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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
January 4, 2005
Avecia Group plc
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(Translation of registrant's name into English)
P.O. Box 42
Hexagon House
Blackley, Manchester
M9 8ZS
England
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F)
Form 20-F [X] Form 40-F [ ]
(Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): ____)
(Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): ____)
(Indicate by check mark whether by furnishing the information contained
in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.)
Yes [ ] No [X]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- ________)
Enclosures:
1. Notice Relating to Offer to Purchase for Cash Outstanding 11% Senior Notes
Due July 1, 2009 of Avecia Group plc, dated January 4, 2005
2. Offer to Purchase and Consent Solicitation Statement, dated January 4, 2005
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This announcement is neither an offer to purchase nor a solicitation of an offer
to sell any securities. The offer described below is made only pursuant to the
Offer Document (as defined below) in those jurisdictions where the securities or
other laws require the offer to be made on behalf of the Company (as defined
below) by the dealer manager or one or more brokers or dealers licensed or
registered under the laws of such jurisdiction. Holders of Notes (as defined
below) should seek advice from an independent financial adviser as to whether
they should tender Notes.
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NOTICE RELATING TO OFFER TO PURCHASE FOR CASH OUTSTANDING
11% Senior Notes due July 1, 2009
of
AVECIA GROUP plc
REG S NOTES (CUSIP G9894BAA6 AND ISIN USG9894BAA64), 144A NOTES (CUSIP
988788AA3 AND COMMON CODE 9875069) REGISTERED NOTES (CUSIP 05354RAA9,
ISIN US05354RAA95, COMMON CODE 010588502)
JANUARY 4, 2005 - Avecia Group plc (the "Company"), today announced that it has
commenced a cash tender offer and solicitation of related consents (together,
the "Offer") relating to the Company's outstanding 11% Senior Notes due July 1,
2009 (the "Notes").
Concurrently with the offer to purchase the Notes, the Company is soliciting
consents (the "Consents") from holders of the Notes to amendments to the
indenture governing the Notes (the "Indenture") that will eliminate or modify
certain restrictive covenants and add certain provisions which would waive the
applicability of certain restrictive covenants in the Notes and the related
Indenture with respect to the sale of the Company's NeoResins business (the
"Proposed Amendments").
If the Offer is completed, the "Clearing Price" that will be paid to the holders
for the Notes will be the highest price offered for the Notes and accepted by
the Company in a Modified Dutch Auction procedure (provided that such price is
not greater than US$990.00 per US$1,000.00 principal amount of the Notes (the
"Maximum Offer Price") nor less than US$861.00 per US$1,000.00 principal amount
of the Notes (the "Minimum Offer Price")), plus accrued and unpaid interest. The
Company expects to have US$459,000,000 (the "Maximum Amount") available to fund
the purchase of the Notes and make the Consent Payments (as defined below) and
therefore will accept for purchase less than all of the outstanding Notes. After
the Consent Payment Deadline (as defined below), the Company will calculate the
total aggregate amount of Consent Payments (the "Aggregate Consent Payments")
owed to holders who validly tender and who do not validly withdraw their Notes,
whether or not such Notes are accepted for purchase. The difference between the
Maximum Amount and the Aggregate Consent Payments (such difference being the
"Available Tender Amount") will be the aggregate amount used by the Company to
pay the Clearing Price.
Not included in the Clearing Price is an amount equal to US$10.00 per
US$1,000.00 principal amount of Notes (the "Consent Payment") that will be paid
to all holders of Notes who validly tender and do not validly withdraw their
Notes and deliver Consents to the Proposed Amendments prior to the Consent
Payment Deadline, regardless of whether such tendered Notes are accepted for
purchase pursuant to the terms of the Offer. If the Offer is completed, only the
"Clearing Price" will be paid for Notes tendered after the Consent Payment
Deadline and prior to the Expiration Time (as defined below). Accrued and unpaid
interest on any Notes validly tendered and accepted for payment will be paid up
to but excluding the settlement date.
In the event that the aggregate principal amount of Notes validly tendered and
not withdrawn prior to the Expiration Time (whether tendered prior or subsequent
to the Consent Payment Deadline) is greater than the Available Tender Amount,
the Company will accept Notes for payment on a pro rata basis from among certain
tendered Notes pursuant to the Offer Document (in each case, with appropriate
adjustments to avoid purchases of Notes in principal amounts other than integral
multiples of US$1,000.00).
The time by which holders of Notes must tender their Notes in order to be
eligible to receive the Clearing Price and the Consent Payment (together, the
"Total Consideration") is prior to 5:00 p.m. New York time, on January 18, 2005,
unless extended (such time and date as the same may be extended, the "Consent
Payment Deadline"). Holders of Notes who desire to receive the Total
Consideration must validly consent to the Proposed Amendments by validly
tendering their Notes in accordance with the requirements of the Depository
Trust Company, on or prior to the Consent Payment Deadline and must have such
tendered Notes accepted for purchase pursuant to the terms of the Offer. Holders
who tender their Notes after the Consent Payment Deadline will be eligible to
receive only the Clearing Price.
The Offer expires at 5:00 p.m., New York time, on February 1, 2005 (such time
and date as the same may be extended, the "Expiration Time"), unless extended or
earlier terminated by the Company by press release or notice to the Tender Agent
in the manner provided in the Offer to Purchase and Consent Solicitation
Statement dated as of January 4, 2005 (the "Offer Document"). If the Offer is
consummated, the settlement date will be on a date promptly after the acceptance
by the Company of tendered Notes. The Company expects the settlement date
(subject to any extension thereof) to be February 4, 2005.
Notes tendered on or prior to the Consent Payment Deadline may be withdrawn at
any time prior to the Consent Payment Deadline. Notes tendered after the Consent
Payment Deadline may not be withdrawn. However, tenders of Notes may be
withdrawn if the Offer is terminated without any Notes being purchased
thereunder or as otherwise provided in the Offer Document. A valid withdrawal of
tendered Notes constitutes the withdrawal of the related Consents. Acceptance
and purchase of Notes tendered pursuant to the Offer is conditioned upon (i) the
valid tender of Notes and delivery of related Consents by holders of not less
than a majority in aggregate principal amount of the outstanding Notes not
subject to any right of withdrawal, (ii) consummation of the sale of the
Company's NeoResins business (as described in the Offer Document) and (iii)
certain general conditions (as defined in the Offer Document). The Company
reserves the right to amend or waive the terms of the Offer.
The Offer is being made solely pursuant to the Offer Document which, among other
things, (a) more fully sets forth and governs the terms and conditions of the
Offer, (b) contains additional information about the terms of the Offer, (c)
sets forth how to tender Notes and deliver Consents and (d) contains the
conditions to the Offer. The Offer Document contains important information that
should be read carefully before any decision is made with respect to the Offer.
In deciding whether to participate in the Offer, each holder should carefully
consider the factors set forth under "Risks to Non-Tendering Holders" and "Risks
to Tendering Holders" in the Offer Document.
Goldman, Sachs & Co. is acting as the exclusive dealer manager for the Offer.
The tender agent for the Offer is Bondholder Services Corporation and the
Luxembourg tender agent for the Offer is Kredietbank S.A. Luxembourgeoise
(together, the "Tender Agents").
Copies of the Offer Document can be obtained (as well as information about the
terms of the Offer, how to tender Notes and the conditions to the Offer) by
contacting Goldman, Sachs & Co. at 85 Broad Street, New York, New York 10004,
Attn: Liability Management Group on (212) 357 3019. Copies of the Offer Document
(as well as information about the terms of the Offer, how to tender Notes and
the conditions to the Offer) may also be obtained from the Tender Agents, Global
Bondholder Services Corporation, at 65 Broad Street - Suite 704, New York, New
York 10006, Attn: Corporate Actions on (212) 430-3774 or Kredietbank S.A.
Luxembourgeoise, at 43 Boulevard Royal, L-2955 Luxembourg, Attn: Cecilia
Guichart, Corporate Trust and Agencies Department, +352 47 97 39 35.
This announcement does not constitute a recommendation regarding the Offer.
Holders should seek advice from an independent financial adviser as to the
suitability of the transactions described herein for the individual concerned.
UNDER NO CIRCUMSTANCES SHALL THIS NOTICE CONSTITUTE AN INVITATION OR OFFER TO
SELL OR THE SOLICITATION OF AN INVITATION OR OFFER TO BUY THE NOTES.
THIS COMMUNICATION IS ONLY FOR CIRCULATION TO HOLDERS OF THE NOTES AND TO OTHER
PERSONS TO WHOM IT MAY LAWFULLY BE ISSUED IN ACCORDANCE WITH THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2001, ANY SUCH PERSON
BEING A "RELEVANT PERSON". THIS COMMUNICATION MAY NOT BE ACTED UPON BY ANYONE
WHO IS NOT A RELEVANT PERSON.
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THIS OFFER DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you
are in any doubt as to the contents of this offer document or the action you
should take, you are recommended to seek your own financial advice immediately
from your stockbroker, bank manager, solicitor, accountant or other independent
financial advisor authorized under the Financial Services and Markets Act 2000,
or from another appropriately authorized independent financial advisor.
OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT
Offer to Purchase for Cash
by
AVECIA GROUP plc
of its
11% Senior Notes Due 2009
and
Solicitation of Consents for Amendments to the Related Indenture
Avecia Group plc (the "Company") hereby offers to purchase for cash
(the "Tender Offer") its outstanding 11% Senior Notes due July 1, 2009 (the
"Securities") upon the terms and subject to the conditions set forth in this
Offer to Purchase and Consent Solicitation Statement (the "Offer to Purchase")
and at a price designated by the holders of Securities (the "Holders") that is
not greater than US$990.00 per US$1,000.00 principal amount of the Securities
(the "Maximum Offer Price") nor less than US$861.00 per $1,000 principal amount
of the Securities (the "Minimum Offer Price"), plus accrued and unpaid interest
thereon. The Company expects to have US$459,000,000 (the "Maximum Amount")
available to fund the purchase of the Securities (excluding accrued interest, if
any) and make the Consent Payments (as defined below) and therefore will accept
for purchase less than all of the outstanding Securities. Accordingly, Holders
participating in the Tender Offer may be subject to pro-ration in certain cases
described herein. After the Consent Payment Deadline (as defined below), the
Company will calculate the total aggregate amount of Consent Payments (the
"Aggregate Consent Payments") owed to the Holders who validly tender and who do
not validly withdraw their Securities. The difference between the Maximum Amount
and the Aggregate Consent Payments (such difference being the "Available Tender
Amount") will be the aggregate amount used by the Company to pay the Clearing
Price (as defined below).
Under this Modified Dutch Auction procedure, the Company will accept
Securities validly tendered (and not withdrawn prior to the Expiration Time (as
defined below)) in the order of the lowest to the highest tender prices
specified by tendering Holders within the price range, continuing until the
Company has purchased Securities at an aggregate purchase price (excluding
accrued interest, if any) equal to the Available Tender Amount. The Company will
pay to each Holder whose offer is accepted the highest price offered for the
Securities and accepted by the Company (the "Clearing Price") even if such
Clearing Price is higher than the price specified by the tendering Holder to the
Company. All offers of Securities below the Clearing Price will be accepted and
all offers above the Clearing Price will be rejected. However, to the extent
acceptance of all offers at the Clearing Price would cause the aggregate
purchase price (excluding accrued interest, if any) to exceed the Available
Tender Amount, the Company will allocate its acceptance of offers at the
Clearing Price among all such offers on a pro rata basis. Holders may indicate
the principal amount of Securities being tendered without specifying a price. If
no offer price is specified, such Holders will be deemed to have tendered the
Securities at the Minimum Offer Price and such tenders will be accepted first by
the Company. Such Holders will receive the same Clearing Price paid to all other
tendering Holders.
In conjunction with the Tender Offer, and on the terms and conditions
set forth in this Offer to Purchase, the Company is also soliciting (the
"Solicitation") consents (the "Consents") to the adoption of proposed amendments
(the "Amendments") to the indenture, dated June 30, 1999, governing the
Securities (the "Indenture") and to the execution by the Company, the Guarantor
(as defined in the Indenture) and The Bank of New York, the trustee under the
Indenture (the "Trustee"), of a supplemental indenture effecting the Amendments
(the "Supplemental Indenture"). A Holder validly tendering Securities pursuant
to the Tender Offer will, by tendering such Securities, be deemed to have
delivered its Consent to the Amendments with respect to those Securities. A
Holder may not consent to the Amendments with respect to any Securities without
tendering such Securities pursuant to the Tender Offer and may not revoke
Consents with respect to any Securities without withdrawing from the Tender
Offer the previously tendered Securities to which such Consents relate.
Holders that validly tender and do not validly withdraw their
Securities prior to the Consent Payment Deadline will, upon the terms and
subject to the conditions set forth in this Offer to Purchase receive a consent
payment (the "Consent Payment") of US$10.00 per US$1,000.00 principal amount of
Securities tendered, whether or not such Securities are accepted for purchase.
Holders that validly tender and do not validly withdraw their Securities prior
to the Consent Payment Deadline and whose Securities are accepted for purchase
will, upon the terms and subject to the conditions set forth in this Offer to
Purchase, including the provisions with respect to pro-ration, receive the
Clearing Price in addition to the Consent Payment. Holders that validly tender
their Securities after the Consent Payment Deadline and prior to the Expiration
Time (as defined below) and whose Securities are accepted for purchase will
receive the Clearing Price, but will not receive the Consent Payment. Holders
whose Securities are accepted for payment will receive accrued and unpaid
interest on such purchased Securities to, but not including, the Settlement Date
(as defined herein). No tenders will be valid if submitted after the Expiration
Time. The Clearing Price and the Consent Payment together are defined herein as
the "Total Consideration". The Tender Offer and the related Solicitation, as
they may be amended from time to time, are referred to herein collectively as
the "Offer."
Principal
Amount CUSIP ISIN
Title of Security Outstanding Number Number Common Code
- ----------------- ----------- ------ ------ -----------
G9894BAA6 (Reg S Notes) USG9894BAA64 -
11% Senior Notes due July 1, 2009 US$540,000,000 988788AA3 (144A Notes) - 9875069
05354RAA9 (Registered Notes) US05354RAA95 010588502
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THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FEBRUARY 1, 2005
UNLESS EXTENDED OR EARLIER TERMINATED (SUCH DATE AND TIME, AS THE SAME MAY BE
EXTENDED, THE "EXPIRATION TIME"). HOLDERS MUST TENDER THE SECURITIES (AS DEFINED
HEREIN) PRIOR TO THE EXPIRATION TIME TO BE ELIGIBLE TO RECEIVE THE TENDER OFFER
CONSIDERATION.
