Pre-Annual General Meeting Information • Sep 22, 2010
Pre-Annual General Meeting Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, another appropriately authorised independent financial adviser in your own jurisdiction.
If you have sold or otherwise transferred, or sell or transfer before 4.30pm on 8 October 2010, all of your Existing Ordinary Shares, please forward this document (but not the personalised Form of Proxy and Election Form) as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. However, such documents should not be distributed, forwarded or transmitted in or into any jurisdiction in which such an act would constitute a breach of the relevant laws of such jurisdiction.
Investec, which is authorised and regulated by the Financial Services Authority, is acting exclusively for Dignity plc and noone else in connection with the contents of this document and will not be responsible to anyone other than Dignity plc for providing the protections afforded to clients of Investec or for providing advice in relation to the Return of Cash or any other matter referred to herein.
Application will be made to the UK Listing Authority and the London Stock Exchange, respectively, for the New Ordinary Shares resulting from the proposed Share Capital Consolidation to be admitted to the Financial Services Authority's Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that dealings in the Existing Ordinary Shares will continue until 4.30pm on 8 October 2010 and that Admission of the New Ordinary Shares will become effective and dealings in them will commence on the London Stock Exchange at 8.00am on 11 October 2010.
Part 11 contains the definitions of terms used in this document. All times are London times.
(incorporated in England and Wales under number 04569346)
Notice of General Meeting
This document should be read as a whole. Your attention is drawn to the letter from the Chairman of Dignity plc, which is set out on pages 5 to 13 of this document and which recommends that you vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out in part 12 of this document.
A summary of the action to be taken by Shareholders is set out on page 12 of this document. If Shareholders have any queries in relation to the action to be taken they may call the Shareholder helpline on 0871 384 2050 (+44 121 415 0259 if calling from outside the United Kingdom) between 8.30am and 5.30pm on any Business Day. Please note that calls may be monitored or recorded and the Shareholder helpline will not provide advice on the merits of the Alternatives or give any financial or tax advice. Calls to 0871 384 2050 are charged at 8p per minute from a BT landline. Other service providers' costs may vary. Calls to +44 121 415 0259 from outside the United Kingdom are charged at applicable international rates.
None of the B Shares, C Shares, Deferred Shares nor the New Ordinary Shares have been or will be registered under the US Securities Act or the state securities laws of the United States and none of them may be offered or sold in the United States unless pursuant to a transaction that has been registered under the US Securities Act and the relevant state securities laws or that is not subject to the registration requirements of the US Securities Act or such laws, either due to an exemption therefrom or otherwise. Alternatives 2 and 3 are not being offered to US Holders.
None of the B Shares, C Shares, Deferred Shares, New Ordinary Shares nor this document have been approved, disapproved or otherwise recommended by any US federal or state securities commission or other regulatory authority or any non-US securities commission or regulatory authority nor have any such authorities confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offence in the United States.
Whether or not you plan to attend the General Meeting in person, please:
The completion and return of the Form of Proxy, electronic submission of your proxy or transmission of a CREST Proxy Instruction will not prevent you from attending the General Meeting and voting in person (in substitution for your proxy vote) if you so wish and are so entitled.
Under the Return of Cash, Shareholders will be able to choose between three Alternatives as to how they receive their proceeds from the Return of Cash and the timing of such return. An Election Form for use by Shareholders (with the exception of Shareholders who hold their Existing Ordinary Shares in CREST) in connection with the Alternatives is enclosed with this document. Please complete and return the Election Form in the prepaid envelope provided so as to be received by Equiniti by no later than 4.30pm on 8 October 2010. If Shareholders do not use the envelope provided, the Election Form should be sent to Equiniti, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA and postage will be payable, or delivered by hand to Equiniti at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA. Full details on how to complete and return the Election Form are set out in part 4 of this document. Replacement Election Forms may be obtained from Equiniti by calling the Shareholder helpline referred to below.
Shareholders who hold their Existing Ordinary Shares in CREST will not be sent Election Forms and may only elect in respect of the Alternatives through CREST by giving an appropriate TTE Instruction. Please refer to paragraph 4 of part 10 of this document for further information.
A summary of the action to be taken by Shareholders is set out on page 12 of this document.
If Shareholders have any queries in relation to the Form of Proxy, transmittal of electronic proxies, CREST Proxy Instructions, the Election Form or TTE Instructions, they may call the Shareholder helpline on 0871 384 2050 (+44 121 415 0259 if calling from outside the United Kingdom) between 8.30am and 5.30pm on any Business Day. Please note that calls may be monitored or recorded and the Shareholder helpline will not provide advice on the merits of the Alternatives or give any financial or tax advice. Calls to 0871 384 2050 are charged at 8p per minute from a BT landline. Other service providers' costs may vary. Calls to +44 121 415 0259 from outside the United Kingdom are charged at applicable international rates.
| Part 1: Letter from the Chairman of Dignity plc 5 | |
|---|---|
| Part 2: Expected timetable of key events 14 | |
| Part 3: Frequently asked questions with answers 15 | |
| Part 4: Completing your Election Form 18 | |
| Part 5: Details of the Return of Cash 20 | |
| Part 6: Rights and restrictions attached to the B Shares 31 | |
| Part 7: Rights and restrictions attached to the C Shares 34 | |
| Part 8: Rights and restrictions attached to the Deferred Shares 39 | |
| Part 9: United Kingdom taxation in relation to the Return of Cash 41 | |
| Part 10: Additional information 46 | |
| Part 11: Definitions 51 | |
| Part 12: Notice of General Meeting 55 |
| Peter Hindley | (Non-Executive Chairman) |
|---|---|
| Mike McCollum | (Chief Executive) |
| Steve Whittern | (Finance Director) |
| Andrew Davies | (Operations Director) |
| Richard Portman | (Corporate Services Director) |
| James Newman | (Senior Independent Director) |
| William Forrester | (Non-Executive Director) |
| Ishbel Macpherson | (Non-Executive Director) |
| Alan McWalter | (Non-Executive Director) |
Plantsbrook House 94 The Parade Sutton Coldfield West Midlands B72 1PH
22 September 2010
To Shareholders and, for information only, to participants in the Dignity Share Schemes
On 20 September 2010, the Directors announced that they proposed, subject to Shareholder approval, to return approximately £63.9 million to Shareholders, equating to £1.00 per Existing Ordinary Share.
The Return of Cash is being made using a structure which gives Shareholders a choice as to when and in what form they receive their proceeds from the Return of Cash. The Return of Cash gives Shareholders the option to receive the cash as capital or as income by electing to receive either B Shares or C Shares.
Shareholder approval is being sought for the proposed Return of Cash, together with certain other matters including proposed amendments to the Articles of Association, at a General Meeting to be held at DLA Piper UK LLP, Victoria Square House, Victoria Square, Birmingham B2 4DL at 11.00am on 8 October 2010. The notice of General Meeting is set out in part 12 of this document.
The Board has resolved, given the proposed Return of Cash, to cancel the interim dividend of 4.43 pence per Existing Ordinary Share, declared on 30 July 2010 and which would otherwise have been payable on 29 October 2010. The Board anticipates resuming dividend payments following the Return of Cash, with the 2010 final dividend payable in June 2011.
The purpose of this document is to explain, and seek Shareholder approval of, the Return of Cash and to explain the choices available to Shareholders and how to decide between them.
If approval for the proposed Return of Cash is not given by Shareholders, the Return of Cash will not be implemented.
Shareholders should read the whole of this document and not just rely on the summarised information set out in this letter.
The aim of the Return of Cash is to establish a more efficient capital structure for the Company and the Group as a whole, reducing the overall cost of capital and generating Shareholder value. The Directors are actioning this by increasing the relative proportion of debt finance to equity capital of the Company. The Directors successfully completed a similar transaction whereby there was an increase in the relative proportion of the Company's debt finance to equity finance, by way of a return of cash to shareholders, in 2006.
The Return of Cash is being funded out of the net proceeds of the Tap Issue, which is expected to be completed on 27 September 2010. If for any reason the Tap Issue is not completed then the Return of Cash will not be implemented and the General Meeting will be cancelled. In determining that the majority of the Tap Proceeds should be used to return cash to Shareholders, the Directors of the Company have had regard to the current balance sheet strength of the Group. In particular, the Directors consider that: acquisitions, in the ordinary course of business can be funded from remaining cash resources (including that part of the Tap Proceeds which are being retained); there is no material capital expenditure that could not be met by the Group's normal cash flow; there are no external debts that could be repaid without the Company incurring an early payment penalty; and it would not be appropriate for the Tap Proceeds to be left in the business as there is no identified use for it. Certain of the Tap Proceeds will not be returned to Shareholders, as they are to be retained for general corporate purposes and a contribution of £1 million is to be made into the Company's final salary pension scheme.
As a consequence of the Tap Issue, and if the Return of Cash is approved by Shareholders and implemented, the Group will have indebtedness that is more substantial than at present in relation to its Shareholders' equity. As a consequence, and without the benefit of the Tap Proceeds, the majority of which will have been returned to Shareholders, the Group will have to maintain and/or generate sufficient cash balances to ensure the Group can service its increased debt. The Directors believe the Company will be able to service this level of debt.
If the Return of Cash is not implemented, as set out in the paragraph above, the Group has no other identified use for the majority of the Tap Proceeds.
The Board has resolved to cancel the interim dividend of the Company of 4.43 pence per Existing Ordinary Share, declared on 30 July 2010 and which would otherwise be payable on 29 October 2010. The Board anticipates resuming dividend payments following the Return of Cash, with the 2010 final dividend payable in June 2011.
The proposed Return of Cash will return £1.00 per Existing Ordinary Share to Shareholders. This represents approximately £63.9 million in total.
Under the terms of the proposed Return of Cash, Shareholders will receive:
The main features of the Return of Cash, and the choices available to Shareholders, are summarised in paragraph 4 below.
The Existing Ordinary Shares will be replaced by New Ordinary Shares in order to reduce the number of Ordinary Shares in issue to reflect the Return of Cash. Subject to normal market movements, this is intended to make the market price per Ordinary Share and other Company data such as earnings and dividends per Ordinary Share comparable before and after the Return of Cash. New Ordinary Shares will be traded on the London Stock Exchange in the same way as Existing Ordinary Shares and will be equivalent in all material respects to the Existing Ordinary Shares, including in respect of their dividend, voting and other rights. Admission is expected to take effect from 8.00am on 11 October 2010. It is expected that share certificates representing the New Ordinary Shares will be sent to Shareholders who hold their Existing Ordinary Shares in certificated form by 15 October 2010, and the CREST accounts of Shareholders who hold their Existing Ordinary Shares in uncertificated form will be credited with New Ordinary Shares at approximately 8.00am on 11 October 2010.
Based on the closing middle market price of 711 pence per Existing Ordinary Share on 20 September 2010 (being the day of the announcement of the proposed Return of Cash), the proposed Return of Cash equates to approximately 14 per cent. of the Company's market capitalisation at that date. Further information on the Share Capital Consolidation, and any fractional entitlements to New Ordinary Shares that may result, is set out in paragraph 3 of part 5 of this document.
Each Shareholder will be able to choose between the Alternatives as to how the cash for each Existing Ordinary Share is received. Shareholders will not be able to combine Alternatives. Shareholders should read part 9 "United Kingdom taxation in relation to the Return of Cash" since these alternatives will have different UK tax consequences.
