UMP and UTV) of the Indian Scheme (so far as it relates to UMP) by
the Indian Court;
(f) the Indian Scheme (so far as it relates to UMP) becoming effective;
(g) as at the Scheme Record Time not more than 25 per cent. (by value) of
the UMP Shares held by the Independent UMP Shareholders are held by persons
located in jurisdictions where the delivery of New UTV Shares to such persons
pursuant to the Proposal would or may infringe the laws of that jurisdiction or
the laws or regulations of India or would or may require UMP or UTV to obtain or
observe any governmental or other consent or any registration, filing or other
formality (including ongoing requirements) with which UMP or UTV is unable to
comply or which UMP or UTV regards as unduly onerous;
(h) if, at any time between the date of the Court Order and the date of
the Indian Court Order, there has been a withdrawal, modification or
qualification of the Independent UMP Directors' recommendation of the Proposal,
then it is required that:
(i) an extraordinary general meeting of the Independent UMP Shareholders
has been convened; and
(ii) a resolution has been passed at such meeting on a poll by a majority
in number representing three-quarters in value of the Independent UMP
Shareholders present and voting either in person or by proxy resolving to
proceed with the Scheme (for which purposes each Independent UMP Shareholder may
cast one vote in respect of each UMP Share held by him);
(i) no written communication has been received from the Indian Stock
Exchanges and no action has been taken by UTV which could reasonably be expected
to prejudice the receipt of the approval of the Indian Stock Exchanges in
relation to the listing and (in respect of the Independent UMP Shareholders who
have supplied correct details of their Demat Account and correctly requested
such account to be credited with their New UTV Shares) trading of the New UTV
Shares;
(j) except as (i) publicly announced in accordance with the Securities
and Exchange Board of India (Disclosure and Investor Protection) Guidelines,
2000 or the rules, bye-laws and regulations of the Indian Stock Exchanges
(including the listing rules) by UTV prior to 20 July 2009; (ii) disclosed in
this document; or (iii) disclosed in the annual report and accounts for UTV for
the period ended 31 March 2009, UTV not since 31 March 2009 having allotted or
issued, or agreed, authorised or proposed the allotment or issue of, additional
shares of any class or any securities convertible into or exchangeable for
shares of any class or rights, warrants or options to subscribe for, or acquire,
any such shares or securities, in circumstances where:
(i) such action constituted or would constitute a rights issue conducted
in accordance with section 81(1) of the Indian Companies Act;
(ii) such action is at a price or exercise price representing a discount
of 10 per cent. or more to the average of the closing market price of UTV Shares
on the stock exchange on which the shares of UTV are most frequently traded
during the two weeks preceding the board of directors of UTV, or a committee
thereof, determining the price for such rights issue and intimating the same to
the Indian Stock Exchanges; and
(iii) the record date for such rights issue is before the Effective Date;
(k) except as (i) publicly announced in accordance with the AIM Rules or
the Disclosure and Transparency Rules or other applicable requirements by UMP or
UTV prior to 20 July 2009; (ii) disclosed in this document; (iii) disclosed in
the annual report and accounts for UMP for the period ended 31 March 2009; or
(iv) disclosed in the annual report and accounts for UTV for the period ended 31
March 2009, there being no provision of any agreement, arrangement, licence,
permit or other instrument or obligation to which any member of the wider UMP
Group or wider UTV Group is a party or by or to which any such member or any of
its assets is or may be bound, entitled or subject, which in consequence of the
Proposal or the proposed acquisition of any shares or other securities in, or
business or assets of, UMP or UTV or because of a change in the control or
management of UMP or UTV or otherwise, would or might reasonably be expected to
result (in each case to an extent which is adverse to and material in the
context of the wider UMP Group or the wider UTV Group taken as a whole (as the
case may be)) in any of the following:
(i) any monies borrowed by or any other indebtedness (actual or
contingent) of any such member, being or becoming repayable or capable of being
declared repayable immediately or earlier than their or its stated maturity date
or repayment date or the ability of any such member to borrow monies or incur
any indebtedness being withdrawn, inhibited or adversely affected;
(ii) any such agreement, arrangement, licence, permit, instrument or
obligation or the rights, liabilities or interests of any such member thereunder
being terminated or modified or affected or any obligation or liability arising
or any adverse action being taken or arising thereunder;
(iii) any assets or interests of any such member being or falling to be
disposed of other than in the ordinary course of business or any right arising
under which any such asset or interest will or could reasonably be expected to
be required to be disposed of or otherwise will or could reasonably be expected
to cease to be available to any such member;
(iv) the enforcement of any mortgage, charge or other security interest
over the whole or any part of the business, property, interests or assets of any
such member; or
(v) any such member being obliged to acquire or to offer to acquire any
asset owned by any other person,
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument or obligation to which any
member of the wider UMP Group or wider UTV Group is a party or by or to which