THE CONSENT PAYMENT DEADLINE (I.E., THE TIME BY WHICH HOLDERS MUST TENDER THE
SECURITIES IN ORDER TO BE ELIGIBLE TO RECEIVE THE TOTAL CONSIDERATION, A PORTION
OF WHICH WILL CONSTITUTE THE CONSENT PAYMENT (EACH AS DEFINED HEREIN)), WILL BE
5:00 P.M., NEW YORK CITY TIME, ON JANUARY 18, 2005, UNLESS EXTENDED OR EARLIER
TERMINATED.
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THIS OFFER TO PURCHASE AND THE RELATED DOCUMENTS CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE A DECISION IS MADE WITH RESPECT TO THE
OFFER. THE OFFER IS SUBJECT TO A NUMBER OF IMPORTANT CONDITIONS DESCRIBED
HEREIN.
IF YOU HAVE RECENTLY SOLD OR OTHERWISE TRANSFERRED YOUR ENTIRE
HOLDING(S) OF SECURITIES, YOU SHOULD IMMEDIATELY FORWARD THIS DOCUMENT TO THE
PURCHASER OR TRANSFEREE, OR TO THE BROKER, BANK OR OTHER AGENT THROUGH WHOM THE
SALE OR TRANSFER WAS EFFECTED, FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.
THIS OFFER TO PURCHASE HAS NOT BEEN FILED WITH OR REVIEWED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY OF ANY COUNTRY,
NOR HAS ANY SUCH COMMISSION OR AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS OFFER TO PURCHASE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL AND MAY
BE A CRIMINAL OFFENSE.
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
Goldman, Sachs & Co.
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The date of this Offer to Purchase is January 4, 2005
TABLE OF CONTENTS
Page
----
IMPORTANT NOTICE TO HOLDERS................................................ i
KEY DATES.................................................................. iii
SUMMARY OF THE OFFER....................................................... 1
DESCRIPTION OF THE SECURITIES.............................................. 5
THE COMPANY................................................................ 5
PURPOSE OF THE OFFER; THE TRANSACTION...................................... 5
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS...................... 8
PROCEDURE FOR TENDERING SECURITIES AND DELIVERING CONSENTS................. 13
WITHDRAWAL OF TENDERS AND REVOCATION OF RELATED CONSENTS................... 14
RISKS...................................................................... 14
RISKS TO TENDERING HOLDERS................................................. 16
CONDITIONS TO THE OFFER.................................................... 16
ACCEPTANCE FOR PAYMENT AND PAYMENT......................................... 17
EXTENSION, AMENDMENT AND TERMINATION....................................... 17
THE AMENDMENTS............................................................. 18
AVAILABLE INFORMATION...................................................... 19
INCORPORATION BY REFERENCE................................................. 19
FORWARD-LOOKING STATEMENTS................................................. 20
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES............................... 20
CERTAIN U.K. AND E.U. TAX CONSEQUENCES..................................... 22
DEALER MANAGER, SOLICITATION AGENT, INFORMATION AGENT AND TENDER AGENT..... 24
MISCELLANEOUS.............................................................. 25
ANNEX A - THE AMENDMENTS................................................... A-1
IMPORTANT NOTICE TO HOLDERS
Any Holder, as defined in the Indenture, or beneficial owner of
Securities who holds the Securities in book-entry form desiring to tender
Securities must request the Holder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction or tender through The
Depository Trust Company ("DTC") pursuant to DTC's Automated Tender Offer
Program ("ATOP").
Any questions or requests for assistance or for additional copies of
this Offer to Purchase or related documents may be directed to Global Bondholder
Services Corporation, the Information Agent, or Kredietbank S.A. Luxembourgeoise
(the "Luxembourg Agent"), at their respective telephone numbers set forth on the
last page of this Offer to Purchase. A Holder may also contact the Dealer
Manager, Solicitation Agent and the Luxembourg Agent at their respective
telephone numbers set forth on the last page of this Offer to Purchase or such
Holder's broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
None of the Company, Goldman, Sachs & Co., as Dealer Manager and
Solicitation Agent, the Trustee, the Information Agent, the Tender Agent, or
their respective directors, employees or affiliates makes any recommendation as
to whether Holders should tender their Securities and deliver Consents. No
person has been authorized to give any information or to make any
representations other than those contained herein and, if given or made, such
information or representations must not be relied upon as having been
authorized. This Offer to Purchase and related documents do not constitute an
offer to buy or the solicitation of an offer to sell Securities or a
solicitation of Consents in any circumstances in which such offer or
solicitation is unlawful. In those jurisdictions where the securities, blue sky
or other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company by the Dealer Manager
and Solicitation Agent or one or more registered brokers or dealers licensed
under the laws of such jurisdiction. Neither the delivery of this Offer to
Purchase and related documents nor any purchase of Securities shall, under any
circumstances, create any implication that the information contained herein or
therein is current as of any time subsequent to the date of such information.
i
This Offer of Purchase and related documents are only for circulation
to Holders and other persons to whom such Offer to Purchase may lawfully be
issued in accordance with the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2001, any such person being referred to as a "relevant person".
This communication may not be acted upon by anyone who is not a relevant person.
ii
KEY DATES
Holders should take note of the following dates in connection with the
Offer. However, the dates below are subject to modification in accordance with
the terms of the Offer:
Date Calendar Date Event
- ------------------------- ------------------------------------ -------------------------------------------
Consent Payment Deadline 5:00 p.m., New York City time, The last day for Holders to validly
on January 18, 2005, unless tender Securities and provide Consents in
extended or earlier terminated order to qualify for the applicable
by the Company in its sole Consent Payment.
discretion.
Withdrawal Deadline 5:00 p.m., New York City time, The last day for Holders to validly
on January 18, 2005, unless withdraw tendered Securities and revoke
extended by the Company in its Consents, except as described under the
sole discretion. caption "Withdrawal of Tenders and
Revocation of Related Consents." A valid
withdrawal of Securities and revocation
of Consents will result in the Holder not
being eligible to receive either the
Consent Payment or the Clearing Price.
Expiration Time 5:00 p.m., New York City time, The last day for Holders to tender
on February 1, 2005, unless Securities pursuant to the Offer.
extended or earlier terminated
by the Company in its sole
discretion.
Settlement Date A date promptly after the The day on which the Company accepts
Expiration Time, unless the Securities validly tendered at (subject
Offer is extended by the to pro-ration) or below the Clearing
Company in its sole discretion. Price and (upon the terms and subject to
the conditions of this offer) prior to
the Expiration Time and not validly
withdrawn prior to the Withdrawal
Deadline. The Company notifies the Tender
Agent that such tendered Securities are
accepted for payment and deposits with
DTC the amount of cash necessary to pay
each tendering Holder whose Securities
are accepted for payment the Clearing
Price, plus accrued and unpaid interest,
if any, to but not including, the
Settlement Date. The Company notifies the
Tender Agent of the Securities tendered
prior to the Consent Payment Deadline and
deposits with DTC the amount of cash
necessary to pay each Holder thereof, the
Consent Payment.
iii
SUMMARY OF THE OFFER
The following is qualified in its entirety by the more detailed
information appearing elsewhere in this Offer to Purchase.
Company............................... Avecia Group plc, a public limited
company incorporated under the laws of
England and Wales.
Securities............................ 11% Senior Notes due July 1, 2009 of
the Company.
Purpose of Offer...................... The purpose of the Offer is to acquire
the Securities and obtain Consents from
Holders to the adoption of the
Amendments to the Indenture. The
Amendments are being sought in order to
amend the Indenture to allow for the
consummation of the Transaction (as
defined below) and to eliminate and/or
modify certain restrictive covenants
and certain related events of default.
See "The Amendments."
The Transaction....................... A subsidiary of the Company agreed on
December 13, 2004 to sell to
Koninklijke DSM N.V., its NeoResins
business. This agreement to sell the
business is subject to certain
conditions, including receipt of
Requsite Consents (as defined below)
from Holders. See "Purpose of Offer;
The Transaction."
Tender Offer and Consent The Company hereby offers to purchase
Solicitation.......................... for cash the outstanding Securities,
upon the terms and subject to the
conditions set forth in this Offer to
Purchase, at a price designated by the
Holders provided that such price is not
greater than US$990.00 (the "Maximum
Tender Price") nor less than US$861.00
(the "Minimum Tender Price") per US$
1,000.00 principal amount of
Securities. Each specified price must
be expressed in U.S. dollars for
US$1,000.00 principal amount of
Securities offered in increments of
US$0.10 between US$861.00 and
US$990.00. The Company expects to have
US$459,000,000 (the "Maximum Amount")
available to fund the purchase of the
Securities and make the Consent
Payments and therefore may accept for
purchase fewer than all of the
Securities tendered which may subject
the Securities tendered to pro-ration,
as described herein. After the Consent
Payment Deadline, the Company will
calculate the Aggregate Consent
Payments owed to the Holders who
validly tender and who do not validly
withdraw their Securities prior to the
Consent Payment Deadline. The
difference between the Maximum Amount
and the Aggregate Consent Payments (the
"Available Tender Amount") will be the
aggregate amount used by the Company to
pay the Clearing Price to those Holders
whose Securities were validly tendered
and not validly withdrawn prior to the
Expiration Time and whose Securities
are accepted for purchase. The Company
intends to publicly announce the
results of the Solicitation of
Consents, including the calculation of
the Available Tender Amount, promptly
following the Consent Payment Deadline.
Under this Modified Dutch Auction
procedure, the Company will accept
Securities validly tendered (and not
withdrawn prior to the Expiration Date)
in the order of the lowest to the
highest tender prices specified by
tendering Holders within the price
range, continuing until the Company has
accepted for purchase Securities at an
aggregate purchase price (excluding
accrued interest, if any) equal to the
Available Tender Amount. The Company
will pay to each Holder whose offer is
accepted the highest price offered for
the Securities and accepted by the
Company (the "Clearing Price"). The
Company will pay the same Clearing
Price for all Securities validly
tendered and accepted for purchase,
even if the Clearing Price is higher
than the price specified by the
tendering Holder to the Company. All
offers of Securities below the Clearing
Price will be accepted and all offers
above the Clearing Price will be
rejected. However, to the extent
acceptance of all offers at the
Clearing Price would cause the
aggregate purchase price (excluding
accrued
1
interest, if any) to exceed the
Available Tender Amount, the Company
will allocate its acceptance of offers
at the Clearing Price among all such
offers on a pro rata basis. Holders may
indicate the principal amount of such
Securities being tendered without
specifying a price. If no offer price
is specified, such Holders will be
deemed to have tendered the Securities
at the Minimum Offer Price and such
tenders will be accepted first by the
Company. Such Holders will receive the
same Clearing Price paid to all other
tendering Holders.
The Company is also soliciting Consents
to the Amendments to the Indenture. A
Holder that validly tenders its
Securities pursuant to the Offer will
be deemed to have delivered its Consent
to the Amendments to the Indenture. A
Holder may not consent to the
Amendments to the Indenture without
tendering its Securities pursuant to
the related Offer. Holders that validly
tender and do not validly withdraw
their Securities prior to the Consent
Payment Deadline, will receive a
consent payment (the "Consent Payment")
of US$10.00 per US$1,000 principal
amount of Securities tendered, whether
or not such Securities are accepted for
purchase. Holders that validly tender
and do not validly withdraw their
Securities prior to the Consent Payment
Deadline and whose Securities are
accepted for purchase will, upon the
terms and subject to the conditions set
forth in this Offer to Purchase,
including the provisions with respect
to pro-ration, receive the Clearing
Price in addition to the Consent
Payment. Holders that validly tender
their Securities after the Consent
Payment Deadline and prior to the
Expiration Time will receive the
Clearing Price, but will not receive
the Consent Payment.
The Clearing Price and the Consent
Payment are together defined herein as
the "Total Consideration".
Withdrawal Deadline................... 5:00 p.m., New York City time, on
January 18, 2005, as extended by the
Company in its sole discretion.
Consent Payment Deadline.............. The Consent Payment Deadline (i.e., the
time by which Holders must tender their
Securities to be eligible to receive
the Total Consideration) will be 5:00
p.m., New York City time, on January
18, 2005, unless extended or earlier
terminated by the Company in its sole
discretion.
Expiration Time....................... The Offer will expire at 5:00 p.m., New
York City time, on February 1, 2005,
unless extended or earlier terminated
by the Company in its sole discretion.
If the Consent Payment Deadline or
Expiration Time are extended, the
Company will issue a public
announcement no later than 9:00 a.m.,
New York City time, on the first
business day after the previously
scheduled Consent Payment Deadline or
Expiration Time, as the case may be,
setting forth a new time and date for
the Consent Payment Deadline or
Expiration Time, as the case may be.
Pro-Ration............................ If more than the Available Tender
Amount of the aggregate principal
amount of the Securities are validly
tendered by the Holders pursuant to the
terms of the Offer, then certain of
such tendered Securities may be
accepted on a pro-rata basis in
accordance with the following
procedures. First, the Company will
accept for payment all Securities
validly tendered (and not withdrawn)
which do not specify a price.
Thereafter, the Company will accept for
payment Securities validly tendered
(and not withdrawn) at the lowest
price; and thereafter continuing with
tenders in order of increasing prices
until the Company has accepted for
purchase Securities at an aggregate
purchase price (excluding accrued
interest, if any) equal to the
Available Tender Amount (which excludes
accrued interest) pursuant to this
Offer to Purchase. The Company will pay
to all Holders whose offers are
accepted the highest price offered for
Securities that are accepted for
purchase by the Company. If the
aggregate principal amount of
Securities offered at the Clearing
Price
2
exceeds the principal amount to be
accepted by the Company at such price
under the foregoing procedure,
acceptances of offers at the Clearing
Price will be allocated among such
Holders on a pro rata basis according
to the principal amount so offered. All
offers of Securities above the Clearing
Price will be rejected by the Company.
