RECOMMENDED ACQUISITION OF CANARY WHARF GROUP PLC
BY SILVESTOR UK PROPERTIES LIMITED, A COMPANY CONTROLLED
BY MORGAN STANLEY-SPONSORED FUNDS AND SIMON GLICK
1. Introduction
Silvestor UK Properties Limited ('Silvestor') and the Independent Committee ofCanary Wharf Group plc ('Canary Wharf' or the 'Company') announce that they havereached agreement on the terms of a recommended acquisition of Canary Wharf by
Silvestor, a company controlled by MSREF IV International - GP, L.L.C. on behalf
of the MSREF IV International series of real estate private equity opportunity
funds sponsored by Morgan Stanley ('MSREF'), Morgan Stanley Real Estate SpecialSituations Fund II, Princes Gate Investors and the Glick Entities (who are, in
aggregate, interested in shares representing approximately 14.5 per cent. of the
issued share capital of the Company) (the 'Acquisition').
It is intended that, other than in relation to the Canary Wharf Shares in which
the Glick Entities are interested, the Acquisition be implemented by way of a
scheme of arrangement under section 425 of the Companies Act (the 'Scheme'). It
is expected that the Scheme Document will be posted in early January 2004 and
that the Scheme will become effective by late February 2004, subject to the
satisfaction of all relevant conditions.
The terms of the Acquisition enable all Canary Wharf Shareholders to receive 265
pence per Canary Wharf Share in cash. Alternatively, Canary Wharf Shareholders
have the opportunity to participate in the long-term potential of Canary Wharf
by choosing to receive some or all of their consideration in the form of AIM
listed Class B Shares in Silvestor's parent company, Silvestor Holdings Limited.
Under the terms of the Scheme, and subject to the conditions and further terms
set out in Appendix I and the terms and conditions that will be set out in the
Scheme Document and Form of Election, Canary Wharf Shareholders will be entitled
to receive, following the Acquisition becoming effective, total consideration of
265 pence per Canary Wharf Share, comprising 220 pence per share payable in cash
and 45 pence per share of equity in the form of shares in Silvestor's parent
company, Silvestor Holdings Limited ('Class B Shares') (the 'Offer').Canary Wharf Shareholders will be able to elect to vary the proportions in which
they receive cash and Class B Shares in respect of their holdings of Canary
Wharf Shares, via a mix and match facility. The Class B Shares (other than those
to be issued to companies held by a trust for the benefit of HRH Prince Alwaleed
Bin Talal Bin Abdulaziz Al Saud and his family) will be fully underwritten by
the Morgan Stanley Group, so that even if all Canary Wharf Shareholders (other
than the companies held by a trust for the benefit of HRH Prince Alwaleed Bin
Talal Bin Abdulaziz Al Saud and his family) elect for all cash consideration,
each such Shareholder will be entitled to 265 pence of cash per Canary Wharf
Share.
On the basis of the Offer of 265 pence per Canary Wharf Share, the Acquisition
values the existing issued share capital of the Company at approximately £1.56
billion, and implies an enterprise value for the Company of approximately £5.23
billion including net debt of approximately £3.68 billion as at 30 June 2003.
Silvestor is a wholly-owned subsidiary of Silvestor Holdings, a company whose
shareholders include MSREF, the Glick Entities, Whitehall 2001 Funds, Real
Estate Special Situations II Funds and Princes Gate Investors. Silvestor and
Silvestor Holdings have been newly incorporated for the purposes of the
Acquisition.
Against the background described in paragraph 5 below, the Independent
Committee, having been so advised by Cazenove, considers the terms of the
Acquisition to be fair and reasonable and that it should be voted for in the
absence of a higher offer.
The Independent Committee has also been advised by Lazard, which considers the
terms of the Acquisition to be fair and reasonable and that it should be voted
for in the absence of a higher offer. Lazard is also advising the Company on the
proposed disposals of certain properties to RBS and will receive a fee in the
event of the successful completion of the proposed disposals. The Acquisition is
conditional on completion of such disposals. Lazard has not acted as Rule 3
adviser to the Independent Committee in relation to the Acquisition for the
purposes of the City Code.
