Jarvis PLC
12 July 2005
FOR IMMEDIATE RELEASE
12 July 2005
JARVIS PLC
FINANCIAL RESTRUCTURING UPDATE
Today, Shareholders in Jarvis are being sent a circular that outlines further
details of the Debt for Equity Exchange and Placing and Open Offer that were
announced on 27 May 2005. The key points of the Restructuring are:
1. Debt for Equity Exchange
• Debt for Equity Exchange in respect of approximately £350 million of
unsecured obligations which on their conversion will represent 95 per cent.
of the Enlarged Ordinary Share Capital, with Existing Warrant Holders
receiving a further 0.25 per cent. of the Enlarged Ordinary Share Capital
• Existing Shareholders who hold 400 or more Existing Ordinary Shares as
at the Record Date, will retain approximately 4.75 per cent. of the
Enlarged Ordinary Share Capital
• Debt for Equity Exchange to be implemented by 12 August 2005 through a
Scheme of Arrangement under section 425 of the Companies Act unless
agreement can be reached with the relevant creditors to implement it
consensually
2. Placing and Open Offer immediately following Debt for Equity Exchange
• Placing followed by Open Offer to Qualifying Shareholders post the
Debt for Equity Exchange, in order for these shareholders to participate
in the Placing pro rata to their post Debt for Equity Exchange
shareholdings, to raise approximately £50 million
• Open Offer, conditionally underwritten by Deutsche Bank, on the basis
of 19 Open Offer Shares for every 1 New Ordinary Share held post the Debt
for Equity Exchange
• Qualifying Shareholders who do not wish to participate in the Open Offer
will receive a cash payment under the cash out alternative entitlement
based on 25 per cent. of the Open Offer Share subscription price
An Extraordinary General Meeting has been convened for 9.00 a.m. on 4 August
2005 at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY,
where Shareholders will be asked to consider and, if thought fit, approve the
Resolutions under which the Debt for Equity Exchange and Placing and Open Offer
will be effected. Although the Restructuring is subject to various conditions
and approvals, and therefore there can be no certainty that it will take place,
Shareholders are being asked to vote on the Resolutions in order to ensure that
the Restructuring can be implemented in time to meet the Group's cash flow
requirements.
Alan Lovell, Chief Executive, commented:
'The Restructuring represents a key step in the Board's strategy of providing
the Group with a capital and funding structure appropriate for its continued
development.'
Enquiries:
Bridget Fury, Merlin 020 7653 6620Appendix I
Recommended proposals for the increase and reorganization of share capital and
other matters in connection with a Restructuring
1. Introduction
On 27 May 2005 the Company announced that it had reached agreement with its Core
Lenders for the implementation of a Debt for Equity Exchange in respect of £297
million of its facilities followed by the Placing and Open Offer to holders of
the Company's share capital as enlarged by the Debt for Equity Exchange. As
announced at that time, the principal terms of the Debt for Equity Exchange and
Placing and Open Offer had been agreed with lenders but the methodology and
details were to be finalised and subject to approvals and conditions.
The Board is now proposing to implement the Debt for Equity Exchange (comprising
the above mentioned facilities, related obligations, certain contingent
obligations and obligations owed to certain other creditors) totalling
approximately £350 million, the Contractual Arrangements and an underwritten
Placing and Open Offer with Deutsche Bank and certain of the Group's Core
Lenders and certain other creditors to raise approximately £50 million.
Documentation to implement the Restructuring is at an advanced stage, with all
material terms having been agreed; however, implementation will be subject to
the fulfilment of certain conditions and receipt of certain approvals. There can
be no guarantee that such conditions will be satisfied or approvals received. In
particular, the launch of the Placing and Open Offer is conditional on the
approval of Deutsche Bank's credit committee and completion of Deutsche Bank's
due diligence in respect of the Placing and Open Offer and the Group. The Debt
for Equity Exchange is proposed to be implemented principally by way of a
creditors' scheme of arrangement under section 425 of the Companies Act 1985
unless agreement can be reached with the relevant creditors to implement it
consensually. The timetable for the Restructuring will depend upon whether the
Debt for Equity Exchange is implemented principally by way of the Scheme (as
currently intended) or consensually. When this has been finally determined, the
Company will announce the definitive timetable on a Regulatory Information
Service, in the press and on its website.
Subject to the Restructuring being approved by Existing Shareholders (and
regardless of whether the Debt for Equity Exchange is implemented principally by
way of the Scheme or consensually), Existing Shareholders who hold 400 or more
Existing Ordinary Shares at the Record Date will retain approximately 4.75 per
cent. of the Company's Enlarged Ordinary Share Capital prior to the Placing and
Open Offer. Deutsche Bank has conditionally agreed to underwrite fully the
approximately £50 million Placing and Open Offer. The key points of the
restructuring are:
• the conversion into equity in the Company of approximately £350
million of unsecured obligations which, on their conversion, will represent 95
per cent. of the Enlarged Ordinary Share Capital before the issue of shares
under the Placing and Open Offer. This is proposed to be implemented principally
by way of the Scheme, unless this can be done consensually;
• Existing Shareholders who hold 400 or more Existing Ordinary Shares as
at the Record Date will retain approximately 4.75 per cent. of the Enlarged
Ordinary Share Capital before the issue of shares under the Placing and
Open Offer;
• Existing Warrant Holders will receive 0.25 per cent. of the Enlarged
Ordinary Share Capital before the issue of shares under the Placing and
Open Offer;
• an approximately £50 million Placing and Open Offer following the Debt
for Equity Exchange in which Qualifying Shareholders will be entitled to
subscribe for New Ordinary Shares pro rata to their shareholdings on the
Open Offer Record Date. Existing Shareholders who hold fewer than 400
Existing Ordinary Shares at the Record Date will not be eligible to
subscribe for shares under the Open Offer in respect of these Existing
Ordinary Shares;
• Qualifying Shareholders, holding 400 Existing Ordinary Shares and who
do not wish to participate in the Open Offer, will receive a conditional
cash-out alternative payment from Deutsche Bank of £1.66 in aggregate in
respect of their entitlement to New Ordinary Shares under the Open Offer -
equivalent to approximately 0.4 pence per Existing Ordinary Share; and
• the securing of the Additional Funding Facilities which will be sought
by the Company before completion of the Restructuring.
If the Restructuring is completed in full, immediately following the
Restructuring and before borrowing any Additional Funding Facilities, the
Directors believe that, on an unaudited basis, the Group should have less than
£20 million of net indebtedness. Additional Funding Facilities to meet the
Group's ongoing funding requirements will be necessary and the amount drawn down
under such Additional Funding Facilities will increase the amount of net
indebtedness. As discussed below, the availability of the Additional Funding
Facilities is not assured.