In the event that the pro-ration of
Securities validly tendered by any
Holder would result in the purchase of
Securities in a principal amount other
than an integral multiple of
US$1,000.00, the Company (through the
Tender Agent) will increase or
decrease, in its discretion, the
principal amount of the Securities to
be purchased from such Holder to the
next higher or lower integral multiple
of US$1,000.00.
The Amendments........................ If the Amendments become operative,
certain of the restrictive covenants
and certain related events of default
in the Indenture will be eliminated
from or modified in the Indenture and
certain provisions will be added to the
Indenture in order to waive the
applicability of certain restrictive
covenants to the extent required to
effect the Transaction. The Amendments
would, among other things: (a)
eliminate covenants contained in the
Indenture relating to (i) change of
control and (ii) mergers,
consolidations or sale of all or
substantially all assets; (b) modify
certain covenants contained in the
Indenture on reports to Holders; and
(c) add provisions to the Indenture
that would effectively waive the
application of the following sections
of the Indenture with respect to the
Transaction: (i) asset sales, (ii)
change of control, (iii) merger,
consolidation or sale of all or
substantially all assets and (iv) any
other provision of the Indenture that,
as a result of the consummation of the
Transaction, would require a payment to
Holders or the making of an offer to
purchase or redeem the Securities, or
whose contravention would result in a
default under the Indenture. See "The
Amendments." Except as otherwise
described in the Offer to Purchase, the
terms of the Indenture will continue to
apply to the Securities.
The Amendments will be set forth in the
Supplemental Indenture and the
Amendments will become operative
immediately upon the execution of the
Supplemental Indenture, which is
expected to be executed promptly
following the Withdrawal Deadline,
provided the Company has received
Consents from Holders of a majority in
principal amount of the outstanding
Securities (excluding for such purposes
any Securities owned by the Company, or
by any person directly or indirectly
controlling or controlled by or under
direct or indirect common control with
the Company) (the "Requisite
Consents"). However, if, after
execution of the Supplemental
Indenture, the Offer is terminated or
withdrawn by the Company, the
Securities are not accepted for payment
or the conditions to the Offer (see
"Conditions to the Offer") are not
satisfied or waived, the original terms
of the Indenture will be reinstated.
Withdrawal Rights and Revocation Tenders of Securities may be withdrawn
of Consents........................... and the related Consents may be revoked
at any time before the Withdrawal
Deadline by following the procedures
described in this Offer to Purchase. A
valid withdrawal of tendered Securities
before the Withdrawal Deadline shall be
deemed a valid revocation of the
related Consent. Securities tendered
and Consents delivered prior to or
after the Withdrawal Deadline may not
be withdrawn after the Withdrawal
Deadline, except in limited
circumstances. See "Withdrawal of
Tenders and Revocation of Related
Consents."
Source of Funds....................... The Company does not, as of the date of
this Offer to Purchase, have the
financial resources to pay for the
Securities tendered in the Offer. The
Company's ability to purchase the
Securities pursuant to this Offer is
dependent on the Company receiving the
proceeds from the consummation of the
Transaction. The receipt of such
proceeds is conditional, inter alia,
upon receipt by the Company of the
Requisite Consents. See "Conditions to
the Offer". The consummation of the
Transaction will be dependent on
3
receiving certain approvals and other
closing conditions. See "Purpose of the
Offer; The Transaction."
Conditions to the Offer............... The Offer is conditioned upon, among
other things:
o satisfaction of the Transaction
Condition;
o satisfaction of the Consent
Condition; and
o satisfaction of the General
Conditions.
If the above conditions to the Offer
are not satisfied, the Company may
delay the acceptance for payment of any
tendered Securities, and may terminate,
extend or amend the Offer, in each
event subject to Rules 14e-1(b) and (c)
under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
See "Conditions to the Offer."
Settlement............................ The Settlement Date will be the date
of, or a date promptly following, the
Expiration Time, which currently is
scheduled to be 5:00 p.m., New York
City time, on February 1, 2005.
Securities validly tendered and not
validly withdrawn pursuant to the
Modified Dutch Auction procedure
described herein prior to the Consent
Payment Deadline will be eligible to
receive the Consent Payment in same-day
funds on the Settlement Date, whether
or not such Securities are accepted for
purchase. Securities validly tendered
and not validly withdrawn prior to the
Consent Payment Deadline and which are
accepted for purchase will be eligible
to receive the Clearing Price in
addition to the Consent Payment in
same-day funds on the Settlement Date.
Securities validly tendered after the
Consent Payment Deadline and prior to
the Expiration Time will be eligible to
receive only the Clearing Price in
same-day funds on the Settlement Date.
Certain U.S. Federal Income Tax For U.S. federal income tax purposes,
Consequences.......................... the sale of Securities pursuant to the
Offer generally will be a taxable
transaction that will result in the
recognition of a taxable gain or loss
by a tendering U.S. Holder. See
"Certain U.S. Federal Income Tax
Consequences."
Certain U.K. and E.U. Tax For U.K. tax purposes, the sale of
Consequences.......................... Securities pursuant to the Offer
generally will be a taxable transaction
that will result in the recognition of
a taxable gain or loss by a tendering
U.K. Holder. See "Certain U.K. And E.U.
Tax Consequences."
Dealer Manager and Solicitation....... Goldman, Sachs & Co.
Agent
Information Agent and Tender Agent.... Global Bondholder Services Corporation
Luxembourg Agent...................... Kredietbank S.A. Luxembourgeoise
Further Information................... Additional copies of this Offer to
Purchase and any other documents
related to the Offer may be obtained by
contacting the Information Agent or the
Luxembourg Agent at their respective
telephone numbers and addresses set
forth on the last page of this Offer to
Purchase.
4
DESCRIPTION OF THE SECURITIES
The following description sets forth certain terms of the Securities
and the Indenture. This description is not complete and is qualified in its
entirety by the Indenture described below. Copies of the Indenture are available
for inspection at the principal offices of the Trustee and are on file with the
U.S. Securities and Exchange Commission.
The Securities were issued pursuant to the Indenture, dated as of June
30, 1999, among Avecia Group plc (formerly known as ZSC Specialty Chemicals plc)
(the "Company"), the Guarantor (as defined in the Indenture) and The Bank of New
York, as trustee. The maturity date of the Securities is July 1, 2009. The
Securities are listed on the Luxembourg Stock Exchange.
The Indenture permits the Company, the Guarantor and the Trustee, with
the consent of Holders of at least a majority in principal amount of the
outstanding Securities, to enter into a supplemental indenture for the purpose
of changing in any manner or eliminating any of the provisions of the Indenture,
except for certain changes that require the consent of each Holder affected
thereby.
THE COMPANY
Avecia Group plc is a global group of specialty chemicals businesses
providing a range of process development and manufacturing services to a high
standard of quality assurance and developing, manufacturing and selling high
quality, technologically advanced, value-added chemical products to customers
across a range of industries. The Company possesses capabilities in organic
chemistry, biological and polymer sciences and in process technology.
The Company is currently divided into four business segments:
Electronic Materials, Biotechnology, Chemicals and NeoResins. These businesses
are supported by 11 manufacturing facilities located in 6 countries. The
Electronic Materials business segment consists of four business units - Ink Jet
Printing Materials, Electrophotography, Displays and Image Polymers - and
develops, manufactures and sells dyes, pigment based inks, toners, infrared
absorbers and organic light emitting materials to customers in a wide range of
industries. The Biotechnology business segment consists of two business units -
DNA Medicines and Biologics - and manufactures complex biotechnology products,
including manufacture to cGMP requirements, and undertakes related process
development for customers. The Chemicals business segment comprises two business
units - Pharmaceutical Intermediates and Fine Chemicals - and undertakes the
custom manufacture of complex chemical intermediates and active ingredients for
the pharmaceutical, agrochemical and other industries.
The Company's NeoResins business segment is a global supplier of
performance polymers, primarily water-based or acrylic resins and water-borne
urethanes, used as additives and binders in the paints, coatings, adhesives and
graphic arts fields. It provides application expertise in the Americas, Europe
and Asia and works closely with customers to make product modifications, as well
as starting point formulations, which conform to their specific requirements.
The Company has, since January 1, 2003, disposed of its interests in
its former Specialty Chemicals business segment (comprising Pool & Spa,
Protection & Hygiene, Pigments & Additives and Metal Extraction Products), as
well as its former Intermediates & Stabilizers and Special Drug Products
business units.
PURPOSE OF THE OFFER; THE TRANSACTION
The purpose of the Offer is to (a) acquire the Securities, (b) obtain
Consents from Holders to the adoption of the Amendments to the Indenture
necessary to consummate the Transaction and (c) amend the Indenture to eliminate
and/or modify certain restrictive covenants and certain related events of
default.
The Transaction
On December 13, 2004, Avecia Investments Limited ("AIL"), a subsidiary
of the Company and certain other subsidiaries of the Company, entered into an
agreement with Koninklijke DSM N.V. ("DSM") for the sale of the Company's
NeoResins business (the "Transaction"). The agreement commits AIL, certain other
subsidiaries of the Company and DSM to execute the definitive sale and purchase
agreement for the NeoResins business as soon as certain advisory and
consultation processes related to the relevant works council and trade unions in
the Netherlands have been undertaken. The terms of the sale and purchase
agreement contemplate, among other things, the sale to DSM of the Company's
entire interest in its NeoResins business, including: (a) Avecia BV, Avecia
Spain SL, NeoResins Inc. and Avecia Asia Pacific Pte Ltd. and their
corresponding manufacturing and laboratory sites, (b) certain intellectual
property interests held by Avecia Limited and Avecia Inc. relating to the
NeoResins Business and
5
(c) all other corporate entities and assets of the Company relating to the
NeoResins business, including certain local sales activities.
The purchase price for the shares of Avecia Holdings BV and its
subsidiaries, intellectual property and all other assets of the NeoResins
business is (euro)515 million, on a net debt free basis. The purchase price at
the consummation of the Transaction is subject to adjustments based on changes
to working capital, the 2004 actual EBITDA of the NeoResins business and for
certain taxes for the period prior to the date of sale. The purchase price will
be payable in full upon completion of the Transaction. After taking into account
the anticipated outcome from the post-closing adjustments referred to above, a
small amount of proceeds to be placed in escrow under the agreement reached with
DSM and certain expenses associated with the Transaction, the Company expects
the cash proceeds from the sale of the NeoResins business to net approximately
(euro)495 million. See "Proceeds Available for Offer to Purchase the Securities"
below.
AIL has given certain warranties, including environmental and tax
warranties, to DSM and, with certain qualifications, has agreed to indemnify DSM
with respect to certain matters, including taxes relating to the period prior to
completion of the Transaction. Furthermore, the terms of the non-competition
clause of the sale and purchase agreement restrict the Company and its
affiliates from engaging in certain activities related to the Polymer Business
(as defined therein) for a period of three years after the completion of the
Transaction. This prohibition does not impact the Company's ability to continue
operating its remaining businesses separate from the NeoResins business.
DSM has the option to terminate the agreement if, by March 1, 2005, (a)
the works council and trade union processes referred to above have not been
concluded or (b) the Requisite Consents of the Holders to waive the
applicability of certain restrictive covenants to the extent required to effect
the Transaction have not been obtained. AIL has the option to terminate if such
conditions have not been fulfilled by June 30, 2005. Completion of the
Transaction is also subject to the fulfillment of certain other conditions,
including obtaining competition law clearance for the Transaction in certain
jurisdictions. If the conditions to completion have not been fulfilled by June
30, 2005, the sale and purchase agreement will lapse.
Proceeds Available for Offer to Purchase the Securities
The Company currently has a term loan facility of (pound)100 million
and a revolving credit facility of (pound)50 million in respect of which
(pound)75 million of the term loan and no amount of the revolving credit
facility was outstanding as at December 31, 2004. Under the terms of the
facilities described above, the Company is required to repay these facilities in
full with proceeds from the Transaction. Furthermore, the Company will retain
approximately (euro)48 million from the proceeds of the Transaction in order to
fund the working capital requirements of the Company and interest payable on the
Securities up to the Settlement Date.
The Company has entered into preliminary discussions with one of its
senior lenders regarding the provision of an ongoing term loan facility and
revolving credit facility following completion of the Transaction to meet the
essential liquidity requirements of the remaining businesses. The size of any
such facility is expected to be significantly smaller than the Company's
existing facility. The Company's businesses that remain after the consummation
of the Transaction have had, on a historical pro forma basis, a negative cash
flow and in the future may not be able to support any significant level of debt.
As of the date hereof, it is unlikely that such discussions will be concluded
prior to the Settlement Date. Therefore, the Offer to Purchase will be
consummated without ongoing or future senior debt facilities having been agreed
or committed by the Company's senior lenders and there can be no assurance that
any such facility will be obtained, or if obtained, what the size or terms will
be. Furthermore, if the facilities are obtained, it may be the case the Company
is required to retain all of the proceeds from such facilities to fund its
ongoing working capital needs.
The proceeds of the Transaction will be received by the Company in
Euros, while the Offer consideration will be paid in U.S. Dollars. In order to
purchase the Securities tendered in the Offer, the Company will be required to
convert the proceeds of the Transaction from Euros to U.S. Dollars. In addition,
the existing term loan facility and revolving credit facility of the Company are
maintained in pounds sterling and the repayment thereof will also require
conversion of the proceeds of the Transaction. The Company has not hedged, nor
does it intend to hedge, the currency exchange risks it faces with regard to the
repayment of its credit facilities or the Offer. The Company may therefore be
required to amend the Offer as a result of changes in exchange rates and their
impact on the funds of the Company required to repay the credit facilities and
available to consummate the Offer.
6
The following table presents the estimated amount of proceeds from the
Transaction available to fund the Offer:
(euro) million US $ million
Purchase price for NeoResins business 515 -
Less: Anticipated closing adjustments, escrow amount and expenses (see (20) -
"The Transaction" above) --------------
Cash proceeds from the sale of NeoResins business 495 -
Less: Amount required to repay the Company's outstanding credit (106)(2)(3) -
facilities (see above)
Less: Proceeds retained to fund working capital requirements of the (48) -
Company and interest payable up to the Settlement Date (see above) --------------
Proceeds available for the Offer to Purchase (see above) 341 459(1)(3)
- ---------------------------
1 Translated from Euros to U.S. Dollars using an exchange rate of 1.3476.
2 In calculating the Euro proceeds available for the Offer, the amount of Euro
proceeds available from the Transaction to repay the (pound)75 million drawn
on the current term loan is translated into pounds sterling using an
exchange rate of 1.4142.