any such member or any of its assets may be bound, entitled or subject, would or
could result in, or might reasonably be expected to result in, any of the events
or circumstances as are referred to in sub-paragraphs (i) to (v) of this
paragraph (k) in any case to an extent which is or would be material in the
context of the wider UMP Group or the wider UTV Group (as the case maybe) taken
as a whole;
(l) no central bank, government or governmental, quasi-governmental,
supranational, statutory, regulatory, administrative, environmental or
investigative authority, body, court, trade agency, association, institution or
any other body or person whatsoever in any jurisdiction (each a "Third Party")
having taken, instituted, implemented or threatened any action, proceeding,
suit, investigation, enquiry or reference, or required any action to be taken or
information to be provided, or enacted, made or proposed any statute,
regulation, decision or order, or having taken any other steps, or refrained
from having taken any other steps, and there not continuing to be outstanding
any statute, regulation, order or decision, which would or might reasonably be
expected to (in each case to an extent which is adverse to and material in the
context of the wider UMP Group or the wider UTV Group (as the case may be) taken
as a whole):
(i) require, prevent, restrict or materially delay the divestiture, or
alter the terms envisaged for any proposed divestiture, by any member of the
wider UTV Group or any member of the wider UMP Group of all or any portion of
their respective businesses, assets or property or impose any limitation on the
ability of any of them to conduct their respective businesses (or any of them)
or to own, use or operate any of their respective assets or properties or any
part thereof;
(ii) impose any limitation on, or result in a delay in, the ability of
any member of he wider UTV Group or the wider UMP Group either directly or
indirectly to acquire or to hold or to exercise effectively any rights of
ownership in respect of shares or loans or securities convertible into shares or
any other securities (or the equivalent) in any member of the wider UMP Group or
the wider UTV Group or to exercise management control over any such member;
(iii) make the Proposal or its implementation or the acquisition or
proposed acquisition by UTV or any member of the wider UTV Group of any shares
or other securities in, or control of, UMP void, voidable, illegal, and/or
unenforceable under the laws of any jurisdiction or otherwise, directly or
indirectly, restrain, restrict, prohibit, delay or otherwise interfere with the
same or impose material additional conditions or obligations with respect
thereto or require material amendment thereof or otherwise challenge or
interfere therewith;
(iv) require any member of the wider UTV Group or the wider UMP Group to
acquire or offer to acquire any shares or other securities (or the equivalent)
or interest in any member of the wider UMP Group or the wider UTV Group owned by
any third party (other than in implementation of the Proposal);
(v) impose any limitation on the ability of any member of the wider UMP
Group or wider UTV Group to integrate or co-ordinate its business, or any part
of it, with the businesses of any other member of the wider UMP Group or wider
UTV Group;
(vi) result in any member of the wider UMP Group or wider UTV Group
ceasing to be able to carry on business under any name under which it presently
does so; or
(vii) otherwise adversely affect any or all of the business, assets,
financial or trading position, profits or prospects of any member of the wider
UTV Group or any member of the wider UMP Group,
and all applicable waiting and other time periods during which any such Third
Party could institute, implement or threaten any such action, proceeding, suit,
investigation, enquiry or reference or any other step under the laws of any
jurisdiction in respect of the Proposal or the acquisition or proposed
acquisition of any UMP Shares having expired, lapsed or been terminated;
(m) all necessary filings or applications having been made in connection
with the Proposal and all statutory or regulatory obligations in any
jurisdiction having been complied with, and all applicable waiting periods
(including any extensions thereof) under any applicable laws or regulations
having expired, lapsed or been terminated, in connection with the Proposal or
the acquisition by any member of the wider UTV Group of any shares or other
securities in, or control of, UMP, or any of its business, assets or property,
and all authorisations, orders, recognitions, grants, consents, licences,
confirmations, clearances, permissions and approvals ("Consents") for the
proposed acquisition of any shares or other securities in, or control of, UMP,
or any of its business, assets or property, by any member of the wider UTV Group
and/or the issue of the New UTV Shares to the Independent UMP Shareholders
having been obtained in terms and in a form reasonably satisfactory to UTV and
UMP from all appropriate third parties or persons with whom any member of the
wider UMP Group or wider UTV Group has entered into contractual arrangements and
all such Consents, together with all Consents reasonably necessary or
appropriate to carry on the business of any member of the wider UMP Group or
wider UTV Group (as the case may be), remaining in full force and effect and all
filings necessary for such purpose having been made and there being no notice or
intimation of any intention to revoke or not to renew any of the same at the
time at which the Scheme becomes effective or otherwise unconditional and all
necessary statutory or regulatory obligations in any relevant jurisdiction