The Independent Committee, having been so advised by Cazenove and Lazard,
unanimously recommends Canary Wharf Shareholders to vote in favour of the
Acquisition, as they intend to do in respect of their own beneficial
shareholdings. In providing advice to the Independent Committee, Cazenove and
Lazard have taken into account the commercial assessments of the Independent
Committee.
Under the mix and match facility, Canary Wharf Shareholders may elect to vary
the proportions in which they receive equity in the form of Class B Shares and
cash in respect of their holdings. Canary Wharf Shareholders are recommended to
consider carefully, in the light of their investment objectives and having taken
independent advice appropriate to their own financial circumstances, whether
they wish to elect for a higher proportion of cash or of equity in the form of
Class B Shares. The Scheme Document will set out the risk factors that the
Independent Committee believes Canary Wharf Shareholders should consider if
electing to receive equity in the form of Class B Shares.
Morgan Stanley is advising Silvestor, Silvestor Holdings, MSREF, Morgan Stanley
Real Estate Special Situations Fund II and Princes Gate Investors in relation to
the Acquisition. Rothschild is advising Silvestor, Silvestor Holdings and Simon
Glick in relation to the Acquisition. Goldman Sachs International is advising
Whitehall 2001 Funds in relation to the Acquisition.
2. The Offer
It is intended that, other than in relation to the Canary Wharf Shares in which
the Glick Entities are interested, the Acquisition will be implemented by way of
a scheme of arrangement under section 425 of the Companies Act. Under the
Scheme, which will be subject to the conditions set out below and in Appendix I
and to be set out in the Scheme Document and Form of Election, Canary Wharf
Shareholders will receive:
For each Canary Wharf Share 220 pence in cash
and
45 pence of Class B Shares
The Offer of 265 pence per Canary Wharf Share represents:
• a premium of approximately 2 per cent. to the Adjusted Net Asset Value of approximately 261 pence per Canary
Wharf Share as at 30 June 2003 (as set out in Appendix II);
• a premium of approximately 68 per cent. to the closing middle-market price of 157.5 pence per Canary Wharf
Share on 24 April 2003 (being the last day prior to the beginning of speculation surrounding a potential offer for the
Company); and
• a premium of approximately 47 per cent. to the closing middle-market price of 180.0 pence per Canary Wharf
Share on 5 June 2003 (the day prior to the Company's announcement that it had received a number of approaches in
relation to a possible offer for the Company).
Class B Shares
Under the basic terms of the Offer, for each Canary Wharf Share, Canary Wharf
Shareholders (excluding the Glick Entities) will receive 45 pence of equity in
the form of Class B Shares in Silvestor Holdings. The Class B Shares will be
formally valued at not less than 45 pence in the Scheme Document. The Class B
Shares will represent approximately 33 per cent. of the share capital of
Silvestor Holdings. The proportion of consideration received by any Canary Wharf
Shareholder in Class B Shares may be varied under the Mix and Match Election as
described below. Class B Shares will have non-proportional voting rights but
will rank pari passu in all economic respects with the other ordinary shares in
Silvestor Holdings, including the rights to dividends and returns of capital.
The Acquisition is conditional on the Class B Shares being admitted to the
Alternative Investment Market upon completion.
Summary information on the share capital of Silvestor Holdings is set out in
paragraph 7 below and a summary of the rights of the Class B Shares is provided
in Appendix III.
Further information on the Class B Shares will be set out in the Scheme
Document.