The Restructuring is conditional, inter alia, upon the approval of Existing
Shareholders, which is being sought at the Extraordinary General Meeting of the
Company to be held at 9.00 a.m. on 4 August 2005 at the offices of Slaughter and
May, One Bunhill Row, London EC1Y 8YY.
If the Restructuring is not implemented because Existing Shareholders fail to
approve the Resolutions:
(a) in order to avoid entry into insolvency proceedings, the Company will
seek to transfer all of the business and assets of the Company to a new company
wholly owned by the Converting Creditors and the Existing Warrant Holders, in
which Existing Shareholders will have no continuing interest, the transfer of
which may involve a delisting of the Ordinary Shares. A delisting would require
Existing Shareholders' approval unless the Company is able to obtain a
derogation from this requirement. The company to which the business and assets
of the Company would be transferred would be wholly owned by the Converting
Creditors and the Existing Warrant Holders, and the Existing Shareholders would
therefore cease to have any interest in the business and assets of the Company
going forward. The Existing Shareholders would continue to hold their Ordinary
Shares; however, since the Company would no longer own any assets, this would
leave the Existing Shareholders with an investment of no value and no assets
available for distribution to Existing Shareholders; and
(b) if the alternative restructuring referred to in paragraph (a) above
cannot be implemented and no other proposals can be secured, the Directors
believe that, in the absence of emergency funding, the Group would be unable to
trade and would enter into insolvency proceedings. If that occurs, the Board
believes there will be no assets available for distribution to Existing
Shareholders.
2. Background to and reasons for the Restructuring
A period of significant debt-financed growth from 1995 to 2003, accompanied by
overly aggressive PFI bidding policies left the Group financially stretched and
with a misaligned cost base for its size.
During the financial periods ended December 1995 to March 2004, Group audited
turnover grew from £76.4 million in 1995 to £1,076 million in 2004, a compound
annual growth rate of 38 per cent. For the financial year ended 31 December
1995, the Group reported audited profit before goodwill amortisation,
exceptional items and tax of £0.5 million, which amount, in the absence of any
goodwill amortisation or exceptional items in that year, was also its profit
before tax. For the financial year ended 31 March 2004, the Group reported
audited profit before goodwill amortisation, exceptional items and tax of £2.8
million and a loss before tax of £256.0 million.
A business plan was developed during the summer of 2004 and was outlined in the
Company's announcement of 22 December 2004. The business plan was designed to
develop a simpler and leaner business. The strategy underlying that business
plan was for the Group to focus primarily on its core businesses of rail, plant
and UK roads activities. Implementing this business plan has led to the Tube
Lines Disposal, the rationalisation of the Group's property interests, the
European Roads Business Disposal, the disposal of the Group's PFI and UPP
bidding operations and the execution of binding documentation relating to the
Construction Funding arrangements. Alan Lovell was appointed Group Chief
Executive in October 2004 and has overseen the continued implementation of the
Group's operational and financial restructuring and is building an executive
management team for the future development of the Group. The Directors have
focused on reducing the Group's cost base and under this business plan have
completed initiatives that are expected to deliver annualised cost savings in
excess of £50 million. The proceeds from the disposals have, however, been
offset by several commitments including the cash contributions made by the Group
as part of the Construction Funding arrangements and the assumption by the Group
of debt in return for contributions made by other stakeholders, the fees
associated with the Group's restructuring programme and the repayment of certain
creditor balances.
Net debt has grown significantly and the unaudited net debt as at 3 June 2005
was approximately £330 million. This balance does not include, inter alia, net
receipts from, or the impact of Group debt assumed by, the acquirer pursuant to
the European Roads Business Disposal. The Board believes that, in the ordinary
course of business, the Group will not be able to sustain interest and principal
payments on the Group's current level of net debt.
In the Company's circular to shareholders dated 24 December 2004 relating to the
Tube Lines Disposal and the Construction Funding and refinancing transactions,
the Company indicated that, following completion of these transactions, the
Board would explore opportunities for restructuring the Company's funding base
through the introduction of new shareholders and/or the further restructuring of
the Group's debt arrangements. On 29 March 2005 the Company indicated that it
would probably require a further short term working capital facility and that
the Board's stated objective of restructuring its funding and capital base could
include a debt for equity conversion. This restructuring was outlined on 27 May
2005 in the European Roads Business Circular and the working capital statement
in that document confirmed that the Board was pursuing the debt for equity
exchange, subsequent placing and open offer and new longer term working capital
facilities, which were intended to provide a stable structure for the Group
going forward. The European Roads Business Circular indicated that the Board
believed that this restructuring could be implemented but could not be
guaranteed. The Restructuring and the Additional Funding Facilities are intended
to provide the Group with a capital and funding structure to enable the
continued trading of the Group going forward. Without the implementation of the
Restructuring, the Directors do not believe that the Group will be in a position
to repay the facilities maturing on 31 August 2005 out of its cash flows. The
Board does not consider it would be appropriate for the Group to continue
trading without a clear plan to deal with its obligations.
On 2 July 2004 the Company entered into an agreement with its then core lenders
which was extended on 29 January 2005, whereby those lenders agreed until 27
March 2006 to a deferral of principal and interest payments and not to enforce
their rights in relation to certain defaults under the lending facilities which
are subject to that agreement (the 'Override Agreement'). All the facilities to
which the Override Agreement currently relates to are fully drawn.
Since 2 July 2004 the Company has negotiated several short term funding
facilities with its lenders, the latest, announced on 27 May 2005, being the
£31.4 million short term working capital facilities provided by Deutsche Bank.
Up to £31.4 million of the new Deutsche Bank Facilities, and the £17 million
term loan made available by JPMorgan Chase Bank, N.A. on 22 March 2005, are
repayable on 31 August 2005. The proceeds of the Placing and Open Offer will be
used to repay the amounts required to be repaid under the Deutsche Bank
Facilities, pay fees, commissions, costs and expenses and amounts owed to
certain unsecured creditors under the Contractual Arrangements and provide
funding for the Group.
3. Outline of the Restructuring
The announcement made on 27 May 2005 relating to the £31.4 million Deutsche Bank
Facilities referred to an agreement in principle on a Debt for Equity Exchange
and a Placing and Open Offer.
Documentation to implement the Restructuring involving the Debt for Equity
Exchange and the Placing and Open Offer is at an advanced stage, with all
material terms having been agreed; however implementation is conditional, inter
alia, upon the approval of the Resolutions by Existing Shareholders.