3 For further information on the currency exchange risks please see the
discussion on currency exchange risks in this section.
The Company After the Transaction
After the disposal of the NeoResins business segment, the Company will
continue to operate the remaining three business segments - Electronic
Materials, Biotechnology and Chemicals - and the corresponding business units
described above. The businesses will be supported by 7 manufacturing facilities
located in 4 countries (UK, USA, Canada and Germany). For a further analysis of
the effects of the disposition of the NeoResins business on the Company, see
"Unaudited Pro Forma Consolidated Financial Statements".
The Company is actively pursuing the sale of its Displays business unit
from the Company's Electronic Materials business segment, and in the future may
consider further divestments of businesses or assets that its board of directors
deems to be in the best interests of the Company. The Displays business unit
comprises Covion Organic Semi-Conductors GmbH ("Covion") and the Company's
organic semi-conductors business ("OSCs"). Covion develops organic
light-emitting materials (OLEDs) for flat panel displays and is engaged in
developing and seeking the commercialization of this technology in collaboration
with potential customers. OSCs is also a new technology business focusing on
applications in the emerging market of organic semi-conductors. The historical
results of the Displays business have not been material to the financial
condition or operations of the Company. Whether any such divestments, including
in respect of the Displays business, will occur and the timing thereof is
uncertain. The proceeds of sale from further divestments will be used to reduce
indebtedness of the Company or for other uses permitted under the Indenture.
7
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited pro-forma consolidated balance sheet of the
Company gives effect to the Transaction and the repayment of the term loan
facility and the revolving credit facility from the proceeds of the Transaction,
the disposal of the Company's interests in its former Additives business
(disposed of on January 31, 2004), Biocides business (disposed of on April 2,
2004) and Special Drug Mixtures business (disposed of on November 22, 2004), and
the consummation of the Offer (on the terms described below) in each case, as if
they had been consummated on September 30, 2004. The accompanying unaudited
pro-forma consolidated profit and loss accounts and statement of cash flows of
the Company gives effect to the Transaction and the repayment of the term loan
facility and the revolving credit facility from the proceeds of the Transaction,
the disposal of the Company's interests in its former Additives business,
Biocides business and Special Drug Mixtures business and the consummation of the
Offer (on the terms described below) in each case, as if they had been
consummated on October 1, 2003. The accompanying unaudited pro forma
consolidated financial statements assume that the Maximum Amount is used to make
the Consent Payment with respect to all outstanding Securities and that the
remaining amount, the Available Tender Amount, is used to acquire Securities at
a Clearing Price of US$990.00 per US$1,000.00 principal amount of Securities,
leaving approximately US$81,000,000 aggregate principal amount of Securities
outstanding after the consummation of the Offer. The pro forma financial
statements have been prepared in accordance with generally accepted accounting
standards in the United Kingdom. These accounting standards differ in certain
significant aspects from generally accepted accounting principles in the United
States.
The pro forma information is presented for illustrative purposes only
and it is not necessarily indicative of the operating results or financial
position that would have occurred if the Transaction and the Tender Offer had
been consummated as presented in the accompanying unaudited pro-forma
consolidated financial statements, nor is it necessarily indicative of future
results of operations or the actual results of the Offer. The pro forma
adjustments and the assumptions on which they are based are described in the
accompanying notes to the Unaudited Pro Forma Consolidated Financial Statements.
These pro forma consolidated financial statements should be read in
conjunction with the Company's historical financial statements and the related
notes thereto that have been incorporated herein by reference.
8
Unaudited Pro Forma Consolidated Balance Sheet
Historical Pro Forma
September 30, Pro Forma September 30,
2004 Adjustments 2004 Footnotes
--------------- --------------- --------------- ---------
(pound) million (pound) million (pound) million
Fixed assets
Tangible fixed assets 225.1 (54.1) 171.0 (1)
Intangible assets 220.4 (161.7) 58.7 (2)
Investments in joint ventures:
Goodwill on joint ventures 8.3 -- 8.3
Share of gross assets 11.1 -- 11.1
Share of gross liabilities (1.5) -- (1.5)
--------------- --------------- ---------------
17.9 -- 17.9
--------------- --------------- ---------------
Total fixed assets 463.4 (215.8) 247.6
Current assets
Stocks 54.6 (14.5) 40.1 (1)
Debtors 93.7 (42.1) 51.6 (1)
Investments 8.3 -- 8.3
Cash at bank and in hand 3.6 -- 3.6
--------------- --------------- ---------------
Total current assets 160.2 (56.6) 103.6
--------------- --------------- ---------------
--------------- --------------- ---------------
Total assets 623.6 (272.4) 351.2
--------------- --------------- ---------------
Current liabilities
External loans due within less -- -- --
than one year
Other creditors (73.5) 31.6 (41.9) (1)
--------------- --------------- ---------------
Total current liabilities (73.5) 31.6 (41.9)
--------------- --------------- ---------------
--------------- --------------- ---------------
Net current assets 86.7 (25.0) 61.7
--------------- --------------- ---------------
External loans due within more (362.0) 318.5 (43.5) (3)
than one year
Provisions for liabilities and (21.2) 4.2 (17.0) (1)
charges
Other creditors due within more (8.3) 0.3 (8.0)
than one year
--------------- --------------- ---------------
Net assets excluding pension 158.6 82.2 240.8
liability --------------- --------------- ---------------
Pension liability (96.2) 17.2 (79.0) (1)
--------------- --------------- ---------------
Net assets including pension 62.4 99.4 161.8
liability --------------- --------------- ---------------
Shareholders equity 22.3 99.4 121.7
Pay-in-kind 16% cumulative
redeemable 40.1 -- 40.1
preference shares
--------------- --------------- ---------------
Total 62.4 99.4 161.8
=============== =============== ===============
9
Unaudited Pro Forma Consolidated Profit and Loss Accounts
Historical Pro Forma
12 months ended 12 months ended
September 30, Pro Forma September 30,
2004 Adjustments 2004 Footnotes
--------------- --------------- --------------- ---------
(pound) million (pound) million (pound) million
Turnover, including share of joint 419.1 (234.4) 184.7 (4)
ventures
Less: share of joint ventures' (9.5) -- (9.5)
turnover --------------- --------------- ---------------
Group turnover 409.6 (234.4) 175.2
Operating costs (429.4) 198.7 (230.7) (4)
Exceptional operating costs (60.3) -- (60.3) (5)
Other operating income 5.5 (1.3) 4.2 (6)
--------------- --------------- ---------------
Group operating (loss)/profit (74.6) (37.0) (111.6)
Share of operating profit of joint 0.9 -- 0.9
ventures
Exceptional items 89.5 (89.5) -- (7)
--------------- --------------- ---------------
Profit/(loss) on ordinary
activities before interest and 15.8 (126.5) (110.7)
taxation --------------- --------------- ---------------
Interest received 34.3 (34.3) --
Interest paid (55.9) 50.7 (5.2) (8)
Other finance costs (2.1) -- (2.1)
--------------- --------------- ---------------
Profit/(loss) on ordinary (7.9) (110.1) (118.0)
activities after taxation
Taxation on profit/(loss) on (0.7) 0.7 -- (9)
ordinary activities
--------------- --------------- ---------------
Profit/(loss) on ordinary (8.6) (109.4) (118.0)
activities after taxation
Attributable to minority interests (6.5) -- (6.5)
--------------- --------------- ---------------
Net profit/(loss) for the period (15.1) (109.4) (124.5)
=============== =============== ===============
10
Unaudited Pro Forma Consolidated Statement of Cash Flows
Historical Pro Forma
12 months ended 12 months ended
September 30, Pro Forma September 30,
2004 Adjustments 2004 Footnotes
--------------- --------------- --------------- ---------
(pound) million (pound) million (pound) million
Operating (deficit)/profit before interest (74.6) (35.6) (110.2) (4)
Depreciation and amortization 87.5 (8.0) 79.5 (4)(10)
Decrease/(increase) in inventories (0.8) 0.5 (0.3) (4)
Decrease/(increase) in trade receivables and (13.5) 7.0 (6.5) (4)
other assets
(Decrease)/increase in accounts payable, (4)
accrued expenses and 11.1 (6.1) 5.0
trade provisions
Other cash and non-cash movements 1.3 1.3 2.6 (4)
--------------- --------------- ---------------
Net cash inflow from operating activities 11.0 (40.9) (29.9)
--------------- --------------- ---------------
Returns on investment and servicing of
finance
Dividends received from associates 3.1 -- 3.1
Interest received 1.3 (1.3) --
Interest paid (41.0) 36.0 (5.0) (8)
--------------- --------------- ---------------
Net cash (outflow) from returns on
investment and (36.6) 34.7 (1.9)
servicing of finance --------------- --------------- ---------------
Taxation 0.3 -- 0.3
Capital expenditure and financial investments
Cash expenditure on fixed assets (26.5) 8.1 (18.4) (4)
Disposals of fixed assets 5.1 (5.0) 0.1 (11)
--------------- --------------- ---------------
Net cash (outflow) from capital expenditure
and financial (21.4) 3.1 (18.3)
investments --------------- --------------- ---------------
Acquisitions and disposals
Payments in respect of acquisitions -- -- --
Disposals of other investments 171.8 (171.8) -- (12)
Net cash disposed of (0.2) 0.2 --
--------------- --------------- ---------------
Net cash inflow from acquisitions and 171.6 (171.6) --
disposals --------------- --------------- ---------------
Financing
Repayment of finance lease capital (0.9) -- (0.9)
External loans repaid (126.2) 126.2 -- (12)
--------------- --------------- ---------------
Net cash (outflow) from financing (127.1) 126.2 (0.9)
--------------- --------------- ---------------
--------------- --------------- ---------------
Net increase/(decrease) in cash (2.2) (48.5) (50.7)
=============== =============== ===============
11
FOOTNOTES
- ---------
(1) The pro forma adjustments eliminate balances relating to those
businesses which have been disposed of during the 12-months ended
September 30, 2004, namely the Additives business (disposed of on
January 31, 2004), the Biocides business (disposed of on April 2,
2004), Special Drug Mixtures (disposed of on November 22, 2004) and
the NeoResins business (to be disposed of pursuant to the
Transaction).
(2) The pro forma adjustment eliminates goodwill attributable to the
NeoResins and Special Drug Mixtures businesses.
(3) The pro forma adjustment reflects the repayment of the existing term
loan facility and revolving credit facility from the proceeds of the
Transaction and the purchase of approximately $459,000,000 of
Securities (representing approximately 85% of the outstanding
Securities) in connection with the Offer. The repayment amounts have
been calculated using an exchange rate of 1.81 for the purchase of
the Securities pursuant to the Offer.
(4) The pro forma adjustment eliminates trading results relating to those
businesses which have been disposed of during the 12-months ended
September 30, 2004, namely the Additives business (disposed of on
January 31, 2004), the Biocides business (disposed of on April 2,
2004), Special Drug Mixtures (disposed of on November 22, 2004) and
the NeoResins business (to be disposed of pursuant to the
Transaction).
(5) Exceptional operating costs include a charge of (pound)42.3 million
for the impairment of goodwill, intangible assets and tangible assets
and (pound)18.0 million for restructuring costs related to reductions
in headcount.
(6) The pro forma adjustment eliminates the profit arising from the
disposition of the Analytical Research Group on May 15, 2004 to
Intertek Caleb Brett.
(7) The pro forma adjustment eliminates the profit on disposal of the
Additives business (disposed of on January 31, 2004) and the Biocides
businesses (disposed of on April 2, 2004).
(8) The pro forma adjustment adjusts interest expense to reflect the
amount of interest that would have been charged to operations during
the 12-months ended September 30, 2004, assuming that the term loan
facility and revolving credit facility were repaid in full at the
beginning of such period and assuming approximately US$81,000,000 of
the Securities were outstanding for such period.
(9) The pro forma adjustment eliminates income tax expense for the
12-months ended September 30, 2004 related to the operations of the
NeoResins business.
(10) Historical and pro forma depreciation and amortization for the
12-months ended September 30, 2004 include a (pound)42.3 million
charge for the impairment of goodwill, intangible assets and tangible
assets.
(11) Disposal of fixed assets primarily represents proceeds from the
disposition of the Analytical Research Group on May 15, 2004 to
Intertek Caleb Brett during the 12-months ended September 30, 2004.
(12) The pro forma adjustment eliminates the proceeds from the disposal of
the Additives business (disposed of on January 31, 2004) and the
Biocides businesses (disposed of on April 2, 2004), and the repayment
of senior debt out of the proceeds of those dispositions.
12
PROCEDURE FOR TENDERING SECURITIES AND DELIVERING CONSENTS
How to Tender Securities and Deliver Consents. Any Holder whose
Securities are held in book-entry form through a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender Securities and
deliver a Consent to the Amendments should contact such broker, bank, dealer or
other nominee promptly and instruct such nominee to submit instructions on such
Holder's behalf. Please check with your nominee to determine its procedure. A
Holder may also contact the Luxembourg Agent at the telephone number set forth
on the last page of this Offer to Purchase in order to obtain information on how
to tender Securities and deliver a Consent to the Amendments.
Procedures to be Followed by Brokers, Dealers, Banks and Other
Nominees; Tender Through ATOP. The Tender Agent and DTC have confirmed that the
Offer is eligible for ATOP. Accordingly, the Tender Agent will establish one or
more accounts on behalf of the Company with respect to the Securities at DTC
promptly after the date of this Offer to Purchase. ATOP allows a financial
institution that is a participant in DTC's system to tender Securities and
deliver Consents by causing DTC to make an electronic book-entry transfer of
Securities into the account established by the Tender Agent and electronically
deliver the Consents with respect to such Securities. Securities may be tendered
and Consents may be delivered by (1) effecting a book-entry transfer of all
Securities to be tendered in the Offer into the account of the Tender Agent, at
DTC, in accordance with DTC's procedures for such transfer and (2) effecting an
Agent's Message.
"Agent's Message" means a message, transmitted by DTC to and received
by the Tender Agent and forming a part of a book-entry confirmation, which
states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant (i) has received
and agrees to be bound by this Offer to Purchase and that the Company may
enforce such agreement against such participant, (ii) indicates the price at
which such Securities are being tendered within the price range or,
alternatively, does not specify a price, and (iii) consents to the Amendments
and to the execution and delivery of the Supplemental Indenture as described in
this Offer to Purchase. Each specified price must be expressed in U.S. dollars
for $1,000 principal amount of Securities offered in increments of US$0.10
between US$861.00 and US$990.00.