Further details of the Alternatives are set out in part 5 of this document.
Unless you are a US Holder, and subject to paragraph 10 of part 5 of this document in relation to other overseas shareholders, you may choose Alternative 1 (Income Option), Alternative 2 (Deferred Income Option) or Alternative 3 (Capital Option) in respect of your Share Entitlements. Only Alternative 1 (Income Option) is being offered to US Holders.
The cash is delivered under Alternative 1 (Income Option) as follows:
The C Share Single Dividend of 100 pence per C Share will generally be treated as income for UK tax purposes.
The C Share Single Dividend is expected to be declared on 11 October 2010. It is expected that Shareholders who elect, or who are deemed to have elected, for Alternative 1 (Income Option) will be sent a cheque, or, if mandated instructions held, their bank account credited, in respect of the C Share Single Dividend on 15 October 2010.
No share certificates will be issued in respect of, and no CREST accounts will be credited with, the C Shares in respect of which the C Share Single Dividend is declared, or in respect of the Deferred Shares, and neither the C Shares nor the Deferred Shares will be listed or traded on the London Stock Exchange or on any other recognised investment exchange. The Deferred Shares will have extremely limited economic rights, no rights to vote and negligible value. The Company will have the right to acquire compulsorily all Deferred Shares in issue for an aggregate consideration of one penny. It is currently expected that the Company will purchase and then cancel the Deferred Shares before the end of January 2011.
The rights and restrictions to be attached to the C Shares and the Deferred Shares are set out in parts 7 and 8 of this document.
The cash is delivered under Alternative 2 (Deferred Income Option) as follows:
The Compulsory Purchase Procedure will result in holders of the relevant C Shares receiving 100 pence per C Share, which will be in addition to the C Share Continuing Dividend (accruing on a daily basis from 15 October 2010) payable in relation to such C Shares. It is expected that the C Shares will be purchased by the Company pursuant to the Compulsory Purchase Procedure before 31 July 2011, on completion of which the holders of the relevant C Shares will receive the Compulsory Purchase Consideration and such proportion of the C Share Continuing Dividend as has accrued from 15 October 2010.
The C Share Continuing Dividend and the Compulsory Purchase Procedure Consideration in excess of the nominal value of the C Shares will generally be treated as income for UK tax purposes.
C Share certificates will be issued to Shareholders who hold their Existing Ordinary Shares in certificated form, and the CREST accounts of shareholders who hold their Existing Ordinary Shares in uncertificated form will be credited with C Shares, to the extent that such Shareholders receive C Shares pursuant to elections for Alternative 2 (Deferred Income Option). These C Shares will not be listed or traded on the London Stock Exchange or on any other recognised investment exchange.
The rights and restrictions to be attached to the C Shares are set out in part 7 of this document. Details of the Compulsory Purchase Procedure are set out in paragraph 9 of part 5 and in part 7 of this document.
The Compulsory Purchase procedure is not applicable to the United States and Alternative 2 (Deferred Income Option) will not be available to US Holders.
The cash is delivered under Alternative 3 (Capital Option), as follows:
The proceeds received on the redemption of the B Shares, or the anticipated sale of the C Shares to Investec pursuant to the Purchase Offer, will generally be treated as capital for UK tax purposes.
It is proposed to capitalise sums in aggregate not exceeding £35,800,000 standing to the credit of the Company's share premium account by paying up B Shares in full up to a maximum of 35,800,000 B Shares. If more than 35,800,000 B Shares are required to satisfy the elections made by Shareholders there will be insufficient share premium account to effect the allotment of further B Shares. In respect of any additional requirements for B Shares under Alternative 3 (Capital Option) the Company will satisfy the element of the election that cannot be met by B Shares by paying up, issuing and allotting C Shares. C Shares will also be paid up in full by capitalising an appropriate amount of the sum standing to the credit of the Company's share premium account. The Company will be able to do this as the C Shares will have a lower nominal value, at 0.01 pence, than the B Shares, which will have a nominal value of 100 pence.
If the number of B Shares in respect of which valid elections are received exceeds the maximum number of B Shares that can be issued, elections for B Shares will be scaled back pro rata (as nearly as may be) to the number of B Shares which each Shareholder elects to receive, and the element of the election for Alternative 3 (Capital Option) which cannot be satisfied by B Shares will instead result in Shareholders receiving C Shares.
C Shares received under Alternative 3 (Capital Option) are expected to be sold to Investec with Shareholders who receive C Shares being deemed to have accepted the Purchaser Offer. The Purchase Offer is expected to result in Shareholders receiving 99 pence per C Share purchased. This will result in Shareholders, who are deemed to have elected to sell their C Shares under Alternative 3 (Capital Option), receiving marginally less for each C Share issued when compared to the amount received by Shareholders by way of redemption of the B Shares issued under the same Alternative. This is due to the fact that in the event that elections for B Shares have to be scaled back, those Shareholders who elect for Alternative 3 (Capital Option) and receive B Shares and C Shares, will, to the extent they receive C Shares, be required to bear (pro rata) the stamp duty taxes incurred by the Company and Investec in relation to the share purchases that are expected to be completed pursuant to the Purchase Offer and under the Put Option Agreement. These costs will be reflected in the price to be paid by Investec for the C Shares, pursuant to the Purchase Offer, which is expected to result in a marginally reduced payment of 99 pence per C Share.
If the Company has to allot and issue C Shares under Alternative 3 then all Shareholders will be treated equally so that each Shareholder will receive the same proportion of B Shares and C Shares. If the proportion of B Shares or C Shares to which a Shareholder is entitled would result in a fractional entitlement to a B Share or C Share, the number of B Shares to which a Shareholder is entitled will be reduced down to the nearest whole number and the number of C Shares will be rounded up accordingly.
The B Shares will be redeemed automatically on the B Share Redemption Date and it is expected that any C Shares issued under Alternative 3 (Capital Option), which Shareholders are deemed to have elected to sell to Investec pursuant to the Purchase Offer, will be sold to Investec on 11 October 2010. It is expected that Shareholders who elect for Alternative 3 (Capital Option) will be sent a cheque in respect of the redemption of the B Shares and a separate cheque in respect of the sale proceeds of the C Shares (if appropriate), or if mandated instructions held, their bank account credited, or if they are a CREST participant be paid via CREST, in respect of the redemption of the B Shares and/or in respect of the sale proceeds of the C Shares on 15 October 2010.
No share certificates will be issued in respect of, and no CREST account will be credited with, B Shares or C Shares that are issued under Alternative 3 (Capital Option), and no B Shares or C Shares will be listed or traded on the London Stock Exchange or on any other recognised investment exchange.
Further details of the rights and restrictions to be attached to the B Shares and the C Shares are set out in parts 6 and 7 of this document. Details of the Purchase Offer are set out in paragraph 8 of part 5 and paragraph 5 of part 10 of this document.
Alternative 3 (Capital Option) will not be available to US Holders.
Details of how to complete and return an Election Form are set out in part 4 of this document.
The effect of the Share Capital Consolidation should be broadly to preserve the value of the Ordinary Shares under option or award immediately before the Return of Cash, subject to normal market fluctuations. Consequently no adjustments are proposed, following the Return of Cash, to be made to options or awards that have been made under the Dignity Share Schemes.
Further details of the implications of the Return of Cash on options or awards that have been made under the Dignity Share Schemes are set out in paragraph 12 of part 5 of this document.
Six Resolutions will be proposed at the General Meeting. Resolutions 1, 4, 5 and 6 will be proposed as special resolutions (the passing of which require at least 75 per cent. of the votes cast to be in favour), and Resolutions 2 and 3 will be proposed as ordinary resolutions (the passing of which require more than 50 per cent. of the votes cast to be in favour).
This Resolution is conditional on Admission and seeks to:
Shareholder approval is required for Resolution 1 in order to comply with the provisions of the Act.
This Resolution is conditional on the passing of Resolution 1 and on Admission and sets out the mechanics of the Return of Cash:
on the basis of one B Share or one C Share for each Existing Ordinary Share held on the Record Date. The authority granted to the Directors will expire at the conclusion of the next annual general meeting or 8 January 2012 (whichever is earlier).
Shareholder approval is required for Resolution 2 in order to comply with the provisions of the Act and to comply with the current Articles of Association.
This Resolution is conditional on the passing of Resolutions 1 and 2 and Admission and sets out the procedure by which the Directors intend to consolidate and sub-divide the Existing Ordinary Shares into New Ordinary Shares. All fractional entitlements which arise will be aggregated and sold on behalf of the Shareholders entitled to them with any net proceeds in excess of £3 distributed in due proportion to them. The proceeds of sale from fractional entitlements not exceeding £3 will be retained by the Company.
Shareholder approval is required for Resolution 3 in order to comply with the provisions of the Act.
This Resolution is conditional on the passing of Resolutions 1, 2 and 3 and Admission and approves the terms of the proposed contract between Investec and the Company under which Investec will be entitled to require the Company to repurchase the C Shares acquired by Investec pursuant to the Purchase Offer at 100 pence per C Share. Such authority will expire on 8 January 2012.
Shareholder approval is required for Resolution 4 in order to comply with the provisions of the Act.
This Resolution is conditional on the passing of Resolutions 1, 2, 3 and 4 and seeks to adopt new Articles of Association to take effect on 1 August 2011, the effect of which will be to remove the rights attaching to the B Shares, C Shares and Deferred Shares at such point when there are no longer any B Shares, C Shares or Deferred Shares in issue.
Shareholder approval is required for Resolution 5 in order to comply with the provisions of the Act.
This resolution is conditional on the passing of Resolutions 1, 2 and 3 and Admission and sets out the procedure by which the Company intends to sub-divide and redesignate the existing deferred share of £0.04 (which was created following the last return of cash by the Company in 2006) into Deferred Shares.
Shareholder approval is required for Resolution 6 in order to comply with the provisions of the Act.
You will find enclosed with this document a Form of Proxy for use at the General Meeting and an Election Form in respect of your Share Entitlements.
Whether or not you propose to attend the meeting, you are requested to complete and sign the enclosed Form of Proxy and return it, in accordance with the instructions printed on it, to the Company's registrars, Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6ZX so as to be received as soon as possible and, in any event, by not later than 11.00am on 6 October 2010. Completion and return of the Form of Proxy will not prevent you from attending the meeting and voting in person should you wish to do so.
If you wish to elect for Alternative 2 (Deferred Income Option) or Alternative 3 (Capital Option) in respect of your Share Entitlement, you should complete the Election Form, opting for one of the Alternatives. Your Election Form should be received by the Company's registrars, Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6ZX completed correctly, as soon as possible and, in any event, by not later than 4.30pm on 8 October 2010. You do not have to complete and return an Election Form in respect of Alternative 1 (Income Option), which is the default option.