3. Mix and Match Election
Canary Wharf Shareholders may elect to vary the proportions of Class B Shares
and cash consideration they receive in respect of their holdings of Canary Wharf
Shares, via a mix and match facility. The Class B Shares (other than those to be
issued to companies held by a trust for the benefit of Prince Alwaleed Bin Talal
Bin Abdulaziz Al Saud and his family) will be fully underwritten by the Morgan
Stanley Group, so that even if all Canary Wharf Shareholders (other than the
companies held by a trust for the benefit of HRH Prince Alwaleed Bin Talal Bin
Abdulaziz Al Saud and his family) elect for all cash consideration, each such
Shareholder will be guaranteed the full 265 pence of cash per Canary Wharf
Share.
Further information on the Mix and Match Election will be set out in the Scheme
Document.
4. Undertakings to vote in favour of the Acquisition
Companies held by a trust for the benefit of HRH Prince Alwaleed Bin Talal Bin
Abdulaziz Al Saud and his family, that are, in aggregate, interested in
13,288,000 shares representing approximately 2.3 per cent. of the issued share
capital of Canary Wharf, have committed to vote in favour of the Acquisition and
to elect to receive Class B Shares in respect of their entire holding of Canary
Wharf Shares. The voting undertaking ceases to be binding if a higher offer is
made.
Silvestor has also received irrevocable undertakings to vote in favour of the
Acquisition from George Iacobescu, Peter Anderson and members of the Independent
Committee, in respect of 3,954,719 Canary Wharf Shares, representing
approximately 0.7 per cent. of the existing issued share capital of the Company.
The undertakings cease to be binding if the recommendation of the Independent
Committee is withdrawn or adversely modified.
Accordingly, Silvestor has received irrevocable undertakings to vote in favour
of the Acquisition, or has received commitments to receive Class B Shares in
respect of, in aggregate, 17,242,719 Canary Wharf Shares, representing
approximately 2.9 per cent. of the existing issued share capital of the Company.
5. Background to and reasons for the Acquisition
History
Since flotation in April 1999, Canary Wharf has undertaken a strategy of
completing developments and returning excess cash to shareholders. Canary Wharf
targeted one million square feet of development starts each year and
subsequently announced its intention to return to shareholders £2 billion in
aggregate, subject to market conditions. The development plan was executed two
to three years ahead of target with the result that Canary Wharf will have
completed 11.6 million square feet by July 2004. In addition, Canary Wharf owns
land on which a potential six million square feet of development can be
completed. This compares with 10.2 million square feet of built space and
potential development at the time of the flotation. To date, £887 million has
been returned to shareholders through a combination of share buybacks and a
special dividend.
Over the past eighteen months there has been a marked deterioration in the
central London office market, reflected in increasing vacancy rates. This has
affected both lettings and rental levels at Canary Wharf. Canary Wharf's share
price reached an all-time low of 132.5 pence on 2 April 2003, following the
market's reaction to the disclosure, in its interim results, of tenants' options
temporarily to 'put back' unwanted space to the Company. On 28 April 2003,
Brascan notified the Company that it had accumulated a stake of 9.0 per cent.
Soon after, Canary Wharf received approaches from parties interested in
acquiring the Company. Given the potential involvement of the management in a
successful offer, the Independent Committee was formed, chaired by Sir Martin
Jacomb, to consider these approaches.
Reasons for the Independent Committee's recommendation
It has taken a considerable period of time to reach the point at which this
Acquisition is being announced. This reflects the complexity of Canary Wharf
and its shareholdings. The Independent Committee has given the Acquisition, and
the circumstances leading up to its being announced, its most careful
consideration.
The Independent Committee believes that:
(i) Canary Wharf rents are at or near the bottom of their cycle; and
(ii) there is unlikely to be any significant recovery in Canary Wharf
rents, which will depend on revitalised tenant demand for prime central London
office space, before 2006 or 2007.
The Independent Committee expects that significant development of Canary Wharf's
land bank would only be resumed once most of the unlet space at Canary Wharf
(currently estimated to stand at 1.4 million square feet at the end of the first
quarter of 2004) has been leased. The Independent Committee does not expect
major new office development to commence before 2006 or 2007.