having been complied with, in each case where not to do so would have a material
and adverse effect on the wider UMP Group or the wider UTV Group (as the case
may be) taken as a whole;
(n) except as (i) publicly announced in accordance with the AIM Rules or
the Disclosure and Transparency Rules or other applicable requirements by UMP or
UTV prior to 20 July 2009; (ii) disclosed in this document; (iii) disclosed in
the annual report and accounts for UMP for the period ended 31 March 2009; or
(iv) disclosed in the annual report and accounts for UTV for the period ended 31
March 2009 (as the case may be):
(i) no change or deterioration having occurred in the business, assets,
financial or trading position, profits or prospects of any member of the wider
UMP Group or wider UTV Group, in each case which is material and adverse in the
context of the wider UMP Group or the wider UTV Group (as the case may be) taken
as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the wider UMP Group or wider UTV Group is or
may become a party (whether as a plaintiff, defendant or otherwise) and no
investigation, complaint or reference to, any Third Party against or in respect
of any member of the wider UMP Group or wider UTV Group having been instituted,
announced or threatened by or against or remaining outstanding in respect of any
member of the wider UMP Group or wider UTV Group which in any such case is or
might reasonably be expected to materially and adversely affect the wider UMP
Group or wider UTV Group (as the case may be) taken as a whole;
(iii) no contingent or other liability having arisen or increased or
become apparent to UTV or UMP which does or would be likely to materially and
adversely affect the wider UTV Group or wider UMP Group (as the case may be)
taken as a whole; and
(iv) no steps having been taken and no omissions having been made which
will or are likely to result in the withdrawal, cancellation, termination or
modification of any licence or Consent held by any member of the wider UMP Group
or wider UTV Group which in either case is necessary for the proper carrying on
of its business and which in any case is material in the context of the wider
UMP Group or the wider UTV Group (as the case may be) taken as a whole;
(o) except as (i) publicly announced in accordance with the AIM Rules or
the Disclosure and Transparency Rules or other applicable requirements by UMP or
UTV prior to 20 July 2009; (ii) disclosed in this document; (iii) disclosed in
the annual report and accounts for UMP for the period ended 31 March 2009; or
(iv) disclosed in the annual report and accounts for UTV for the period ended 31
March 2009, no member of the wider UMP Group or wider UTV Group (as the case may
be) having, since 31 March 2009:
(i) other than as required by the implementation of the Proposal, made
any alteration to its memorandum or articles of association or other
constitutional documents which is or could reasonably be considered to adversely
affect the pari passu status of the New UTV Shares in relation to all other
equity shares in the capital of UTV or which otherwise to adversely and
materially affect the interests of the Independent UMP Shareholders in the
context of the Proposal;
(ii) other than to another wholly-owned member of the wider UTV Group,
recommended, declared, paid or made or proposed to recommend, declare, pay or
make any bonus issue, dividend or other distribution (whether payable in cash or
otherwise) which is material in the context of the wider UMP Group or the wider
UTV Group (as the case may be) taken as a whole;
(iii) save for intra-UTV Group transactions, purchased, redeemed or repaid
or announced any proposal to purchase, redeem or repay any of its own shares or
other securities or reduced or made any other change to any part of its share
capital;
(iv) entered into, varied or terminated or authorised, proposed or
announced its intention to enter into, vary or terminate any contract,
transaction, arrangement or commitment (whether in respect of capital
expenditure or otherwise) which is of a long term, onerous or unusual nature or
magnitude or which involves or could reasonably be expected to involve an
obligation of such a nature or magnitude which is other than in the ordinary
course of business and which in any case is material and adverse in the context
of the wider UMP Group or the wider UTV Group (as the case may be) taken as a
whole;
(v) become unable or admitted or threatened in writing that it is unable,
to pay its debts or having stopped or suspended (or threatened to stop or
suspend) payment of its debts generally or a substantial part thereof, or ceased
or threatened to cease carrying on all or a substantial part of its business, in
any case which is material in the context of the wider UMP Group or the wider
UTV Group (as the case may be) taken as a whole
(vi) had instituted against it any proceedings seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or had a petition is
presented for its winding-up or liquidation and, in the case of any such
proceeding or petition instituted or presented against it, such proceeding or
petition (a) results in a judgment of insolvency or bankruptcy or the entry of
an order for relief or the making of an order for its winding-up or liquidation
or (b) is not dismissed, discharged, stayed or restrained in each case within 60
days of the institution or presentation thereof, in any case with a material
adverse effect on the wider UMP Group or the wider UTV Group (as the case may
be) taken as a whole;
(vii) taken any corporate action or had any legal proceedings started or
threatened against it for its winding-up, dissolution, striking off or
reorganisation or for the appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of all or any of its assets or
revenues or any analogous proceedings in any jurisdiction or had any such person