(A) Debt for Equity Exchange
(i) Share sub-division and partial share reclassification
To facilitate the Debt for Equity Exchange, the Company will undertake a
share sub-division and partial share reclassification followed by a share
consolidation. Under the share sub- division, each Existing Ordinary Share of
five pence will be sub-divided into five new shares, each having a nominal value
of one penny (''Sub-Divided Shares''). Therefore, the Company's existing143,853,409 issued Ordinary Shares of five pence nominal value will be split
into 719,267,045 Sub-Divided Shares in the Company each having a nominal value
of one penny.
Under the terms of the partial share reclassification, of the
719,267,045 Sub-Divided Shares, 399 out of every 400 Sub-Divided Shares will be
converted into Deferred Shares. The other one share out of the 400 Sub-Divided
Shares will remain as an ordinary share with a nominal value of one penny (a
''New Interim Share''). Where an individual holding of Sub-Divided Shares is not
wholly divisible by 400, the 399 or fewer Sub-Divided Shares that are in excess
of the whole multiple of 400 will be converted into Deferred Shares. After the
proposed share sub-division and partial share reclassification, Existing
Shareholders will therefore hold in aggregate 1,798,167 New Interim Shares and
717,468,878 Deferred Shares (subject to adjustment for fractional entitlements
as described above).
The Deferred Shares will carry no voting rights or rights to income and,
on a winding-up of the Company, will only carry the right to the return of the
one penny nominal value of the share, provided that the holders of Ordinary
Shares then in issue have first received a sum of £10,000 per share out of the
surplus assets of the Company available for distribution.
The Deferred Shares will not be listed and definitive certificates of
title to the Deferred Shares will not be posted to Shareholders holding such
shares.
It is proposed that the Company will transfer all Deferred Shares at a
later date to a Deferred Share Transferee and thereafter acquire these Deferred
Shares from the Deferred Share Transferee for no monetary consideration. The
Deferred Shares will then be cancelled.
(ii) Share consolidation
In order to maintain a manageable number of shares after the
sub-division and partial share reclassification, a share consolidation of the
New Interim Shares will be effected. Under the terms of the share consolidation,
holders of New Interim Shares will receive one New Ordinary Share with a nominal
value of five pence in exchange for every five New Interim Shares held. The New
Ordinary Shares will have the same rights and restrictions as the New Interim
Shares that they are replacing. Consolidations of New Interim Shares into New
Ordinary Shares will be rounded down to the nearest whole number and fractional
entitlements arising on such consolidation will not be allotted to Shareholders
but will be aggregated and sold in the market. The sale proceeds, together with
the relevant proceeds from the cash-out alternative (referred to below) in
respect of these shares, will be pooled and cheques in respect of this
proportionate entitlement will be sent to each Existing Shareholder provided
that it exceeds £3 (all lesser amounts being retained for the benefit of the
Company).
Therefore an Existing Shareholder with 400 Existing Ordinary Shares will
receive 2,000 Sub-Divided Shares of which, 1,995 will be reclassified as
Deferred Shares leaving a holding of 5 New Interim Shares which will consolidate
into 1 New Ordinary Share as described above.
By way of illustration, the effect of these proposals on Existing Shareholders
who hold 100, 1,000 and 10,000 Existing Ordinary Shares will be as follows:
Shareholder
________________________________
A B C
Shareholdings in Jarvis share capital
(1) Holding of Existing Ordinary Shares 100 1,000 10,000
(2) Post share division
- Sub-Divided Shares 500 5,000 50,000
(2) Post partial share reclassification
- New Interim Shares held 1 12 125
- Deferred Shares held 499 4,988 49,875
(3) Post share consolidation
- New Ordinary Shares held Nil 2 25
- Deferred Shares held 499 4,988 49,875
Pending receipt of a share certificate in respect of the New Ordinary
Shares, Shareholders wishing to transfer their New Ordinary Shares will be
required to produce their existing Jarvis share certificates to the Company's
registrars. With effect from the date of the share consolidation, share
certificates for Existing Ordinary Shares will cease to be valid. On receipt of
his share certificate in respect of his New Ordinary Shares, a shareholder
should destroy his share certificates for Existing Ordinary Shares.
(iii) Debt for Equity Exchange
After the share sub-division, partial share reclassification and share
consolidation as outlined above have been implemented, the following will occur
under the Debt for Equity Exchange pursuant to the terms of the Scheme or, if
applicable, a Restructuring Agreement and, in each case, associated
arrangements:
• approximately £350 million of the Company's unsecured obligations owed
to the Converting Creditors will be converted into approximately 7,192,660
New Ordinary Shares which, on issue to the Converting Creditors (on a pro
rata basis), will represent 95 per cent. of the Enlarged Ordinary Share
Capital before the issue of shares under the Placing and Open Offer;
• Existing Shareholders who hold 400 or more Existing Ordinary Shares as
at the Record Date, together with the holders of the aggregated fractional
entitlements, will retain 4.75 per cent. of the Enlarged Ordinary Share
Capital before the issue of shares under the Placing and Open Offer and 100
per cent. of the Deferred Shares; and
• Existing Warrant Holders will receive 0.25 per cent. of the Enlarged
Ordinary Share Capital before the issue of shares under the Placing and
Open Offer. Existing Warrants and any right to further warrants under the
instrument constituting the Existing Warrants will be cancelled. It is
proposed to convene a meeting of holders of Existing Warrants to approve a
resolution giving effect to these proposals.
In formulating the terms of the Restructuring, the Company has taken
into account an assessment of the amounts creditors would receive in a
liquidation of the Company. That assessment indicates that there would be no
assets available for distribution to Shareholders. Notwithstanding this, in
recognition that all parties will benefit from an orderly restructuring process,
the Converting Creditors have been asked to agree to the allocation to the
Shareholders of the equity of the Company indicated above.
The Company intends to implement the Debt for Equity Exchange
principally by way of the Scheme unless agreement can be reached with all the
Converting Creditors to implement it consensually. To implement the Scheme, it
will be necessary to post a document containing details of the Scheme to all
creditors who will be subject to the Scheme, convene a meeting of such Scheme
Creditors and, if the Scheme is approved at the Scheme Creditors' meeting, apply
to the High Court to sanction the implementation of the Scheme. The Scheme is
conditional, inter alia, on Existing Shareholders passing the Resolutions. No
other action is required by Existing Shareholders in their capacity as such in
connection with the Scheme.
