RNS No 0135h
FIRSTBUS PLC
7th July 1997
FIRSTBUS PLC ("FIRSTBUS")
PROPOSED ACQUISITION OF SOUTHAMPTON CITYBUS (1993) LIMITED ("CITYBUS")
Highlights
* FirstBus announces that it has agreed the terms of an Offer to acquire
the whole of the issued share capital of Citybus, which operates local
bus services in and around Southampton and Havant, at a total cost of
approximately #11.1 million (including net debt and the Special
Dividend).
* The Offer is unanimously recommended by the directors of Citybus.
* Irrevocable undertakings to accept the Offer have been given by those
directors of Citybus who hold Citybus shares in respect of their
beneficial shareholdings, representing approximately 0.83 per cent of the
Citybus shares and, if the Resolution is passed, by the EBTs in respect
of their shareholdings representing approximately 42.84 per cent of the
Citybus shares.
* The Offer values Citybus's capital at approximately #5.7 million to be
satisfied by the payment of #5.7 million in cash or the issue of new
FirstBus shares.
* In addition Citybus proposes to pay a Special Dividend of 125p per
Citybus Share (net) if the Offer becomes wholly unconditional.
* Citybus reported an operating profit of #0.7 million on turnover of #11.7
million for the year ended 31st December 1996.
* The proposed acquisition of Citybus offers an attractive opportunity to
acquire a profitable company with a progressive approach towards public
transport operating in Southampton and the surrounding areas.
* The acquisition of Citybus is expected to enhance FirstBus's earnings per
share for the year to 31st March 1998.
Commenting on the transaction, Moir Lockhead, Group Chief Executive of
FirstBus said:-
"I am delighted to have reached agreement with the board of Citybus on the
terms of the Offer. This acquisition represents further expansion and focus
of our operations in major urban areas in line with our strategy and we look
forward to working with the management team and employees to enhance the
business."
Commenting on the Offer for Citybus, Bill Greening, Chairman of Citybus said:-
"Citybus's board is very pleased that the negotiations with FirstBus,
resulting in its offer to acquire Citybus's issued share capital, have been so
satisfactorily concluded. Given FirstBus's leading position in the bus
industry and Citybus's own success in its local markets, we see great
opportunities for both companies in Citybus becoming a part of the FirstBus
Group."
ENQUIRIES
FirstBus
Moir Lockhead (Group Chief Executive) Tel: 0171 291 0500
Tony Osbaldiston (Group Finance Director)
Frances Gibson Smith (Investor Relations)
Citybus
Bill Greening (Chairman) Tel: 01703 584 321
Ian Phillips (Managing Director)
This announcement, for which FirstBus is responsible, has been approved by
Paull & Williamsons, Solicitors for the purpose of section 57 of the Financial
Services Act 1986. It does not constitute an offer or invitation to purchase
any securities.
FirstBus plc ("FirstBus")
Recommended Offer for the whole of the issued share capital
in Southampton Citybus (1993) Limited ("Citybus")
The boards of FirstBus and Citybus announce that agreement has been reached on
the terms of a recommended Offer to be made by FirstBus for all of the issued
ordinary shares in Citybus.
The board of Citybus will unanimously recommend shareholders to accept the
Offer, as those of the directors of Citybus who hold Citybus shares have
irrevocably undertaken to do in respect of their own beneficial shareholdings
which represent approximately 0.83 per cent of the Citybus shares in issue, on
the terms set out below.
The EBTs have irrevocably undertaken that, if the Resolution is passed, they
will accept the Offer in respect of their shareholding which represents
approximately 42.84 per cent of the Citybus shares in issue, on the terms set
out below.
The Offer, together with the Special Dividend, values Citybus at approximately
#7.2 million. In addition, FirstBus will refinance Citybus's net debt
obligations upon the Offer becoming unconditional. On completion, these net
debt obligations in aggregate are not expected to exceed #3.9 million.
The Offer
The Offer which will be made subject to the conditions referred to below will
be made on the basis of 471p for each Citybus share held.