appointed, in each case with a material adverse effect on the wider UMP Group or
the wider UTV Group (as the case may be) taken as a whole;
(viii) entered into or varied, or announced its intention to enter into or
vary, any contract, transaction, commitment or other arrangement which is, will
or is reasonably likely to be restrictive on the business of any member of the
wider UMP Group or the wider UTV Group other than to a nature and extent which
is normal in the context of the business concerned or which is not material in
the context of the wider UMP Group or the wider UTV Group (as the case may be)
taken as a whole;
(ix) compromised any claim against it otherwise than in the ordinary
course of business or which is of an amount which is not material and adverse in
the context of the business of the wider UMP Group or of the wider UTV Group (as
the case may be), in each case taken as a whole; or
(x) entered into any contract, commitment, arrangement or agreement or
passed any resolution or made any offer (which remains open for acceptance) with
respect to, or announced any intention to, or to propose to, effect any of the
transactions, matters or events referred to in sub-paragraphs (i) to (ix) of
this paragraph (o);
(p) except as (i) publicly announced in accordance with the AIM Rules or
the Disclosure and Transparency Rules or other applicable requirements by UMP or
UTV prior to 20 July 2009; (ii) disclosed in this document; (iii) disclosed in
the annual report and accounts for UMP for the period ended 31 March 2009; or
(iv) disclosed in the annual report and accounts for UTV for the period ended 31
March 2009 (as the case may be), UMP not having discovered in relation to the
wider UTV Group and UTV not having discovered in relation to the wider UMP Group
that:
(i) any financial, business or other information concerning the wider
UMP Group or wider UTV Group as contained in the information publicly disclosed
at any time by or on behalf of any member of the wider UMP Group or wider UTV
Group, or disclosed at any time in writing by or on behalf of UTV or UMP to UMP
or UTV (respectively) or to or by their respective professional advisers (in
each case in the context of the Proposal), is materially misleading, contains a
material misrepresentation of fact or omits to state a fact necessary to make
that information not misleading and was not subsequently corrected before 20
July 2009, in each case to an extent which is material in the context of the
wider UMP Group or the wider UTV Group (as the case may be) taken as a whole;
(ii) any member of the wider UMP Group or wider UTV Group is subject to
any material liability (contingent or otherwise) which is not disclosed in the
annual report and accounts of UMP for the year ended 31 March 2009 or the annual
report and accounts of UTV for the year ended 31 March 2009 (respectively) and
which is material in the context of the wider UMP Group or wider UTV Group (as
the case may be) when taken as a whole;
(iii) any information which affects the import of any information
disclosed at any time by or on behalf of any member of the wider UMP Group or
the wider UTV Group (as the case may be) and which is material and adverse in
the context of the wider UMP Group or wider UTV Group, in each case when taken
as a whole; or
(iv) any circumstance exists whereby a person or class of persons would be
likely to have any claim or claims against any member of the wider UMP Group or
wider UTV Group which is material to the context of the wider UMP Group or wider
UTV Group, in each case when taken as a whole; and
(q) except as (i) publicly announced in accordance with the AIM Rules or
the Disclosure and Transparency Rules or other applicable requirements by UMP or
UTV prior to 20 July 2009; (ii) disclosed in this document; (iii) disclosed in
the annual report and accounts for UMP for the period ended 31 March 2009; or
(iv) disclosed in the annual report and accounts for UTV for the period ended 31
March 2009 (as the case may be):
(i) no past or present member of the wider UMP Group or wider UTV Group
has failed to comply with any and/or all applicable legislation or regulation,
of any jurisdiction with regard to the disposal, spillage, release, discharge,
leak or emission of any waste or hazardous substance or any substance likely to
impair the environment or harm human health or animal health or otherwise
relating to environmental matters, or that there has otherwise been any such
disposal, spillage, release, discharge, leak or emission (whether or not the
same constituted a non-compliance by any person with any such legislation or
regulations, and wherever the same may have taken place) any of which disposal,
spillage, release, discharge, leak or emission would be reasonably likely to
give rise to any liability (actual or contingent) on the part of any member of
the wider UMP Group or wider UTV Group and which is material in the context of
the wider UMP Group or wider UTV Group as the case may be; or
(ii) there is, or is reasonably likely to be, for that or any other
reason whatsoever, any liability (actual or contingent) of any past or present
member of the wider UMP Group or wider UTV Group to make good, repair, reinstate
or clean up any property or any controlled waters now or previously owned,
occupied, operated or made use of or controlled by any such past or present
member of the wider UMP Group or wider UTV Group, under any environmental
legislation, regulation, notice, circular or order of any government,
governmental, quasigovernmental, state or local government, supranational,
statutory or other regulatory body, agency, court, association or any other
person or body in any jurisdiction and which is material to the context of the
wider UMP Group or wider UTV Group as a whole.