If the Debt for Equity Exchange is implemented consensually, Converting
Creditors would agree to enter into a Restructuring Agreement. The timetable for
the Restructuring will depend upon whether the Debt for Equity Exchange is
implemented principally by way of the Scheme or consensually. When this has been
finally determined, the Company will announce the definitive timetable on a
Regulatory Information Service, in the press and on its website. Set out in
Appendix II is a timetable for the Restructuring, on the basis that the Debt for
Equity Exchange is implemented principally by way of the Scheme and an
indicative timetable on the basis that the Debt for Equity Exchange is
implemented consensually.
The Company's preference is for the Restructuring to be implemented
consensually since the cost of implementing the Restructuring principally by way
of the Scheme is greater than if the Restructuring is implemented consensually.
However, to implement the Restructuring consensually would require the agreement
of all Converting Creditors. The economic effect for Existing Shareholders will
be the same whether the Debt for Equity Exchange is implemented as currently
intended by way of the Scheme and Contractual Arrangements, or is implemented
consensually by way of the Restructuring Agreement.
(B) The Placing and Open Offer
After the share sub-division, partial share reclassification, share
consolidation and Debt for Equity Exchange outlined above, the Company will
place up to 143,853,199 new Ordinary Shares with Deutsche Bank (the ''Placing
Shares'') at a price of 35 pence per Placing Share, raising gross proceeds of
approximately £50 million. The Placing Shares will rank pari passu with the New
Ordinary Shares then in issue. Under the draft Placing and Open Offer Agreement,
on the Placing Date, Deutsche Bank and the Placees will subscribe in full for
the Firm Placed Shares (estimated to be approximately 63 per cent. of the
Placing Shares) and will procure that the subscription funds therefor (estimated
to be approximately £31 million) are effectively remitted to the Company on that
date, net of (i) amounts borrowed under the £22.7 million tranche of the
Deutsche Bank Facilities which are to be repaid out of the proceeds from the
issue of the Firm Placed Shares and (ii) Deutsche Bank's underwriting commission
and costs and expenses incurred to that date. Deutsche Bank's commitment to
enter into the Placing and Open offer Agreement is subject to a number of
conditions. In particular, the launch of the Placing and Open Offer is
conditional on the approval of Deutsche Bank's credit committee and completion
of Deutsche Bank's due diligence in respect of the Placing and Open Offer and
the Group. Under the terms of the Open Offer, Qualifying Shareholders will be
offered the opportunity to subscribe for Placing Shares that have been placed
conditionally with Deutsche Bank and the Placees (the ''Open Offer Shares'') at
a price of 35 pence per Open Offer Share on the following basis:
19 Open Offer Shares for every 1 New Ordinary Share
held on the Open Offer Record Date. To the extent that Qualifying
Shareholders do not subscribe for the Open Offer Shares under the Open Offer,
such shares will be subscribed for by Deutsche Bank and the Placees pursuant to
the Placing and Open Offer Agreement. Dependent upon the level of take up of the
Open Offer by Qualifying Shareholders, Deutsche Bank and the Placees will hold
an amount estimated as being between 63 per cent. and 98 per cent. of the Fully
Enlarged Ordinary Share Capital on completion of the Open Offer.
It is the Company's intention to list the Ordinary Shares issued
pursuant to the Debt for Equity Exchange and the Placing and Open Offer on the
Official List and to admit them to trading on the London Stock Exchange. The UK
Listing Authority requires that a sufficient number of these shares
(approximately 25 per cent.) is in public hands. For the purposes of calculating
the number of Ordinary Shares in public hands, individual or group shareholdings
of 5 per cent. or more are excluded. The Company will work with Deutsche Bank,
the Placees and other relevant potential shareholders to admit the relevant
Ordinary Shares to the Official List. However, admission of these shares
following the close of the Open Offer cannot be guaranteed. If the relevant
Ordinary Shares are not admitted at this time, then it is likely that the
Company's listing on the Official List will be cancelled and the Ordinary Shares
will cease to be traded on the London Stock Exchange. In this event, the Company
will use reasonable endeavours to effect the relisting on the Official List of
its Ordinary Shares and their admission to the London Stock Exchange within a
reasonable timeframe. The underwriting and cash-out alternative obligations of
Deutsche Bank in the proposed Placing and Open Offer Agreement in relation to
the Open Offer Shares are conditional, inter alia, upon those shares being
admitted to the Official List. In the event this condition is not satisfied,
Deutsche Bank will be entitled to terminate its underwriting obligations.
Not all Shareholders will be Qualifying Shareholders. Certain
Shareholders who are on the register of members as at the Open Offer Record Date
but who are not resident in the UK will not be entitled to participate in the
Open Offer. In addition, as a result of the share sub-division, partial share
reclassification and share consolidation outlined above, Existing Shareholders
who hold fewer than 400 Existing Ordinary Shares at the Record Date (whether or
not they are resident in the UK) will not be entitled to participate in the Open
Offer in respect of those shares.
Qualifying Shareholders who subscribe for their Open Offer entitlement
in full will retain their relative holdings (immediately following the Debt for
Equity Exchange) in the Fully Enlarged Ordinary Share Capital following the
Placing and Open Offer. Therefore, if those of the Existing Shareholders who
become Qualifying Shareholders subscribe in full for their entitlements under
the Open Offer, they (together with the holders of the aggregated fractional
entitlements) will hold in aggregate 4.75 per cent. of the Fully Enlarged
Ordinary Share Capital.
Application forms to participate in the Open Offer are expected to be
despatched to Qualifying Shareholders on 15 August 2005 assuming the
Restructuring is implemented by way of the Scheme or, if implemented
consensually, 8 August 2005 (at the earliest) and have not been included with
this announcement. Accompanying the application form will be a Prospectus issued
by the Company in connection with the Open Offer and the admission of the New
Ordinary Shares arising under the Debt for Equity Exchange and to be issued
pursuant to the Placing. The Prospectus will contain detailed information on the
business and condition of the Company, as well as on the procedures for the
Placing and Open Offer.
Qualifying Shareholders who do not wish to participate at all in the
Open Offer will, subject to satisfaction or waiver of the conditions under the
Placing and Open Offer Agreement (as discussed above), receive a cash payment
from Deutsche Bank under a cash-out alternative for the 19 Open Offer Shares to
which they will be entitled for each 1 New Ordinary Share they will hold
following the Debt for Equity Exchange. The cash payment will be an amount equal
to 25 pence for each £1.00 of the Placing Price for those 19 Open Offer Shares,
which equates to £1.66 in aggregate. The cash-out alternative only relates to a
Qualifying Shareholder's entitlement to New Ordinary Shares under the Open Offer
and does not otherwise affect his holding of New Ordinary Shares.