In addition, if the Offer becomes wholly unconditional, Citybus intends to pay
on 13th August 1997, a Special Dividend of 125p (net) per Citybus share to
each holder of Citybus shares on the register on 4th July 1997.
The Share Alternative
Citybus shareholders who prefer to receive new FirstBus shares for some or all
of the consideration to which they would otherwise have become entitled under
the Offer can elect to receive those on the basis of 2.292 new FirstBus shares
for each Citybus share and so in proportion for any other number of such
shares held.
Assuming that the Offer becomes or is declared unconditional in all respects,
and assuming that the Share Alternative is taken up in full, approximately
2.75 million new FirstBus shares will be issued, representing approximately
0.87 per cent of the enlarged share capital of FirstBus. These new FirstBus
shares will be credited as fully paid and will rank pari passu in all respects
with the existing FirstBus shares, including the right to receive all
dividends and distributions declared, made or paid on such shares after the
date hereof. The first dividend which the holders of the new FirstBus shares
will be entitled to receive will be the interim dividend for the year ended
31st March 1998, which is expected to be paid in February 1998.
Financial Arrangements
FirstBus will finance the Offer from its own existing committed facilities.
In addition, if the Offer becomes wholly unconditional then to the extent that
Citybus is unable to finance the Special Dividend from its own cash resources
FirstBus has undertaken to provide Citybus with the necessary cash resources
to enable it to do so.
Conditions to the Offer
The Offer is conditional, inter alia, upon 90 per cent acceptance by the
shareholders of Citybus, the listing of the new FirstBus shares, the passing
of the Resolution at an extraordinary general meeting of Citybus approving,
inter alia, amendments to the articles of association of Citybus to permit the
Offer to be accepted.
Full details of the conditions to the Offer are set out in Appendix I to this
announcement.
Information on FirstBus
Formed in 1995, FirstBus is now the largest bus company in the United Kingdom
with a 22 per cent market share. It has mainly urban operations throughout
the United Kingdom, employs more than 22,000 people and operates a fleet of
over 8,800 buses. Its strategy is to increase the efficiency and
profitability of its core business and to acquire operations in urban areas in
the United Kingdom and overseas.
The FirstBus Group also has significant rail interests, having won the Great
Eastern Railway franchise and acquired a 24.5 per cent interest in Great
Western and North Western Trains franchises.
The board of FirstBus believes that long-term growth will come from organic
growth based on the provision of good quality, reliable and cost-effective
public transport. The FirstBus Group is therefore committed to continued
investment and constant improvement in customer service.
Information on Citybus
Citybus was formed in 1993 to effect the employee buy-out of SCT from
Southampton City Council. The Citybus Group operates local bus services in
Southampton and the surrounding area and in the area of Havant. The Citybus
Group has approximately 440 employees running a fleet of 152 public service
vehicles from its depot in Portswood, Southampton.
Citybus's trading subsidiary, SCT, operates the largest fleet of natural gas-
powered buses in the United Kingdom, with a fleet of 16 vehicles. Citybus is
also working with Hampshire County Council in the development of a traffic
management scheme which provides real-time bus information to passengers at
bus stops. Over 40 stops in Southampton are already linked in to the scheme.
For the year ended 31st December 1996, Citybus reported audited operating
profit of #0.7 million and profit before taxation of #0.6 million on turnover
of #11.7 million. As at 31st December 1996, Citybus's audited net assets were
#3.3 million. Additional financial information is set out in Appendix II to
this announcement.
Reasons for the proposed acquisition
The directors of FirstBus expect the acquisition of Citybus to enhance
FirstBus's earnings per share for the year to 31st March 1998. The other key
benefits of the acquisition of Citybus are:-
- an opportunity to enter the urban market in Southampton, a conurbation of
some 200,000 people;
- Citybus's progressive approach towards public transport; and
- Citybus's similar views on employee participation through share
ownership.
Management and employees of Citybus
FirstBus will give certain binding commitments to Citybus employees on a range
of employment and pension issues including the following:-
* existing contracts of employment and current terms and conditions of
employment will be honoured; and
* for a period of at least three years from the date of the Offer becoming
unconditional there will be no compulsory redundancies among PSV drivers.