If you do not properly complete and return an Election Form or TTE Instruction so as to be received by the Company's registrar, Equiniti as set out above, you will be deemed to have chosen Alternative 1 (Income Option) and, accordingly, you may only receive
If you are in any doubt as to how to complete the Form of Proxy or Election Form please contact Equiniti on 0871 384 2050 (or +44 121 415 0259 if calling from outside the United Kingdom) between 8.30am to 5.30pm on any Business Day. Please note that calls may be monitored or recorded and Equiniti will not be able to provide advice on the merits of the Return of Cash or the Alternatives nor give any financial advice. For financial advice, including taxation advice, you will need to consult your own independent professional adviser. Calls to 0871 384 2050 are charged at 8p per minute from a BT landline. Other service providers' costs may vary. Calls to +44 121 415 0259 from outside the United Kingdom are charged at applicable international rates.
The Board is of the opinion that the Return of Cash and each of the Resolutions are in the best interests of Shareholders as a whole. Accordingly, the Board unanimously recommends that you vote in favour of such Resolutions, as the Directors intend to do in respect of their own beneficial holdings amounting in aggregate to 881,812 Existing Ordinary Shares representing approximately 1.38 per cent of the current issued share capital of the Company.
Yours faithfully
Peter Hindley Non-Executive Chairman
| 2010 | ||
|---|---|---|
| Latest time and date for receipt of Forms of Proxy, electronic proxy instructions or CREST Proxy Instructions for the General Meeting |
11.00am on 6 October | |
| General Meeting | 11.00am on 8 October | |
| Latest time and date for dealings in Existing Ordinary Shares | 4.30pm on 8 October | |
| Latest time for receipt of Election Forms and TTE instructions from CREST holders in relation to the Alternatives |
4.30pm on 8 October | |
| Record Date for the Capital Reorganisation and the Return of Cash. Existing Ordinary Shares register closed and Existing Ordinary Shares disabled in CREST |
6.00pm on 8 October | |
| New Ordinary Shares admitted to the Official List and to trading on the London Stock Exchange's market for listed securities |
8.00am on 11 October | |
| Dealings in the New Ordinary Shares commence and enablement in CREST. New Ordinary Shares credited to CREST accounts |
8.00am on 11 October | |
| C Share Single Dividend declared on C Shares issued in respect of the election for Alternative 1 (Income Option) and those C Shares convert automatically into Deferred Shares |
11 October | |
| Investec makes the Purchase Offer by means of an announcement on the Regulatory News Service of the London Stock Exchange |
11 October | |
| Redemption of B Shares | 11 October | |
| Cheques issued or, if mandated instructions held, bank accounts credited or (with the exception of the C Share Single Dividend, which will be paid by cheque or by crediting bank accounts) if held in CREST, CREST accounts credited in respect of the C Share Single Dividend, the redemption of the B Shares and/or purchase of the C Shares by Investec, as appropriate, and fractional entitlements, together with tax vouchers |
15 October | |
| CREST accounts credited in respect of C Shares retained | 15 October | |
| Despatch of New Ordinary Share certificates and retained C Share certificates |
15 October |
Notes
References to times in this document are to London time.
If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on the Regulatory News Service of the London Stock Exchange.
This part of the document sets out some commonly asked questions and provides brief answers. Shareholders should read and rely on the whole of this document and not just the frequently asked questions with answers.
If Shareholders have any further questions, they may call the Shareholder helpline on 0871 384 2050 (+44121 415 0259 if calling from outside the United Kingdom) between 8.30am and 5.30pm on any Business Day. Please note calls may be monitored or recorded and that the Shareholder helpline will not provide advice on the merits of the Alternatives or give any financial or tax advice. Calls to 0871 384 2050 are charged at 8p per minute from a BT landline. Other service providers' costs may vary. Calls to +44 121 415 0259 from outside the United Kingdom are charged at applicable international rates.
Dignity is expected to complete the Tap Issue on 27 September 2010. Dignity announced on 20 September 2010 that it intended to return the majority of the Tap Proceeds to Shareholders and this is now being undertaken. The aim of the Return of Cash is to establish a more efficient capital structure for the Company and the Group as a whole, reducing the overall cost of capital and generating Shareholder value.
We have chosen a method which we believe represents the most efficient and effective way to return cash to Shareholders. The proposed Return of Cash is intended to give Shareholders the flexibility to receive their cash as capital or income both for tax purposes or otherwise.
The proposed Return of Cash involves a Share Capital Consolidation whereby the Existing Ordinary Shares will be consolidated, reducing the number of ordinary shares that all Shareholders will hold. As a result of the Share Capital Consolidation, for every 7 Existing Ordinary Shares held at the Record Date, you will receive 6 New Ordinary Shares and, if applicable (and for amounts of £3 or more only), cash representing any fractional entitlement to a New Ordinary Share. Any fractional entitlement which results in amounts of less than £3 will be retained by the Company. The Share Capital Consolidation ratio has been determined by reference to a price of 712.4 pence per Existing Ordinary Share, being the average middle market closing price per Existing Ordinary Share, as derived from the Daily Official List for the five working days ended 20 September 2010, the last practicable date prior to the date of publication of this document.
We appreciate that the proposals can seem complicated. The structure is similar to that used by other listed companies to return cash to shareholders. They are intended to provide all Shareholders with an equal opportunity to participate in receiving the cash and to allow them to choose (subject to the restriction for US Holders set out in paragraph 10 of part 5 of this document) the Alternative that best suits their own circumstances, including their own tax position.
All Shareholders, with the exception of US Holders, have three choices. Further details of these choices are set out in paragraph 4 of part 1 and paragraph 4 of part 5 of this document.
A summary of the UK tax implications of the Return of Cash is set out in part 9 of this document.
Shareholders can vote by filling in and returning the enclosed Form of Proxy to Equiniti or by submitting a proxy electronically as set out on page 2. The Board recommends that Shareholders vote in favour of the Return of Cash. Shareholders are strongly urged to complete, sign and return the enclosed Form of Proxy or submit an electronic proxy as soon as possible, so as to be received by Equiniti not later than 11.00am on 6 October 2010.
Alternatively, Shareholders can vote in person by attending the General Meeting, which will be held at 11.00am on 8 October 2010 at DLA Piper UK LLP, Victoria Square House, Victoria Square, Birmingham B2 4DL. Notice of the General Meeting is set out in part 12 of this document.
Yes, unless you wish to elect for Alternative 1 (Income Option). If Shareholders do not complete and return the Election Form (or if an invalid election is made or a Shareholder fails to sign the Election Form) they will be deemed to have elected for Alternative 1 (Income Option) in respect of all of their Share Entitlement.
Shareholders should indicate their choice by completing and signing the enclosed Election Form and returning it so as to be received by Equiniti by not later than 4.30pm on 8 October 2010. Instructions on how to complete the Election Form are printed on the form itself.
Shareholders who hold their Existing Ordinary Shares in CREST will not be sent an Election Form. They will, however, be able to make their election by way of a TTE Instruction through the CREST system to be received by Equiniti by not later than 4.30pm on 8 October 2010. Further information for Shareholders who hold their Existing Ordinary Shares in CREST is contained in paragraph 4 of part 10 of this document.
If Shareholders do not complete and return a valid Election Form so as to be received by Equiniti by 4.30pm on 8 October 2010 or, if they are a CREST Shareholder and do not send a valid TTE Instruction for settlement by 4.30pm on 8 October 2010, they will be deemed to have elected for Alternative 1 (Income Option).
It is expected that share certificates representing the New Ordinary Shares will be sent to Shareholders who hold their Existing Ordinary Shares in certificated form by 15 October 2010. Share certificates are sent to Shareholders at their own risk. Dealings in the New Ordinary Shares is expected to commence on 11 October 2010 and Shareholders will be able to trade their New Ordinary Shares in the normal manner prior to receipt by them of their new share certificates.
It is expected that the CREST accounts of Shareholders who hold their Existing Ordinary Shares in CREST will be credited with New Ordinary Shares at approximately 8.00am on 11 October 2010.
Share certificates will not be issued for the C Shares issued pursuant to Alternative 1 (Income Option) or for the B Shares or C Shares issued pursuant to Alternative 3 (Capital Option). Share certificates will be issued in relation to the C Shares issued pursuant to Alternative 2 (Deferred Income Option). It is expected that share certificates, representing the C Shares issued pursuant to Alternative 2, will be sent to Shareholders who hold their Existing Ordinary Shares in certificated form by 15 October 2010.
Whilst the B Shares and C Shares are technically transferable, they will not be listed on any exchange and it is highly unlikely that an active market for them will develop or, if developed, be sustained.
If you need a replacement Election Form, you should call the Shareholder helpline on 0871 384 2050 (+44 121 415 0259 if calling from outside the United Kingdom) between 8.30am and 5.30pm on any Business Day. You will need to take into account the postal time necessary for a replacement Election Form to reach Equiniti by 4.30pm on 8 October 2010. Please note that calls may be monitored or recorded and that the Shareholder helpline will not provide advice on the merits of the Alternatives or give any financial or tax advice. Calls to 0871 384 2050 are charged at 8p per minute from a BT landline. Other service providers' costs may vary. Calls to +44 121 415 0259 from outside the United Kingdom are charged at applicable international rates.
The Election Form accompanies this document. Shareholders electing through CREST should not complete an Election Form but instead should refer to paragraph 4 of part 10 of this document.
Shareholders wishing to elect for Alternative 1 (Income Option) need NOT complete or return the Election Form. The C Share Single Dividend will be paid on all C Shares issued to a Shareholder who has not elected for Alternative 2 (Deferred Income Option) or Alternative 3 (Capital Option).
The following instructions set out what you should do when completing your Election Form. Any decisions you reach should be based on the information contained in this document.
References to Boxes refer to the boxes indicated on the Election Form.
The Election Form shows the name of the Shareholder, or names of joint Shareholders, and (for information only) the number of Existing Ordinary Shares held at 16 September 2010 (being the latest practicable time prior to the posting of this document) for which an election for Alternative 1 (Income Option), Alternative 2 (Deferred Income Option) or Alternative 3 (Capital Option) may be made. When the Election Form is completed the Shareholder, or all joint Shareholders, need to sign the Election Form and these signatures need to be witnessed (the witness must be over 18 years of age and cannot be the Shareholder or one of the joint Shareholders, although one person could separately witness the signature of all joint Shareholders). If the Election Form is executed under a power of attorney, such power of attorney should be lodged with the Election Form.
Box A on the Election Form shows the number of Existing Ordinary Shares held as at 16 September 2010. If you do not buy, sell or transfer any Existing Ordinary Shares between 16 September 2010 and 8 October 2010, then this number will also be the number of Existing Ordinary Shares that you will hold at the Record Date and may make an election for. If you do buy, sell or transfer any Existing Ordinary Shares you should take care to ensure that your election is in respect of the number of Existing Ordinary Shares that will be registered in your name(s) on 8 October 2010. The number of your Share Entitlements will equal the Existing Ordinary Shares registered in your name(s) on that date.
To choose Alternative 1 (Income Option) for your Share Entitlements you need to take no further action. You need not complete and return the Election Form. Shareholders who do not return the Election Form will automatically receive the C Share Single Dividend payment on all of their C Shares.
To choose Alternative 2 (Deferred Income Option) for your Share Entitlements you should tick Box 2. You will receive C Shares in respect of your Share Entitlements.
To choose Alternative 3 (Capital Option) for your Share Entitlements you should tick Box 3. You will receive B Shares (or in certain circumstances B Shares and C Shares) in respect of your Share Entitlements.