The Independent Committee understands that a material proportion of Canary Wharf
Shareholders would welcome the opportunity to consider an offer at the current
time and, in light of the deliberations described above, regards the Acquisition
as providing fair value to Shareholders at this point in the property cycle,
bearing in mind the uncertainty over the timing of any recovery. In forming its
view of the Offer, the Independent Committee has had regard to all of the above
factors and also to the net asset values set out in Appendix II.
The Acquisition provides Canary Wharf Shareholders with the opportunity to
realise a significant amount of their investment in cash whilst retaining an
ongoing participation in the Company's long term future, by way of the share
consideration. Shareholders will be investing in Canary Wharf alongside MSREF
and the Glick Entities, which are targeting private equity returns, albeit such
shareholders will have limited voting rights. Alternatively, the full
underwriting of the share consideration allows Canary Wharf Shareholders, who so
elect, to receive 265 pence in cash.
6. Information on Canary Wharf
Canary Wharf is a distinctive, integrated property development and investment
project focused exclusively on Grade A office space and high quality retail
facilities at the 97 acre Canary Wharf Estate (the 'Estate'), in close proximity
to the City of London.
Canary Wharf develops, owns and manages the Estate as well as undertaking the
construction of the buildings and facilities on it. In aggregate, approximately
13.1 million square feet of office and retail space has been constructed to date
(including approximately 2.5 million square feet in other ownership) with a
further 1.0 million square feet under construction.
The current built estate comprises twenty five completed buildings of which
twenty are owned by Canary Wharf, more than 550,000 square feet of retail space
concentrated in two shopping malls, a conference and banqueting centre, two
Docklands Light Railway stations, a London Underground station, 20 acres of
landscaped grounds and five car parks (in addition to car parking below the
office buildings).
For the year ended 30 June 2003, Canary Wharf reported turnover of £250.3
million and a loss before tax of £13.2 million. As at 30 June 2003, Canary
Wharf had net assets of £1,519.4 million. Based on the market value of Canary
Wharf's property portfolio of £5,811.5 million as at 30 June 2003, Canary Wharf
Net Asset Value was £2,015.3 million, or 344 pence per share, as set out in
Appendix II.
7. Information on Silvestor and Silvestor Holdings
Silvestor Holdings is a company newly incorporated in England specifically for
the purpose of the Acquisition. Silvestor, a company newly incorporated in
England, is a wholly-owned subsidiary of Silvestor Holdings. Neither Silvestor
Holdings nor Silvestor has traded prior to the date of this announcement.
Following the completion of the Acquisition, the equity ownership of Silvestor
Holdings is expected to be as follows:
Shareholder Class of Share Percentage of Silvestor
Holdings Share Capital
MSREF Class A Shares 19%
Glick Entities SG Shares 33%
Canary Wharf Shareholders* Class B Shares 33%
Whitehall 2001 Funds Class A Shares 7%
Princes Gate Investors Class A Shares 4%
Morgan Stanley Real Estate Special Class A Shares 4%
Situations Fund II
* Holders of Class B Shares may include persons to whom such shares are issued
by virtue of underwriting arrangements including entities controlled and/or
managed by the Morgan Stanley Group.
The SG Shares have the right to receive a priority return of 8 per cent.
dividend on net invested capital. The Class A Shares and Class B Shares (which
together form the ordinary shares) receive the next 8 per cent. return on net
invested capital. Unpaid dividends on SG Shares and ordinary shares compound
quarterly per annum. All other distributions are pari passu on net invested
capital among the SG Shares and the Class A Shares and Class B Shares. The SG
Shares carry the right to be redeemed in whole or in part six years after issue
and, if the redemption right is not exercised, convert into Class A Shares. (Net
invested capital is equity invested less distributions in excess of 8 per cent.
per annum.) SG Shares rank ahead of Class A and Class B Shares in a liquidation.
The directors of both Silvestor and Silvestor Holdings are Stephane Theuriau and
Sam Levinson.