DTC will authorize DTC participants for whom DTC or its nominee holds
Securities (as set forth in a securities position listing of DTC) to execute
Consents with respect to such Securities as if such participants were the
Holders of record of such Securities; accordingly, such participants shall be
deemed for purposes hereof to be Holders of record of such Securities and
Agent's Messages transmitted by DTC shall be deemed to be valid Consents with
respect to such Securities.
Timely book-entry delivery requires receipt of a confirmation of a
book-entry transfer into the Tender Agent's account at DTC (a "Book-Entry
Confirmation") by the Tender Agent prior to the Consent Payment Deadline (in
order to receive the Consent Payment) or the Expiration Time (in order to
receive the Clearing Price). Although delivery of Securities may be effected
through book-entry transfer into the Tender Agent's account at DTC, an Agent's
Message in connection with a book-entry transfer, together with any other
required documents, must, in any case, be delivered or transmitted to and
received by the Tender Agent at the address set forth on the last page of this
Offer to Purchase (1) prior to the Consent Payment Deadline to receive the
Consent Payment and (2) prior to the Expiration Time to receive the Clearing
Price for tendered Securities. Delivery will be deemed made only when actually
received by the Tender Agent. Holders desiring to tender their Securities on the
date of the Consent Payment Deadline or the date of the Expiration Time must
allow sufficient time for completion of the ATOP procedures during normal
business hours of DTC on such date. Delivery of such documents to DTC does not
constitute delivery to the Tender Agent.
Interpretation. All questions as to the form of documents and validity,
eligibility (including time of receipt), acceptance for payment and withdrawal
of tendered Securities and revocation of corresponding Consents will be
determined by the Company in its sole discretion, and its determination will be
final and binding. The Company reserves the absolute right to reject any and all
tenders and withdrawals of the Securities that it determines are not in proper
form or for which the acceptance for payment or payment may, in the opinion of
its counsel, be unlawful. The Company also reserves the absolute right in its
sole discretion to waive any of the conditions of the Offer or any defect or
irregularity in the tender or withdrawal of the Securities of any particular
Holder, whether or not similar conditions, defects or irregularities are waived
in the case of other Holders. Tenders or withdrawals of Securities will not be
deemed to have been made until such defects or irregularities have been cured or
waived. The Company's interpretation of the terms and conditions of the Offer
will be final and binding. None of the Company, the Dealer Manager and
Solicitation Agent, the Information Agent, the Tender Agent, the Trustee or any
other person will be under any duty to give notice of any defects or
irregularities in tenders or consents or any notices of withdrawal or will incur
any liability for failure to give any such notice.
13
No Guaranteed Delivery. There are no guaranteed delivery provisions
provided for by the Company in connection with the Offer under the terms of this
Offer to Purchase or any other related documents. Holders must tender their
Securities in accordance with the procedures set forth above.
WITHDRAWAL OF TENDERS AND REVOCATION OF RELATED CONSENTS
Securities tendered pursuant to the Offer may be withdrawn at any time
prior to the Withdrawal Deadline, but no consideration will be payable in
respect of Securities so withdrawn and not validly retendered. A valid
withdrawal of tendered Securities prior to the Withdrawal Deadline will
constitute the concurrent valid revocation of (and will be the only means of
validly revoking) the related Consent. The Withdrawal Deadline shall be 5:00
p.m., New York City time, on January 18, 2005, unless extended by the Company in
its sole discretion. The Company will issue a public announcement promptly after
obtaining the Requisite Consents. The Supplemental Indenture will be executed
and become effective promptly after the Withdrawal Deadline, provided the
Company has received the Requisite Consents. If, however, after the execution of
the Supplemental Indenture, the Offer is terminated or withdrawn by the Company,
the Securities are not accepted for payment or the conditions to the Offer are
not satisfied or waived, the original terms of the Indenture will be reinstated.
(See "The Amendments" below.)
Securities tendered may not be withdrawn and Consents delivered may not
be revoked after the Withdrawal Deadline, unless the Company reduces the amount
of the Clearing Price, the Consent Payment or the principal amount of Securities
subject to the Offer (other than as a result of determining the Available Tender
Amount) or is otherwise required by law to permit withdrawal. In such
situations, previously tendered Securities may validly be withdrawn until the
expiration of ten business days after the date that notice of any such reduction
or change is first published, sent or given to the Holders by the Company. If
the Offer is terminated without any Securities being purchased, the Securities
tendered pursuant thereto will be promptly returned to the tendering Holders.
For a withdrawal of Securities to be effective, the notice of
withdrawal must be timely received by the Tender Agent at its address set forth
on the last page of this Offer to Purchase. The withdrawal notice must:
o specify the DTC Voluntary Offer Instruction (V.O.I.) Number, the
name of the participant for whose account such Securities were
tendered and such participant's account number at DTC to be
credited with the withdrawn Securities;
o contain a description of Securities to be withdrawn (including the
principal amount to be withdrawn); and
o be submitted through ATOP by such participant in the same manner
as the Agent's Message, or be accompanied by evidence satisfactory
to the Company, that the person withdrawing the tender has
succeeded to the beneficial ownership of such Securities.
Withdrawal of tenders of Securities may not be rescinded, and any
Securities properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. Properly withdrawn Securities may, however, be retendered
by again following one of the procedures described in "Procedure for Tendering
Securities And Delivering Consents" above at any time prior to the Withdrawal
Deadline or the Expiration Time, as the case may be.
Withdrawals of Securities and revocation of Consents can only be
accomplished in accordance with the foregoing procedures. See "Procedure for
Tendering Securities And Delivering Consents--Interpretation" for additional
information regarding the validity and eligibility of a withdrawal of Securities
and a revocation of Consents.
RISKS TO NON-TENDERING HOLDERS
Neither the Company, the Dealer Manager, the Solicitation Agent, the
Information Agent, the Tender Agent, the Trustee or their respective directors,
employees or affiliates make any recommendation as to whether a Holder should
tender or refrain from tendering any or all of its Securities and neither the
Company, the Dealer Manager, the Solicitation Agent, the Information Agent, the
Tender Agent, the Trustee or their respective directors, employees or affiliates
have authorized any person to make any such recommendation. Holders are urged to
evaluate carefully all information included or incorporated by reference in this
Offer to Purchase, consult with their own investment and tax advisors and make
their own decision whether to tender Securities. In deciding whether to
participate in the Offer, you should carefully consider the following, in
addition to the other information contained in this Offer to Purchase.
The Company is not Tendering for all Outstanding Securities
The amount available to fund the purchase of the Securities is limited
to the Available Tender Amount. This
14
amount will not be sufficient to purchase all of the Securities outstanding
within the specified price range and therefore not all Securities outstanding,
or possibly even tendered, will be accepted by the Company. Any Securities not
purchased by the Company will be the obligation solely of the Company's
remaining businesses following the Transaction.
Adverse Effect of the Proposed Amendments on Holders of the Securities
If the Amendments are adopted and the Offer is consummated, Securities
that are not tendered or purchased pursuant to the Offer will be subject to the
terms of the Indenture, as modified by the Supplemental Indenture, as described
under "The Amendments." As a result of the adoption of the Amendments, Holders
of outstanding Securities will not be entitled to the benefits of certain of the
restrictive covenants and certain events of default related to them contained in
the Indenture and the Securities. The modifications of the Indenture that will
be affected by the adoption of the Amendments will permit the Company to take
actions that previously could not be taken under the Indenture and which could
be adverse to the interests of Holders. See "The Amendments."
Adverse Effect on the Trading Market, the Market Price and Price Volatility of
the Securities
The Securities are listed on the Luxembourg Stock Exchange. The
Securities are traded infrequently in transactions arranged through brokers, and
no reliable pricing information for the Securities is available. Holders of
Securities are urged to contact their brokers to obtain the best available
information as to current market prices.
To the extent that Securities are tendered and accepted in the Offer,
the outstanding principal amount of Securities will be reduced. Any debt
security with a smaller outstanding principal amount available for trading,
commonly referred to as the "float," may experience less liquidity, more price
volatility and generally lower prices than would a comparable debt security with
a greater float. Therefore, the market price for Securities not tendered or
purchased may be affected adversely to the extent the amount of Securities
tendered and purchased pursuant to the Offer reduces the float of the
Securities. In addition, upon the operativeness of the Amendments, specific
covenants will be eliminated, which may adversely affect the market price for
the Securities.
The Company cannot assure you that an active market, or that any
trading market, in the Securities will exist, or give you any assurance as to
the price or prices at which the Securities may trade after the consummation of
the Offer. The extent of the market for outstanding Securities following
consummation of the Offer will depend, among other factors, upon the number of
Holders that remain at such time and the interest in maintaining a market in the
Securities on the part of securities firms.
Subsequent Repurchases of Securities
The Company expressly reserves the absolute right, in its sole
discretion, from time to time to purchase any Securities that remain outstanding
after the Expiration Time through open market or privately negotiated
transactions, one or more additional tender or exchange offers or otherwise,
upon such terms and at such prices as it may determine which may be more or less
than the price paid pursuant to this Offer and Solicitation and may involve cash
or non-cash consideration, or to exercise any of its rights under the Indenture,
including the right to optionally redeem the remaining Securities after the
consummation of the Offer.
No Ongoing Credit Facility
The Company currently has a term loan Facility of (pound)100 million
and a revolving credit Facility of (pound)50 million. Under the terms of the
facilities, the Company is required to repay these facilities in full with the
proceeds of the Transaction. The Company has entered into preliminary
discussions with one of its senior lenders regarding the provision of an ongoing
term loan facility and revolving credit facility following completion of the
Transaction to meet the liquidity requirements of the remaining businesses. As
of the date hereof, it is unlikely that such discussions will be concluded prior
to the Settlement Date. Therefore, the Offer to Purchase will be consummated
without ongoing or future senior debt facilities having been agreed or committed
by the Company's senior lenders and there can be no assurance that any such
facility will be obtained or, if obtained, what the size and terms will be.
Tax Considerations
See "Certain U.S. Federal Income Tax Consequences" and "Certain U.K.
And E.U. Tax Considerations" for a discussion of certain tax matters that should
be considered in evaluating the Offer.
15
RISKS TO TENDERING HOLDERS
Because the purpose of the Transaction and the Offer is to improve the
Company's financial position, the prices at which the Securities trade after
consummation of the Transaction may be higher than current trading prices and/or
higher than the Total Consideration. In addition, if the Company is successful
in completing the Transaction, and over time for any other reason its financial
results could improve which could, in turn, result in an increase in the trading
price of the Securities that are not tendered in the Offer. See "Unaudited Pro
Forma Consolidated Financial Statements".
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, the Company will not
be required to accept any Securities tendered pursuant to the Offer and may
terminate, extend or amend the Offer, and the Company may, subject to Rule 14e-1
under the Exchange Act, postpone the acceptance of Securities so tendered if:
o the Transaction Condition shall not have been satisfied;
o the Consent Condition shall not have been satisfied; or
o any of the General Conditions (as defined below) shall not have
been satisfied.
The "Transaction Condition" shall mean the consummation of the
Transaction, which is subject to certain transaction specific and customary
closing conditions.
The "Consent Condition" shall mean receipt of the Requisite Consents
with respect to the proposed Amendments and execution of the Supplemental
Indenture providing for the proposed Amendments. See cover page, "The Offer" and
"The Amendments."
For purposes of the foregoing provisions, all of the "General
Conditions" shall be deemed to have been satisfied unless any of the following
conditions shall occur on or prior to the execution and effectiveness of the
Supplemental Indenture and the consummation of the Transaction:
(i) there shall have been instituted or threatened or be pending any
action or proceeding before or by any court or governmental regulatory or
administrative agency or instrumentality, or by any other person, in connection
with the Offer or the purchase of the Securities pursuant to the Offer, or
otherwise relating to the Offer, that is, or is reasonably likely to be, in the
sole judgment of the Company, materially adverse to the business, operations,
properties, condition (financial or otherwise), assets, liabilities or prospects
of the Company or its subsidiaries;
(ii) there shall have occurred or be likely to occur any event
affecting the business or financial affairs of the Company that, in the sole
judgment of the Company, would or might prohibit, prevent, restrict or delay
consummation of the Offer, or that will, or is reasonably likely to, materially
impair the contemplated benefits of the Offer to the Company, or otherwise
result in the consummation of the Offer not being or reasonably likely not to be
in the best interests of the Company;
(iii) any order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been proposed, enacted, entered,
issued, promulgated, enforced or deemed applicable by any court or governmental,
regulatory or administrative agency or instrumentality that, in the sole
judgment of the Company, would or might prohibit, prevent, restrict or delay the
consummation of the Offer or that is, or is reasonably likely to be, materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets, liabilities or prospects of the Company or its subsidiaries;
(iv) the Company shall not have obtained all consents, approvals,
waivers or amendments from third parties necessary to permit the consummation of
the Offer;
(v) the Trustee shall have objected in any respect to, or taken any
action that, in the sole judgment of the Company, could adversely affect the
consummation of the Offer or the Company's ability to cause the proposed
Amendments to become operative, or shall have taken any action that challenges
the validity or effectiveness of the Supplemental Indenture or the procedures
used by the Company, in soliciting the Consents to the proposed Amendments
(including the form thereof) or in making the Offer or the acceptance of, or
payment for, any of the
16
Securities or the Consents; or
(vi) there shall have occurred (a) any general dispensation of or
limitation on prices for trading in securities in the capital or financial
markets, (b) any significant adverse change in the price of the Securities, (c)
a material impairment of the trading market for debt securities, (d) a
declaration of a banking moratorium or any suspension of payments in respect to
banks in Europe or other major financial markets or (e) any act of war or armed
hostilities or other national or international calamity directly or indirectly
involving Europe or the United States.
The conditions to the Offer are for the sole benefit of the Company and
may be asserted by the Company in its sole discretion regardless of the
circumstances giving rise to such conditions or may be waived by the Company, in
whole or in part, at any time and from time to time, in its sole discretion,
whether or not any other condition of the Offer is also waived. Any
determination by the Company concerning the events described in this section
shall be final and binding upon all persons. The failure by the Company at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
right and each right will be deemed an ongoing right which may be asserted at
any time and from time to time.
ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment any and all Securities that are validly tendered
pursuant to the terms and subject to the conditions of the Offer, up to the
Available Tender Amount, subject to pro-ration as described herein. The Company
will be deemed to have accepted for payment tendered Securities if, as and when
the Company gives written notice to the Tender Agent of its acceptance for
payment of such Securities.
Payment for Securities will be made by the Company in immediately
available funds by deposit with DTC on the Settlement Date of the aggregate
purchase price of such Securities accepted for purchase. Similarly, payment for
the Aggregate Consent Payments will be made by the Company in immediately
available funds by deposit with DTC on the Settlement Date. It is expected that,
in accordance with DTC's standard procedures, DTC will transmit the aggregate
purchase price and Consent Payments, as the case may be, in immediately
available funds to each of its participant financial institutions holding the
Securities accepted for purchase and/or with respect to which Consent Payments
are due on behalf of the Holders for delivery to the Holders. Under no
circumstances will any additional interest be payable by the Company due to any
delay in the transmission of funds from DTC to the tendering Holders. The
Company expressly reserves the right, in its sole discretion and subject to Rule
14e-1(c) under the Exchange Act, to delay acceptance for payment of or payment
for the Securities in order to comply, in whole or in part, with any applicable
law.
Securities tendered and Consents delivered pursuant to the Offer will
be accepted only in principal amounts equal to US$1,000.00 or any integral
multiple thereof. If, for any reason, acceptance for purchase of, or payment
for, validly tendered Securities and validly delivered Consents pursuant to the
Offer is delayed or the Company is unable to accept for purchase, or to pay for,
validly tendered Securities or validly delivered Consents pursuant to the Offer,
then the Tender Agent may, nevertheless, on behalf of the Company, retain
tendered Securities and delivered Consents, without prejudice to the rights of
the Company described under "Extension; Amendment and Termination," "Conditions
to the Offer" and "Withdrawal of Tenders And Revocation of Related Consents"
(subject to Rule 14e-1(c) under the Exchange Act).
EXTENSION, AMENDMENT AND TERMINATION
The Company expressly reserves the right, at any time or from time to
time, regardless of whether or not the conditions set forth in "Conditions to
the Offer" shall have been satisfied, subject to applicable law:
o to extend the Consent Payment Deadline or Expiration Time and
retain any Securities that have been tendered pursuant to the
Offer;
o to waive any Condition to the Offer and accept all Securities
previously tendered for purchase pursuant to the Offer;
o to amend the Offer in any respect; or
o to terminate the Offer prior to the execution and effectiveness of
the Supplemental Indenture and consummation of the Transaction and
return the Securities tendered pursuant thereto;
17
in each case, by giving written notice of such extension, amendment or
termination to DTC. If the Clearing Price is modified, the Offer will be
extended to the extent necessary to permit it to remain open for at least 10
business days from the date that notice of such modification is first published
or sent or given to Holders. Any waiver, amendment or modification of the Offer
will apply to all Securities tendered pursuant to the Offer or Consents
delivered pursuant to the Offer. If the Company makes a material change in the
terms of the Offer or the information concerning the Offer in a manner
determined by the Company in its sole discretion, to constitute a material
adverse change to the Holders, the Company will disseminate additional material
in respect of the Offer and will extend the Offer, in each case, to the extent
required by law.
There can be no assurance that the Company will exercise its right to
extend the Consent Payment Deadline or Expiration Time. Any extension, amendment
or termination will be followed as promptly as practicable by public
announcement thereof, with the announcement in the case of an extension to be
issued no later than 9:00 a.m., New York City time, on the first business day
after the previously scheduled Consent Payment Deadline or Expiration Time, as
the case may be. Without limiting the manner in which the Company may choose to
make any public announcement, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to DTC, the Wall Street Journal and as soon as practicable,
the Luxembourger Wort.
THE AMENDMENTS
A Holder validly tendering Securities will, by tendering such
Securities, be consenting to the proposed Amendments described below to the
Indenture under which the Securities were issued.
The Amendments will, among other things, eliminate and/or modify the
Company's obligation to comply with certain of the "restrictive covenants" and
certain events of default related to them in the Indenture and add certain
provisions to the Indenture which, with respect to the Transaction, would waive
the applicability of: (a) Section 5.06 (Asset Sales), (b) Section 5.08 (Change
of Control), (c) Section 6.01 (Merger, Consolidation or Sale of All or
Substantially All Assets) and (d) any other provision of the Indenture that as a
result of the consummation of the Transaction would require the making of an
offer to purchase or redeem the Securities, or whose contravention would result
in a default under the Indenture, with respect to the Transaction.
The Amendments will, in substance, add the following provisions to the
Indenture:
o Section 5.17 (Waiver of Applicability of Covenants); and
o The definition of the term "Transaction" to Section 1.01.
The Amendments will, in substance, modify the following sections
of the Indenture with respect to the Securities:
o Section 5.02(b), (c) (Reports to Holders).
The Amendments will, in substance, eliminate the following sections of
the Indenture with respect to the Securities:
o Section 5.08 (Change of Control);
o Section 6.01 (Merger, Consolidation or Sale of All or
Substantially All Assets); and
o Section 7.01(3) (Events of Default).
Certain definitions (Section 1.01) and other provisions in the
Indenture also will be added, amended, modified or deleted, as appropriate, to
make changes consistent with the foregoing.
The Amendments to the Indenture constitute a single proposal and a
consenting Holder must consent to the Amendments to the Indenture as an entirety
and may not consent electively with respect to certain of such Amendments. The
Amendments to the Indenture are more fully described in Annex A.
The Amendments to the Indenture will be set forth in the Supplemental
Indenture that will be executed and will become operative promptly following the
Withdrawal Deadline, provided the Company has received the Requisite
18
Consents. If the Amendments to the Indenture become operative, the Holders will
be bound thereby. However, if after the execution of the Supplemental Indenture
pursuant to this Offer to Purchase, the Offer is terminated or withdrawn by the
Company, the Securities are not accepted for payment or the conditions to the
Offer (see "Conditions to the Offer") are not satisfied or waived, then the
Supplemental Indenture will become inoperative and the original terms of the
Indenture will be reinstated.
The foregoing is qualified in its entirety by reference to the
Indenture and the form of Supplemental Indenture, copies of which can be
obtained without charge from the Information Agent.
AVAILABLE INFORMATION
The Company currently is either subject to the reporting requirements
under the Exchange Act or is required to file with the U.S. Securities and
Exchange Commission (the "Commission") pursuant to the Indenture and, in
accordance therewith, annual, quarterly and other reports are furnished to the
Commission. Such reports and other information (including the documents
incorporated by reference into this Offer to Purchase) may be inspected and
copied at the Commission's public reference room at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549 and on the Commission's Internet website at
http://www.sec.gov. Copies of such materials can also be obtained at prescribed
rates from the Public Reference Section of the Commission at its Washington
address. The Company's filings are also available to the public at the
Commission's website at http://www.sec.gov.
In addition, the Company currently files annual and periodic reports
and furnishes other information with the Luxembourg Stock Exchange in accordance
with the listing requirements of such exchange. These reports and other
information are available upon request from Kredietbank S.A. Luxembourgeoise, 43
Boluevard Royal, L-2955, Luxembourg.
INCORPORATION BY REFERENCE
The Company "incorporates by reference" into this Offer to Purchase
certain information it files with the Securities and Exchange Commission (the
"Commission"), which means that the Company can disclose important information
to you by referring you to those documents. Any information that the Company
files with the Commission after the date of this Offer to Purchase and prior to
the Expiration Time will automatically update this Offer to Purchase. Any
information included directly in this Offer to Purchase updates and supersedes
any information previously filed with the Commission. The information
incorporated by reference, as updated, is an important part of this Offer to
Purchase.
The Company incorporates by reference the following information it
files with the Commission:
o Annual Report on Form 20-F for the fiscal year ended December 31,
2003, filed on May 20, 2004;
o Report on Form 6-K filed on May 21, 2004;
o Report on Form 6-K filed on August 11, 2004;
o Report on Form 6-K filed on November 4, 2004;
o Report on Form 6-K filed on December 15, 2004; and
o Report on Form 6-K filed on December 27, 2004.
The Company also incorporates by reference all documents filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Offer to Purchase and prior to the
Expiration Time.
You may request a copy of any of the filings listed above (other than
exhibits, unless that exhibit is specifically incorporated by reference into
that filing) at no cost, by writing to or telephoning the Company at the
following address and telephone number:
Avecia Group plc
P.O. Box 42
Hexagon House
19
Blackley, Manchester
M9 8ZS
England
Attention: Public Affairs Group Manager
+44 161 721 2890
FORWARD-LOOKING STATEMENTS
Certain statements included in this document which are not statements
of historical fact, including but not limited to those identified with the words
"expect," "will" or "look" are intended to be identified as "forward-looking
statements," as defined in the Exchange Act and involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
result, performance or achievement expressed or implied by such forward-looking
statement. Such factors include, among others, changes in general economic
conditions in the United States and Europe; the failure of market conditions in
the major industry sectors and regions we operate in; the failure of our
products to perform as anticipated, including the continued development of an
outsourcing market in pharmaceutical intermediaries; the highly competitive
nature of diverse specialty chemical markets and competition from generic
manufacturers; our technological and manufacturing assets and our ability to
utilize them to further increase sales and the profitability of our businesses;
our ability to retain existing and obtain new customers; risks related to
environmental costs, liabilities and claims; and other factors mentioned in
other documents filed by the Company with the Commission. The Company does not
undertake any obligation to publicly update or revise any forward-looking
statements because of new information, future events or otherwise.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. federal income tax
consequences to U.S. Holders (as defined below) who tender Securities pursuant
to the Offer to Purchase and the consequences of the adoption of the Amendments
to Non-Tendering U.S. Holders (as defined below). This summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
Treasury regulations, judicial decisions, administrative rulings and U.S.
Internal Revenue Service ("IRS") practice, all as in effect as of the date
hereof and all of which are subject to change or differing interpretations,
possibly with retroactive effect. The Company has not sought any ruling from the
IRS or an opinion of counsel with respect to the statements made and the
conclusions reached in the following summary, and there can be no assurance that
the IRS will agree with such statements and conclusions.
This discussion is intended for general information only and, as such,
does not address all of the tax considerations that may be important to
particular Holders in light of their particular circumstances. This summary
discusses only Securities held as capital assets within the meaning of Section
1221 of the Code. This summary does not apply to Holders that may be subject to
special tax rules, including, without limitation, persons subject to the
alternative minimum tax, U.S. expatriates, banks, insurance companies, financial
institutions, tax-exempt organizations, persons owning (directly, indirectly or
by attribution) 10% or more of the outstanding share capital or voting stock of
the Company, persons who use the mark-to-market method of accounting, securities
broker-dealers, persons holding the Securities as a position in a hedging
transaction, straddle, or conversion transaction, or persons having a functional
currency other than the U.S. dollar. Such Holders may be subject to U.S. federal
income tax consequences different from those set forth below.
If a partnership holds Securities, the tax treatment of a partner
generally will depend upon the status of the partners and the activities of the
partnership. A partner in a partnership that holds the Securities is urged to
consult its own tax advisor regarding the specific tax consequences of the
Offer.
For purposes of this section, a "U.S. Holder" is a beneficial owner of
a Security that for U.S. federal income tax purposes is (i) a citizen or
resident of the United States, (ii) a corporation (including any entity treated
as a corporation for U.S. federal income tax purposes) created or organized
under the laws of the United States or any state thereof, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, or (iv) a trust if a court within the United States is able to exercise
primary supervision over its administration and one or more U.S. persons have
the authority to control all of its substantial decisions.
HOLDERS OF SECURITIES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR
SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE,
LOCAL, FOREIGN OR OTHER
20
TAXING JURISDICTION.
Tender of Securities
The sale of a Security by a U.S. Holder pursuant to the Offer to
Purchase generally will be a taxable transaction for U.S. federal income tax
purposes. Subject to the discussion of the market discount rules set forth
below, a U.S. Holder selling Securities pursuant to the Offer to Purchase
generally will recognize capital gain or loss in an amount equal to the
difference between the total amount of cash received as consideration (other
than amounts received attributable to accrued interest not yet included in
income, which will be taxable as foreign source ordinary interest income in
accordance with a Holder's regular method of tax accounting) and the U.S.
Holder's adjusted tax basis in the tendered Securities at the time of sale. A
U.S. Holder's adjusted tax basis in the tendered Securities generally will equal
the cost of the tendered Securities to such U.S. Holder, increased by the amount
of any market discount previously taken into income by the U.S. Holder, and
reduced by the amount of any amortizable bond premium previously amortized by
the U.S. Holder with respect to the tendered Securities. The gain or loss
generally will be U.S. source capital gain or loss, and generally will be
treated as long-term capital gain or loss if the tendered Securities have been
held for more than one year at the time of the sale. The deductibility of
capital losses is subject to significant limitations.
U.S. Holders that have purchased Securities at different times for
different prices should consult their tax advisors with respect to the
procedures for determining gain or loss.
Market Discount
An exception to the capital gain treatment described above may apply to
a U.S. Holder who purchased the Securities at a "market discount." In general, a
U.S. Holder is considered to have acquired a debt instrument with "market
discount" if the Holder's tax basis in the debt instrument immediately after its
acquisition is less than the stated redemption price of the Security at maturity
(unless the amount of market discount is less than a specified de minimis
amount, in which case the market discount is considered to be zero). In general,
unless the U.S. Holder has elected to include market discount in income
currently as it accrues, any gain recognized by a U.S. Holder on the sale of
debt instruments having market discount will be treated as ordinary income to
the extent of the lesser of (i) the gain recognized or (ii) the portion of the
market discount that has accrued (on a straight-line basis or, at the election
of the U.S. Holder, on a constant-yield basis) but has not yet been taken into
income while those debt instruments were held by the U.S. Holder. Gain in excess
of such accrued market discount will be subject to the capital gains rules
described above.
Consent Payment
The U.S. federal income tax treatment of the Consent Payment is not
entirely clear. The receipt of a Consent Payment by a U.S. Holder may be treated
for U.S. federal income tax purposes either as (i) additional consideration in
exchange for the Securities, in which case such amount would be taken into
account in determining the amount of gain or loss on the sale, or (ii) separate
consideration for consenting to the Amendments, in which case such amount would
constitute ordinary income to the U.S. Holder. U.S. Holders should consult their
tax advisors regarding the U.S. federal income tax treatment of a Consent
Payment.