Subject to applicable legislation, Citybus Group employees will participate in
the profit related share appropriation under the FirstBus ESOP in respect of
the year beginning 1st April 1997. This FirstBus share appropriation to
Citybus Group employees is expected to take place in the summer of 1998.
Irrevocable undertakings
Irrevocable undertakings to accept, or procure the acceptance of, the Offer
have been received from the directors of Citybus who hold Citybus shares in
respect of their beneficial shareholdings, representing approximately 0.83 per
cent of issued Citybus shares and to cast, or procure the casting of the votes
attaching to those shares in favour of the Resolution.
Irrevocable undertakings have also been received from the EBTs to accept the
Offer, if the Resolution is passed, in respect of their shareholdings which
comprise approximately 42.84 per cent of issued Citybus shares. The EBTs have
also undertaken to vote in favour of the Resolution, if authorised to do so by
the terms of the Employee Ballot and to recommend employees to sanction the
passing of the Resolution.
Recommendation
The directors of Citybus consider that the acquisition of Citybus by FirstBus
is in the best interests of Citybus and the Citybus shareholders and
employees. The directors of Citybus consider the terms of the Offer to be
fair and reasonable.
Lyon Pilcher, Registered Auditors, have advised the directors of Citybus that
they consider the terms of the Offer to be fair and reasonable. In providing
the advice to the directors Lyon Pilcher have taken account of the directors'
commercial assessment of the Offer.
Accordingly, the directors of Citybus will unanimously recommend Citybus
shareholders to accept the Offer and to vote in favour of the Resolution, as
those directors who have beneficial shareholdings in Citybus have undertaken
to do.
General
The Offer Document will be despatched to Citybus shareholders as soon as
practicable. Application will be made to the London Stock Exchange for the
new FirstBus shares to be admitted to the Official List of the London Stock
Exchange and dealings are expected to commence on the day following the day on
which the Offer is declared unconditional in all respects (other than listing
becoming effective).
The definitions in Appendix III apply throughout this announcement unless the
context otherwise requires.
This announcement, for which FirstBus is responsible, has been approved by
Paull & Williamsons for the purpose of section 57 of the Financial Services
Act 1986. It does not constitute an offer or invitation to purchase any
securities.
ENQUIRIES
FirstBus
Moir Lockhead (Group Chief Executive) Tel: 0171 291 0500
Tony Osbaldiston (Group Finance Director)
Frances Gibson Smith (Investor Relations)
Citybus
Bill Greening (Chairman) Tel: 01703 584321
Ian Phillips (Managing Director)
APPENDIX I
FirstBus plc
FURTHER TERMS AND CONDITIONS OF THE OFFER
Conditions of the Offer
The Offer is conditional on:
(a) valid acceptances being received by 3.00 p.m. on 28th July 1997 (or such
later time(s) and/or date(s) not being later than 5.00 pm on 29th August
1997 without the approval of the board of Citybus as FirstBus may decide)
in respect of not less than 90 per cent in nominal value of the Citybus
shares to which the Offer relates; for this purpose, the expression
"Citybus shares to which the Offer relates" means the aggregate of (i)
the Citybus shares which have been allotted as at the date of the Offer;
and (ii) any Citybus shares allotted after the date of the Offer but on
or before 28th July 1997 (or such later date or dates as FirstBus, may
decide), but excluding Citybus shares which at the date of the Offer are
held by FirstBus and/or its associates (within the meaning of section
430E of the Companies Act 1985) or which, at such date, FirstBus and/or
its associates have contracted to acquire, other than under a contract of
the type referred to in section 428(5) of that Act;
(b) the London Stock Exchange announcing its decision to admit to the
Official List of the London Stock Exchange the new FirstBus shares to be
issued under the Share Alternative and the admission of all such new
FirstBus shares becoming effective in accordance with the listing rules
made under Part IV of the Financial Services Act 1986;
(c) clearances being obtained from the Board of Inland Revenue, in terms
satisfactory to Citybus, in respect of the Offer under section 707 of the
Income and Corporation Taxes Act 1988 and under section 138 of the
Taxation of Chargeable Gains Act 1992;
(d) the passing at an extraordinary general meeting of the Citybus
shareholders (or at any adjournment thereof) of the Resolution in the
form of those set out in the notice of meeting at the end of the Offer
Document or of a resolution in such other form as FirstBus and the board
of Citybus may agree;
(e) save as disclosed in writing to FirstBus, there being no provision of any