8. Information on the Consortium
Morgan Stanley Real Estate Fund IV International
The Morgan Stanley Real Estate Fund IV International ('MSREF') is the latest inthe series of discretionary real estate private investment opportunity funds
sponsored by the Morgan Stanley Group. MSREF has raised aggregate committed
capital of US$2.38 billion from investors including the Morgan Stanley Group,
its employees and third-party institutional investors such as pension funds and
insurance companies.
Since 1992, the MSREF series of real estate funds (the 'MSREF Funds') have been
one of the most active real estate investors in the world acquiring over, in
aggregate, US$29 billion of assets globally, including approximately US$11
billion in Europe. In the United Kingdom, the MSREF Funds together own several
investments totalling approximately US$2.1 billion. Their investments include
portfolios of real estate assets; individual assets; development properties;
real estate management and operating companies; and portfolios of performing and
non-performing real estate loans. Since inception the MSREF Funds have invested
an aggregate of US$5.4 billion of equity globally, including over US$1.6 billion
in Europe.
The MSREF Funds utilise the expertise, relationships and franchise of the Morgan
Stanley Group and have professionals strategically located around the world
providing acquisition, finance and asset management services.
Simon Glick
Simon Glick is a New York based professional investor who has invested both his,
and his family's capital, for over three decades. Areas in which Mr. Glick
invests include risk arbitrage, statistical arbitrage, special situations,
undervalued securities, private equity, bank debt and real estate. Mr. Glick
first invested in Canary Wharf in December 1995 when Canary Wharf was purchased
by a consortium of international property investors including Mr. Paul Reichmann
and Mr. Glick as well as a company held by a trust for the benefit of HRH Prince
Al Waleed bin Talal bin Abdulaziz Al Saud and his family, CNA Financial Corp,
which is approximately 90% majority owned by Loews Corporation, Franklin Mutual
Series Fund and affiliates of Republic New York Corporation. As at 4 December
2003 the Glick Entities were interested in approximately 14.5 per cent. of the
existing issued share capital of Canary Wharf.
Whitehall 2001 Funds
The Whitehall 2001 Funds are the latest in a series of real estate investment
funds sponsored and managed by The Goldman Sachs Group, Inc. and/or its
affiliates (such investment funds, the 'Whitehall Funds'). In total, through
June 2003, the Whitehall Funds and certain affiliates have acquired (or have,
under contract, to acquire) approximately US$66 billion in gross asset cost of
real estate (and real estate-related assets) worldwide (corresponding to an
aggregate equity capital investment of approximately US$12 billion). Since
1994, the Whitehall Funds have acquired (or have, under contract, to acquire)
US$18 billion in gross asset cost of European real estate (and real
estate-related assets) through corporate acquisitions and/or direct asset
investments. In the United Kingdom, the Whitehall Funds own several investments
exceeding US$880 million in gross asset cost.
Morgan Stanley Real Estate Special Situations Fund II
The Morgan Stanley Real Estate Special Situations Fund II ('MSRESS') is thelatest in a series of Morgan Stanley sponsored discretionary private equity
funds that focus on making minority investments in the securities of real estate
operating companies (the 'MSRESS Funds'). Since 1997 the MSRESS Funds have
invested in aggregate approximately US$500 million of equity in minority stakes
in US, Asian and European real estate operating companies managing over US$5
billion of assets.
MSRESS focuses exclusively on European real estate operating companies, and to
date has invested a total of US$155 million of equity in three separate
transactions.
Princes Gate Investors
Princes Gate Investors is a US$1.2 billion private equity fund, which targets
non-controlling equity and equity-related investments. Princes Gate Investors is
managed by PG Investors III, Inc. a wholly-owned subsidiary of Morgan Stanley.
Capital is non-discretionary from 17 international private investors and Morgan
Stanley. Since the founding of Princes Gate Investors in 1992, approximately $1
billion has been invested in a wide range of businesses across the globe.