Continued Ownership of Securities
Under U.S. Treasury Regulation Section 1.1001-3 (the "Regulation"), the
modification of a debt instrument will result in a deemed exchange of the
original instrument for a modified instrument (upon which gain or loss may be
recognized) if the modification constitutes a "significant modification" for
U.S. federal income tax purposes. The Regulation provides, in pertinent part,
that modifications that alter customary accounting or financial covenants are
not significant modifications. As a result, although the matter is not free from
doubt, the Company believes that the adoption of the Amendments should not
constitute a "significant" modification of the Securities and therefore should
not result in a deemed exchange. Thus, U.S. Holders that do not tender any or
all of their Securities pursuant to the Offer to Purchase ("Non-Tendering U.S.
Holders") should have the same adjusted tax basis and holding period in their
retained Securities following the adoption of the Amendments as the
Non-Tendering U.S. Holders had in such retained Securities immediately prior to
the adoption of the Amendments.
Information Reporting and Backup Withholding
Payments of interest on and proceeds from the sale of the Securities
(including the Consent Payment) may be subject to information reporting to the
IRS and backup withholding at a current rate of 28%. Backup withholding will not
apply to a Holder who furnishes a correct taxpayer identification number and
makes any other required
21
certification, or who is otherwise exempt from backup withholding. U.S. persons
who are required to establish their exempt status generally must provide a duly
completed IRS Form W-9 (Request for Taxpayer Identification Number and
Certification). Holders, who are not otherwise exempt from backup withholding,
that receive payment through a brokerage account or other intermediary are
advised to ensure that they provide (or have previously provided) to such broker
or intermediary a duly completed and valid IRS Form W-9 prior to payment.
Persons in doubt as to the necessity of furnishing this form should consult
their own tax advisors.
Backup withholding is not an additional tax. Amounts withheld under the
backup withholding tax rules may be credited against that Holder's U.S. federal
income tax liability. A Holder may obtain a refund of any excess amounts
withheld by filing the appropriate claim for refund with the IRS and furnishing
any required information.
CERTAIN U.K. AND E.U. TAX CONSEQUENCES
The following is a summary of the Company's understanding of current
law and practice in the United Kingdom relating to certain U.K. tax consequences
for Holders of Securities who tender Securities pursuant to the Tender Offer and
Consent Solicitation. It applies only to Holders who are the absolute beneficial
owners of those Securities. It does not apply to certain classes of person (such
as dealers and persons connected with the Company) to whom special rules may
apply. Holders (particularly those that may be subject to tax in a jurisdiction
other than the United Kingdom) should in any event consult their own
professional advisers with regard to their tax position.
The U.K. tax consequences under current law and practice for Holders
who do not tender Securities pursuant to the Tender Offer and Consent
Solicitation are considered briefly below. However all such Holders should
consult their own professional advisers with regard to any effect that the
Amendments (if they are adopted), and/or any action undertaken by the Company
after consummation of the Tender Offer and Consent Solicitation, may have on
their tax position.
Consequences to Tendering Holders of Securities
Interest on the Securities (including Accrued Interest)
Payment of Interest on the Securities. Payment of interest on the
Securities may be made without withholding or deduction for or on account of
U.K. tax while the Securities remain listed on a "recognised stock exchange" as
defined in section 841 of the Income and Corporation Taxes Act 1988. The
Luxembourg Stock Exchange is a "recognised stock exchange" for these purposes.
The Securities will satisfy the requirement of being listed on a "recognised
stock exchange" if and so long as they are listed by a competent authority in
Luxembourg and admitted to trading on the Luxembourg Stock Exchange.
Interest on the Securities may also be paid without withholding or
deduction for or on account of U.K. tax where the Company reasonably believes
(and any person by or through whom interest on the Securities is paid reasonably
believes) that the beneficial owner is a company within the charge to U.K.
corporation tax as regards the payment of interest at the time the payment is
made, provided that the Inland Revenue has not given a direction, the effect of
which is that such payment may not be made without such withholding or
deduction.
In all other cases, an amount must be withheld from payments of
interest on the Securities on account of U.K. income tax at the lower rate
(currently 20%), subject to the availability of relief under an applicable
double tax treaty or other relief.
Holders of Securities who are individuals may wish to note that the
Inland Revenue has power to obtain information (including the name and address
of the beneficial owner of the interest) from any person in the United Kingdom
who either pays interest to or receives interest for the benefit of an
individual. Such information may, in certain circumstances, be exchanged by the
Inland Revenue with the tax authorities of other jurisdictions.
Further United Kingdom Tax Issues. Interest on the Securities
constitutes U.K. source income for tax purposes and, as such, may be subject to
income tax direct assessment even where paid without withholding.
However, interest with a U.K. source received without deduction or
withholding on account of U.K. tax will not be chargeable to U.K. tax in the
hands of a Holder of Securities (other than certain trustees) who is not
resident for tax purposes in the United Kingdom unless the Holder of the
Securities is (a) a company which carries on a trade in the United Kingdom
through a permanent establishment in the United Kingdom or, (b) if not such a
company, carries on a trade, profession or vocation in the United Kingdom
through a branch or agency in the United Kingdom, and in either case the
interest is received in connection with, or the Securities are attributable to,
that permanent
22
establishment, branch or agency. There are exemptions for interest received by
certain categories of agent (such as some brokers and investment managers). The
provisions of an applicable double taxation treaty may also be relevant for such
Holders of Securities.
The Consent Payment - Withholding Tax
The applicable Consent Payment will be payable without withholding or
deduction on account of U.K. tax.
U.K. Corporation Tax Payers
The acceptance of the Tender Offer will constitute a disposal of the
tendered Securities. In general, Holders of Securities that are within the
charge to U.K. corporation tax will recognize for the purposes of U.K.
corporation tax on income all returns, profits, gains or losses arising from,
and fluctuations in value arising in connection with, their tendered Securities
including their disposal (whether attributable to currency fluctuations or
otherwise) broadly in accordance with their statutory accounting treatment.
Other U.K. Tax Payers
Taxation of chargeable gains. The acceptance of the Tender Offer will
constitute a disposal of the tendered Securities. A disposal of Securities by a
Holder who is not within the charge to U.K. corporation tax but who is resident
or ordinarily resident in the United Kingdom or who carries on a trade,
profession or vocation in the United Kingdom through a branch or agency in the
United Kingdom to which the Securities are attributable may give rise to a
chargeable gain or an allowable loss for the purposes of the U.K. taxation of
chargeable gains. It should be noted that, in calculating any chargeable gain or
allowable loss arising on a disposal of Securities, the Consent Payment should
be treated as part of the disposal proceeds received for the Securities. It
should also be noted that, in calculating any such gain or loss arising on such
a disposal, sterling values are compared at acquisition and disposal.
Accordingly, a chargeable gain may arise on disposal even where the U.S. dollar
proceeds are less than, or equal to, the amount in U.S. dollars paid to acquire
the Securities.
Taxation as income. The acceptance of the Tender Offer will constitute
a disposal of the tendered Securities. On a disposal of Securities by a Holder
who is not within the charge to U.K. corporation tax, but who is resident or
ordinarily resident in the United Kingdom or who carries on a trade, profession
or vocation in the United Kingdom through a branch or agency in the United
Kingdom to which the Securities are attributable, any interest which has accrued
since the last interest payment date may be chargeable to tax as income under
the rules of the accrued income scheme as set out in Chapter II of Part XVII of
the Income and Corporation Taxes Act 1988. Holders are in any event advised to
consult their own professional advisers with regard to the potential
consequences of the application of the accrued income scheme.
Stamp Duty and Stamp Duty Reserve Tax. The acceptance of the Tender
Offer will constitute a disposal of the tendered Securities. No U.K. stamp duty
or stamp duty reserve tax will be payable by Holders of Securities on the
disposal of their Securities pursuant to the Tender Offer.
Consequences to Non-Tendering Holders of Securities
For Holders of Securities who do not tender any or all of their
Securities pursuant to the Tender Offer there may be adverse U.K. tax
consequences arising if the Amendments outlined herein are adopted and/or the
Company undertakes certain actions after the consummation of the Tender Offer
and Consent Solicitation.
Interest on the Securities
Payment of Interest on the Securities. Payment of interest on the
Securities may be made without withholding or deduction for or on account of
U.K. tax while the Securities remain listed on a "recognised stock exchange" as
defined in section 841 of the Income and Corporation Taxes Act 1988. The
Luxembourg Stock Exchange is a "recognised stock exchange" for these purposes.
The Securities will satisfy the requirement of being listed on a "recognised
stock exchange" if and so long as they are listed by a competent authority in
Luxembourg and admitted to trading on the Luxembourg Stock Exchange.
Interest on the Securities may also be paid without withholding or
deduction for or on account of U.K. tax where the Company reasonably believes
(and any person by or through whom interest on the Securities is paid reasonably
believes) that the beneficial owner is a company within the charge to U.K.
corporation tax as regards the payment of interest at the time the payment is
made, provided that the Inland Revenue has not given a direction, the
23
effect of which is that such payment may not be made without such withholding or
deduction.
In all other cases (and in particular if at any time the Company
de-lists the Securities from the Luxembourg Stock Exchange without listing them
on another "recognised stock exchange"), an amount must be withheld from
payments of interest on the Securities on account of U.K. income tax at the
lower rate (currently 20%), subject to the availability of relief under an
applicable double tax treaty or other relief.
Holders of Securities who are individuals may wish to note that the
Inland Revenue has power to obtain information (including the name and address
of the beneficial owner of the interest) from any person in the United Kingdom
who either pays interest to or receives interest for the benefit of an
individual. Such information may, in certain circumstances, be exchanged by the
Inland Revenue with the tax authorities of other jurisdictions.
U.K. Corporation Tax Payers
Holders of Securities within the charge to U.K. corporation tax in
respect of the Securities should recognize as income any return, profit, gain or
loss arising from, or fluctuation in value arising in connection with, their
retained Securities (whether attributable to currency fluctuations or otherwise)
as a result of the variation in the terms of the Securities pursuant to the
Amendments outlined herein broadly in accordance with their statutory accounting
treatment.
Other U.K. Tax Payers
Taxation of chargeable gains. The variation in the terms of the
Securities pursuant to the Amendments outlined herein should not give rise to a
disposal of retained Securities by a Holder who is resident or ordinarily
resident in the United Kingdom or who carries on a trade, profession or vocation
in the United Kingdom through a branch or agency in the United Kingdom to which
the Securities are attributable for the purposes of U.K. taxation of chargeable
gains.
Taxation as income. The variation in the terms of the Securities
pursuant to the Amendments outlined herein may constitute a transfer of the
retained Securities by a Holder who is not within the charge to U.K. corporation
tax but who is resident or ordinarily resident in the United Kingdom, or who
carries on a trade, profession or vocation in the United Kingdom through a
branch or agency in the United Kingdom to which the retained Securities are
attributable, for the purposes of the accrued income scheme as set out in
Chapter II of Part XVII of the Income and Corporation Taxes Act 1988 with the
result that any interest which has accrued since the last interest payment date
may be chargeable to tax as income under the rules of that scheme. Holders are
in any event advised to consult their own professional advisers with regard to
the potential consequences of the application of the accrued income scheme.
Stamp Duty and Stamp Duty Reserve Tax
No U.K. stamp duty or stamp duty reserve tax should be payable by
Holders of Securities solely as a result of the adoption of the Amendments
outlined herein.
EU Directive on the Taxation of Savings Income
The European Union has adopted a Directive regarding the taxation of
savings income. Subject to a number of important conditions being met, it is
proposed that Member States will be required from 1 July 2005 to provide to the
tax authorities of other Member States details of payments of interest and other
similar income paid by a person to an individual in another Member State, except
that Austria, Belgium and Luxembourg will instead impose a withholding system
for a transitional period unless during such period they elect otherwise.
DEALER MANAGER, SOLICITATION AGENT, INFORMATION AGENT AND TENDER AGENT
The Company has retained Goldman, Sachs & Co. to act as Dealer Manager
(the "Dealer Manager") and Solicitation Agent (the "Solicitation Agent") and
Global Bondholder Services Corporation to act as Information Agent (the
"Information Agent") and Tender Agent (the "Tender Agent"). The Company has
agreed to pay the Information Agent and the Tender Agent customary fees for
their services in connection with the Offer to Purchase. The Company has also
agreed to pay the Dealer Manager reasonable customary fees for its services as
Dealer Manager in connection with the Offer and to reimburse the Dealer Manager,
Information Agent and Tender Agent for their reasonable out-of-pocket expenses
(including, with respect to the Dealer Manager, the reasonable fees and expenses
of its counsel) and to indemnify the Dealer Manager against certain liabilities,
including liabilities under U.S.
24
federal securities laws.
Tendering Holders will not be obligated to pay brokerage fees or
expenses of the Dealer Manager, the Solicitation Agent, the Information Agent,
the Tender Agent or DTC.
The Dealer Manager and Solicitation Agent, in the ordinary course of
its business, makes markets in securities of the Company, including the
Securities. As a result, from time to time, the Dealer Manager and Solicitation
Agent may own certain of the Company's securities, including the Securities. In
addition, the Dealer Manager and Solicitation Agent and its affiliates have
performed or may perform various investment banking, commercial lending and
financial advisory services for the Company, including in connection with the
Transactions, for which they receive customary compensation.
None of the Dealer Manager, the Solicitation Agent, the Information
Agent, the Tender Agent, the Trustee or their respective directors, employees or
affiliates assume any responsibility for the accuracy or completeness of the
information concerning the Company or its affiliates or the Securities contained
in this Offer to Purchase or for any failure by the Company to disclose events
that may have occurred and may affect the significance or accuracy of such
information.
Any questions or requests for assistance or for additional copies of
this Offer to Purchase or related documents may be directed to the Information
Agent or the Luxembourg Agent at their respective telephone numbers on the last
page of this Offer to Purchase. A Holder may also contact the Dealer Manager and
Solicitation Agent at the telephone number set forth on the last page of this
Offer to Purchase or such Holder's broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer to Purchase.