The Directors shall determine all questions as to the form and validity (including time and place of receipt) of any Election Form, in their absolute discretion, which determination shall be final and binding. The Directors also reserve the absolute right to waive any defect or irregularity in relation to, or in relation to the receipt of, any Election Form completed by or on behalf of any Shareholder, and such determination will be binding on such Shareholder. The Directors shall not be liable to Shareholders for any loss arising from the determination of questions as to the form and validity (including time and place of receipt) of any Election Form, unless attributable to their own wilful default or fraud and the Directors shall not be under any duty to give notification of any defect or irregularity in any Election Form or incur any liability for failure to give any such notice.
After the end of the Election Period, any election made is irrevocable. If the Election Period is extended, withdrawal rights will also be extended (withdrawal rights are described more fully in paragraph 15 of part 5 of this document). No authority conferred by or agreed to by the signing of an Election Form will be affected by, and all such authority will survive, the death or incapacity of the Shareholder executing such form or giving such instruction. All obligations of such Shareholder will be binding upon the heirs, personal representatives, successors and assigns of such Shareholder.
Once completed, signed and witnessed the Election Form should be returned in the reply-paid envelope provided. No stamps will be needed if posted in the UK. To be valid, Election Forms must be returned so as to be received by Equiniti by 4.30pm on 8 October 2010. If you do not use the envelope provided, the Election Form should be sent to Equiniti, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA (postage payable).
If you need assistance in completing the Election Form or have any queries relating to it, you should telephone the Shareholder helpline on 0871 384 2050 (or if calling from outside the United Kingdom on +44 121 415 0259) between 8.30am and 5.30pm on any Business Day. Please note that calls may be monitored or recorded and the Shareholder helpline will not provide advice on merits of the Return of Cash or give any financial or tax advice. Calls to 0871 384 2050 are charged at 8p per minute from a BT landline. Other service providers' costs may vary. Calls to +44 121 415 0259 from outside the United Kingdom are charged at applicable international rates.
The Return of Cash comprises the Alternatives (see paragraph 4 of this part 5) and the Capital Reorganisation (see paragraph 3 of this part 5).
The Return of Cash is conditional on:
If these conditions are not satisfied by 8.00am on 11 October 2010, or such other time and/or date as the Directors may determine, no New Ordinary Shares, B Shares or C Shares will be allotted and the Return of Cash and the Capital Reorganisation will not take effect.
In addition, Investec's obligation to make the Purchase Offer is subject to certain conditions and termination rights, as set out in paragraph 5 of part 10 of this document.
It is proposed that the Company capitalises a sum not exceeding £35,806,407.5399 standing to the credit of the Company's share premium account and to apply such sum in paying up in full up to a maximum of (i) 35,800,000 B Shares with a nominal value of 100 pence each, and (ii) 64,075,399 C Shares with a nominal value of 0.01 pence each.
The B Shares and the C Shares will be issued on the basis of one B Share or one C Share for each Existing Ordinary Share held at the Record Date (expected to be 6.00pm on 8 October 2010).
The exact number of B Shares and C Shares to be issued will depend on the elections made by each Shareholder between the Alternatives, but in total will be equal to the number of Existing Ordinary Shares held at the Record Date. As at 20 September 2010 (the latest practicable date prior to the publication of this document) there were 63,881,627 Existing Ordinary Shares in issue and currently exercisable options under the Dignity Share Schemes giving a right to subscribe for a total of 193,772 Existing Ordinary Shares.
The rights and restrictions to be attached to the B Shares and the C Shares are more fully set out in parts 6 and 7 of this document. No application has been, or will be, made for the B Shares or the C Shares to be admitted to listing on the Official List or admitted to trading on the London Stock Exchange's market for listed securities or any other recognised investment exchange. The Company will announce the exact number of B Shares and C Shares issued under the proposed Capital Reorganisation on or shortly following Admission of the New Ordinary Shares.
Under the Share Capital Consolidation, Shareholders will be entitled to receive 6 New Ordinary Shares for every 7 Existing Ordinary Shares held at the Record Date. This will be achieved by first sub-dividing each Existing Ordinary Share into 6 shares of 1.5 pence each and immediately consolidating every 7 of those shares into one New Ordinary Share. The New Ordinary Shares will have the same rights attaching to them as the Existing Ordinary Shares in all material respects including voting rights and rights to dividends. The nominal value of each New Ordinary Share will be 10.5 pence.
The intention of the Share Capital Consolidation is that (subject to normal market fluctuations) the market price of each New Ordinary Share immediately following the date of Admission should be approximately the same as the market price of each Existing Ordinary Share immediately prior to the implementation of the Share Capital Consolidation. New Ordinary Shares will be traded on the London Stock Exchange and will be equivalent in all material respects to Existing Ordinary Shares (with the exception of the difference in the nominal value). The effect of the Share Capital Consolidation will be to reduce the number of issued Ordinary Shares to reflect the return of 100 pence per Existing Ordinary Share, but Shareholders will own the same proportion of the Company as they did previously, subject to fractional entitlements.
Application will be made for the New Ordinary Shares to be admitted, with dealings expected to commence at 8.00am on 11 October 2010. The Company will apply for the New Ordinary Shares to be admitted to CREST with effect from Admission so that general market transactions in the New Ordinary Shares may be settled within the CREST system.
Share certificates representing the New Ordinary Shares will be issued following the Capital Reorganisation and are expected to be sent to Shareholders on or around 15 October 2010. Shareholders who hold their Existing Ordinary Shares in CREST will automatically have their New Ordinary Shares credited to their CREST accounts. The relevant CREST accounts are expected to be credited under the new ISIN GB00B4JZFN18 at approximately 8.00am on 11 October 2010.
A fractional entitlement will arise as a result of the Share Capital Consolidation unless a holding of Existing Ordinary Shares is exactly divisible by 7. For example, a Shareholder holding 100 Existing Ordinary Shares would, after the Share Capital Consolidation, be entitled to 85 New Ordinary Shares and a fractional entitlement to seven tenths of a New Ordinary Share.
These fractional entitlements will be aggregated into New Ordinary Shares and sold in the market on behalf of the relevant Shareholders and the proceeds of the sale will be distributed pro-rata to those Shareholders, except that amounts of less than £3.00 will be retained by the Company. Cheques for an amount of £3.00 or more in respect of the proceeds of sale of such fractional entitlements will be despatched (or, if mandated instructions are held, bank accounts credited) or CREST accounts will be credited with the proceeds, as appropriate, on 15 October 2010.
Shareholders may choose Alternative 1 (Income Option), Alternative 2 (Deferred Income Option) or Alternative 3 (Capital Option) in respect of their Share Entitlement. Details of how to make your choice are set out in part 4 of this document and in the enclosed Election Form. Shareholders who hold their Existing Ordinary Shares in CREST will not be sent an Election Form. Such Shareholders may only elect in respect of the Alternatives through CREST and should refer to paragraph 4 of part 10 of this document for further information.
Shareholders who do not complete and return a valid Election Form or TTE Instruction by 4.30pm on 8 October 2010 will be deemed to have elected for Alternative 1 (Income Option).
Shareholders are advised to read part 9 of this document (United Kingdom taxation in relation to the Return of Cash) before electing for any of the Alternatives.
Under Alternative 1 (Income Option), you will receive C Shares in respect of your Share Entitlement. Each C Share that you receive because you have elected, or have deemed to have elected, for Alternative 1 (Income Option) will entitle you to receive the C Share Single Dividend of 100 pence per C Share. This C Share Single Dividend is expected to be declared on 11 October 2010 and paid on 15 October 2010, following which all C Shares upon which the C Share Single Dividend has been declared will automatically convert into Deferred Shares of negligible value. It is currently expected that the Company will purchase and then cancel the Deferred Shares for an aggregate cash consideration of one penny before the end of January 2011. In view of its negligible amount, entitlement to the aggregate consideration of one penny will not be sent to individual Shareholders.
It is expected that Shareholders who elect, or who are deemed to have elected, for Alternative 1 (Income Option) will be sent a cheque, or if mandated instructions are held, have their bank accounts credited, in respect of the C Share Single Dividend on 15 October 2010.
Shareholders who wish to elect for Alternative 1 (Income Option) in respect of their Share Entitlement need take no further action and need not return their Election Form or send a TTE Instruction.
No share certificates will be issued in respect of, and no CREST accounts will be credited with, C Shares that are issued in respect of elections for Alternative 1 (Income Option), nor in respect of Deferred Shares, and neither the C Shares nor the Deferred Shares will be listed or traded on the London Stock Exchange or on any other recognised investment exchange. The Deferred Shares will have extremely limited economic rights, no rights to vote and negligible value.
The rights and restrictions attached to the C Shares and the Deferred Shares are set out in parts 7 and 8 of this document respectively. Your attention is drawn to part 9 of this document which explains the UK tax position if you elect for Alternative 1 (Income Option).
Under Alternative 2 (Deferred Income Option), you will receive C Shares in respect of your Share Entitlement. Shareholders who elect to receive C Shares under Alternative 2 (Deferred Income Option) will not be entitled to receive the C Share Single Dividend, but will retain their C Shares until the Company purchases them under the Compulsory Purchase Procedure. Until the C Shares are purchased under the Compulsory Purchase Procedure they will carry the C Share Continuing Dividend.
The Compulsory Purchase Procedure will result in holders of the relevant C Shares receiving 100 pence per C Share, which will be in addition to the C Share Continuing Dividend payable in relation to such C Shares. It is expected that the C Shares will be purchased by the Company pursuant to the Compulsory Purchase Procedure before 31 July 2011, on completion of which the holders of the relevant C Shares will receive the Compulsory Purchase Consideration and such proportion of the C Share Continuing Dividend as has accrued from 15 October 2010.
A C Share certificate will be issued to Shareholders who hold their Existing Ordinary Shares in certificated form, and the CREST accounts of Shareholders who holder their Existing Ordinary Shares in uncertificated form will be credited with C Shares, to the extent that such Shareholders receive C Shares pursuant to elections for Alternative 2 (Deferred Income Option). These C Shares will not be listed or traded on the London Stock Exchange or on any other recognised investment exchange.
The rights and restrictions attached to the C Shares are set out in part 7 of this document. Your attention is drawn to part 9 of this document which explains the UK tax position if you elect for Alternative 2 (Deferred Income Option).
The Compulsory Purchase Procedure is not applicable to the United States and Alternative 2 (Deferred Income Option) will not be available to US Holders.
Under Alternative 3 (Capital Option), you will receive B Shares and possibly some C Shares in respect of your Share Entitlement. The circumstances in which you may receive C Shares under this Alternative 3 (Capital Option) are described below.
It is proposed to capitalise a sum not exceeding £35,800,000 million standing to the credit of the Company's share premium account by paying up B Shares in full up to a maximum of 35,800,000 B Shares. B Shares which Shareholders receive under Alternative 3 (Capital Option) are redeemable and are expected to be redeemed at a price of 100 pence per B Share on 11 October 2010.