By way of illustration, the amounts payable under the cash-out
alternative to Existing Shareholders who hold 100, 1,000 and 10,000 Existing
Ordinary Shares and the number of New Ordinary Shares such Existing Shareholder
will hold will be as follows:
Shareholder
_________________________________
A B C
(1) Holding of Existing Ordinary Shares 100 1,000 10,000
(2) Post share consolidation
- New Ordinary Shares held Nil 2 25
(3) Entitlement to Open Offer
- Open Offer Shares Nil 38 475
- Cost of subscribing for Open Offer Shares Nil £13.30 £166.25
(4) Cash-out alternative payable if entitlement Nil £3.32 £41.56
not taken up
(C) The New Warrants
It is a term of the Restructuring that the Company creates New Warrants,
which will be issued to Deutsche Bank and the Placees under the Placing and Open
Offer Agreement following the completion of the Open Offer. The New Warrants
will give the holders in aggregate the right to subscribe at the Placing Price
for New Ordinary Shares equal to 15 per cent. of the Fully Enlarged Ordinary
Share Capital.
The Restructuring is conditional, inter alia, upon the passing of each
of the Resolutions by the Existing Shareholders at the Extraordinary General
Meeting. The Placing and Open Offer will be subject to further conditions, which
will be set out in the Prospectus.
4. Objective of the Restructuring
The Directors believe that the implementation of the Restructuring will create a
stronger foundation for the Group's business going forward. For example:
• unsecured obligations of the Group will be reduced by approximately
£360 million. This is the Company's current estimate of what those
obligations of the Group will be as at 22 July 2005, that are to be
released in full pursuant to the Restructuring (including the Contractual
Arrangements currently estimated to be approximately £10 million). The
actual value of these liabilities may be greater or less than this amount;
• annual interest charges and other fees incurred by the Group in respect of
its unsecured obligations will be reduced to a significantly lower level;
and
• the Group's balance sheet will be strengthened by the net receipts of the
Placing and Open Offer.
A result of the strengthening of the Group's financial position will be to
enable senior management to focus its efforts on further improving the operating
performance of the Group and provide additional stability to the Group's
customers, suppliers, employees and other stakeholders.
Immediately following the Restructuring and before borrowing any Additional
Funding Facilities, the Directors believe that, on an unaudited basis, the Group
should have less than £20 million of net indebtedness. In reaching this view,
the Directors have taken into account the level of net debt at 3 June 2005, the
receipt of the proceeds from the European Roads Disposal and trading and working
capital requirements in the period to date and that forecast for the period to
the end of August, in addition to the costs of achieving the Restructuring.
Additional Funding Facilities to meet the Group's ongoing funding requirements
will be necessary and the amount drawn down under such Additional Funding
Facilities will increase the amount of net indebtedness. As discussed below, the
availability of the Additional Funding Facilities is not assured.
5. Working Capital
(A) Before the Restructuring
The Directors are of the opinion that the Group does not have sufficient working
capital for its present requirements, that is for at least the next 12 months
from the date of this announcement.
The level of financing and adviser costs, the additional costs of implementing
the Construction Funding arrangements and the delay in the receipt of certain
amounts relating to previous trading have increased the Group's requirements for
working capital.
As part of the Group's business planning process and in order to assess the
Group's funding requirement, the Directors have prepared short term financial
forecasts updated from those prepared for the European Roads Business Circular
(the ''Updated Forecasts'').
Provided the Group trades and manages its working capital in line with the
Updated Forecasts, it will be able to operate within its existing facilities
until mid-August 2005 (the ''Funding Period''), by which time the Company is
seeking to have completed the Debt for Equity Exchange and have received the
cash subscription proceeds from Deutsche Bank and the Placees in respect of the
Firm Placed Shares. This position is consistent with that outlined in the
European Roads Business Circular.
The Directors are of the view that it is possible that the Group will be able to
remain within the existing facilities during the Funding Period and they intend
to continue managing the Group's cash position to achieve this. However, they
acknowledge that forecasting in the Group's current position is inherently
difficult and that financial headroom is minimal so there is very limited margin
to accommodate any adverse trading or other developments that might have an
impact on the Group in the Funding Period. The achievement of the following
critical assumptions, which underlie the Forecasts, is essential:
• continuation of the support for the Group by its creditors and
stakeholders, in particular in agreeing to such waivers as are and might be
required in order for the Group to implement the Restructuring;
• maintenance by the Group's businesses, on similar or improved terms, of
their relationships with customers, suppliers, employees and other
stakeholders, resulting in the completion, retention or renewal of key
contracts, in particular with the Group's principal customer; and
• maintenance of the support and obligations of the Group's lenders during
the Funding Period, including the Group's ability to comply with the
terms and conditions of the existing facilities governed by the Override
Agreement and the Deutsche Bank Facilities and the amended and restated
term facility agreement with JPMorgan Chase Bank, N.A.
If some or all of the assumptions above should prove to be incorrect or if other
adverse events should occur, the impact of which the Directors are unable to
manage, this is likely to lead to a situation in which the Group would be unable
to continue within its finance facilities during the Funding Period. In this
event, the Group would require emergency funding. If such funding was not
forthcoming, the Group would be unable to continue to trade.
The Board is currently pursuing the Restructuring, the successful implementation
of which will result in the Debt for Equity Exchange and the Placing and Open
Offer, and will seek to arrange Additional Funding Facilities. These
arrangements are ultimately intended to provide a capital and funding structure
to enable the continued trading of the Group. The Board believes that the Debt
for Equity Exchange and Placing and Open Offer can be achieved, and the
Additional Funding Facilities arranged, but this cannot be guaranteed.
If proceeds from the initial placing of shares pursuant to the Restructuring at
the level expected are not received by the end of the Funding Period, emergency
funding would be required. If such emergency funding were not forthcoming, the
Group would be unable to trade.
If the Restructuring is not implemented because Existing Shareholders fail to
approve the Resolutions:
(a) in order to avoid entry into insolvency proceedings, the Company will
seek to transfer all of the business and assets of the Company to a new company
wholly owned by the Converting Creditors and the Existing Warrant Holders, in
which Existing Shareholders will have no continuing interest, the transfer of
which may involve a delisting of the Ordinary Shares. A delisting would require
Existing Shareholders' approval unless the Company is able to obtain a
derogation from this requirement. The company to which the business and assets
of the Company would be transferred would be wholly owned by the Converting
Creditors and the Existing Warrant Holders, and the Existing Shareholders would
therefore cease to have any interest in the business and assets of the Company
going forward. The Existing Shareholders would continue to hold their Ordinary
Shares; however, since the Company would no longer own any assets, this would
leave the Existing Shareholders with an investment of no value and no assets
available for distribution to Existing Shareholders; and
(b) if the restructuring referred to in paragraph (a) above cannot be
implemented and no other proposals can be secured, the Directors believe that,
in the absence of emergency funding, the Group would be unable to trade and
would enter into insolvency proceedings. If that occurs, the Board believes
there will be no assets available for distribution to Existing Shareholders.
