FOR IMMEDIATE RELEASE
RECOMMENDED OFFER BY NTL FOR VIRGIN MOBILE
London, England, April 4, 2006 - NTL Incorporated (NASDAQ: NTLI) ("ntl")
and the Independent Board of Virgin Mobile Holdings (UK) plc ("Virgin
Mobile") are pleased to announce that they have reached agreement on the
terms of a cash offer, with a share alternative offer and a share and
cash alternative offer, to be made by ntl and one of its wholly owned
subsidiaries to acquire the entire share capital of Virgin Mobile (the
"Offer"). Full details of the Offer are detailed in an announcement made
today in the United Kingdom under Rule 2.5 of the U.K. Takeover Code.
Under the Offer, Virgin Mobile Shareholders can elect for:
(1) 372 pence in cash for each Virgin Mobile share; or
(2) the share alternative of 0.23245 shares of ntl common stock for
each Virgin Mobile share, valued at 389p per share based on the
closing price of ntl's common stock and the $/(pound) exchange rate
at 3 April 2006; or
(3) the share and cash alternative of 0.18596 shares of ntl common
stock, valued at 311p per Virgin Mobile share based on the closing
price of ntl's common stock and the $/(pound) exchange rate at 3
April 2006, plus 67 pence in cash, for each Virgin Mobile share.
The Cash Offer values Virgin Mobile at approximately (pound)962.4
million.
Virgin Group Investments Limited ("Virgin Group"), which beneficially
owns approximately 71.2 per cent. of Virgin Mobile's shares, and Virgin
Entertainment Investments Holdings Limited ("Virgin Entertainment"),
have irrevocably undertaken, irrespective of whether any higher
competing bid is made, to elect in full for the share and cash
alternative. Other Virgin Mobile shareholders, who hold an additional
0.82 per cent. of Virgin Mobile's shares, have also irrevocably
undertaken to accept the Offer.
Virgin Mobile is the UK's leading mobile virtual network operator with
4.3 million customers. Virgin Mobile uses the T-Mobile network for the
transmission of its traffic. For the last twelve months ended September
30, 2005, Virgin Mobile had total revenues, under IFRS, of (pound)539
million. Virgin Mobile does not operate outside of the United Kingdom,
and does not own Virgin Mobile in the United States or in other
countries.
ntl is also entering into a long-term exclusive license agreement with
Virgin Enterprises Limited under which its existing license to use
certain Virgin trade marks within the United Kingdom and Ireland in
respect of its internet business will be extended to television, fixed
line telephony and, upon completion of the acquisition of Virgin Mobile,
mobile telephony, as well as the acquisition and branding of sports,
movies and other premium television content and the branding and sale of
certain communications equipment, such as set top boxes and cable
modems. The agreement will provide for an annual royalty of 0.25% of
relevant consumer revenues, subject to a minimum annual royalty of
(pound)8.5 million (the royalty would have been approximately (pound)9
million based on 2005 revenues including Virgin Mobile and Virgin.Net).
ntl will also have the right to adopt a corporate name that includes the
Virgin name. In connection with the agreement, Virgin Enterprises will
have the right to propose a candidate to serve as a director of ntl, and
it will also have the right to nominate a senior marketing executive as
an ntl employee. Pursuant to the U.K. Takeover Code, the license
agreement is subject to approval by a majority of the Virgin Mobile
shareholders who are not affiliated with the Virgin Group. ntl expects
to commence the proposed re-branding within 12 months of the license
agreement becoming unconditional.