If elections under Alternative 3 (Capital Option) exceed the maximum number of B Shares, the Company will pay up, issue and allot sufficient C Shares to satisfy the Share Entitlement of Shareholders that cannot be satisfied with B Shares. C Shares will also be paid up in full by capitalising an amount standing to the credit of the Company's share premium account. The Company will be able to do this because C Shares will have a nominal value of 0.01 pence (one hundredth of a penny) each, which is lower than the B Shares, which will have a nominal value of 100 pence per B Share. The C Shares are not redeemable, and in any event under a redemption of C Shares the amount returned to Shareholders over and above nominal value would not be regarded as capital, and so it is expected that any C Shares issued to Shareholders electing for Alternative 3 (Capital Option) will be purchased by Investec pursuant to the Purchase Offer.
If the Company has to allot and issue C Shares to satisfy elections for Alternative 3 (Capital Option), then all Shareholders who elect for Alternative 3 (Capital Option) will be treated similarly so that each Shareholder will receive the same proportion (as nearly practical) of B Shares and C Shares. If the proportion of B Shares and/or C Shares to which a Shareholder is entitled would result in a fractional entitlement to a B Share or a C Share, the number of B Shares to which a Shareholder is entitled will be reduced down to the nearest whole number and the number of C Shares will be rounded up accordingly.
Shareholders who elect for Alternative 3 (Capital Option) and receive C Shares will be deemed to have elected not to receive the C Share Single Dividend or to retain their C Shares and receive the C Share Continuing Dividend and will instead be subject to the Purchase Offer. The amount received by Shareholders for each C Share issued to satisfy elections for Alternative 3 (Capital Option) will be marginally less than the amount received by Shareholders for each C Share issued under Alternative 1 (Income Option) or each C Share issued under Alternative 2 (Deferred Income Option) or for each B Share issued under Alternative 3 (Capital Option). This is due to the fact that the stamp duty taxes incurred by the Company and Investec in relation to the share purchases that are expected to be completed pursuant to the Purchase Offer and under the Put Option Agreement, are to be borne (pro rata) by those Shareholders who elect for Alternative 3 (Capital Option), by reducing the amount paid to such Shareholders for C Shares purchased pursuant to the Purchase Offer. It is expected that this will result in a marginally reduced payment of 99 pence per C Share.
Following completion of the Purchase Offer, Investec will have the right to require the Company to purchase from Investec, at 100 pence for each C Share, those C Shares purchased by Investec from Shareholders under the Purchase Offer. Any C Share purchased by the Company from Investec under the Put Option Agreement will be cancelled.
Under Alternative 3 (Capital Option), payments will be made to Shareholders in respect of both: (i) the redemption of B Shares, and (ii) the proceeds received under the Purchase Offer by two cheques (one cheque in respect of the redemption of the B Shares and a separate cheque in respect of the sale proceeds of the C Shares, if appropriate) or if mandated instructions held, bank accounts credited, or for CREST participants CREST accounts being credited, on or around 15 October 2010.
To elect for Alternative 3 (Capital Option) in respect of their Share Entitlement, Shareholders should follow the instructions in part 4 of this document or, if they hold their Existing Ordinary Shares in CREST, Shareholders should refer to paragraph 4 of part 10 of this document for further information.
No share certificates will be issued in respect of, and no CREST accounts will be credited with, B Shares or C Shares that are issued in respect of elections for Alternative 3 (Capital Option), and no B Shares or C Shares will be listed or traded on the London Stock Exchange or on any other recognised investment exchange.
Further details of the rights and restrictions to be attached to the B Shares and the C Shares are set out in parts 6 and 7 respectively of this document. Details of the Purchase Offer are set out in paragraph 8 of this part 5 and in paragraph 5 of part 10 of this document.
The Existing Ordinary Shares will be subdivided and consolidated so that Shareholders will receive 6 New Ordinary Shares for every 7 Existing Ordinary Shares they own at 6.00pm on 8 October 2010. The intention is that, subject to normal market movements, the share price of one New Ordinary Share immediately after Admission should be approximately equal to the share price of one Existing Ordinary Share immediately beforehand. The effect of this will be to reduce the number of issued ordinary shares to reflect the return of 100 pence per share to Shareholders, but Shareholders will own the same proportion of the Company as they did previously, subject to fractional entitlements.
New Ordinary Shares will be traded on the London Stock Exchange in the same way as Existing Ordinary Shares and will be equivalent in all material respects to the Existing Ordinary Shares, including in respect of their dividend, voting and other rights. Share certificates in respect of New Ordinary Shares will be issued following the Capital Reorganisation to those Shareholders who held their Existing Ordinary Shares in certificated form. Holders of Existing Ordinary Shares whose holdings are registered in CREST will automatically have any New Ordinary Shares credited to their CREST accounts by 8.00am on 11 October 2010.
Application will be made for the New Ordinary Shares to be admitted to the Official List and to trading on the London Stock Exchange's market for listed securities, with dealings expected to commence on 11 October 2010. The Company will apply for the New Ordinary Shares to be admitted to CREST with effect from Admission so that general market transactions in the New Ordinary Shares may be settled within the CREST system.
Unless a holding of Existing Ordinary Shares is exactly divisible by 7 a Shareholder will have a fractional entitlement to a New Ordinary Share following the Share Capital Consolidation. So, for example, a Shareholder having 100 Existing Ordinary Shares would, after the Share Capital Consolidation, be entitled to 85 New Ordinary Shares and a fractional entitlement to seven tenths of a New Ordinary Share.
These fractional entitlements of all Shareholders will be aggregated and sold in the market on their behalf. The proceeds of sale will be distributed pro rata to the relevant Shareholders. Cheques in respect of the proceeds of sale are expected to be despatched to relevant Shareholders (or, if mandated instructions held, bank accounts credited) or CREST accounts credited with the proceeds, as appropriate, together with certificates for New Ordinary Shares, where applicable on 15 October 2010.
Should the cash consideration for your fractional entitlement be less than £3.00, which based on the Company's current share price is very likely, you will not receive a cheque and your CREST account will not be credited in respect of that entitlement, rather the proceeds will be retained by the Company.
Shareholders who receive C Shares under Alternative 3 (Capital Option) will, provided the Purchase Offer is made, have the C Shares they receive purchased by Investec as they will be deemed to accept the Purchase Offer.
The following terms will apply to the Purchase Offer:
8.3 the Election Form, the giving of a TTE Instruction and all contracts resulting therefrom will be governed by and construed in accordance with English law. Execution by or on behalf of a Shareholder of an Election Form or the giving of a TTE Instruction constitutes that Shareholder's submission, in relation to all matters arising out of or in connection with such form or instruction and the exercise of the powers of the agent elected thereunder, to the exclusive jurisdiction of the English courts;
8.4 upon execution of the Election Form, or the giving of a TTE Instruction, the Shareholder represents and warrants that he or she has full power and authority to tender, sell, assign and transfer the C Shares in relation to which that Shareholder has accepted the Purchase Offer under that Election Form or TTE Instruction and that Investec will acquire such C Shares free and clear from all liens, charges, restrictions, claims, equitable interests and encumbrances and together with all rights attaching thereto. In addition, by execution of the Election Form or the giving of a TTE Instruction pursuant to which the Shareholder will be deemed to have elected to participate in the Purchase Offer, the Shareholder: (i) agrees that he or she will do all other things and execute any additional documents which may be necessary or, in the opinion of Investec, desirable to effect the purchase of such C Shares by Investec and/or to perfect any of the authorities expressed to be given under the Election Form or deemed to be given by virtue of the TTE Instruction; and (ii) acknowledges that Investec shall have no liability whatsoever to such Shareholder in respect of acts done or omitted to be done by it on behalf of such Shareholder in connection with the instructions given to it by such Shareholder pursuant to the Election Form, TTE Instruction or otherwise in relation to the Purchase Offer;
8.10 the Directors may, if they so determine in their absolute discretion, accept an Election Form or TTE Instruction which is received after the relevant time or which is not correctly completed.
Further details of the Purchase Offer are set out in paragraph 5 of part 10 of this document.
The rights attaching to the C Shares are such that, subject to the provisions of the Act, the Company may at any time after 1 May 2011 but before 31 July 2011 purchase C Shares then in issue subject to paying the then registered holder of such C Shares 100 pence per C Share.
Further details of the rights and restrictions to be attached to the C Shares, including details of the Compulsory Purchase Procedure are set out in part 7 of this document.
Shareholders who are not resident in the United Kingdom or who are citizens, residents or nationals of other countries should consult their professional advisers to ascertain whether the Return of Cash will be subject to any restrictions or require compliance with any formalities imposed by the laws or regulations of, or any body or authority located in, the jurisdiction in which they are resident or to which they are subject. In particular, it is the responsibility of any Shareholder not resident in the United Kingdom or a citizen, resident or national of another country wishing to receive the C Share Single Dividend, the C Share Continuing Dividend, have the B Shares redeemed or have the C Shares purchased or otherwise dispose of any shares in the Company to satisfy himself as to full observance of the laws of each relevant jurisdiction in connection with the Return of Cash, including the obtaining of any government, exchange control or other consents which may be required, or the compliance with other necessary formalities needing to be observed and the payment of any issue, transfer or other taxes or duties in such jurisdiction.
Alternatives 2 and 3 are not being offered into the United States and US Holders may not elect for Alternatives 2 or 3. Accordingly any purported election by a US Holder will automatically be deemed an election for Alternative 1 in respect of the entirety of such US Holder's Share Entitlement and the Company shall not be required to take into account any election for any other Alternative that any US Holder may purport to make. As a result, US Holders will only receive C Shares and the C Share Single Dividend (as well as the relevant number of New Ordinary Shares arising under the Share Capital Consolidation).
The distribution of this document in certain jurisdictions may be restricted by law. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Neither this document nor any other document issued or to be issued by or on behalf of the Company in connection with the issue of New Ordinary Shares or C Shares, the issue or redemption of B Shares, the purchase or repurchase of C Shares or the payment of the C Share Single Dividend or the C Share Continuing Dividend constitutes an invitation, offer or other action on the part of the Company in any jurisdiction in which such invitation, offer or other action is unlawful.
In the event that the Company is advised that it would or might be required to make filings or take any other action in any jurisdiction as a result of its issuing any Return of Cash Shares to Shareholders who have registered addresses in any overseas jurisdiction or who are citizens, residents or national of other countries, it is proposed that the Return of Cash Shares to which such Shareholders are entitled will nevertheless be allotted to such Shareholders but may be issued to a nominee and then sold with the net proceeds of sale being remitted to such Shareholders.
The above provisions of this paragraph relating to overseas Shareholders may be waived or modified as regards specific Shareholders or on a general basis by the Company in its absolute discretion, or by the Company and Investec if the waiver or modification relates to the expected purchase of C Shares by Investec.
A number of consequential amendments to the Articles of Association are required in order to implement the Return of Cash. These amendments relate to the creation of the B Shares (in substitution for the rights attaching to the B Shares in the current Articles of Association), the C Shares and Deferred Shares, the rights attaching to which are set out in parts 6, 7 and 8 of this document.
The Company currently operates two share option schemes, the Dignity Share Schemes, whereby employees and Directors of the Company have been given options to acquire Existing Ordinary Shares. As at 20 September 2010 (the latest practicable date prior to the publication of this document), options to acquire a total of 946,378 Existing Ordinary Shares pursuant to the Dignity Share Schemes had been granted which had not been exercised and had not yet lapsed. These options represent approximately 1.48 per cent of the Ordinary Shares as at 20 September 2010 (the latest practicable date prior to the publication of this document).