arrangement, agreement, licence or other instrument to which any member
of the Citybus Group or any partnership, joint venture or company in
which any member of the Citybus Group is interested (an 'associate') is a
party or by or to which any such member or associate or any of their
assets may be bound or entitled or be subject, which would, or is likely
to, as a consequence of the making or implementation of the Offer or the
proposed acquisition by FirstBus of the ordinary shares result in:
(i) any moneys borrowed by or other indebtedness of any such member
or associate becoming repayable or becoming capable of being
declared repayable immediately, or earlier than the maturity or
repayment date stated in such arrangement, agreement, licence or
instrument; or
(ii) any such arrangement, agreement, licence or other instrument
being terminated or modified, or any action being taken or any
onerous obligation arising thereunder; or
(iii) the business of any such member or associate or the
interests of any such members or associates in any other person (or
any arrangements relating to such business or interests) being
terminated or modified or affected; or
(iv) any such member or associate ceasing to be able to carry on
business under any name under which it presently does so; or
(v) any assets of any such member or associate being or falling to
be disposed of or charged otherwise than, in any such case, in the
ordinary course of business; or
(vi) the creation of any mortgage, charge or other security interest
over the whole or any material part of the business, property or
assets of any member of the Citybus Group, or any such mortgage,
charge or other security interest (whenever arising or having
arisen) becoming enforceable;
which in any such case would be material and adverse in the context of
the Citybus Group taken as a whole;
(f) save as disclosed in writing to FirstBus or in Part 6 of the Offer
Document, no member of the Citybus Group having since 31st December 1996
without the prior consent of FirstBus:
(i) made any alteration to its Memorandum or Articles of
Association;
(ii) issued or authorised or proposed the issue of additional shares
of any class, or securities convertible into, or rights warrants or
options to subscribe for or acquire, any such shares or convertible
securities or any loan capital or redeemed, purchased or reduced any
part of its share capital;
(iii) declared, paid or made or proposed to declare, pay or make
any dividend or other distribution, whether payable in cash or
otherwise (other than dividends payable by wholly owned subsidiaries
of Citybus) except for the Special Dividend;
(iv) authorised or proposed or announced an intention to propose any
merger or demerger or acquisition or disposal of assets or shares
(other than in the ordinary course of business) which is or would be
material in the context of the Citybus Group taken as a whole;
(v) issued or proposed the issue of any debentures or other
securities or, save in the ordinary course of business and, save for
intra-group transactions, incurred or increased any indebtedness or
contingent liability of an aggregate amount which is or would be
material in the context of the Citybus Group, taken as a whole;
(vi) disposed of or transferred, mortgaged or encumbered any assets
or any right, title or interest in any asset other than in the
ordinary course of business and where such disposal, transfer,
mortgage or encumbrance is or would be material in the context of
the Citybus Group, taken as a whole;
(vii) entered into any reconstruction, amalgamation or scheme of
arrangement;
(viii) entered into any transaction, commitment or contract
(whether in respect of capital expenditure or otherwise) which is of
a long term, onerous or unusual nature or is outside the ordinary
course of business and which is or is likely to be material and
adverse in the context of the Citybus Group taken as a whole or
which involves or is likely to involve an obligation of a nature or
magnitude which is or is likely to be material and adverse in the
context of the Citybus Group taken as a whole;
(ix) entered into, or varied the terms of, any service agreement
with any of the directors of Citybus or any of its subsidiaries; or
(x) entered into any contract, commitment or agreement with respect
to any of the transactions or events referred to in this paragraph
(f), or passed any resolution in general meeting to sanction,
approve or implement any such transaction or event;
(g) save as disclosed in Part 6 of the Offer Document:
(i) no litigation, arbitration, prosecution or other legal
proceedings having been instituted or threatened or remaining
outstanding against or by any member of the Citybus Group (whether
as plaintiff or defendant or otherwise) which, in any of the
foregoing cases, are material in the context of the Citybus Group
taken as a whole;
