MGM MIRAGE AND WEMBLEY PLC
RECOMMENDED CASH ACQUISITION
BY MGM MIRAGE OF WEMBLEY PLC
AND RELATED PROPOSALS
1. Introduction
The boards of MGM MIRAGE and Wembley announce that they have reached agreement
on the terms of a recommended cash acquisition by MGM MIRAGE of Wembley to be
effected by means of a scheme of arrangement of Wembley under section 425 of the
Companies Act.
Under the terms of the Acquisition, Wembley Shareholders will receive 750 pence
in cash per Wembley Share. Wembley Shareholders will also receive shares in
Newco pro rata to their shareholdings in Wembley.
The Acquisition values the entire issued and to be issued share capital of
Wembley at approximately £270 million before taking into account any additional
value attributable to the shares in Newco. On this basis, the Acquisition
represents a premium of 22.4 per cent. (before ascribing any value to Newco)
over the closing mid-market price of 612.5 pence per Wembley Share on 26 January
2004, the last business day prior to this announcement, and a premium of 42.2
per cent. (before ascribing any value to Newco) over the closing mid-market
price of 527.5 pence per Wembley Share on 19 November 2003, the day prior to the
announcement by Wembley that it had received approaches from a number of parties
interested in acquiring some or all of the assets of Wembley.
2. Recommendation
The Wembley Board, which has been so advised by Hawkpoint and Merrill Lynch,
considers the terms of the Acquisition to be fair and reasonable. In providing
advice to the Wembley Board, Hawkpoint and Merrill Lynch have taken into account
the commercial assessments of the Wembley Directors. Accordingly, the Wembley
Directors unanimously recommend that Wembley Shareholders vote in favour of the
resolutions to be considered at the Wembley Court Meeting(s) and the Wembley
Extraordinary General Meeting, as they have indicated they will do in respect of
their entire holdings of 94,891 Wembley Shares, representing 0.3 per cent. of
the existing issued share capital of Wembley.
3. Details of the Acquisition
Under the terms of the Acquisition, Wembley Shareholders will receive:
for each Wembley Share 750 pence in cash
Upon the Acquisition taking effect, Wembley Shareholders will also receive
shares in Newco pro rata to their shareholdings in Wembley. Newco is an English
company to be formed as part of the Lincoln Park Reorganisation, the purpose of
which is to separate from the Wembley Group (immediately prior to its
acquisition by MGM MIRAGE) any potential liability for, and associated costs of,
the Lincoln Park Litigation. Newco's only asset will be LPRI, a Rhode Island
limited liability company which, in addition to the potential liability for, and
associated costs of, the Lincoln Park Litigation will, upon the Acquisition
taking effect, have cash balances of $16.3 million (approximately £9.0 million,
equivalent to approximately 25 pence per Wembley Share). This will include $8
million which has been deposited in an escrow account following agreement with
the US Attorney that this is the maximum aggregate fine that would be sought
under the Lincoln Park Litigation. On this basis, the Wembley Directors
believe, following legal advice, that LPRI will have sufficient funds to meet
its liability for, and associated costs of, the Lincoln Park Litigation.
On resolution of the Lincoln Park Litigation, the directors of Newco (who will
be the current Wembley Directors) will return any remaining cash to
shareholders. The timing and amount of any such return will depend on the
extent to which LPRI is successful in resolving the Lincoln Park Litigation for
an aggregate cost (including any penalty imposed) which is less than the amount
of its cash balances. If LPRI is acquitted on all counts at the trial of the
Lincoln Park Litigation, $8 million (approximately £4.4 million, equivalent to
approximately 12 pence per Wembley Share) will be distributed to shareholders,
together with any cash balances remaining after the payment of legal and other
costs. MGM MIRAGE and Citigroup express no opinion as to whether the retained
cash balances will be sufficient and, accordingly, whether or when any future
return of cash to shareholders will be made. Given the limited liability status
of Newco and LPRI (the only asset of Newco), Wembley Shareholders should have no
legal or financial exposure (beyond the cash retained in LPRI) relating to the
outcome of the Lincoln Park Litigation arising out of their shareholdings in
Newco, nor should Wembley or MGM MIRAGE have any legal or financial exposure
relating to such litigation. MGM MIRAGE will not acquire any interest in Newco
or LPRI and neither it nor Wembley will have any responsibility for the conduct
or outcome of the Lincoln Park Litigation.
No application will be made for the admission of the shares in Newco to the
Official List or to trading on the London Stock Exchange.
Wembley Shares will be acquired under the Acquisition fully paid and free from
all liens, charges, equitable interests, encumbrances, rights of pre-emption and
other third party rights or interests and together with all rights attaching
thereto, including, without limitation, the right to receive all dividends and
other distributions (if any) announced, declared, made or paid hereafter.