The Sharesave Plan is a HMRC approved savings related share option scheme.
The Share Capital Consolidation is designed to ensure that, subject to normal market fluctuations, the economic value of each New Ordinary Share is, as far as possible, the same as each Existing Ordinary Share. Therefore, no adjustment is required to the number of Ordinary Shares over which participants in the Sharesave Plan have share options, nor to the amount payable on the exercise of such share options.
Under the LTIP, certain executives of the Group have been granted options over shares in the Company. The actual number of shares over which an LTIP option may be exercised is determined with reference to performance conditions.
The Share Capital Consolidation is designed to ensure that, subject to normal market fluctuations, the economic value of each New Ordinary Share is, as far as possible, the same as each Existing Ordinary Share. Therefore, no adjustment is required to the number of Ordinary Shares over which participants in the LTIP have share options, nor to amounts payable on the exercise of such share options.
Participants under the Dignity Share Schemes are not entitled to participate in the Return of Cash except to the extent that they are Shareholders.
From the time of Admission of the New Ordinary Shares, Shareholders' Existing Ordinary Share certificate(s) will no longer be valid. New Ordinary Share certificates will only be issued following the Share Capital Consolidation. It is therefore important that, if Shareholders hold certificates in respect of their Existing Ordinary Shares, they retain them for the time being until New Ordinary Share certificates are despatched, which is expected to be on 15 October 2010. Following this date, the certificates in respect of the Existing Ordinary Shares can be destroyed. Share certificates are despatched to Shareholders at their own risk.
For Shareholders wishing to hold any New Ordinary Shares through the CREST system, the relevant CREST accounts are expected to be credited at 8.00am on 11 October 2010. Shareholders holding New Ordinary Shares, B Shares and C Shares through the CREST system will not receive any share certificates.
No share certificates will be issued by the Company in respect of any C Shares on which a C Share Single Dividend is paid, any B Shares, any C Shares purchased pursuant to the Purchase Offer or any Deferred Shares.
The Return of Cash will be made by reference to holdings of Existing Ordinary Shares on the register of members as at the Record Date.
It is expected that dealings and settlement within the CREST system of the Existing Ordinary Shares will continue until the Record Date when, in the case of Existing Ordinary Shares held in certificated form, the register of members will be closed for transfers and no further transfers of Existing Ordinary Shares will be able to be made. The registration of uncertificated holdings in respect of the Existing Ordinary Shares will be 'disabled' in CREST on the Record Date.
The Company expects to despatch on 15 October 2010 definitive share certificates in respect of the New Ordinary Shares held in certificated form. From Admission of the New Ordinary Shares, certificates in respect of the Existing Ordinary Shares will no longer be valid. Share certificates are despatched at the Shareholders' own risk.
It is expected that Shareholders who hold their Existing Ordinary Shares through the CREST system will, on Admission, have their CREST accounts credited with New Ordinary Shares.
Temporary documents of title will not be issued and, pending despatch of definitive share certificates, transfers of New Ordinary Shares held in certificated form will be certified against the register held by Equiniti.
It is expected that cheques (two cheques in the event that Shareholders elect for Alternative 3 and are issued B Shares and C Shares, with the C Shares being purchased under the Purchase Offer), or if mandated instructions held bank accounts credited, in respect of B Shares redeemed, C Shares purchased under the Purchase Offer, the C Share Single Dividend and any fractional entitlements, will be despatched to relevant Shareholders on 15 October 2010. Cheques will be despatched at the Shareholder's own risk.
Shareholders should note that any election, whether made by signing an Election Form or the giving of a TTE Instruction, for the Alternatives should be made by 4.30pm on 8 October 2010. Any election for the Alternatives may be withdrawn, and a new election for Alternative 2 (Deferred Income Option) or Alternative 3 (Capital Option) may be made in respect of any Share Entitlements in respect of which an election has previously been made prior to that date. If an election is validly withdrawn, but a new valid election is not made by the Shareholder by 4.30pm on 8 October 2010, the Shareholder will be deemed to have elected for Alternative 1 (Income Option) in respect of their Share Entitlement. For a withdrawal of an election to be effective, an original notice of withdrawal signed by the person(s) who signed the relevant Election Form must:
New election forms must be obtained from Equiniti by calling the Shareholder helpline and may be resubmitted in place of any Election Forms so withdrawn at any time up to 4.30pm on 8 October 2010.
The Directors shall determine all questions as to the form and validity (including time and place of receipt) of any notice of withdrawal or Election Form or TTE Instruction submitted in place of one withdrawn, in their absolute discretion, which determination shall be final and binding. The Directors also reserve the absolute right to waive any defect or irregularity in the withdrawal of any Election Form TTE Instruction by any Shareholder and/or the submission of any new Election Form TTE Instruction in place of one withdrawn, and such determination will be binding on such Shareholder. The Directors shall not be liable to Shareholders for any loss arising from the determination of questions as to the form and validity (including time and place of receipt) of any notice of withdrawal and/or the submission of any New Election Form, unless attributable to their own wilful default or fraud and neither the Company, the Directors nor Equiniti or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification.
The following summarises the proposed amendments to the Articles of Association in respect of the rights to be attached to the B Shares.
The B Shares shall not carry any right to receive any dividend or other distributions of income save for the right to redemption under Article 7.1.3 below.
7.1.3.2 The Company shall pay on each of the B Shares so redeemed an amount of 100 pence ("Redemption Amount") per B Share to each holder of B Shares. The Company's liability to pay to each holder of B Shares the Redemption Amount for each such B Share shall be discharged by the Company by a payment to each holder within 10 days of the B Share Redemption Date.
7.1.3.3 Where the Company is precluded by the Act or otherwise by law from redeeming any B Shares on the B Share Redemption Date then:
The holders of the B Shares shall not be entitled, in their capacity as holders of such shares, to receive notice of any general meeting of the Company nor to attend, speak or vote at any such general meeting.
Article 7.1 shall remain in force until there are no longer any B Shares in existence notwithstanding any provision in the articles to the contrary. Thereafter, Article 7.1 shall be and shall be deemed to be of no effect (save to the extent that the provisions of Article 7.1 are referred to in other articles) and shall be deleted and replaced with the wording "Article 7.1 has been deleted", and the separate register for the holders of B Shares shall no longer be required to be maintained by the Company; but the validity of anything done under Article 7.1 before that date shall not otherwise be affected and any actions taken under Article 7.1 before that date shall be conclusive and shall not be open to challenge on any grounds whatsoever."
The following summarises the proposed amendments to the Articles of Association in respect of the rights to be attached to the C Shares.
value ("Deferred Share") with the rights and restrictions set out in Article 7.3.
corporation) by a representative shall have one vote, and on a poll every such holder shall have one vote for each C Share he holds.
paying to the holders of the C Shares the preferential amounts to which they are entitled as set out above.
7.2.6.3 If at any time a currency other than pounds sterling is accepted as legal tender in the United Kingdom in place of or in addition to pounds sterling, the Directors shall be entitled, without the consent of the holders of the New Ordinary Shares, the B Shares or C Shares or any other class of shares, to make such arrangements and adjustments in respect of the method of calculation and payment of any of the entitlements of holders of C Shares under these Articles as the Directors consider necessary, fair and reasonable in the circumstances to give effect to the rights attaching to the C Shares including (without limitation) in respect of the calculation and payment of the C Share Continuing Dividend, notwithstanding the fact of such acceptance. Any such arrangements and adjustments shall not involve a variation of any rights attaching to the C Shares for any purpose.
Article 7.2 shall remain in force until there are no longer any C Shares in existence whether by way of conversion into Deferred Shares, repurchase or cancellation, whichever is earlier, notwithstanding any provision in the Articles to the contrary. Thereafter, Article 7.2 shall be and shall be deemed to be of no effect (save to the extent that the provisions of Article 7.2 are referred to in other Articles) and shall be deleted and replaced with the wording "Article 7.2 has been deleted", and the separate register for the holders of C Shares shall no longer be required to be maintained by the Company; but the validity of anything done under Article 7.2 before that date shall not otherwise be affected and any actions taken under Article 7.2 before that date shall be conclusive and shall not be open to challenge on any grounds whatsoever."
The following summarises the proposed amendments to the Articles of Association in respect of the rights to be attached to the Deferred Shares.
The Deferred Shares shall not be entitled to any right to participate in the profits of the Company.
The holders of the Deferred Shares shall not be entitled, in their capacity as holders of such shares, to receive notice of any general meeting of the Company nor to attend, speak or vote at any such general meeting.
to the confirmation of the court in accordance with the Act and without obtaining the consent of the holders of Deferred Shares).
The Deferred Shares shall not be transferable except to the Company or as set out in Article 7.3.5.
Article 7.3 shall remain in force until there are no longer any Deferred Shares in existence notwithstanding any provision in the Articles to the contrary. Thereafter, Article 7.3 shall be and shall be deemed to be of no effect (save to the extent that the provisions of Article 7.3 are referred to in other Articles) and shall be deleted and replaced with the wording "Article 7.3 has been deleted", and the separate register for the holders of Deferred Shares shall no longer be required to be maintained by the Company; but the validity of anything done under Article 7.3 before that date shall not otherwise be affected and any actions taken under Article 7.3 before that date shall be conclusive and shall not be open to challenge on any grounds whatsoever."
The following comments do not constitute tax advice and are intended only as a current guide to UK law and HMRC published practice (which are both subject to change at any time, possibly with retrospective effect). They relate only to certain limited aspects of the UK taxation treatment of Shareholders and are intended to apply only, except to the extent, stated below, to persons who are resident and, if individuals, ordinarily resident in the UK for UK tax purposes, and who are absolute beneficial owners of the Return of Cash Shares (otherwise than through an Individual Savings Account or a Self Invested Personal Pension Plan) and who hold them as investments (and not as securities to be realised in the course of a trade). They may not apply to certain Shareholders, such as dealers in securities, insurance companies and collective investment schemes, Shareholders who are exempt from taxation and Shareholders who have (or are deemed to have) acquired their Return of Cash Shares by virtue of an office or employment. Such persons may be subject to special rules.
For the purposes of United Kingdom taxation of capital gains and corporation tax on chargeable gains ("CGT"):
The Company will not be required to withhold tax at source when paying the C Share Single Dividend.
A United Kingdom resident individual Shareholder who is liable to income tax at the starting or basic rate will pay no tax on the C Share Single Dividend unless the dividend, when aggregated with the Shareholders other income, takes that Shareholder's income into the higher rate tax band.
A United Kingdom resident individual Shareholder who is liable to income tax at the 40 per cent. rate will be liable to pay tax equal to 25 per cent. of the cash dividend received, to the extent that the gross dividend falls within the Shareholder's 40 per cent. income tax rate band.
A United Kingdom resident individual Shareholder who is liable to income tax at the 50 per cent. rate will be liable to pay tax equal to 36.1 per cent. of the cash dividend received, to the extent that the gross dividend falls within the Shareholder's 50 per cent. income tax rate band.
United Kingdom resident taxpayers who are not liable to United Kingdom tax on dividends, including pension funds and charities, will not be liable to pay tax on the C Share Single Dividend.
Shareholders within the charge to UK corporation tax which are "small companies" (for the purposes of the UK taxation of dividends) may not generally expect to be subject to tax on dividends from the Company.