Closely following the merger of ntl and Telewest to create the UK's
leading triple-play provider, ntl's combination with Virgin Mobile and
the proposed re-branding of its combined consumer businesses with the
Virgin brand represents an important milestone in ntl's history. ntl
believes the combination and re-branding of its combined consumer
operations will deliver wide-ranging strategic and financial benefits
to shareholders. In particular, ntl believes that the combination with
Virgin Mobile and the re-branding of the combined consumer operations
with the Virgin brand will:
o help transform it from the UK's leading triple-play cable
provider into a national entertainment and communications
company, harnessing the powerful Virgin consumer champion brand
o enhance ntl as a scale competitor in the UK, enabling ntl to
compete more effectively with the large incumbents in the UK
telecommunications market. In addition, the extension of ntl's
product suite to include mobility will, ntl believes, provide a
strong platform for innovation and development of innovation
converged products, such as converged fixed and mobile telephony
devices, and video and voice services
o appeal to existing and new consumers by offering a wide range of
high quality communications services from a single provider, with
the unique flavour and customer focus of the Virgin brand
o allow it to extend its expertise in bundling and cross-selling
communications products to mobile telephony
o provide potential for revenue synergies:
o increasing penetration and reducing customer churn by
providing an appealing product suite under the Virgin brand
o increasing average revenue per user through the effective
cross-selling of mobile services into customer homes serviced
by ntl, and triple-play services to Virgin Mobile subscribers
o not materially affect ntl's current leverage. Other potential
benefits anticipated include savings on some of the re-branding
costs ntl may have incurred had it rebranded under a newly created
brand, and the use of certain existing capital allowances to
offset Virgin Mobile taxable income
Virgin Mobile will retain its existing brand and will continue to be
based in the UK. Virgin Mobile's operating business will continue to
be led by members of Virgin Mobile's current management team, and it is
intended that a marketing director from Virgin will join ntl, bringing
Virgin's brand expertise to the ntl management team.
The Offer will be implemented through a U.K. Scheme of Arrangement.
After receiving court approval to hold a shareholder meeting, Virgin
Mobile shareholders will be asked at a meeting of shareholders to
approve the Scheme of Arrangement. The court will then be asked to
confirm the fairness of the Scheme. The Scheme will be structured so
that the ntl shares issued in the Scheme will be exempt from
registration under the U.S. Securities Act of 1933, as amended.
Completion of the Scheme is expected in late June 2006. The Offer is
subject to competition authority approval in the United Kingdom and is
also subject to the shareholder vote described above relating to the
license agreement. The Offer is not subject to approval by ntl
shareholders.
ntl will finance the cash portion of the Offer (approximately (pound)414
million, assuming that all of the shareholders other than those
affiliated with the Virgin Group take cash), the refinancing of Virgin
Mobile's outstanding indebtedness (approximately (pound)193 million as
at September 30, 2005) and transactional expenses through (pound)475
million of additional bank borrowings committed under its existing
facility and cash on hand.
The Independent Board of Virgin Mobile, who have been so advised by
Morgan Stanley & Co. Limited, consider the terms of the Offer to be fair
and reasonable. In providing advice to the Independent Board, Morgan
Stanley & Co. Limited has taken into account the commercial assessments
of the Independent Board. The Independent Board of Virgin Mobile has
indicated to ntl that it intends unanimously to recommend that the
Virgin Mobile shareholders vote in favor of the Scheme at the
appropriate meetings, as the Independent Directors have undertaken to do
in respect of all their own beneficial holdings of Virgin Mobile shares.
Virgin Mobile shareholders considering making an election for the share
alternative or for the share and cash alternative are referred to the
investment considerations that will be set out in the Scheme document.
The decision as to whether Virgin Mobile shareholders make an election
for the share alternative or for the share and cash alternative will
depend on their individual circumstances. If Virgin Mobile shareholders
are in any doubt as to the action they should take, they should seek
their own financial advice from an independent financial advisor.
The affiliates of Virgin Group who will receive ntl stock in the share
and cash offer have agreed to: (a) limit (with the restriction relaxing
on a staged basis) the disposition of their ntl shares over 18 months;
and (b) certain limitations on their conduct as ntl shareholders. They
have also received certain registration rights under the U.S.
securities laws.
Commenting on the Offer, James Mooney, Executive Chairman of ntl, said:
"We are delighted to announce the recommended Offer and the brand
licensing with Virgin today, which not only delivers mobile capability
to our product bundle but also gives us access to a leading consumer
brand. It truly is a step-change transaction not only for ntl but for
the media sector as a whole in the UK.
Central to today's announcement is our strong belief that offering a
quad-play underpins true media convergence, and offering high quality
communications services will, we believe, appeal to existing
subscribers of the enlarged business as well as new customers. There
is a natural appeal for mobile, telephony, broadband and television
content and ntl is now truly unique in its mass market product
offering."
Commenting on the Offer, Charles Gurassa, Chairman of Virgin Mobile,
said:
"After careful consideration, the Independent Directors of Virgin
Mobile intend to recommend ntl's Offer to shareholders. This Offer
reflects the strong operational and financial performance of Virgin
Mobile and represents an excellent opportunity for Virgin Mobile
shareholders to realise the significant increase in shareholder value
since flotation. We believe this Offer is in the best interests of
Virgin Mobile's shareholders, customers and employees."