The Acquisition will be subject to the conditions and terms set out or referred
to in Appendix I of this announcement and in the Scheme Document.
4. The Lincoln Park Reorganisation
The indictment under the Lincoln Park Litigation is currently against Lincoln
Park Inc., an indirect wholly-owned subsidiary of Wembley. The Lincoln Park
Reorganisation is intended to separate from the Wembley Group (immediately prior
to its acquisition by MGM MIRAGE) any potential liability for, and associated
costs of, the Lincoln Park Litigation.
Under the Lincoln Park Reorganisation, the following steps are proposed
(although Wembley and MGM MIRAGE reserve the right to agree amendments to these
steps to effect the underlying commercial objectives):
(i) Lincoln Park Inc. will be reorganised by way of merger into LPRI, a
Rhode Island limited liability company.
(ii) LPRI will transfer (by distribution or otherwise) its business,
assets and liabilities to its immediate holding company, UTGR Inc., save that it
will retain its liability for the Lincoln Park Litigation, including associated
legal and other costs. It will also retain cash balances of $16.3 million
(approximately £9.0 million), being an amount which the directors of Wembley
believe, following legal advice, will be sufficient to provide for such
liability and costs.
(iii)A new English company, Newco, will be established, following which
UTGR Inc. will transfer its membership interest in LPRI to Newco.
(iv) Upon the Scheme becoming effective, Wembley Shareholders will receive
shares in Newco pro rata to their shareholdings in Wembley.
The US Attorney has confirmed, as part of the agreement establishing the $8
million escrow account referred to above, that he would not object to the
implementation of the Lincoln Park Reorganisation.
The Lincoln Park Reorganisation will only be implemented once the necessary
resolutions have been passed at the Wembley Court Meeting(s) and the Wembley
Extraordinary General Meeting and the necessary regulatory clearances have been
received. It is expected that, in such circumstances, the Lincoln Park
Reorganisation would be implemented immediately prior to the Scheme becoming
effective.
5. Reasons for the Acquisition
MGM MIRAGE believes that Wembley will geographically and commercially complement
its existing core gaming assets in the United States. Wembley's leading
position in Rhode Island represents a strong fit with MGM MIRAGE's existing
gaming operations and will allow MGM MIRAGE to leverage its significant gaming
expertise and strong balance sheet across the Wembley Group. Additionally,
Wembley owns sites in the United Kingdom which could complement MGM MIRAGE's
plans to develop facilities in the United Kingdom, should the currently proposed
gaming reforms be adopted.
6. Background to and reasons for the recommendation of the Board of Wembley
Wembley has undergone considerable change since its reconstruction in 1995. The
Wembley Board has concentrated on the development of a focused group and has
sought to realise assets where good value could be achieved. Following the
reconstruction, it has also pursued an active share buy-back programme, which
totalled some £118 million and significantly enhanced Wembley's earnings per
share.
Following the conclusion of a programme of disposing of non-core assets that
included the disposal of Wembley Stadium in 1999 and the sale of the Wembley
Complex in 2002, Wembley now has gaming operations in three principal locations,
namely Rhode Island, Colorado and the United Kingdom. Wembley's facility at
Rhode Island in the United States now generates the vast majority of the Wembley
Group's profitability (approximately 93.5 per cent. of operating profit in
2002). As a consequence of the risks associated with being so heavily dependent
on a single profit source, the Wembley Board concluded that it would be in the
interests of Wembley Shareholders to explore a possible sale of the Wembley
Group. Pursuit of this strategy was temporarily hindered by the announcement in
September 2003 that, following an investigation by a Federal Grand Jury in Rhode
Island, indictments had been issued against Lincoln Park Inc. and two company
executives.
On 20 November 2003, Wembley announced that it had received approaches from a
number of parties interested in acquiring some or all of its assets. In order
to facilitate a sale should an appropriate offer be made, Wembley formulated the
Lincoln Park Reorganisation pursuant to which the potential liability for, and
associated costs of, the Lincoln Park Litigation could be separated from the
Wembley Group. In light of this structure, MGM MIRAGE proposed the Acquisition
which the Wembley Directors, taking into account, inter alia, the discussions
that Wembley had had with other parties, believe provides the best available
means for Wembley Shareholders to realise their investments in cash at a
significant premium to the prevailing share price.
Accordingly, the Wembley Board has decided unanimously to recommend that Wembley
Shareholders vote in favour of the resolutions to be proposed at the Wembley
Court Meeting(s) and the Wembley Extraordinary General Meeting.