Other Shareholders within the charge to UK corporation tax will not be subject to tax on dividends (including dividends from the Company) provided those dividends fall within an exempt class and certain conditions are met. In general, dividends paid to a UK corporate Shareholder holding less than 10 per cent of the issued share capital of the payer (or of any separate class in respect of which the dividend is paid) is an example of a dividend that falls within an exempt class. Shareholders will need to ensure that they satisfy the requirements of any exempt class before treating any dividend as exempt, and seek appropriate professional advice where necessary.
A Shareholder (whether an individual or a company) who is not liable to tax on dividends from the Company will not be entitled to claim payment of tax credit in respect of those dividends.
Non-United Kingdom resident Shareholders will not generally be able to claim repayment from HMRC under any double tax treaty in respect of the C Share Single Dividend. A Shareholder resident outside the United Kingdom may also be subject to foreign taxation on dividend income under local law. Shareholders who are not resident in the United Kingdom (for tax purposes) should consult their own tax adviser concerning their tax liabilities on dividends received from the Company.
For CGT purposes, the C Share Single Dividend (and the consequent conversion of the C Shares into Deferred Shares) will not be treated as giving rise to a disposal or part disposal of the C Shares.
Shareholders who receive the C Share Single Dividend should note that, consequent to the Capital Reorganisation, a proportion of the base cost, for CGT purposes, of their Existing Ordinary Shares will be attributed to the C Shares and this amount will continue to be attributed to those C Shares following their conversion into Deferred Shares (notwithstanding that the Deferred Shares have limited rights or value). Correspondingly, only a proportion of the base cost of the original holding of Existing Ordinary Shares will be available on a disposal of New Ordinary Shares.
A disposal of the Deferred Shares (including a purchase of the Deferred Shares by the Company) will be treated as described in paragraph 4 below and may result in a Shareholder realising a capital loss. Shareholders liable to corporation tax should note that it is possible that Section 30 of the Taxation of Chargeable Gains Act 1992 could be regarded as being applicable when they dispose of the Deferred Shares. In that event, any consideration actually received on a disposal of the Deferred Shares into which the C Shares convert would be treated for tax purposes as increased by such amount as is "just and reasonable" having regard to the payment of the C Share Single Dividend.
Dividends payable on the C Shares that are retained will be subject to United Kingdom tax under the dividend rules in force at the time of receipt. The current rules are the same as for the C Share Single Dividend. However, the attention of UK resident corporate shareholders is drawn to the provisions of section 521C, Corporation Tax Act 2009 which contains provisions which may in certain circumstances treat returns on certain types of share as falling to be taxed as income under the "loan relationship rules". Shareholders who are in any doubt as to the application or otherwise of these provisions should consult an appropriate adviser.
On a disposal of the whole or part of a Shareholder's holding of C Shares to the Company (or its agent), pursuant to the Compulsory Purchase Procedure, the majority of the consideration received will be characterised for tax purposes as an income distribution and therefore taxable as income.
If, prior to the Compulsory Purchase Procedure, a Shareholder disposes of his holding of C Shares other than to the Company (or its agent), they may, depending on his or her circumstances, be subject to CGT on the amount of any chargeable gain realised or realise a capital loss. Please refer to paragraph 1(i) above for details of the manner in which the Shareholder's base cost is allocated as between the New Ordinary Shares and the C Shares and to paragraph 4 for details of how a gain or loss is calculated and taxed where applicable.
The redemption of the B Shares by the Company pursuant to the rights attaching to the B Shares should (on the basis that the B Shares have been paid up otherwise than out of the profit and loss account reserves of the Company) be treated as a disposal of those shares for UK tax purposes.
Also, a sale of the C Shares by a Shareholder to Investec pursuant to the Purchase Offer should be treated as a normal third party disposal for UK tax purposes.
Accordingly, the Directors have been advised that:
(ii) no part of the proceeds received by a Shareholder, whether pursuant to the Purchase Offer or on redemption of the B Shares, should be an income distribution in the Shareholder's hands;
(iii) the amount of CGT, if any, payable by an individual Shareholder as a consequence of accepting the Purchase Offer or redemption of B Shares will depend on his or her personal tax position. No tax will be payable on any gain realised on a disposal of C Shares or B Shares if the amount of the net chargeable gains realised by the shareholder, when aggregated with other net chargeable gains realised by the shareholder in the year of assessment (and after taking account of allowable losses), does not exceed the annual exemption (£10,100 for 2010/2011). Broadly, any gains in excess of this amount will be taxed at a rate of 18 per cent for a taxpayer paying tax at the basic rate and 28 per cent for a taxpayer paying tax at a rate above the basic rate of income tax. For a basic rate tax payer whose net chargeable gains, when aggregated with income in the year of assessment, result in part of the gain being assessable at the higher CGT rate, a combination of the 18 per cent and 28 per cent rates will be assessed on the gain.
Under the provisions of part 15, Ch 8, CTA 2010 (for companies) and part 13, Ch 1 ITA 2007 (for individuals), HMRC can in certain circumstances counteract tax advantages arising in relation to a transaction or transactions in securities. If these provisions were to be applied by HMRC to the proposed Return of Cash, in broad terms, those Shareholders who elected to receive a capital return might be liable to taxation as if they had received an income amount.
In accordance with s748 CTA 2010 and s701 ITA 2007, the Company has applied for and received clearance from HMRC that they are satisfied that the transactions in securities provisions should not be applied to the proposed Return of Cash.
and when the Company repurchases any shares C Shares from Shareholders under the Compulsory Purchase Procedure.
The rights and restrictions attaching to the New Ordinary Shares will be set out in the Articles of Association, as amended, if the relevant Resolutions are passed at the General Meeting. These may be summarised as regards income, return of capital and voting, as follows:
Income: Subject to the payment of the C Share Single Dividend or the C Share Continuing Dividend on the C Shares, the holders of the New Ordinary Shares shall be entitled to be paid any further profits of the Company available for distribution and determined to be distributed. Any dividend payable on the New Ordinary Shares which has remained unclaimed for 12 years from the date when it became due for payment shall be forfeited and shall cease to remain owing by the Company.
Capital: On a return of capital on a winding-up (excluding any intra-group or reorganisation on a solvent basis) after paying such sums as may be due in priority to the holders of any other class of shares in the capital of the Company (including the B Shares and the C Shares), any further such amount shall be paid to the holders of the New Ordinary Shares rateably according to the amounts paid up or credited as paid up in respect of each New Ordinary Share.
Voting: The holders of the New Ordinary Shares shall be entitled in respect of such shares to receive notice of any general meeting of the Company and to attend and vote at any such general meeting. At any such meeting, on a show of hands, every holder of New Ordinary Shares present in person shall have one vote and every such holder present in person or by proxy shall upon a poll have one vote for every New Ordinary Share of which he is the holder.
The New Ordinary Shares, the B Shares and C Shares are not renounceable and will be transferrable by an instrument of transfer in usual or common form. The New Ordinary Shares, the B Shares and C Shares will be in registered form. The Company will apply for the New Ordinary Shares to be admitted to CREST with effect from Admission. Accordingly, settlement of transactions in the New Ordinary Shares may take place within the CREST system in respect of general market transactions. The Company will further apply for the C Shares allotted pursuant to the elections for Alternative 2 (Deferred Income Option) to be admitted to CREST with effect from 15 October 2010.
CREST holders who have elected to retain C Shares will have their CREST accounts credited with the C Shares under the new ISIN GB00B43SR186 on 15 October 2010.
If the Existing Ordinary Shares to which any election made on the enclosed Election Form relates are currently held in certificated form and are subsequently dematerialised into CREST before 4.30pm on 8 October 2010 (or such later time and/or date as the Directors may determine), any instruction given by the submission of an Election Form will become ineffective. Shareholders who subsequently hold their Existing Ordinary Shares in CREST will need to submit a valid TTE Instruction in place of the submitted Election Form by 4.30pm on 8 October 2010.
If your Shares are held in uncertificated form you do not have to complete or return an Election Form. You should however take (or procure to be taken) the action set out below to transfer (by means of a TTE Instruction) the number of Existing Ordinary Shares held at the Record Date to an escrow balance, specifying Equiniti in its capacity as a CREST receiving agent (under its participant ID referred to below) as the escrow agent, as soon as possible and in any event so that the transfer to escrow settles not later than 4.30pm on 8 October 2010.
If you are a CREST personal member, you should refer to your CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your participant ID and the member account ID under which your Existing Ordinary Shares are held. In addition, only your CREST sponsor will be able to send the TTE Instruction to Euroclear in relation to the Share Entitlements.
You should send (of if you are a CREST personal member, procure that your CREST sponsor sends) a TTE Instruction to Euroclear, which must be properly authenticated in accordance with Euroclear's specifications and which must contain, in addition to other information that is required for the TTE Instruction to settle in CREST, the following details:
Shareholders who hold shares in CREST for and on behalf of one or more Underlying Shareholders ("Nominee Shareholders"), can make an election, for and on behalf of each of its Underlying Shareholders (provided that no Underlying Shareholder will be able to combine Alternatives), by taking the action set out above. If a TTE Instruction is for an amount of Existing Ordinary Shares which is less than the entire holding of that Nominee Shareholder (as detailed in the Nominee Shareholder's CREST member account), that Shareholder represents and warrants that the amount of shares in the TTE Instruction represents the entire holding of one or more of its Underlying Shareholders.
Further information on the specific elections available to Shareholders is set out below:
Shareholders who hold shares in CREST and who wish in respect of their holdings of Existing Ordinary Shares, or wish on behalf of one or more Underlying Shareholders in respect of their holdings of Existing Ordinary Shares, to elect for Alternative 1 (Income Option) should send their TTE Instruction with the following information, in addition to the information listed above:
Shareholders who hold shares in CREST and who wish in respect of their holdings of Existing Ordinary Shares, or wish on behalf of one or more Underlying Shareholders in respect of their holdings of Existing Ordinary Shares, to elect for Alternative 2 (Deferred Income Option), should send their TTE Instruction with the following information, in addition to the information listed above:
Shareholders who hold shares in CREST and who wish in respect of their holdings of Existing Ordinary Shares, or wish on behalf of one or more Underlying Shareholders in respect of their holdings of Existing Ordinary Shares, to elect for Alternative 3 (Capital Option), should send their TTE Instruction with the following information, in addition to the information listed above:
Shareholders who hold Existing Ordinary Shares in CREST who wish to withdraw their elections in the manner set forth in paragraph 15 in part 4 of this document should send (or, if a CREST personal member, procure that their CREST sponsor sends) an ESA instruction to settle in CREST in relation to each electronic acceptance in respect of which an election is varied. Each ESA instruction must, in order for it to be valid and settle, including the following details:
the member account ID of the escrow agent included in the relevant electronic acceptance. This is RA022201 for Alternative 1 (Income Option), RA022202 for Alternative 2 (Deferred Income Option) and RA022203 for Alternative 3 (Capital Option);
the CREST transaction ID of the electronic acceptance to be withdrawn to be inserted at the beginning of the shared note field;
Any such change of election in respect of Shares in uncertificated form will be conditional upon Equiniti verifying that the request is validly made. Accordingly, Equiniti will, on behalf of the Company, reject or accept the requested change of election by transmitting in CREST a receiving agent reject (AEAD) or receiving agent accept (AEAN) message.