For the purposes of these Conditions the "wider UMP Group" means UMP
and its subsidiary undertakings, associated undertakings and any other
undertaking in which UMP and/or such undertakings (aggregating their interests)
have a significant interest and the "wider UTV Group" means UTV and its
subsidiary undertakings, associated undertakings and any other undertaking in
which UTV and/or such undertakings (aggregating their interests) have a
significant interest, other than in each case UMP and any subsidiary
undertakings thereof, and for these purposes "subsidiary undertaking",
"associated undertaking" and "undertaking" have the meanings given by the
Companies Act 2006 and "significant interest" means a direct or indirect
interest in ten per cent., or more of the equity share capital (as defined in
the Companies Act 2006).
Without prejudice to paragraph 1 above, the Conditions must be
satisfied (or, to the extent applicable, waived) as follows:
(i) Condition 2(a) must be satisfied by the time that the Scheme
Document is posted;
(ii) Conditions 2 (b) and (c) (in each case, if UMP has agreed to defer
satisfaction of such Conditions to a time later than the time of the Court
hearing as referred to in paragraph 1 above), (d), (h) and (k) to (q)
(inclusive) must be satisfied by the time of the Indian Court hearing; and
(iii) Conditions 2(e), (f), (g), (i) and (j) must be satisfied by the
Effective Date,
(or in each such case such later date as UTV and UMP may, with the
consent of the Panel and (if required) the Court, agree), failing which the
Scheme shall not become effective in accordance with its terms and the Proposal
shall lapse.
Subject to the requirements of the Panel and/or (if relevant) the
Court:
(i) UTV and UMP reserve the right to waive in their sole discretion, in
whole or in part, all or any of Conditions 2(g) to (j) (inclusive);
(ii) UTV reserves the right to waive in its sole discretion, in whole or
in part, all or any of Conditions 2 (k) to (q) (inclusive), so far as they
relate to UMP, the UMP Group or any part thereof; and
(iii) UMP reserves the right to waive in its sole discretion, in whole or
in part, all or any of Conditions 2(k) to (q) (inclusive), so far as they relate
to UTV, the UTV Group or any part thereof.
Neither UTV nor UMP (as applicable) shall be under any obligation to
waive or treat as satisfied any of Conditions 2 (b), (c), (d), (h) and (k) to
(q) (inclusive) by a date earlier than the Indian Court hearing or any of
Conditions 2 (e), (f), (g), (i) and (j) (inclusive) by a date earlier than the
Effective Date, in each case notwithstanding that the other Conditions of the
Scheme may at such earlier date have been waived or fulfilled and that there are
at such earlier date no circumstances indicating that any of such Conditions may
not be capable of fulfilment.
The availability of the Proposal to persons not resident in the
United Kingdom may be affected by the laws of the relevant jurisdictions.
Persons who are not resident in the United Kingdom should inform themselves
about and observe any applicable requirements.
This document is not an offer of securities for sale in the United
States and the New UTV Shares, which will be issued in connection with the
Proposal, have not been, and will not be, registered under the US Securities Act
or under the securities law of any state, district or other jurisdiction of the
United States, Australia, Canada or Japan, and no regulatory clearance in
respect of the New UTV Shares has been, or will be, applied for in any
jurisdiction other than India.
The Proposal will be governed by the laws of the Isle of Man and is
subject to the jurisdiction of the Isle of Man Courts. The Proposal will comply
with the requirements of the City Code and the AIM Rules.
3. Certain Further Terms
The Proposal will not proceed if, before the date of the Court Meeting, the
European Commission initiates proceedings under Article 6(1)(c) of Council
Regulation (EEC) 139/2004 in respect of the Proposal or any matter arising from
or relating to the Proposal or any matter arising from or relating to the
Proposal is referred to the Competition Commission (being the independent public
body established by the UK Competition Act 1998).
The New UTV Shares shall be allotted and issued free from all liens, equities,
charges, encumbrances and other interests. The New UTV Shares shall be issued
and allotted as fully paid and shall rank equally in all respects with existing
UTV Shares.
APPENDIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
*
* All prices quoted for UMP Shares are closing prices on the relevant date and are
derived from the Daily Official List of the London Stock Exchange.
*
*
*
*
*
* All prices quoted for UTV Shares are the average of the closing prices for UTV Shares on the Bombay Stock Exchange and the National Stock Exchange on the relevant date. The market capitalisation for UTV is based on the average of the closing prices for UTV Shares on the Bombay Stock Exchange and the National Stock Exchange on 17 July 2009, being the last Business Day prior to this announcement and the 34,195,468 UTV Shares in issue at the date of this announcement. The market capitalisation for UMP is based on the closing price for UMP Shares derived from the Daily Official List of the London Stock Exchange on 17 July 2009, being the last Business Day prior to the date of this announcement and the 104,137,931 UMP Shares in issue at the date of this announcement. The return on capital employed for UTV is calculated on a consolidated basis by dividing the net profit before minority interest plus depreciation for the year ended 31 March 2009 by the capital employed of UTV as at 31 March 2009. Unless otherwise stated, historical profit and loss figures in this announcement have been converted using a currency exchange rate of US$1.00 to Rs.46.46 which represents the average of the twelve month-end exchange rates for the financial year ending 31 March 2009.Unless otherwise stated, a currency exchange rate of US$1.00 to Rs. 48.69 has been used, being the exchange rate at 3:30 p.m. in Mumbai (being the time the market closes in Mumbai) on 17 July 2009, the Business Day in Mumbai prior to the date of this announcement, as sourced from www.rbi.org.in.
APPENDIX III
DETAILS OF IRREVOCABLE UNDERTAKINGS
1. The Independent UMP Directors have given irrevocable undertakings, as
described in paragraph 14 to vote in favour of the resolution to be proposed at
the Court Meeting as follows:
+--------------------------+---------------------+-----------------------+
| Name | Number of UMP | Percentage of UMP |
| | Shares | Shares held by |
| | | Independent UMP |
| | | Shareholders |
+--------------------------+---------------------+-----------------------+
| Andrew Carnegie | 90,288 | 0.37 |
+--------------------------+---------------------+-----------------------+
| Peter Vanderpump | 10,000 | 0.04 |
+--------------------------+---------------------+-----------------------+
These undertakings will lapse if there is a competing offer which, in the
reasonable opinion of Jefferies, has a value which is at least ten per cent.
higher than the value attributed by the Proposal or if the Implementation
Agreement lapses or is terminated in accordance with its terms.
2. The following UTV Shareholders have given irrevocable undertakings as
described in paragraph 14 to vote in favour of the resolution to be proposed to
UTV Shareholders at the Indian Court Meeting:
+--------------------------+---------------------+-----------------------+
| Name | Number of UTV | Percentage of votes |
| | Shares | entitled to be cast |
| | | at Indian Court |
| | | Meeting |
+--------------------------+---------------------+-----------------------+
| TWDC(SEA) | 12,752,500 | 48.21 |
+--------------------------+---------------------+-----------------------+
| Rohinton Screwvala | 2,172,347 | 8.21 |
+--------------------------+---------------------+-----------------------+
| Unilazer | 3,231,740 | 12.22 |
+--------------------------+---------------------+-----------------------+
| Unilazer HK | 2,565,593 | 9.70 |
+--------------------------+---------------------+-----------------------+
| Zarina Mehta | 800 | 00.00 |
+--------------------------+---------------------+-----------------------+
The undertaking by TWDC(SEA) is conditional on UTV complying with certain
obligations in relation to the implementation of the Proposal. All undertakings
in this paragraph 2 will lapse if the Indian Scheme is cancelled, withdrawn,
lapses in accordance with its terms or otherwise does not become effective.