(ii) no contingent liability having arisen since 31st December 1996
which, if it became an actual liability, would be likely materially
and adversely to affect the Citybus Group taken as a whole;
(iii) no person, firm or corporation having taken or threatened
any steps for the early repayment of any indebtedness by any member
of the Citybus Group which (in each case) would be likely to
materially affect the business, profits or prospects of any member
of the Citybus Group or having taken any steps to appoint a receiver
or administrative receiver in respect of any member of the Citybus
Group;
(iv) no order having been made or resolution passed or petition
presented for the winding up or administration of any member of the
Citybus Group or for the appointment of any liquidator, interim
liquidator, provisional liquidator, administrator, interim
administrator, judicial factor, interim judicial factor, manager or
trustee in respect of any member of the Citybus Group nor any
voluntary arrangement having been made or proposed in respect of any
member of the Citybus Group under the provisions of Part I of the
Insolvency Act 1986;
(v) no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or material modification of
any licence held by any member of the Citybus Group which is
necessary for the proper carrying on of its business and where such
withdrawal, cancellation, termination or material modification would
be likely to materially and adversely affect the Citybus Group taken
as a whole; and
(vi) there having been no destruction or loss of or damage to any
substantial part of the assets of the Citybus Group which is not
adequately covered by insurance and which would be likely to
materially and adversely affect the business of the Citybus Group
taken as a whole;
(h) no government or governmental, quasi-governmental, supra-national,
statutory or regulatory body or trade agency, or professional association
or any court or any other person or body in any jurisdiction having
(prior to the date by which all other conditions shall have been
fulfilled or waived) instituted, implemented or threatened any action,
proceedings, suit, investigation or enquiry or made or proposed any order
or decision that would or is likely to adversely affect in any material
respect the Citybus Group taken as a whole;
(i) FirstBus not having discovered that the financial or business information
contained in the written information disclosed to FirstBus at any time by
or on behalf of any member of the Citybus Group or by any of the
directors of Citybus either contains a material misrepresentation of fact
or omits to state a fact whose omission makes the information contained
therein materially misleading or that any contingent liability disclosed
in such information has crystallised in a manner which would materially
and adversely affect directly or indirectly the business, profits or
prospects of the Citybus Group, taken as a whole; and
(j) FirstBus not having discovered that the audited accounts for the year
ended 31st December 1996 do not give a true and fair view of the state of
affairs of the Citybus Group and of the profit of the Citybus Group for
the financial year ended on that date.
General
FirstBus reserves the right to waive all or any of the conditions (other than
conditions (b) and (d)), in whole or in part, save that condition (c) may only
be varied by FirstBus with the consent of the directors of Citybus. The Offer
will lapse unless it has become wholly unconditional by 5.00pm on 4th August
1997 or such later time and date (not being later than 5.00pm on 29th August
1997) without the approval of the board of Citybus as FirstBus may nominate.
Any determination by FirstBus concerning the events described above shall be
final and binding. The Offer will become unconditional in all respects only
when all the above condition are satisfied or waived. FirstBus will not
invoke and shall not fail to waive any conditions to the Offer so as to cause
the Offer to lapse unless there exist circumstances which give rise to the
right to invoke the relevant condition which are of material significance to
FirstBus in connection with the Offer.
APPENDIX II
FINANCIAL INFORMATION RELATING TO THE CITYBUS GROUP
1. Three Year Statement of financial results
Years ended 31 December
1996 1995 1994
Notes #000 #000 #000
Turnover 11,729 11,270 10,952
Operating costs (10,989) (10,415) (10,230)
____________ ___________ ___________
Operating profit 740 855 722
Exceptional items (i) 92 - -
___________ ___________ ___________
Profit/(loss) on ordinary
activities before interest 832 855 722
Net interest (257) (234) (198)
____________ ___________ ___________
Profit/(loss) on ordinary
activities before taxation 575 621 524
Taxation (55) (76) -
____________ ___________ ___________
520 545 524
Notes:
(i) Exceptional items:
Profit on disposal of
Red Ensign Coaches 92 - -
(ii) Dividends
No dividends were paid in any of the three years.