The following agreements have been entered into, or are intended to be entered into, in relation to the Purchase Offer:
Under the Purchase Offer Deed, Investec has agreed that if the Company serves upon Investec by no later than 6.00pm on 11 October 2010 (or such later time and date as the parties may agree) a notice requiring Investec to make the Purchase Offer, it will, as principal, make an off-market offer by means of an announcement on the Regulatory News Service of the London Stock Exchange to purchase those C Shares which are issued under Alternative 3. The Purchase Offer will be made in the manner and on the terms set out in this document and the Election Form. The obligation of Investec to make the Purchase Offer is conditional among other things on the satisfaction, or waiver by Investec, of a number of conditions including:
Investec also has a right to terminate its obligations on the occurrence of certain force majeure events.
If the Resolutions are passed at the General Meeting, the Company intends to execute the Put Option Agreement, which will grant to Investec the right to require the Company to purchase from Investec, as an off-market purchase, the C Shares purchased by Investec under the Purchase Offer. The amount payable by the Company to Investec on exercise by Investec of its rights under the Put Option Agreement in respect of the C shares acquired pursuant to the Purchase Offer will be 100 pence per C Share.
Investec has given and has not withdrawn its written consent to the issue of this document with the inclusion herein of references to its name in the form and context to which it appears.
Copies of the following documents will be available for inspection during normal business hours on any weekday (public holidays excepted) at the offices of DLA Piper UK LLP, 3 Noble Street, London, United Kingdom EC2V 7EE from the date of this document up to and including the date of the General Meeting and will also be available for inspection at the General Meeting:
The following words and expressions have the following meanings in this document unless the context requires otherwise:
| "Act" | the Companies Act 2006, as amended; |
|---|---|
| "Admission" | admission of the New Ordinary Shares to: (i) the Official List; and (ii) trading on the London Stock Exchange's market for listed securities becoming effective in accordance with, respectively the Listing Rules and the Standards; |
| "Alternatives" | Alternative 1 (Income Option), Alternative 2 (Deferred Income Option), Alternative 3 (Capital Option) or any of them as the context may require; |
| "Alternative 1 (Income Option)" |
the allotment of C Shares and the right to receive the C Share Single Dividend in respect of those C Shares; |
| Alternative 2 (Deferred Income Option)" |
the allotment of C Shares and the right to receive the C Share Continuing Dividend and to retain those C Shares subject to the Compulsory Purchase Procedure; |
| "Alternative 3 (Capital Option)" |
the allotment of B Shares to be redeemed on or around 11 October 2010, and possibly C Shares which are expected to be subject to the Purchase Offer, in the event that the election for B Shares exceeds the number of B Shares that can be issued and that the allotment of B Shares needs to be scaled back; |
| "Articles of Association" | the articles of association of the Company; |
| "B Share Redemption Date" | 11 October 2010; |
| "B Shares" | the redeemable B Shares of 100 pence each in the capital of the Company carrying the rights and restrictions summarised in part 6 of this document; |
| "Board " | the board of directors of Dignity plc; |
| "Business Day" | a day (other than Saturday, Sunday or a public holiday) on which banks are generally open for business in the City of London for the transaction of normal banking business; |
| "C Share Continuing Dividend" |
the non-cumulative preferential dividend payable in relation to each C Share of 0.4 pence per C Share per annum which accrues on a daily basis; |
| "C Share Single Dividend" | the single dividend of 100 pence per C Share; |
| "C Shares" | the non cumulative irredeemable shares of 0.01 pence each in the capital of the Company carrying the rights and restrictions summarised in part 7 of this document; |
| "Capital Reorganisation" | the reorganisation of the Company's share capital comprising the issuance of the B Shares and/or the C Shares and the Share Capital |
Consolidation;
| "Company" | Dignity plc, a company registered in England and Wales with company number 04569346; |
|---|---|
| "Compulsory Purchase Procedure" |
the provisions under which the Company may compulsorily acquire C Shares as set out in the rights and restrictions attaching to the C Shares; |
| "Compulsory Purchase Procedure Consideration" |
100 pence for each C Share; |
| "CREST" | the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated in accordance with the Uncertificated Securities Regulations; |
| "CREST Proxy Instruction" | a properly authenticated CREST message appointing and instructing a proxy to attend and vote in place of a Shareholder at the General Meeting and containing the information required to be contained in the manual published by Euroclear; |
| "CTA 2010" | Corporation Tax Act 2010; |
| "Daily Official List" | the daily record setting out the prices of all trades in shares and other securities conducted on the London Stock Exchange; |
| "Deferred Shares" | the deferred shares in the capital of the Company carrying the rights and restrictions summarised in part 8 of this document; |
| "Dignity Share Schemes" | means the Dignity plc Sharesave Plan and the Dignity Plc Directors and Senior Executive Long Term Incentive Plan; |
| "Directors" | the directors of the Company from time to time; |
| "Election Form" | the election form enclosed with this document, where this document is sent to Shareholders holding Existing Ordinary Shares in certificated form; |
| "Election Period" | the period until 4.30pm on 8 October 2010, during which time Shareholders may elect for the Alternatives; |
| "Equiniti" | the Company's registrar and receiving agent, Equiniti Limited of Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA; |
| "Euroclear" | Euroclear UK & Ireland Limited the operator of CREST (formerly known as CRESTCo Limited); |
| "Existing Ordinary Shares" | the ordinary shares of 9 pence each in the capital of the Company; |
| "Form of Proxy" | the form of proxy enclosed with this document for use by Shareholders in connection with the General Meeting; |
| "Group" | the Company and its subsidiary undertakings and associated undertakings; |
| "General Meeting" | the General Meeting of the Company to be held at Victoria Square House, Victoria Square, Birmingham B2 4DL on 8 October 2010 at 11am; |
|---|---|
| "Investec" | Investec Bank plc, 2 Gresham Street, London EC2V 7QP; |
| "Investec Group" | Investec and its subsidiaries and subsidiary undertakings (each as defined in the Act); |
| "ITA 2007" | Income Tax Act 2007; |
| "Listing Rules" | the rules and regulations made by the UK Listing Authority for the purposes of part V1 of the Financial Services and Markets Act 2000 as amended from time to time; |
| "London Stock Exchange" | London Stock Exchange plc; |
| "New Ordinary Shares" | the new ordinary shares of 10.5 pence each in the capital of the Company, arising as a result of the Share Capital Consolidation; |
| "Official List" | the Official List of the UK Listing Authority; |
| "Ordinary Shares" | Existing Ordinary Shares or New Ordinary Shares, as the context may require; |
| "Purchase Offer" | the offer expected to be made by Investec, acting as principal, to purchase C Shares issued under Alternative 3 (Capital Option), the terms of which are set out in paragraph 8 of part 5 of this document; |
| "Purchase Offer Agreement" |
the agreement dated 21 September 2010 between Investec and the Company in respect of the Purchase Offer, details of which are set out in paragraph 5.1 of part 10 of this document; |
| "Put Option Agreement" | the agreement which is expected to be entered into (subject to Shareholder approval) between the Company and Investec requiring the Company to purchase as an off-market purchase the C Shares purchased by Investec under the Purchase Offer, details of which are set out in paragraph 5.2 of part 10 of this document; |
| "Record Date" | 6.00pm on 8 October 2010 (or such later time and/or date and the Directors in their absolute discretion may determine); |
| "Resolutions" | the resolutions set out in the notice of the General Meeting contained in part 12 of this document; |
| "Return of Cash" | the transactions comprising the Capital Reorganisation and the Share Alternatives; |
| "Return of Cash Shares" | B Shares or C Shares, as the context may require; |
| "Share Capital Consolidation" |
the consolidation and sub-division of the Existing Ordinary Shares in the manner set out in resolution 3 in the notice convening the General Meeting set out at the end of this document and as more fully described in paragraph 3 of part 4 of this document; |
| "Share Entitlement" | the entitlement of the Shareholders to receive one B Share or one C Share for each Existing Ordinary Share held at the Record Date; |
|---|---|
| "Shareholders" | holders of Ordinary Shares, B Shares and/or C Shares as the context may require; |
| "Standards" | the requirements contained in the "Admission and Disclosure Standards" dated April 2010 containing, among other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's market for listed securities; |
| "Tap Issue" | the issue of £48,650,000 million Class A Secured 6.310% Notes due 2023 and £33,100,000 million Class B Secured 8.151% Notes due 2031 by Dignity Finance plc, which is expected to complete on 27 September 2010; |
| "Tap Proceeds" | the net proceeds of the Tap Issue; |
| "TTE Instruction" | transfer to escrow instruction; |
| "UK" or "United Kingdom" | the United Kingdom of Great Britain and Northern Ireland; |
| "UK Listing Authority" or "UKLA" |
the Financial Services Authority acting in its capacity as the competent authority for the purposes of part VI of the Financial Services and Markets Act (as amended); |
| "uncertificated" or "in uncertificated form" |
when used in relation to shares, recorded on the relevant register of the share concerned as being held in uncertificated form in CREST, and title to which, by virtue of the Uncertificated Securities Regulations may be transferred by means of CREST; |
| "Uncertificated Securities Regulations" |
the Uncertificated Securities Regulation 2001; |
| "Underlying Shareholder" | any underlying beneficial holder of Existing Ordinary Shares, whose holdings are registered in the name of a nominee; |
| "US" or "United States" | the United States of America, its territories, possessions, any State of the United States of America and the District of Columbia; |
| "US Holders" | means US persons who are holders of Existing Ordinary Shares and/or holders of Existing Ordinary Shares resident in the United States; and |
| "US Securities Act" | the United States Securities Act of 1933 (as amended) and the rules and regulations promulgated thereunder. |
Notice is hereby given that a general meeting of Dignity ("Company") will be held at the offices of DLA Piper UK LLP, Victoria Square House, Victoria Square, Birmingham B2 4DL on 8 October 2010 at 11am for the purposes of considering and, if thought fit, passing the following resolutions. Resolutions 1, 4, 5 and 6 will be proposed as special resolutions and resolutions 2 and 3 will be proposed as ordinary resolutions.
on the basis of one B Share or one C Share for every existing ordinary share of £0.09 in the capital of the Company (each an "Existing Ordinary Share") held at 6.00pm on 8 October 2010, in accordance with valid elections made by the holders of the Existing Ordinary Shares pursuant to the terms of the circular sent by the Company to its shareholders on 22 September 2010 (the "Circular") as to whether to receive a B Share or a C Share in respect of each Existing Ordinary Share they hold.
of £0.0001, each such Deferred Share having the rights set out in the new articles of association to be adopted pursuant to Resolution 1.
By order of the board
Richard Portman
Company Secretary
22 September 2010
Registered office Plantsbrook House 94 The Parade Sutton Coldfield West Midlands B72 1PH
Registered in England and Wales No. 04569346
members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s) who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's (formerly CRESTCo's) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID RA19) by no later than 11am on 6 October 2010. No such message received through the CREST network after this time will be accepted. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the registrars are able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the Shareholder as to the exercise of voting rights. The statement of the rights of the shareholders in relation to the appointment of proxies in notes 2, 3, 8 and 9 does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by Shareholders of the Company
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