APPENDIX IV
DEFINITIONS
"AIM" the market by that name operated by the London Stock Exchange;
"AIM Rules" the AIM Rules for Companies published by the London Stock
Exchange from time to time;
"Bombay Stock Exchange" or "BSE" the Bombay Stock Exchange Limited;
"Business Day" a day, other than a Saturday or Sunday or public holiday or
bank holiday, on which banks are generally open for normal business in the City
of London;
"City Code" or the "Code" the City Code on Takeover and Mergers;
"Companies Act 2006" the United Kingdom Companies Act 2006;
"Conditions" the conditions to the implementation of the Scheme and the
Proposal, which are set out in Appendix I to this announcement;
"Court" the High Court of Justice in the Isle of Man;
"Court Hearing" the Court hearing to sanction the Scheme;
"Court Hearings" the Court Hearing and the Indian Court Hearing;
"Court Meeting" the meeting of the Independent UMP Shareholders to be
convened by order of the Court pursuant to section 157 of the Isle of Man
Companies Act to consider and, if thought fit, approve the Scheme (with or
without amendment) (and any adjournment thereof);
"Court Order" the order of the Court sanctioning the Scheme;
"CREST" the computerised settlement system to facilitate the holding and
transfer of title to or interests in securities in uncertificated form, operated
by Euroclear UK & Ireland Limited;
"Demat Account" an account operated with a depository participant in India in
accordance with the provisions of the Depositaries Act, 1996 of India (and the
rules and regulations under such act) which facilitates dematerialised
settlement in relation to trading in UTV Shares on the Indian Stock Exchanges;
"Disclosure and Transparency Rules" the Disclosure and Transparency Rules, as
published by the UK Financial Services Authority;
"Effective Date" the date on which the Scheme becomes effective in
accordance with its terms;
"FIPB" the Foreign Investment Promotion Board of India;
"fully diluted basis" the total number of UTV Shares outstanding as of the
relevant date assuming the exercise or conversion of all rights to subscribe for
or convert into UTV Shares (including, without limitation, all Promoter Group
Warrants and all options outstanding at such time under all stock options plans
excluding, at all times prior to the Effective Date, all New UTV Shares);
"HMRC" HM Revenue & Customs;
"Implementation Agreement" the Agreement made between UTV, UMP and the
Independent UMP Directors dated 20 July 2009 relating to the implementation of
the Proposal and other ancillary matters;
"Independent UMP Directors" Andrew Carnegie and Peter Vanderpump;
+--------------------------------+---------------------------------------------+
| "Independent UMP Shareholders" | the UMP Shareholders (other than UTV); |
| | |
+--------------------------------+---------------------------------------------+
"Indian Closing Price" the average of the closing middle market prices for
an UTV Share on the National Stock Exchange and the Bombay Stock Exchange on the
relevant date;
"Indian Companies Act" the Companies Act, 1956 of India (as amended);
"Indian Court" the High Court of Bombay, India (or any other appropriate
authority under sections 391 to 394 (read with section 78 and sections 100 to
103) of the Indian Companies);
"Indian Court Hearing" the Indian Court hearing to sanction the Indian
Scheme;
"Indian Court Meeting" the meeting of UTV Shareholders and (if required by
the Indian Court) UTV Creditors convened by the Indian Court pursuant to
sections 391 to 394 (read with section 78 and sections 100 to 103) of the Indian
Companies Act to consider and, if thought fit, approve the Indian Scheme
(written without amendment) (and any adjournment thereof);
"Indian Court Order" the order of the Indian Court sanctioning the Indian
Scheme under sections 391 to 394 (read with section 78 and sections 100 to 103)
of the Indian Companies Act;
"Indian Registrar of Companies" the Registrar of Companies, Maharashtra;
"Indian Scheme" the scheme of arrangement under sections 391 to 394 (read
with section 78 and sections 100 to 103) of the Indian Companies Act for the
transfer and vesting of all the assets and business of UMP to UTV and,
separately, the transfer and vesting of all the assets and businesses of
UTV(Mauritius) to UTV;
"Indian Scheme Document" the Indian Scheme, together with the notice and
explanatory statement to be sent to UTV Shareholders and UTV Creditors;
"Indian Stock Exchanges" the Bombay Stock Exchange and the National Stock
Exchange;
"Isle of Man Companies Act" the Isle of Man Companies Act 2006 (as amended);
"Isle of Man Companies Registry" or the Companies Registry in the Isle of
Man;
"Registrar of Companies"
"Jefferies" Jefferies International Limited;
"London Stock Exchange" London Stock Exchange plc;
"Mauritius Companies Act" Mauritius Companies Act 2001;
"Mauritius Scheme" the scheme of arrangement under sections 261 to 264 of,
and paragraph 4 of Part II of the fourteenth schedule to, the Mauritius
Companies Act which, amongst other things, provides for the transfer and vesting
of UTV(Mauritius)'s business and undertaking to UTV and simultaneous dissolution
without winding up of UTV(Mauritius), to be approved by the Mauritius Court;
"Merged Group" the UTV Group following the implementation of the Proposal;