9. Arrangements with Simon Glick and the Glick Entities
It was announced on 1 September 2003 that MSREF had entered into an exclusivity
agreement with Simon Glick in relation to a potential offer for the Company.
This exclusivity agreement has now been superseded by a Conduct of Offer
Agreement entered into by MSREF, the Glick Entities, the Morgan Stanley Real
Estate Special Situations Fund II, Princes Gate Investors and Simon Glick to
regulate the conduct of the Consortium's offer. The Conduct of Offer Agreement
includes an undertaking by the Glick Entities not to sell any shares in the
Company nor to accept any third party offer for the Company in respect of the
shares in which the Glick Entities are interested (representing, in aggregate,
approximately 14.5 per cent. of the issued share capital of the Company), to
vote those shares in favour of the resolutions to be proposed at the Court
Meeting(s) and the Canary Wharf Extraordinary General Meeting and against
resolutions put to any general meeting of Canary Wharf Shareholders in
connection with a competing offer. These obligations cease to apply if (i) the
Independent Committee's recommendation of the Acquisition (on its original or
any revised terms) is withdrawn and either (a) remains withdrawn on the day
before any closing date of a Third Party Transaction or 24 hours before the
deadline for submitting proxies for any meeting of Company shareholders in
relation to the Acquisition or that Third Party Transaction (where it is an
offer by way of a scheme) or (b) Silvestor announces that it will not increase
its offer; (ii) a competing offer becomes or is declared unconditional as to
acceptances, or (if made by way of a scheme) becomes effective; or (iii) the
Scheme is not approved by the necessary majority at the Court Meeting or by the
Court.
The Glick Entities and Simon Glick have also entered an agreement with Silvestor
Holdings pursuant to which the Glick Entities currently propose to roll-over
85,004,663 million Canary Wharf Shares, representing approximately 14.5 per
cent. of the issued share capital of the Company, into SG Shares in Silvestor
Holdings (subject to the Scheme receiving the sanction of the Court and to the
Acquisition otherwise being unconditional in all respects).
10. Financing
The cash consideration payable to Canary Wharf Shareholders under the terms of
the Acquisition will be provided from a combination of equity subscriptions from
members of the Consortium and debt financing from a group of lenders including
Citigroup, Goldman Sachs, JP Morgan Chase and Morgan Stanley. To the extent that
Canary Wharf Shareholders do not elect to receive Class B Shares, any additional
cash consideration payable will be financed by way of an underwriting agreement
entered into between Silvestor Holdings and Morgan Stanley Securities Limited.
11. Canary Wharf Property Transactions
The Offer is conditional on Canary Wharf Shareholders approving certain property
transactions to be voted on at a Canary Wharf Extraordinary General Meeting to
be convened before the end of December 2003, as outlined in an announcement made
by Canary Wharf on 5 December 2003.
12. Management and Employees
It is expected that certain members of the current management team of the
Company will enter into new service contracts with Silvestor following the
Scheme becoming effective. The levels of remuneration provided for in these
contracts will not vary from that to which they are entitled as employees of
Canary Wharf. It is intended that certain members of the management will in due
course also be incentivised by reference to the performance of the Company and
its assets although no arrangements with management are in place.
13. Canary Wharf Share Schemes and Warrants
The Acquisition will affect share options and incentive awards granted under the
Canary Wharf Share Schemes. Participants in the Canary Wharf Share Schemes will
be contacted regarding the effect of the Acquisition on their rights and
appropriate proposals will be made in due course.
An appropriate offer to the holder of Warrants will also be made in due course.
For the avoidance of doubt, the Offer is not conditional upon acceptance of the
warrant offer.
14. Inducement Fee
The Company has agreed to pay an inducement fee to MSREF of approximately £15.6
million in the event that (a) the Independent Directors of Canary Wharf withdraw
or adversely modify their recommendation of the Acquisition and thereafter the
Acquisition is not made, lapses or is withdrawn or (b) a Third Party Transaction
is successful.