(B) After the Restructuring
The Directors are of the opinion that, on the basis that the Restructuring
completes, the Group does not have sufficient working capital for its present
requirements that is for at least 12 months from the date of this announcement.
The Directors are making this statement because, as indicated in the European
Roads Business Circular, they are working towards a restructuring that comprises
not only the Debt for Equity Exchange and the Placing and Open Offer but also
sufficient additional funding facilities to meet the Group's ongoing funding
requirements (the ''Additional Funding Facilities''). Whilst the Directors
anticipate seeking the Additional Funding Facilities by the time of the
Prospectus, scheduled to be published in August 2005, these facilities have not
yet been committed.
Immediately following the Restructuring, and on the basis that it completes, the
financial position of the Group will be significantly improved. The Group's
unsecured obligations will be reduced by approximately £360 million and the
gross proceeds from the Placing and Open Offer will be used to repay amounts
required to be repaid under the £31.4 million Deutsche Bank Facilities, pay
fees, commissions, costs and expenses and amounts owed to certain unsecured
creditors under the Contractual Arrangements of approximately £15 million with
the balance available for general working capital requirements. It is proposed
to extend the £17 million JPMorgan Chase loan for a further 18 months.
The Company is in discussions on the terms of the Additional Funding Facilities
and is also considering ways in which the size of its budgeted requirements
could be reduced. As these discussions have not yet concluded the Directors
cannot guarantee that sufficient Additional Funding Facilities will be
available.
Currently the Directors anticipate that they will be seeking Additional Funding
Facilities of the order of £25 million by the time of the Prospectus. Provided
that the Group trades and manages its working capital in line with its budget,
the Directors believe that this level of facilities will meet the Company's
budgeted liquidity requirements for the next 12 months. The Directors
acknowledge that forecasting in the Group's current position is difficult and
that, although this level of facilities should be sufficient for the Group's
trading requirements, there is limited margin to accommodate adverse trading or
other developments which might impact the Group.
If the Company cannot secure Additional Funding Facilities sufficient to meet
the requirements described above, emergency funding and/or other measures to
improve liquidity would be required. If such emergency funding and/or other
means of improving liquidity were not forthcoming, the Group would be unable to
trade.
A further update on the Company's future working capital position will be
included in the Prospectus that will be issued in connection with the Placing
and Open Offer.
6. Dividends
As a result of exceptional losses sustained by the Company, the Company has a
profit and loss reserve deficit. Until this deficit is eliminated, the Company
would not in any event be able to distribute any profits by way of dividend. The
Company is considering ways in which this deficit might be eliminated after the
Restructuring and will review its dividend policy at that time.
7. Strategy
As explained in the circular to Shareholders dated 27 May 2005 in relation to
the European Roads Business Disposal, the Directors put together a new business
plan in 2005 for the three financial years ending March 2008. This builds on the
previous strategy and identifies areas for further improvements in operational
and financial performance. These include the potential for expansion and growth
that complement the Group's core businesses and build on the investments that
have already been made in technology, new products and equipment with the
objective of maintaining competitive advantage and winning new market share.
The Directors remain focused on reducing the Group's cost base and have
identified further cost reduction opportunities which are in addition to the
completed initiatives that are expected to deliver annualised costing savings of
in excess of £50 million.
Over the last 18 months, management changes and a modernisation programme have
improved the Group's operational performance in the rail sector. The Directors
believe that improved relationships have been developed both with Network Rail
and other stakeholders in the rail industry which provides them with confidence
in the prospects of the rail business. A key element of the division's
competitive advantage is considered to be its engineering expertise and
technology, in particular its innovative equipment, which provides for efficient
plain line track renewals, and the Group's Accutrack track renewal delivery
system.
The strategy for the Jarvis Rail division during the business plan period is to
further develop the Accutrack process in the UK and the division's project
management and design capabilities and to seek selective international
expansion, focusing on those new eastern European EU accession countries to
which EU funds have been allocated for the modernisation of rail infrastructure.
Within the last two years, the Plant division's focus has moved from being a
predominantly internal supplier to the Rail and Road divisions to become more
externally focused. The division operates approximately 50 per cent. of the UK's
on track machines, has an extensive network of depots and train drivers with
wide rail route knowledge. The Plant division is a market leader in the
development of an innovative range of road vehicles, marketed under the
Crewmaster brand, which provide support facilities for workers in remote or
isolated locations.
The divisional strategy for Plant during the business plan period is to develop
its external markets both nationally and internationally, whilst at the same
time maintaining support for the Group's other divisions.
The Prismo road products and markings business is viewed as a leader in its
market sector in the UK. Prismo has recently established one of the most modern
manufacturing plants in the industry, which houses research and development and
new product development functions on site. The development of the new product
'Clusterbead' has received many accolades, including the European Innovation
Award 2004/05 and the Prince Michael International Road Safety award for 2005.
The Directors believe that significant opportunities exist internationally as
more countries become focused on reducing road accidents.
The Group's activities also include legacy construction and related
accommodation facilities management operations. These, combined with certain of
the Group's road activities, represent the Group's non-core businesses. The exit
opportunities for these non-core businesses are being reviewed and a new
management team is refocusing the construction and accommodation facilities
management operations with a view to improving the performance of these
operations prior to a future disposal.
8. Current trading and prospects of the Group
The interim unaudited results for the six months ended 30 September 2004 were
announced on 29 December 2004. The reported loss before tax totalled £283.1
million of which £240.1 million was exceptional and mainly related to the write
off of goodwill in the roads business, provision for construction losses and the
write off of aged debtor balances and certain work in progress.
Overall, trading in the core Group for the second half of the financial year
ended 31 March 2005 remained challenging. Rail and plant business turnover in
aggregate was below the level achieved in the first half due to lower volumes on
major projects business. The net financial outcome of the rail business for the
year will also depend on the settlement of certain contract balances that are
currently being negotiated.
The second half of the financial year, the winter period, is normally a weaker
period for the roads business than the first half. Performance in the second
half of this financial year was impacted by the loss of the Cheshire contract,
as previously disclosed, with the highways maintenance market remaining the most
challenging of the Group's core businesses to stabilise. In addition, the
highways maintenance business has been adversely impacted by the weakness of the
Group's balance sheet.