MISCELLANEOUS
We are not aware of any jurisdiction where the making of the Tender
Offer or the Consent Solicitation is not in compliance with the laws of such
jurisdiction. If we become aware of any jurisdiction where the making of the
Tender Offer or the Consent Solicitation would not be in compliance with such
laws, we will make a good faith effort to comply with any such laws or may seek
to have such laws declared inapplicable to the Tender Offer and the Consent
Solicitation. If, after such good faith effort, we cannot comply with any such
applicable laws, the Tender Offer or the Consent Solicitation will not be made
to (nor will tenders or Consents be accepted from or on behalf of) the Holders
residing in each such jurisdiction.
25
ANNEX A
THE AMENDMENTS
The following definition is proposed to be added to Section 1.01 of the
Indenture:
""Transaction" means the sale of the Company's NeoResins business to
Koninklijke DSM N.V. as announced by the Company on December 14, 2004."
The following section is proposed to be added to the Indenture:
"Section 5.17 Waiver of Application of Covenants
Application of any and all of the following sections of the Indenture
is waived with respect to the Transaction: (a) Section 5.06, (b) Section 5.08,
(c) Section 6.01 and (d) any other provision of the Indenture that as a result
of the consummation of the Transaction would require a payment or the making of
an offer to purchase or redeem the Notes, or whose contravention would result in
a Default or Event of Default under the Indenture."
The following sections are proposed to be modified as set forth below:
Section 5.02. Maintenance of Office or Agency; Report to Holders.
(b) The Company will (i) make available to the investor website service
maintained by Bloomberg L.P. (or if such service website is no longer maintained
or accessible for these purposes, a similar service), (ii) post on its website
or (iii) file with the SEC, and in any case provide the Trustee upon its
request, the following reports, whether or not required by the rules and
regulations of the SEC: (x) within 120 days following the end of each fiscal
year of the Company, all annual financial information that would be required to
be contained in a filing with the SEC on Form 20-F (or any successor form) if
the Company were required to file such Form, prepared in accordance with GAAP
consistently applied, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
financial information, a report thereon by the Company's certified public
accountants, provided, that the Company shall not be required to include (1) any
reconciliation of any line item to US GAAP nor any other US GAAP disclosures nor
any audit under US generally accepted auditing standards, (2) the disclosures
required by item 15 (Controls and Procedures), Item 16A (Audit Committee
Financial Expert), and Item 16B (Code of Ethics), (3) the disclosure required by
Section 404 of the Sarbanes-Oxley Act 2002, (4) the exhibits required by a Form
20-F (including for the avoidance of doubt, certificates of relevant officers of
the Company required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002),
or (5) separate financial statement for any of its Affiliates, even if such
statement would be required to be included on Form 20-F pursuant to a rule or
rules under Regulation S-X as promulgated by the Commission and (y) within 60
days following the end of the first three fiscal quarters in each fiscal year of
the Company, unaudited consolidated financial statements for the Company for the
quarterly period then ended prepared in accordance with GAAP (which need not
contain any reconciliation to U.S. GAAP) consistently applied, together with
footnote disclosures and a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" substantially as would be required to be
contained in a filing with the Commission on Form 10-Q (or any successor form)
for such period if the Company were required to file such form, provided, that,
for the avoidance of doubt, the Company shall not be required to include (1) any
reconciliation of any line item to US GAAP or the disclosures required by Item 4
(Controls and Procedures), (2) the exhibits required by such form (including,
for the avoidance of doubt, certificates of relevant officers of the Company
required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002), or (3) any
review of its quarterly financial statements by the Company's certified public
accountant's.
(c) In addition, the Company shall furnish to the Holders of the Notes
and to prospective investors, upon the requests of such Holders, any information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so
long as the Notes are not freely transferable under the Act by Persons not
"affiliates" under the Securities Act.
A-1
The following sections are proposed to be deleted from the Indenture:
Section 5.08. Change of Control.
(a) Upon the occurrence of a Change of Control, unless all Notes have
been called for redemption pursuant to Article 4, each Holder shall have the
right to require the Company to repurchase all or any part (equal to US$1,000 or
an integral multiple thereof) of such Holder's Notes pursuant to an offer (the
"Change of Control Offer") at an offer price in cash (the "Change of Control
Payment") equal to 101% of the aggregate principal amount of Notes repurchased
plus accrued and unpaid interest and Additional Amounts (if any) to the date of
purchase (and in the case of Definitive Notes, subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
Interest Payment Date and Additional Amounts (if any) in respect thereof).
(b) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 5.08 applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
(c) In the event that the Company shall be required to commence a
Change of Control Offer, the Company shall:
(1) Within 30 days after any Change of Control (unless notice of
redemption of all Notes has then been given pursuant to Article 4), the
Company shall (x) commence a Change of Control Offer, which shall
remain open for a period of at least 30 but not more than 60 Business
Days following its commencement (the "Change of Control Offer Period")
and (y) deliver written notice of such Change of Control Offer to the
Trustee and, so long as any Global Notes are outstanding, publish a
notice of a Change of Control Offer in a leading newspaper having a
general circulation in The City of New York (which is expected to be
The Wall Street Journal) and, in the case of Definitive Notes, mail a
notice to each Holder (and, in either case, if and so long as the Notes
are listed on the Luxembourg Stock Exchange and the rules of such Stock
Exchange shall so require, a newspaper having general daily circulation
in Luxembourg (which is expected to be the Luxemburger Wort), in each
case with a copy to the Trustee, which notice shall contain (or, in the
case of notice by publication, which notice shall contain instructions
on how to obtain from the Company) all instructions and materials
necessary to enable such Holders to tender Notes pursuant to such
Change of Control Offer. The notice, which shall govern the terms of
the Change of Control Offer, shall describe the transaction or
transactions that constitute the Change of Control and shall state:
(a) that the Change of Control Offer is being made pursuant
to this Section 5.08;
(b) that the Company is required to offer to repurchase all
of the outstanding principal amount of Notes, the purchase price
and, that on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date
such notice is first published or, where relevant, mailed (except
as may otherwise be required by applicable law) (the "Change of
Control Payment Date") the Company shall repurchase all Notes
validly tendered and not withdrawn pursuant to this Section 5.08;
(c) that any Note not so tendered or not accepted for payment
pursuant to the Change of Control Offer shall continue to accrue
interest;
(d) that, unless the Company defaults in making such payment,
Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest on and after the Change of Control
Payment Date;
(e) that Holders electing to have a Note purchased pursuant
to a Change of Control Offer may elect to have all or any portion
(equal to US$1,000 or integral multiples thereof) of such Note
purchased;
(f) that Holders electing to have a Note or portions thereof
represented by a Global Note purchased pursuant to a Change of
Control Offer shall be required to cause presentation of the
relevant Global Note to a Paying Agent at its address specified in
the notice prior to the close of business on a date specified in
such notice that is prior to the Change of Control Payment Date
(but which may not be more than five Business Days prior to the
Change of Control Payment Date);
A-2
(g) that Holders electing to have a Definitive Note or a
portion thereof purchased pursuant to a Change of Control Offer
shall be required to surrender the Definitive Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to a Paying Agent at its address specified in
the notice prior to the close of business on a date specified in
such notice that is prior to the Change of Control Payment Date
(but which may not be more than five Business Days prior to the
Change of Control Payment Date);
(h) that Holders shall be entitled to withdraw their election
if the Company or the Paying Agent, as the case may be, receives,
not later than the expiration of the Change of Control Offer
Period, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Note or portion thereof the Holder surrendered or caused to be
presented for purchase and a statement that such Holder is
withdrawing its election to have such Note or portion thereof
purchased;
(i) that Holders whose Definitive Notes are purchased only in
part shall be issued new Definitive Notes by the Paying Agent to
whom the original Definitive Note was surrendered, equal in
principal amount to the unpurchased portion of the Definitive
Notes surrendered; and
(j) the ISIN, CUSIP, CINS and Common Code numbers, if any,
printed on the Notes being repurchased and that no representation
is made as to the correctness or accuracy of the ISIN, CUSIP, CINS
and Common Code numbers, if any, listed in such notice or printed
on such Notes.
(2) On the Change of Control Payment Date, the Company shall to
the extent lawful, (a) accept for payment the Notes or portions thereof
properly tendered pursuant to Change of Control Offer and not
thereafter withdrawn, (b) deposit with the relevant Paying Agent an
amount equal to the payment required in respect of all Notes or
portions thereof so tendered and (c) deliver or cause to be delivered
to the Trustee the Definitive Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes
or portions thereof purchased by the Company.
(3) The relevant Paying Agent shall promptly (1) in respect of
Global Notes, pay to the bearer of a Global Note the Change of Control
Payment relating thereto or (2) in the case of Definitive Notes, pay to
each Holder the Change of Control Payment for such Note and promptly
deliver at the office of a Paying Agent or (at the risk and, if mailed
at the request of the Holder otherwise than by ordinary uninsured mail,
at the expense of the Holder) send by mail to the Holder a new
Definitive Note equal in principal amount to the unpurchased portion of
the Note surrendered, if any, provided that each new Definitive Note
will be in a principal amount of $1,000 or an integral multiple
thereof.
(4) Each such payment in respect of Notes represented by a Global
Note will be made against presentation and surrender (or in the case of
part payment only, endorsement) of such Global Note at the specified
office of a Paying Agent, at the option of the bearer thereof, by check
drawn on, or by transfer to an account maintained by the payee with, a
branch of a bank in London. Each such payment in respect of Definitive
Notes will be made against presentation and surrender (or, in the case
of part payment only, endorsement) of the relevant Definitive Note at
the office of such Paying Agent by check drawn on a branch of a bank in
London and mailed on the Change of Control Payment Date to the Holder
of the Note transferred at the address specified in the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note or, if
so elected in such form, by transfer on the Change of Control Payment
Date to an account maintained by the payee with a branch of a bank in
London. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
If the Company complies with the provisions of the preceding clause
(1), on and after the Change of Control Offer Payment Date interest shall cease
to accrue on the Notes or the portions of Notes repurchased. If a Definitive
Note is repurchased on or after an interest record date but on or prior to the
related Interest Payment Date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note accepted is not repurchased upon
surrender because of the failure of the Company to comply with the preceding
clause (1), interest shall be paid on the unpaid principal and premium and
Additional Amounts, if any, from the Change of Control Payment Date until such
principal, premium and Additional Amounts, if any, are paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case at the
rate provided in the Notes and in Section 5.01 hereof.
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(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other applicable
securities laws or regulations, including any securities laws of the United
Kingdom the requirements of any securities exchange on which the Notes are
listed, to the extent such laws, regulations or requirements are applicable in
connection with the repurchase of Notes pursuant to this Section 5.08. To the
extent that the provisions of any applicable securities laws or regulations
conflict with provisions of this Section 5.08, the Company shall comply with
such applicable laws or regulations and shall not be deemed to have breached its
obligations under this Section 5.08 by virtue thereof.
ARTICLE 6
SUCCESSOR ENTITY
Section 6.01. Merger, Consolidation or Sale of All or Substantially All Assets.
(a) The Company may not, directly or indirectly, (1) consolidate or
merge with or into (whether or not the Company is the surviving corporation), or
(2) sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to, another Person unless:
(1) the Company is (a) the surviving corporation or (b) the Person
formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (the "Successor
Entity") is a corporation organized or existing under the laws of the
United Kingdom, any country that is a member of the European Union at
the time or the United States of America, any state thereof or the
District of Columbia (each, an "Eligible Jurisdiction");
(2) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Company under the Notes
and this Indenture (including the due and punctual payment of all
Additional Amounts), as the case may be, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of
Default exists;
(4) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such
sale, assignment, transfer, lease, conveyance or other disposition
shall have been made shall, at the time of such transaction and after
giving pro forma effect thereto as if such transaction had occurred at
the beginning of the applicable four-quarter period, either (a) be
permitted to incur at least (pound)1.00 of additional Debt pursuant to
Section 5.03(a) or (b) have a Fixed Charge Coverage Ratio at least
equal to the Fixed Charge Coverage Ratio of the Company for such
four-quarter reference period; and
(5) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
(b) Notwithstanding the foregoing, (1) any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company, and (2) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
Eligible Jurisdiction.
The following clause is proposed to be deleted from Section 7.01,
"Events of Default":
(3) Failure by the Company (or the Guarantor, to the extent applicable
to it) (A) to comply with Section 6.01 or (B) for a period of 30 days after
receipt of written notice specifying such a failure, stating that such notice is
a "Notice of Default" under this Indenture and demanding that the Company remedy
the same, shall have been given by registered or certified mail, return receipt
requested, to the Company by the Trustee, or the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding to comply with Sections 5.03, 5.04, 5.05, 5.06, 5.07, 5.08, 5.11,
5.12 and 5.13.
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The Information Agent and Tender Agent for the Offer and the Solicitation is:
Global Bondholder Services Corporation
65 Broadway - Suite 704
New York, NY 10006
USA
Attention: Corporate Actions
Banks and Brokers call: +1 (212) 430 3774
Toll Free: +1 (866) 294 2200
By Facsimile
(for Eligible Institutions only):
(212) 430-3775
Confirmation:
(212) 430-3774
By Mail: By Overnight Courier: By Hand:
65 Broadway - Suite 704 65 Broadway - Suite 704 65 Broadway - Suite 704
New York, NY 10006 New York, NY 10006 New York, NY 10006
USA USA USA
The Luxembourg Agent for the Offer and the Solicitation is:
Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
L-2955
Luxembourg
Attention: Corporate Trust and Agencies
Telephone: +352 47 97 3935
By Facsimile: +352 4797 73951
Any questions or requests for assistance or for additional copies of this Offer
to Purchase or related documents may be directed to the Information Agent or the
Luxembourg Agent at their respective telephone numbers set forth above. A Holder
may also contact the Dealer Manager, Solicitation Agent and the Luxembourg Agent
at their respective telephone numbers set forth below or such Holder's broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Dealer Manager for the Offer and Solicitation Agent
for the Solicitation is:
Goldman, Sachs & Co.
Liability Management Group
29th Floor, 85 Broad Street
New York, NY 10004
USA
Toll Free: +1 (800) 828 3128
Collect: +1 (212) 357 3019
Attention: Credit Liability Management
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Avecia Group plc
Date: January 4, 2005 By: /s/ Derrick Nicholson
-----------------------------
Name: Derrick Nicholson
Title: Chief Financial Officer