7. Information on MGM MIRAGE
MGM MIRAGE is one of the world's leading and most respected hotel and gaming
resort operators. It owns and operates 12 casino resorts located in Nevada,
Mississippi, Michigan and Australia. The company is headquartered in Las Vegas,
Nevada and is listed on the New York Stock Exchange with a market capitalisation
of approximately $5.8 billion (approximately £3.2 billion). Its portfolio of
resorts includes Bellagio, MGM Grand, The Mirage, Treasure Island, New York-New
York, Beau Rivage, MGM Grand Detroit and the Primm Valley Resorts. The company
also operates three championship golf courses (one in Nevada and two in
California, at the Nevada border). MGM MIRAGE is a 50 per cent. owner of
Borgata, a destination casino resort at Renaissance Pointe in Atlantic City, New
Jersey and a 50 per cent. owner of the Monte Carlo Casino Hotel in Las Vegas.
Internationally, MGM MIRAGE owns and operates MGM Grand Australia in Darwin,
Australia and holds a 25 per cent. interest in casino developer Metro Casinos
Limited of Great Britain. MGM MIRAGE has recently entered the United Kingdom
market notably through a joint venture development agreement with Earls Court
and Olympia Group that could lead to the development of a new gaming and
entertainment complex in the Olympia Exhibition Centre in London and a 50:50
joint venture with Newcastle United PLC to build a major new mixed-use
development on a prime site above St. James' Metro Station.
For the year ended 31 December 2002, MGM MIRAGE reported net revenue of $3.8
billion (2001: $3.7 billion) and net income of $292 million (2001: $170
million). As at 31 December 2002, MGM MIRAGE had total assets of $10.5 billion
and total stockholders' equity of $2.7 billion.
For the nine months ended 30 September 2003, MGM MIRAGE reported net revenues of
$2.9 billion (2002: $2.9 billion) and net income of $152 million (2002: $253
million).
8. Information on Wembley
Wembley is a track-based gaming business with operations in the United Kingdom
and the United States. In the United States, Wembley has operations in the
states of Rhode Island and Colorado. Wembley's principal venue is the Lincoln
Park greyhound track in Rhode Island. In Colorado, Wembley owns and operates
three greyhound racing tracks and one horse racing track, together with an
off-track betting operation. At Lincoln Park, Wembley's strategy is to offer
additional gaming opportunities in the form of video lottery terminals. Video
lottery terminals at greyhound racing tracks are not presently authorised under
Colorado law, a referendum seeking such authorisation having been defeated in
2003. In the United Kingdom, Wembley is the leading owner and operator of
greyhound tracks, with tracks in Wimbledon, Manchester, Birmingham, Oxford and
Portsmouth.
For the year ended 31 December 2002, Wembley reported audited turnover from
continuing operations of £101.1 million (2001: £101.2 million) and audited
operating profit from continuing operations and before tax, interest and
exceptional items of £38.9 million (2001: £35.1 million). As at 31 December
2002, Wembley had audited net assets of £189.0 million.
For the six months ended 30 June 2003, Wembley reported unaudited turnover from
continuing operations of £50.5 million (2002: £51.2 million) and unaudited
operating profit from continuing operations and before tax, interest and
exceptional items of £18.0 million (2002: £20.1 million). As at 30 June 2003,
Wembley had unaudited net assets of £195.3 million and net cash of £1.2 million.
Wembley issued a trading update on 5 November 2003. Since then, the Wembley
Group has been trading in line with the Wembley Board's expectations. It is
expected that Wembley will announce its preliminary results for the year ended
31 December 2003 on 24 February 2004, full details of which will be incorporated
in the Scheme Document.
In light of the Acquisition, Wembley will not be declaring a final dividend in
respect of the year ended 31 December 2003.
9. Description of the Scheme
The Acquisition will be effected by way of a scheme of arrangement of Wembley
under section 425 of the Companies Act. It is expected that the Scheme Document
will be posted to Wembley Shareholders in late February 2004. Application will
be made to the Court to obtain a hearing date for final sanction of the Scheme
when the necessary regulatory clearances have been obtained or the timing for
obtaining them has been clarified. It is hoped that regulatory clearances will
be obtained by not later than June 2004.
Under the Scheme, each Wembley Share will be cancelled pursuant to the Capital
Reduction and new shares in Wembley will be issued fully paid to MGM MIRAGE. In
consideration for the cancellation of their shares in Wembley, Wembley
Shareholders will receive the cash consideration under the terms of the
Acquisition as outlined above. On the Scheme becoming effective, Wembley will
become a wholly-owned subsidiary of MGM MIRAGE.
The Scheme will be subject to the conditions set out in Appendix I, including
the satisfaction of certain regulatory conditions and the sanction of the Scheme
by the Court.
To become effective, the Scheme requires, amongst other things, the approval of
a majority in number representing three-fourths in value of Wembley Shareholders
present and voting, either in person or by proxy, at the relevant Wembley Court
Meeting(s).
In addition to the Wembley Court Meeting(s), an Extraordinary General Meeting of
Wembley will be held for the purpose of considering and, if thought fit,
approving the necessary resolutions relating to the Capital Reduction, the
Lincoln Park Reorganisation and the implementation of the Scheme. This meeting
will be held directly after the Wembley Court Meeting(s).