Goldman Sachs & Co. acted as financial advisor to ntl, and provided a
fairness opinion as to the consideration in the Offer to the ntl
board. Morgan Stanley & Co. Limited acted as financial advisor to
Virgin Mobile. Fried Frank Harris Shriver & Jacobson LLP and Ashurst
acted as counsel to ntl. Allen & Overy LLP acted as counsel to the
Independent Board of Virgin Mobile. Herbert Smith LLP acted as counsel
to Virgin Group Investments Limited.
ENQUIRIES:
ntl
Richard Williams Tel: +44 (0)20 7299 5479
richard.williams@ntl.com
Buchanan Communications (PR Adviser to ntl)
Mark Edwards/Jeremy Garcia Tel: +44 (0)20 7466 5000
Goldman Sachs & Co. (Financial Adviser to ntl)
Alain Carrier Tel: +44 (0)20 7774 1000
Virgin Mobile
Steven Day or Mike Thomas Tel: +44 (0)20 7484 4300
Morgan Stanley & Co. Limited (Financial Adviser to
Virgin Mobile)
Justin Manson or Scott Bruckner Tel: +44 (0)20 7425 8000
Investec Bank (UK) Limited (Corporate
Broker to Virgin Mobile)
Chris Godsmark Tel: +44 (O)20 7597 5051
JP Morgan Cazenove (Corporate Broker to
Virgin Mobile)
Arjun Khullar Tel: +44 (O)20 7155 8642
Finsbury (PR Adviser to Virgin Mobile)
James Murgatroyd or Don Hunter Tel: +44 (0)20 7251 3801
A conference call and webcast for analysts and investors regarding the
Offer will be held today at 2 p.m. UK time/ 9 a.m. Eastern Standard
Time (UK: +44 20 7365 8426, US: +1 617 597 5341, participant code:
ntl). The presentation can also be accessed live via webcast on ntl's
website, www.ntl.com/investors. The teleconference replay will be
available for one week beginning approximately two hours after the end
of the call and will be available until Tuesday, 11 April 2006. The
dial-in replay number for the US is: +1 617 801 6888 and the
international dial-in replay number is: +44 (0) 207 365 8427, pass
code: 98450630.
Goldman Sachs International, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting
exclusively for ntl and the Cash Offeror and no one else in connection
with the Offer and will not be responsible to anyone other than ntl and
the Cash Offeror for providing the protections afforded to its
customers or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
Morgan Stanley & Co. Limited is acting exclusively for Virgin Mobile
and no one else in connection with the Offer and will not be
responsible to anyone other than Virgin Mobile for providing the
protections afforded to its clients or for providing advice in relation
to the Offer or any matter or arrangement referred to herein.
Investec Bank (UK) Limited is acting exclusively for Virgin Mobile and
no one else in connection with the Offer and will not be responsible to
anyone other than Virgin Mobile for providing the protections afforded
to its clients or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
JP Morgan Cazenove is acting exclusively for Virgin Mobile and no one
else in connection with the Offer and will not be responsible to anyone
other than Virgin Mobile for providing the protections afforded to its
clients or for providing advice in relation to the Offer or any matter
or arrangement referred to herein.
FURTHER INFORMATION ON THE OFFER
The availability of the Offer to Virgin Mobile Shareholders who are not
resident in the United Kingdom and the United States may be affected by
the laws of relevant jurisdictions. Virgin Mobile Shareholders who are
not resident in the United Kingdom or the United States will need to
inform themselves about and observe any applicable requirements.
Any securities that are offered pursuant to the Offer described in this
announcement have not been and will not be registered under the
applicable securities laws of Australia, Canada or Japan. Accordingly,
any such securities may not be offered, sold or delivered, directly or
indirectly, in or into Australia, Canada or Japan except pursuant to
exemptions from applicable requirements of such jurisdictions.
The Offer will be subject to the applicable rules and regulations of
the UKLA, the London Stock Exchange and the City Code. In addition,
the Offer will be subject to the applicable requirements of the United
States federal and state securities laws and the applicable rules and
regulations of NASDAQ (except to the extent exempt from such
requirements).