"Merrill Lynch" Merrill Lynch International, a subsidiary of Bank of America
Corporation;
"Movies Acquisition Agreements" the agreements pursuant to which five
completed movies, two movies in production and the Movies in Incubation were
acquired by UTV(Mauritius) upon the admission of UMP to trading on AIM;
"Movies in Incubation" the thirty nine movie projects entered into directly
by UTV(Mauritius) or acquired from UTV or its subsidiary in the US in relation
to which, on the date of the Movies Acquisition Agreements, production had yet
to commence;
"New UTV Shares" the UTV Shares to be issued by UTV to Independent UMP
Shareholders pursuant to the Indian Scheme and as a condition of the Scheme;
"National Stock Exchange" or "NSE" the National Stock Exchange of India
Limited;
"Open Offer" an offer made by TWDC(SEA) to acquire 77,45,494 UTV Shares in
2008 under the provisions of the SEBI Regulations;
"Overseas Shareholders" legal or beneficial holders of UMP Shares who are
resident in or ordinarily resident in or citizens of, Relevant Jurisdictions;
"Promoter Group" Rohinton Screwvala, Unilazer, Unilazer HK and Zarina Mehta;
"Promoter Group Warrants" 4,532,000 warrants issued to a Promoter Group
entity which can be exchanged for UTV Shares in accordance with their terms and
conditions;
"Proposal" the proposed transaction to be implemented primarily by way of the
Scheme pursuant to which: (i) the Independent UMP Shareholders will receive 1
New UTV Share for every 3.75 UMP Shares they hold; (ii) all the assets and
business of UMP will be transferred to UTV; and (iii) UMP will be dissolved
without a winding-up;
"RBI" the Reserve Bank of India;
"Relevant Jurisdictions" has the meaning given to it in paragraph 12;
"Scheme" the scheme of arrangement proposed to be made under section 157 of
the Isle of Man Companies Act between UMP and the Independent UMP Shareholders
with or subject to any modification, addition or condition approved or imposed
by the Court and agreed by UMP and UTV;
"Scheme Document" the circular in respect of the Scheme to be posted to the
Independent UMP Shareholders appearing on the Register on the Business Day
before the date of that document, and setting out, amongst other things, the
full terms and conditions to implementation of the Scheme and the notice of the
Court Meeting;
+--------------------------------+----------------------------------------------+
| "Scheme Record Time" | anticipated (subject to confirmation in the |
| | Scheme Document) to be 6.00 p.m. (London |
| | time) on the Business day before the |
| | Effective Date; |
+--------------------------------+----------------------------------------------+
"SEBI Regulations" the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997;
"Securities Act" the United States Securities Act 1933, as amended;
"Shareholders' Agreement" the shareholders' agreement dated 16 February 2008
made between TWDC(SEA), Rohinton Screwvala, Unilazer, Unilazer HK and UTV
relating to the holding of shares in UTV;
"Subscription Agreement" the subscription agreement dated 16 February 2008
made between TWDC(SEA), Rohinton Screwvala, Unilazer, Unilazer HK and UTV
relating to the subscription of shares in UTV;
"Takeover Panel" or "Panel" the Panel on Takeovers and Mergers which
administers the City Code;
"TWDC(SEA)" The Walt Disney Company (Southeast Asia) Pte. Ltd., a company
incorporated under the laws of Singapore whose registered office is situated at
One Marina Boulevard, #28-00, Singapore 018989, a wholly owned subsidiary of The
Walt Disney Company;
"UGBL" UTV Global Broadcasting Limited, a company incorporated in India under
the Indian Companies Act;
"UMP" UMP Plc, a company incorporated in the Isle of Man with registered
number 000687V;
"UMP Group" UMP and its subsidiary, UTV(Mauritius);
"UMP Shareholders" the holders of the issued UMP Shares from time to time;
"UMP Shares" the ordinary shares of US$0.05 each in the capital UMP;
"Unilazer" Unilazer Exports and Management Consultants Limited, a company
incorporated in India;
"Unilazer HK" Unilazer (Hong Kong) Limited, a company incorporated Hong Kong;
"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern
Ireland;
"United States" or "US" the United States of America;
"UTV" UTV Software Communications Limited, a company incorporated under the
laws of India with registered number 11-56987;
"UTV's Articles of Association" the articles of association of UTV as in
force from time to time;
"UTV Creditors" the creditors of UTV for the purposes of the Indian Scheme,
being the UTV Secured Creditors and the UTV Unsecured Creditors;
"UTV Group" UTV and its subsidiary undertakings other than UMP and
UTV(Mauritius);
"UTV(Mauritius)" UTV Motion Pictures (Mauritius) Ltd., a company incorporated
under the laws of Mauritius with registered number 52972 C2/GBL;
"UTV Secured Creditors" the secured creditors of UTV, being a class of
creditors of UTV for the purposes of the Indian Scheme;
"UTV Shareholders" the holders of the UTV Shares for the purposes of the
Indian Scheme;
"UTV Shares" ordinary shares of Rs.10 each in the capital of UTV; and
"UTV Unsecured Creditors" the unsecured creditors of UTV, being a class of
creditors of UTV for the purposes of the Indian Scheme.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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