The Scheme will become effective upon delivery to the Registrar of Companies of
a copy of the Order and the registration of such Order. Upon the Scheme becoming
effective, it will be binding on all Wembley Shareholders, irrespective of
whether or not they attended or voted at the Wembley Court Meeting(s) or the
Wembley Extraordinary General Meeting.
10. Management and employees
The directors of Wembley and the other head office employees will be made
redundant upon the Scheme becoming effective and paid in accordance with their
terms of employment and normal Wembley redundancy practice. In respect of the
employees and management within the rest of the Wembley Group, MGM MIRAGE has
assured the Wembley Board that, upon the Scheme becoming effective, the existing
employment rights, including pension rights, of all such employees and
management will be fully safeguarded.
11. Wembley Share Option Schemes
Appropriate proposals will be made in due course to the holders of options under
the Wembley Share Option Schemes.
12. Inducement fee
As an inducement to MGM MIRAGE to make the Acquisition, Wembley and MGM MIRAGE
have entered into an agreement under which Wembley has agreed to pay MGM MIRAGE
approximately £2.7 million in the event that:
(i) the Wembley Directors withdraw their unanimous recommendation to the
Wembley Shareholders to vote in favour of the Acquisition (other than in
circumstances where it is withdrawn as a result of and, in Wembley's reasonable
opinion, because of the act or omission of MGM MIRAGE) and subsequently the
Acquisition lapses or is withdrawn in accordance with its terms; or
(ii) any person unconnected with MGM MIRAGE makes a takeover proposal
which subsequently becomes or is declared unconditional in all respects or is
otherwise completed or implemented and, for these purposes, 'takeover proposal'
means any offer (as defined in the City Code) for Wembley or other business
combination involving the acquisition of control of Wembley or of all or a
material part of the assets of Wembley (including, without limitation, the
Lincoln Park Business).
13. Letters of intent
Letters of intent to vote in favour of the Acquisition have been received by MGM
MIRAGE from certain Wembley Shareholders in respect of a total of 17,937,755
Wembley Shares, representing approximately 51.7 per cent. of Wembley's existing
issued share capital.
14. General
It is expected that the Scheme Document, containing the full terms and
conditions of the Acquisition, together with further details of the Lincoln Park
Reorganisation, will be despatched in late February 2004 to Wembley Shareholders
and, for information only, to holders of options under the Wembley Share Option
Schemes.
Enquiries:
MGM MIRAGE Tel: +1 (702) 891 7147
Alan M. Feldman
Citigroup Tel: +44 (0) 207 986 4000
Wendell Brooks
Simon Gluckstein
Carl Byoir & Associates Tel: +44 (0) 207 413 3042
Lalu Dasgupta
Wembley Tel: +44 (0) 208 795 8003
Claes Hultman
Mark Elliott
Hawkpoint Tel: +44 (0) 207 665 4500
Paul Baines
Vinay Ghai
Merrill Lynch Tel: +44 (0) 207 628 1000
Simon Mackenzie-Smith
Tim Pratelli
College Hill Tel: +44 (0) 207 457 2020
Matthew Smallwood
Justine Warren
Citigroup Global Markets Limited, which is regulated by the Financial Services
Authority for the conduct of investment business in the United Kingdom, is
acting for MGM MIRAGE and no one else in connection with the Acquisition and
will not be responsible to anyone other than MGM MIRAGE for providing the
protections afforded to clients of Citigroup Global Markets Limited or for
providing advice in relation to the Acquisition.
Hawkpoint, which is regulated by the Financial Services Authority for the
conduct of investment business in the United Kingdom, is acting for Wembley and
no one else in connection with the Acquisition and will not be responsible to
anyone other than Wembley for providing the protections afforded to clients of
Hawkpoint or for providing advice in relation to the Acquisition.
Merrill Lynch, which is regulated by the Financial Services Authority for the
conduct of investment business in the United Kingdom, is acting for Wembley and
no one else in connection with the Acquisition and will not be responsible to
anyone other than Wembley for providing the protections afforded to clients of
Merrill Lynch or for providing advice in relation to the Acquisition.
This announcement does not constitute an offer to sell or invitation to purchase
any securities or the solicitation of any vote or approval in any jurisdiction.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or distributed
should inform themselves about and observe such restrictions.
The information contained herein is not for publication or distribution,
directly or indirectly, in or into the United States, Australia, Canada or
Japan. The announcement is not an offer to sell or a solicitation of any offer
to buy shares in Newco in the United States; the shares in Newco may not be
offered or sold in the United States absent registration or an exemption from
registration. There will be no public offer of shares in Newco in the United
States.
Appendix II contains the definitions of certain terms used in this announcement.