The Company has agreed to pay an inducement fee to MSREF of approximately £7.8
million in the event that the Acquisition is unsuccessful for any other reason.
If the Acquisition is unsuccessful and either of the Canary Wharf property
transactions as described in paragraph 11 has closed, Canary Wharf will pay
MSREF an additional fee of £4.0 million, together with any amount payable in
respect of VAT, although, in the circumstances described in (a) or (b) above,
the inducement fee would be reduced by £4.0 million.
15. Scheme of Arrangement
Under the Scheme, each Canary Wharf Share will be cancelled (other than, if
relevant, any Exchange Shares) and new shares in Canary Wharf will be issued
fully paid to Silvestor. In consideration for the cancellation of their shares
in Canary Wharf, Canary Wharf Shareholders will receive consideration under the
terms of the Acquisition as outlined above. On the Scheme becoming effective and
following the acquisition of the Exchange Shares by Silvestor Holdings, Canary
Wharf will be a wholly-owned subsidiary of Silvestor Holdings and Silvestor.
The Scheme will be subject to the conditions set out in Appendix I, including
the sanction of the Scheme by the Court and satisfaction of certain regulatory
conditions.
To become effective, the Scheme requires, amongst other things, the approval of
a majority in number of Canary Wharf Shareholders representing three fourths or
more in value of Canary Wharf Shares (or the relevant class or classes thereof)
entitled to vote, either in person or by proxy, at the relevant Court
Meeting(s).
In addition to the Court Meeting(s), an Extraordinary General Meeting of Canary
Wharf will be held for the purpose of considering and, if thought fit, approving
one or more special resolutions relating to the Capital Reduction and the
implementation of the Scheme. This meeting will be held directly after the
Court Meeting(s).
The Scheme will become effective upon, amongst other things, delivery to the
Registrar of Companies in England and Wales of a copy of the order of the Court
sanctioning the Scheme and the registration of such order. Upon the Scheme
becoming effective, it will be binding on all Canary Wharf Shareholders,
irrespective of whether or not they attended or voted at the Court Meeting(s) or
the Canary Wharf Extraordinary General Meeting.
16. Taxation
Further information on the tax consequences of the Acquisition for Canary Wharf
Shareholders will be contained in the Scheme Document. Canary Wharf
Shareholders who are resident or ordinarily resident for tax purposes in the
United Kingdom or who carry on a trade in the United Kingdom through a United
Kingdom branch, agency or permanent establishment in connection with which the
Canary Wharf Shares are held, should note that the receipt by a Canary Wharf
Shareholder of Class B Shares will not qualify for rollover relief under Section
135 or 136 of the Taxation of Chargeable Gains Act 1992. Accordingly, Canary
Wharf Shareholders receiving Class B Shares may have a charge to United Kingdom
capital gains tax or corporation tax on chargeable gains (as appropriate),
depending on the relevant shareholder's particular circumstances.
17. Other
The Scheme Document will be despatched to Canary Wharf Shareholders and, for
information only, to holders of warrants over Canary Wharf Shares and to
participants in the Canary Wharf Share Schemes.
The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting(s) and the Canary Wharf Extraordinary General
Meeting, the expected timetable and a Form of Election, and will specify the
necessary action to be taken by Canary Wharf Shareholders.
As at the close of business on 3 December 2003, the Morgan Stanley Group was the
beneficial owner of 462,802 Canary Wharf Shares and held 2,093,624 Shares on
behalf of clients. As at the close of business on 3 December 2003, Goldman Sachs
was the beneficial owner of 658,317 Canary Wharf Shares and did not hold any
Shares on behalf of clients. As at the close of business on 3 December 2003,
Rothschild did not beneficially own or hold any Canary Wharf Shares on behalf of
clients.
The availability of the Acquisition to persons not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Such persons
should inform themselves about and observe any applicable requirements. Further
details in relation to overseas shareholders will be contained in the Scheme
Document.