The Board continues to explore options in relation to its facilities management
operations and to implement the exit from legacy unfinished construction
projects, both of which represent a cash cost to the Company.
The financial performance in the second half of the financial year included
exceptional profits from the Tube Lines Disposal and the disposal of the
majority of the Group's property interests, and reflected the initial benefits
of the cost saving programmes. The continuing reorganisation and restructuring
of the Group's operations and funding structure have resulted in further costs.
Trading at the start of the current financial year demonstrates an improved
performance. The cost base reflects the benefits of the significant savings
achieved over the last nine months and there are a number of encouraging
developments within the core business, which is trading in line with the Board's
expectations.
The Directors believe that the successful completion of the Restructuring and
the continuation of the Group's strategy, as set out in more detail in paragraph
7 above, aligned with the cost saving initiatives and the exit from or
stabilisation of the non core businesses, will provide for a further
stabilisation of the Group's businesses.
As mentioned in the European Roads Business Circular, deficits totalling £19
million were identified in two of the Group's UK defined benefit pension schemes
(the Streamline LG Pension Scheme and the Streamline Pension Fund). The trustees
of the schemes and the Company have reached agreement on a plan to address these
deficits, which will result in additional pension contributions by the Group of
approximately £500,000 per year. The terms of this agreement are currently with
the Pensions Regulator for approval.
On 13 June 2005, the Company announced the appointment of Alasdair Marnoch as
Group Finance Director. As previously announced on 17 June 2005, Andrew Lezala,
the Company's Chief Operating Officer, left the Company to take up an
appointment with Metronet. The Company is at an advanced stage in finding a
suitable replacement.
Appendix II
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The timetable for the Restructuring will depend upon whether the Debt for Equity
Exchange is implemented principally by way of the Scheme described in this
announcement (as is currently proposed by the Company) or with the consent of
certain of the Company's creditors. The timetable for the Restructuring if the
Debt for Equity Exchange is implemented principally by way of the Scheme and an
indicative timetable showing the earliest dates on which the Restructuring could
be implemented consensually are set out below. When it has been finally
determined which route will be followed, the Company will announce the
definitive timetable on a Regulatory Information Service, in the press and on
its website.
Creditors' Consensual
scheme of Debt for
arrangement Equity Exchange
(1)
2005
_________________________________
High Court Hearing to give directions regarding the Scheme 15 July -
Latest time for receipt of Forms of Proxy for use at the 9.00 a.m. on 9.00 a.m. on
Extraordinary General Meeting 2 August 2 August
Meeting of Scheme Creditors 3 August -
Extraordinary General Meeting 9.00 a.m. on 9.00 a.m. on
4 August 4 August
Record Date for share sub-division, partial share 11 August 4 August
reclassification and share consolidation
High Court Hearing to sanction the Scheme and expected date of 11 August -
the Scheme becoming effective
Expected date of creation of New Ordinary Shares and Deferred 11 August 4 August
Shares pursuant to the share sub-division, partial share
reclassification and share consolidation
Record date for Open Offer 12 August 5 August
Expected Open Offer ex-date (consensual) - 8 August
Expected date of admission and commencement of dealings in 12 August 11 August
shares issued on Debt for Equity Exchange and Firm Placed Shares
Expected Open Offer ex-date (Scheme) 15 August -
Expected date of despatch of share certificates for New Ordinary 19 August 18 August
Shares (including Firm Placed Shares)
Expected date of admission and commencement of dealings in Open 14 September 7 September
Offer Shares
Expected date of despatch of share certificates for Open Offer 21 September 14 September
Shares
Note:
(1) The indicative timetable for a consensual Debt for Equity Exchange
assumes, for current purposes, that a Restructuring Agreement would be signed on
4 August 2005.
Appendix III
DEFINITIONS
''Additional Funding Facilities'' the additional funding facilities
which the Company will seek to arrange for
the Group by the time of the
Prospectus
''Board'' or ''Directors'' the directors of the Company
''Business Day'' any day on which banks are open for business
generally (other than solely for the trading
and settlement of euro) in the City of London
''Company'' Jarvis plc, a public limited company
incorporated in England under registered
number 2238084
''Construction Funding'' the series of arrangements entered into in
January 2005 for amending and providing
further funding for the Group's construction
obligations in respect of the 14 major PFI
and UPP projects where construction then
remained outstanding
''Contractual Arrangements'' the contractual arrangements between the
Company, a Converting Creditor and certain of
the Company's unsecured creditors pursuant to
which the Company will be released from
certain liabilities which are being
compromised in addition to the Debt for
Equity Exchange,
''Converting Creditor'' a creditor of the Company who will be issued
New Ordinary Shares pursuant to the Debt for
Equity Exchange in consideration of the full
and effective release of the Company from its
liabilities to that creditor pursuant to
certain unsecured obligations owed to that
creditor
''Core Lenders'' Banc of America Securities Limited, Barclays
Bank plc, Bayerische Landesbank, CanPartners
Investments IV, LLC, Commerzbank AG, London
Branch, Credit Suisse, London Branch, Danske
Bank A/S, De Montfort Insurance Company plc,
Deutsche Bank AG London, Euler Hermes
Guarantee plc, Greywolf Loan Participation
LLC, JPMorgan Chase Bank, N.A., Liberty
International Underwriting Services Limited,
Mellon HBV Alternative Strategies LLC,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley Bank
International Limited, Orn European Debt
SARL, Prudential Insurance Company of
America, River Run Fund Limited, The Royal
Bank of Scotland plc / National Westminster
Bank plc, St Paul Travellers Insurance
Company, Strategic Value Partners (UK) LLP,
Teachers Insurance and Annuity Association of
America and Third Point Loan LLC and their
assignees or transferees from time to time
''Debt for Equity Exchange'' the release of all claims of Converting
Creditors (including the Converting Creditor
who is subject to the Contractual
Arrangements and being issued New Ordinary
Shares in respect of a claim of approximately
£0.6 million) against the Company in respect
of such claims in consideration for the issue
of New Ordinary Shares to the Converting
Creditors on the terms set out in the Scheme
and, where applicable, the Contractual
Arrangements, or a Restructuring Agreement,
as the case may be
''Deferred Shares'' the deferred shares of one penny each in the
capital of the Company
''Deferred Share Transferee'' the person to be appointed by the Board who
will be authorised to receive transfers
pursuant to the power granted of Deferred
Shares for no monetary consideration from
Shareholders
''Deutsche Bank'' Deutsche Bank AG London
''Deutsche Bank Facilities'' the £22,700,000 revolving working capital
facility and the £8,700,000 standby term loan
facility provided by Deutsche Bank on the
terms of the facility agreement, dated
27 May 2005, between Deutsche Bank, the
Company and various members of the Group
''Enlarged Ordinary Share the issued ordinary share capital of the
Capital'' Company as enlarged following the issue of
New Ordinary Shares to Existing Warrant
Holders and pursuant to the Debt for Equity
Exchange
''EU'' the European Union
''European Roads Business means the circular to shareholders dated
Circular'' 27 May 2005 in respect of the European Roads
Business Disposal
''European Roads Business the disposal by the Group of the shares it
Disposal'' held in Prosign and Veluvine to Somaro S.A.