APPENDIX I
CONDITIONS to the ACQUISITION
The Acquisition is conditional upon the Scheme becoming unconditional and
effective by no later than 27 August 2004 or such later date (if any) as Wembley
and MGM MIRAGE may agree and the Court may allow.
1 Conditions of the Scheme
The Scheme is conditional upon:
(a) approval of the Scheme by a majority in number representing three fourths
in value of the holders of Wembley Shares present and voting, either in person
or by proxy, at the Wembley Court Meeting(s);
(b) any resolution or resolutions of Wembley Shareholders required to approve
and implement the Scheme and related matters, in each case, being duly passed by
the requisite majority at the Wembley Extraordinary General Meeting (or at any
adjournment of that meeting);
(c) the sanction (with or without modification) of the Scheme (and
confirmation of the Capital Reduction) by the Court on terms satisfactory to
both Wembley and MGM MIRAGE acting reasonably; and
(d) delivery of an office copy of the Order by Wembley for registration to the
Registrar of Companies (and registration of the Order confirming the Capital
Reduction with the Registrar of Companies).
2 Other Conditions of the Acquisition
Wembley and MGM MIRAGE have agreed that, subject as stated in paragraph 3 below,
the Acquisition is also conditional upon the following conditions being
satisfied or, where relevant, waived (as referred to below) prior to the Scheme
being sanctioned by the Court:
(a) it being established, in terms satisfactory to MGM MIRAGE (acting
reasonably), that the Acquisition, or any aspect thereof, will not be referred
to the Competition Commission, provided that, if a request to the European
Commission is made by the competent authorities of one or more Member States
under Article 22(3) of Council Regulation (EEC) 4064/89 (as amended by Council
Regulation (EC) 1310/97) (the 'Merger Regulation') and is accepted by the
European Commission, then this paragraph (a) shall be deemed to be satisfied if:
(i) it is established, in terms satisfactory to MGM MIRAGE (acting
reasonably), that it is not the intention of the European Commission to initiate
proceedings under Article 6(1)(c) of the Merger Regulation; and
(ii) to the extent that the competent authorities of the United Kingdom
retain jurisdiction over any aspect of the proposed acquisition of Wembley by
MGM MIRAGE, it is established, in terms satisfactory to MGM MIRAGE (acting
reasonably), that the proposed acquisition of Wembley by MGM MIRAGE or any
matter arising from that acquisition will not be referred to the Competition
Commission;
(b) all necessary notifications and filings required by law or regulation
having been made, all or any applicable waiting and other time periods
(including any extensions thereof (including requests for additional
information)) under any applicable legislation or regulation of any jurisdiction
(including, without limitation, in the United States, Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (as amended) and the regulations made
thereunder) having expired, lapsed or terminated and any approvals or clearances
required by law or regulation having been obtained to the reasonable
satisfaction of MGM MIRAGE as appropriate in each case in respect of the
Acquisition, its implementation and the acquisition of any shares in Wembley or
control of Wembley (or any member of the Wembley Group) by MGM MIRAGE or any
member of the MGM MIRAGE Group and all necessary statutory and regulatory
obligations in connection with the Acquisition in any jurisdiction having been
complied with;
(c) in relation to the Lincoln Park Business:
(i) the Rhode Island Lottery Commission, the Rhode Island Department
of Business Regulation and all other relevant state and federal regulators
having confirmed, on terms reasonably satisfactory to MGM MIRAGE and Wembley,
that, on the Scheme becoming effective, all material licences and other
operating authorities (however denominated) necessary for the operation of the
Lincoln Park Business will have and will continue to have full force and effect
on terms and conditions (including tax) which are no less favourable in any
material respect than those currently enjoyed by Wembley; and
(ii) completion of the Lincoln Park Reorganisation subject only, if
applicable, to the Scheme becoming effective;
(d) other than investigations and waiting periods listed in paragraph 2(b), no
central bank, government or governmental, quasi-governmental, supranational,
statutory or regulatory body or association, institution or agency (including
any trade agency) or any court or other body (including any professional or
environmental body) or person in any jurisdiction (each a 'Relevant Authority')
having decided to take, instituted or threatened any action, proceeding, suit,
investigation, enquiry or reference or enacted, made or proposed and there not
continuing to be outstanding any statute, regulation, order or decision that
would or might:
(i) make the Acquisition, its implementation or the acquisition or
the proposed acquisition of any Wembley Shares in, or control of, Wembley by any
member of the MGM MIRAGE Group void, unenforceable or illegal or directly or
indirectly prohibit or restrict, delay or interfere with the implementation of,
or impose additional conditions or obligations with respect to, or otherwise
challenge, the Acquisition, its implementation or the acquisition of any shares
in, or control of, Wembley by any member of the MGM MIRAGE Group;
(ii) result in a delay in the ability of MGM MIRAGE or any member of
the MGM MIRAGE Group, or render MGM MIRAGE or any member of the MGM MIRAGE Group
unable, to acquire all of the Wembley Shares or require a divestiture by MGM