Virgin Mobile Shareholders should read any prospectus that may be filed
by ntl with the SEC, because any such prospectus will contain important
information. Investors may obtain a free copy of any prospectus, if
and when it becomes available, and other documents filed by ntl with
the SEC, at the SEC's website at http://www.sec.gov. Free copies of
any prospectus, if and when it becomes available, may be obtained by
directing a request to ntl Incorporated, 9098 Third Avenue, Suite 2863,
New York, New York 10022, Attention: Investor Relations. If the Offer
proceeds by way of scheme of arrangement, however, it is anticipated
that no prospectus would be required because the transaction would be
exempt from registration under the US Securities Act of 1933, as
amended, pursuant to section 3(a)(10) thereof, in which case this fact
will be disclosed in the scheme document sent to all Virgin Mobile
Shareholders.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, or the solicitation of any
vote or approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of such jurisdiction.
CITY CODE
Under the provisions of Rule 8.3 of the City Code, if any person is, or
becomes, "interested" (directly or indirectly) in 1 per cent. or more
of any class of "relevant securities" of ntl, the Cash Offeror or of
Virgin Mobile, all "dealings" in any "relevant securities" of that
company (including by means of an option in respect of, or a derivative
referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 p.m. (London time) on the Business Day
following the date of the relevant transaction. This requirement will
continue until the date on which the Offer becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or on
which the "offer period" otherwise ends. If two or more persons act
together pursuant to an agreement or understanding, whether formal or
informal, to acquire an "interest" in "relevant securities" of ntl, the
Cash Offeror or Virgin Mobile, they will be deemed to be a single
person for the purpose of Rule 8.3. Under the provisions of Rule 8.1
of the City Code, all "dealings" in "relevant securities" of ntl, the
Cash Offeror or of Virgin Mobile by ntl, the Cash Offeror or Virgin
Mobile, or by any of their respective "associates", must be disclosed
by no later than 12.00 noon (London time) on the Business Day following
the date of the relevant transaction. A disclosure table, giving
details of the companies in whose "relevant securities" "dealings"
should be disclosed, and the number of such securities in issue, can be
found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long
economic exposure, whether conditional or absolute, to changes in price
of securities. In particular, a person will be treated as having an
"interest" by virtue of the ownership or control of securities, or by
virtue of any option in respect of, or derivative referenced to,
securities. Terms in quotation marks are defined in the City Code,
which can also be found on the Panel's website. If you are in any
doubt as to whether or not you are required to disclose a "dealing"
under Rule 8, you should consult the Panel.
FORWARD LOOKING STATEMENTS
Certain statements in this document regarding the proposed transaction
between ntl and Virgin Mobile, the expected timetable for completing
the transaction, future financial and operating results, benefits and
synergies of the transaction, future opportunities for the combined
company and products and any other statements regarding Virgin Mobile's
or ntl's future expectations, beliefs, goals or prospects constitute
forward-looking statements as that term is defined in the U.S. Private
Securities Litigation Reform Act of 1995. When used in this document,
the words "believe", "anticipate", "should", "intend", "plan", "will",
"expects", "estimates", "projects", "positioned", "strategy", and
similar expressions or statements that are not historical facts, in
each case as they relate to ntl and Virgin Mobile, the management of
either such company or the proposed transaction, are intended to
identify those expressions or statements as forward-looking statements.
In addition to the risks and uncertainties noted in this document,
there are certain factors, risks and uncertainties that could cause
actual results to differ materially from those anticipated by some of
the statements made, many of which are beyond the control of ntl and
Virgin Mobile. These include: (1) the failure to obtain and retain
expected synergies from the integration of legacy ntl and legacy
Telewest Global and the proposed transaction, (2) rates of success in
executing, managing and integrating key acquisitions, including the
integration of legacy ntl and legacy Telewest Global and the proposed
acquisition, (3) the ability to achieve business plans for the combined
company, (4) the ability to manage and maintain key customer
relationships, (5) delays in obtaining, or adverse conditions contained
in, any regulatory or third-party approvals in connection with the
proposed acquisition, (6) availability and cost of capital, (7) the
ability to manage regulatory, tax and legal matters, and to resolve
pending matters within current estimates, (8) other similar factors,
and (9) the risk factors summarized and explained in the 2005 Form 10-K
for NTL Holdings Inc. (fka NTL Incorporated). For additional
information concerning factors that could cause actual results to
materially differ from those projected herein, please refer to ntl and
NTL Holdings Inc.'s most recent Form 10-K, 10-Q and 8-K reports.