which completed on 16 June 2005
''Existing Ordinary Shares'' the ordinary shares of five pence each in the
capital of the Company in issue as at the
date of this announcement or to be issued
prior to the creation of the New Interim
Shares and the Deferred Shares
''Existing Shareholders'' the holders of the Existing Ordinary Shares
''Existing Warrant Holders'' the holders of the Existing Warrants on the
relevant record date for the Debt for Equity
Exchange
''Existing Warrants'' the warrants over 7,081,180 Ordinary Shares,
constituted by a warrant instrument dated
27 August 2004
''Extraordinary General Meeting'' the extraordinary general meeting of the
Company to be held on 4 August 2005
''Firm Placed Shares'' the shares to be placed firm with Deutsche
Bank and the Placees at the Placing Date
(representing their pro rata entitlement
under the Open Offer) and that are therefore
not subject to clawback under the Open Offer
''Fully Enlarged Ordinary Share the issued ordinary share capital of the
Capital'' Company as enlarged following the issue of
New Ordinary Shares to Existing Warrant
Holders and under both the Debt for Equity
Exchange and the Placing and Open Offer
''Funding Period'' has the meaning given in Appendix I of this
announcement
''Group'' or ''Jarvis'' means the Company and its subsidiary
undertakings
''High Court'' the High Court of Justice in England and
Wales
''London Stock Exchange'' London Stock Exchange plc
''Network Rail'' Network Rail Infrastructure Limited
''New Interim Shares'' the Ordinary Shares of one penny each in the
capital of the Company proposed to be created
pursuant to the sub-division of the Existing
Ordinary Shares
''New Ordinary Shares'' the Ordinary Shares of five pence each in the
capital of the Company proposed to be created
pursuant to the consolidation of the New
Interim Shares
''New Warrants'' the warrants to be constituted pursuant to
the terms of a warrant instrument proposed to
be entered into by the Company
''Open Offer'' the conditional offer to be made to
Qualifying Shareholders for the Open Offer
Shares to be subscribed for at the Placing
Price on the terms and conditions to be set
out in the application form to be sent to
such Qualifying Shareholders
'Open Offer Record Date' the date on which registered shareholdings of
New Ordinary Shares are determined for the
purposes of calculating the respective
entitlements to Shareholders under the Open
Offer which, if the Debt for Equity Exchange
is implemented principally by way of a
Scheme, will be 12 August 2005
''Open Offer Shares'' the New Ordinary Shares to be issued to
Qualifying Shareholders in accordance with
their respective entitlements under the
Open Offer
''Ordinary Shares'' ordinary shares of five pence each in the
capital of the Company
''Override Agreement'' the override agreement dated 2 July 2004
(as extended, amended and restated from time
to time) between, inter alios, the Company,
certain other members of the Group and the
then core lenders to the Group (in various
capacities)
''PFI'' the private finance initiative under which
private sector participants finance, design,
build and manage public infrastructure
projects
''Placees'' certain of the Core Lenders who subscribe for
Firm Placed Shares and underwrite the Open
Offer together with Deutsche Bank
''Placing'' the placing of the New Ordinary Shares
''Placing and Open Offer
Agreement'' the proposed conditional placing and
open offer agreement to be entered into by
Deutsche Bank, NM Rothschild & Sons
Limited and the Company prior to the Debt for
Equity Exchange
''Placing Date'' the date on which all of the conditions
precedent under the Placing and Open Offer
Agreement to the firm placing of the Firm
Placed Shares are fulfilled or waived or, if
such date is not a Business Day, the next
Business Day
''Placing Price'' 35 pence per New Ordinary Share
''Placing Shares'' the New Ordinary Shares to be issued under
the Placing and Open Offer
''Prosign'' Prosign S.A., a company incorporated in
France under registered number 542 050 406
''Prospectus'' the prospectus to be issued by the Company in
connection with the Open Offer and the
admission of the New Ordinary Shares
''Qualifying Shareholders'' holders of New Ordinary Shares on the Open
Offer Record Date who qualify, under the
terms of the Open Offer, to participate in
the Open Offer
''Record Date'' the date on which registered shareholdings of
Existing Ordinary Shares are determined for
the purposes of calculating the share
sub-division, partial share reclassification
and share consolidation described in Appendix
I which, if the Debt for Equity Exchange is
implemented principally by way of the Scheme,
will be 11 August 2005
''Resolutions'' the resolutions to be proposed at the
Extraordinary General Meeting
''Restructuring'' the Debt for Equity Exchange, the Placing and
the Open Offer
''Restructuring Agreement'' any restructuring agreement that may be
entered into by the Company with Converting
Creditors to give effect to the Debt for
Equity Exchange on a consensual basis in the
event that the Scheme does not become
effective for any reason
''Scheme'' the proposed creditors' scheme of arrangement
under section 425 of the Companies Act 1985
for the implementation of substantially all
of the Debt for Equity Exchange
''Scheme Creditors'' Converting Creditors who are subject to the
Scheme
''Shareholders'' holders of shares in the capital of the
Company in issue from time to time
''Sub-Divided Shares'' has the meaning given in Appendix I of this
announcement
''Tube Lines Disposal'' the realisation of value from the Group's
investment in the Tube Lines PPP Project
''Tube Lines PPP Project'' the public private partnership for the
management, maintenance and upgrade of the
assets and infrastructure of the Jubilee,
Northern and Piccadilly lines on the London
underground rail network
''UK'' or ''United Kingdom'' the United Kingdom of Great Britain and
Northern Ireland
''UK Listing Authority'' the Financial Services Authority, acting in
its capacity as the competent authority for
the purposes of the Financial Services and
Markets Act 2000
''UPP'' the University Partnership Programme, a PFI
programme formerly between Jarvis and certain
universities
''Veluvine'' Veluvine B.V., a company incorporated in The
Netherlands under registered number 20054080