MIRAGE or any member of the MGM MIRAGE Group of any Wembley Shares;
(iii) require, prevent or delay the divestiture (or alter the terms of
any proposed divestiture) by any member of the Wider MGM MIRAGE Group or any
member of the Wembley Group of all or any part of their respective businesses,
assets or properties or impose any limitation on their ability to conduct all or
any part of their respective businesses and to own any of their respective
assets or properties to an extent which is material in the context of the
Wembley Group taken as a whole or the MGM MIRAGE Group taken as a whole (as the
case may be);
(iv) impose any material limitation on, or result in any material delay
in, the ability of any member of the MGM MIRAGE Group to acquire or hold Wembley
Shares or other securities (or the equivalent) in any member of the Wembley
Group or to exercise effectively, directly or indirectly, all or any rights of
ownership of Wembley Shares or other securities (or the equivalent) in, or to
exercise management control over, any member of the Wembley Group or on the
ability of any member of the Wembley Group to hold or exercise effectively,
directly or indirectly, all or any rights of ownership of shares or other
securities (or the equivalent) in, or to exercise management control over, any
other member of the Wembley Group;
(v) result in any member of the Wembley Group ceasing to be able to
carry on business under any name which it presently does so to an extent which
is material in the context of the MGM MIRAGE Group taken as a whole;
(vi) require any member of the MGM MIRAGE Group or of the Wembley Group
to acquire or offer to acquire any shares or other securities (or the
equivalent) in any member of the Wembley Group or any member of the Wider MGM
MIRAGE Group owned by any third party (other than in the implementation of the
Acquisition);
(vii) impose any material limitation on the ability of any member of the
Wider MGM MIRAGE Group or the Wembley Group to integrate or co-ordinate its
business, or any part of it, with the businesses or any part of the businesses
of any other member of the Wider MGM MIRAGE Group and/or the Wembley Group; or
(viii) otherwise adversely affect the business, assets, financial or
trading position or profits of any member of the Wider MGM MIRAGE Group or of
the Wembley Group in a manner which is adverse to and material in the context of
the MGM MIRAGE Group taken as a whole or the Wembley Group taken as a whole (as
the case may be),
and all applicable waiting and other time periods during which any such Relevant
Authority could decide to take, institute or threaten any such action,
proceeding, suit, investigation, enquiry or reference having expired, lapsed or
been terminated;
(e) all authorisations, orders, grants, recognitions, confirmations,
licences, consents, clearances, permissions and approvals ('authorisations')necessary or appropriate in any jurisdiction for, in respect of or resulting
from the Acquisition, its implementation or the proposed acquisition by MGM
MIRAGE or any member of the MGM MIRAGE Group of any shares in Wembley or control
of Wembley (or any member of the Wembley Group) being obtained in terms and in a
form reasonably satisfactory to MGM MIRAGE from appropriate Relevant Authorities
or from any persons or bodies with whom any member of the Wider MGM MIRAGE Group
or the Wembley Group has entered into contractual arrangements and such
authorisations together with all authorisations necessary or appropriate for any
member of the Wembley Group to carry on its business remaining in full force and
effect (in each case where the consequence of a failure to obtain such
authorisation would have a material adverse effect on the Wembley Group (taken
as a whole)) and no intimation of any intention to revoke, suspend, restrict or
modify or not to renew any of the same having been made in each case where the
consequences of such revocation, suspension, restriction or modification would
have a material adverse effect on the Wembley Group (taken as a whole);
(f) save as fairly disclosed in writing by or on behalf of Wembley to MGM
MIRAGE, or as publicly announced to a Regulatory Information Service by or on
behalf of Wembley, (in each such case) prior to the date of this announcement,
there being no provision of any agreement, arrangement, lease, licence, permit
or other instrument to which any member of the Wembley Group is a party or by or
to which any such member or any of its assets is or may be bound, entitled or
subject which, as a result of the Acquisition, its implementation or the
acquisition or proposed acquisition by MGM MIRAGE of any shares in, or change in
the control or management of, Wembley or otherwise, would or might reasonably be
expected to result in, to an extent which is material in the context of the
Wembley Group taken as a whole:
(i) any moneys borrowed by or any other indebtedness (actual or contingent)
of any such member being or becoming repayable or being capable of being
declared repayable immediately or earlier than the stated repayment date or the
ability of such member to borrow moneys or incur any indebtedness being
withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of any
such member or any such security interest (whenever arising or having arisen)
becoming enforceable;
(iii) any assets or interests of any such member being or falling to be
disposed of or charged or any right arising under which any such asset or
interest could be required to be disposed of or charged other than in the
ordinary course of trading;
(iv) the interest or business of any such member in or with any other person,
firm or company (or any agreements or arrangements relating to such interest or