Under the buy-out agreement with Southampton City Council dated 21
December 1993, the Company was prohibited from paying any dividends until
the total deferred consideration of #900,000 had been repaid.
2. Balance sheet at 31 December 1996
#000 #000
Fixed assets
Tangible assets 6,898
Investments 25
_______
6,923
Current assets
Stocks 306
Debtors 1,042
Cash at bank and in hand 603
______
1,951
Creditors: amounts falling due within one year (2,420)
Net current liabilities (469)
_______
Total assets less current liabilities 6,454
Creditors: amounts falling due after more than
one year (3,133)
_______
Net assets 3,321
Capital and reserves
Called up share capital - equity 1,200
Reserve arising on consolidation 536
Profit and loss account 1,585
_______
Equity shareholders' funds 3,321
3. Basis of preparation
The financial information set out in this Appendix II has been extracted from
the audited statutory accounts of Citybus.
The financial information set out above does not constitute statutory accounts
within the meaning of section 240 of the Act. Statutory accounts dealing with
each of the financial years specified:
(a) have been filed with the Registrar of Companies; and
(b) have received an audit report by Lyon Pilcher which is unqualified and
does not contain any statement of the nature referred to in section
237(2) or 237(3) of the Act.
APPENDIX III
DEFINITIONS
The following definitions apply throughout this announcement unless the
context requires otherwise:
'Act' Companies Act 1985 (as amended)
'Citybus' or Southampton Citybus (1993) Limited
'the Company'
'Citybus Group' Citybus and its subsidiary undertakings
'Citybus shareholders' holders of Citybus shares
'Citybus shares' or the ordinary shares of #1 each in the capital of
Citybus
'EBTs' Southampton City Transport (EBT 1) Limited and
Southampton City Transport (EBT 2) Limited as
trustees of the Southampton Citybus (1993) Limited
Employee's Share Schemes
'Employee Ballot' the Employee Ballot (as defined in the Trust Deeds
establishing the EBTs) to be concluded by 22nd July
1997 in relation to the passing of the Resolution
'enlarged share capital' the issued share capital of FirstBus after the issue
of new FirstBus shares under the Share Alternative
'FirstBus' FirstBus plc
'FirstBus ESOP' the FirstBus plc Employee Share Ownership Plan
'FirstBus Group' FirstBus and its subsidiary undertakings
'FirstBus shares' ordinary shares of 5p each in the capital of FirstBus
'London Stock Exchange' London Stock Exchange Limited
'Lyon Pilcher' Lyon Pilcher, Registered Auditors, Park House, 102-
108 Above Bar, Southampton, SO14 7NH
'Offer' the offer to acquire all of the issued Citybus
shares, details of which are set out in Parts 2 and 4
of the Offer Document
"Offer Document" the document containing the Offer
'PST' the Southampton Citybus Profit Sharing Scheme,
constituted by a Trust Deed and Rules dated 4th
August 1995 between Citybus and W C Greening and W M
Cox
'PSV' public service vehicle or passenger carrying vehicle
'relevant securities' Citybus shares or debentures, FirstBus shares or
debentures and all investments falling within
paragraphs 4, 5 or 7 of Schedule 1 to the Financial
Services Act 1986 which relate to Citybus shares or
debentures or FirstBus shares or debentures
'Resolution' the special resolution, inter alia, to adopt new
articles of association to be proposed at the
extraordinary general meeting of Citybus to be held
on 30th July 1997
'SCT' Southampton City Transport Company Limited, a wholly-
owned subsidiary of Citybus
'Share Alternative' the alternative whereby accepting Citybus
shareholders may choose to receive new FirstBus
shares instead of some or all of the cash
consideration due to them, details of which are set
out in Parts 2 and 4 of the Offer Document
'Special Dividend' the dividend of 125p (net) per Citybus share (which,
for the avoidance of doubt excludes the associated
tax credit of 31.25p per Citybus Share) due to be
paid on 13th August 1997.
END
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