business) being terminated or adversely affected;
(v) any such member ceasing to be able to carry on business under any name
under which it presently does so;
(vi) the value of any such member or its financial or trading position or
profits being prejudiced or adversely affected;
(vii) any such agreement, arrangement, licence or other instrument being
terminated or adversely modified or any onerous obligation arising or any
adverse action being taken or arising thereunder; or
(viii) the creation of any liabilities (actual or contingent) by any such
member,
and no event having occurred which, under any provision of any agreement,
arrangement, licence or other instrument to which any member of the Wembley
Group is a party or by or to which any such member or any of its assets may be
bound or be subject, could reasonably be expected to result in any events or
circumstances as are referred to in sub-paragraphs (i) to (viii) of this
paragraph (f);
(g) since 31 December 2002 (except as disclosed in the interim results of
Wembley for the six months ended 30 June 2003 or as publicly announced to a
Regulatory Information Service by or on behalf of Wembley before the date of
this announcement or as fairly disclosed in writing by or on behalf of Wembley
to MGM MIRAGE prior to the date of this announcement), no member of the Wembley
Group having:
(i) save as between Wembley and wholly-owned subsidiaries of Wembley prior
to the date of this announcement or upon the exercise of rights to subscribe for
Wembley Shares pursuant to options granted under the Wembley Share Option
Schemes prior to the date of this announcement, issued or agreed to issue or
authorised the issue of additional shares of any class, or securities
convertible into or exchangeable for, or rights, warrants or options to
subscribe for or acquire, any such shares or convertible securities;
(ii) recommended, declared, paid or made or
proposed to recommend, declare, pay or make any bonus issue, dividend or other
distribution, whether payable in cash or otherwise, other than a distribution by
any wholly-owned subsidiary of Wembley;
(iii) save for transactions between Wembley and its wholly-owned
subsidiaries, implemented or authorised any merger or demerger or acquired or
disposed of or other than in the ordinary course of business transferred,
mortgaged or charged, or created any other security interest over, any asset or
any right, title or interest in any asset;
(iv) implemented or authorised any reconstruction, amalgamation or scheme of
arrangement;
(v) purchased, redeemed or repaid any of its own shares or other securities
or reduced or made or authorised any other change in its share capital;
(vi) (save as between Wembley and wholly-owned subsidiaries of Wembley) made
or authorised any change in its loan capital or issued or authorised the issue
of any debentures or incurred or increased any indebtedness or contingent
liability;
(vii) entered into, varied or terminated, or authorised the entry into,
variation or termination of, any contract, commitment, agreement, proposal or
arrangement (whether in respect of capital expenditure or otherwise) which is
outside the ordinary course of trading or which is of a long-term, onerous or
unusual nature or magnitude or which involves or could involve an obligation of
a nature or magnitude which is material in the context of the Wembley Group
(taken as a whole) or which is or is likely to be restrictive on the business of
any member of the Wembley Group or the Wider MGM MIRAGE Group to an extent which
is material in the context of the Wembley Group or the MGM MIRAGE Group (as
appropriate) taken as a whole;
(viii) been unable, or admitted in writing that it is unable, to pay its debts
or having stopped or suspended (or threatened to stop or suspend) payment of its
debts generally or ceased or threatened to cease carrying on all or a
substantial part of its business;
(ix) taken any corporate action or had any legal proceedings started or
threatened against it for its winding-up (voluntary or otherwise), dissolution
or reorganisation (or for any analogous proceedings or steps in any
jurisdiction) or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer (or for the appointment of
any analogous person in any jurisdiction) of all or any of its assets and
revenues or any analogous proceedings in any jurisdiction or appointed any
analogous person in any jurisdiction;
(x) waived, compromised or settled any claim otherwise than in the ordinary
course of trading;
(xi) entered into or varied the terms of any service agreement or
arrangement with any director or senior executive of Wembley;
(xii) made or consented to any significant change to the terms of the trust
deeds constituting the pension schemes established for its directors and/or
employees and/or their dependants or to the benefits which accrue, or to the
pensions which are payable thereunder, or to the basis on which qualification
for or accrual or entitlement to such benefits or pensions are calculated or
determined, or to the basis upon which the liabilities (including pensions) of
such pension schemes are funded or made, or agreed or consented to, any change
to the trustees; or
(xiii) entered into any contract, commitment or arrangement or passed any
resolution or made any offer (which remains open for acceptance) with respect
to, or proposed or announced any intention to effect or propose, any of the
transactions, matters or events referred to in this condition;
(h) since 31 December 2002 (except as disclosed in the interim results of
Wembley for the six months ended 30 June 2003 or as publicly announced to a
Regulatory Information Service by or on behalf of Wembley before the date of
this announcement or as fairly disclosed in writing by or on behalf of Wembley
to MGM MIRAGE prior to the date of this announcement):
(i) no adverse change having occurred in the business, assets, financial or
trading position or profits of any member of the Wembley Group to an extent
which is material to the Wembley Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings having been threatened, announced, instituted or remaining
outstanding by, against or in respect of any member of the Wembley Group or to
which any member of the Wembley Group is a party (whether as claimant or
defendant or otherwise) and no investigation by any Relevant Authority or other
investigative body against or in respect of any member of the Wembley Group
having been threatened, announced, instituted or remaining outstanding by,
against or in respect of any member of the Wembley Group which, in any such
case, might be likely to adversely affect any member of the Wembley Group to an
extent which is material to the Wembley Group (taken as a whole); and
(iii) no contingent or other liability having arisen which would or might be
likely to adversely affect any member of the Wembley Group to an extent which is
material to the Wembley Group taken as a whole;
(i) except as fairly disclosed to MGM MIRAGE in writing by or on behalf of
Wembley prior to the date of this announcement, MGM MIRAGE not having discovered
that:
(i) any financial, business or other information concerning the Wembley
Group publicly disclosed at any time by or on behalf of any member of the
Wembley Group which is material in the context of the Acquisition is misleading,
contains a misrepresentation of fact or omits to state a fact necessary to make
the information contained therein not misleading;
(ii) any member of the Wembley Group is subject to any liability,
contingent or otherwise, which should have been but is not disclosed in the
annual report and accounts of Wembley for the year ended 31 December 2002 or the
interim results of Wembley for the six months ended 30 June 2003 and which is
material in the context of the Wembley Group (taken as a whole);
(iii) in relation to any release, emission, discharge, disposal or other
fact or circumstance which causes or might reasonably be expected to cause
pollution of the environment or harm to human health, no past or present member
of the Wembley Group having (i) committed any violation or any laws, statues,
ordinances or regulations of any Relevant Authority and/or (ii) incurred any
liability (whether actual or contingent) with respect thereto; or
(iv) there is or is likely to be any obligation or liability (whether actual
or contingent) to make good, repair, re-instate or clean up any property now or
previously owned, occupied, operated or made use of or controlled by any past or
present member of the Wembley Group under any environmental legislation,
regulation, notice, circular or order of any Relevant Authority in any
jurisdiction in each case to an extent which is material in the context of the
Wembley Group (taken as a whole).
If MGM MIRAGE is required by the Panel to make an offer for Wembley Shares under
the provisions of Rule 9 of the City Code, then MGM MIRAGE may make such
alterations to any of the above conditions as are necessary to comply with the
provisions of that Rule.
Subject to the consent of the Panel, MGM MIRAGE reserves the right to make a
takeover offer (as defined in section 428 of the Companies Act) for Wembley
Shares on the same terms and conditions as set out in this announcement but
subject to such changes as MGM MIRAGE considers are appropriate including,
without limitation, the incorporation of an acceptance condition.
MGM MIRAGE acknowledges and agrees that anything that arises in the Lincoln Park
Litigation or any action effected to implement the Lincoln Park Reorganisation,
which would otherwise give MGM MIRAGE the right to invoke a Condition set out in
this paragraph 2, shall not give rise to any such right.
The Acquisition and the Scheme will be governed by English law and be subject to
the jurisdiction of the English courts and to the conditions set out above and
below and in the Scheme Document.
3 Waiver of the conditions
MGM MIRAGE reserves the right at its absolute discretion to waive all or any of
conditions 2 (a) to (i) above inclusive, in whole or in part, save that it may
only waive Condition 2(c)(ii) with the prior written consent of Wembley.
Conditions 1(a) to (d) cannot be waived. The Acquisition will lapse and the
Scheme will not proceed unless all the above conditions are fulfilled or (if
capable of waiver) waived or, where appropriate, determined by MGM MIRAGE to
have been satisfied or to remain satisfied prior to the Scheme being sanctioned
by the Court. MGM MIRAGE shall be under no obligation to waive or treat as
fulfilled any of conditions 2 (a) to (i) above inclusive by a date earlier than
the date specified above for the fulfilment thereof notwithstanding that the
other conditions of the Acquisition may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances indicating
that any of such conditions may not be capable of fulfilment.
4 Lapse of the Acquisition
Unless the Panel otherwise consents, the Acquisition will lapse and the Scheme
will not proceed if, prior to the date of the Wembley Court Meeting(s), the
Acquisition, or any aspect thereof, is referred to the Competition Commission or
the European Commission either initiates proceedings under Article 6(1)(c) of
the Regulation or, following a referral to a competent authority in the United
Kingdom under Article 9(1) of the Merger Regulation, the Acquisition, or any
aspect thereof, is then referred to the Competition Commission.