Offering of c.£425 million convertible bonds due 2011
THIS ANNOUNCEMENT IS NOT FOR PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA
3i Group plc ("i"), a leading international private equity company, announces that it has launched an offering (the "Offering") of c.£425 million unsecured Convertible Bonds due 2011 (the "Bonds").
3i is issuing the Bonds principally to refinance its existing €550m 1.375% convertible bonds which mature on 1 August 2008 (the "Existing Bonds"). 3i intends to use the net proceeds from the issue of the Bonds primarily either to purchase the Existing Bonds in the market or to redeem the Existing Bonds at maturity to the extent they have not, at maturity, been converted or purchased and cancelled, and for general corporate purposes.
The Bonds will be issued and redeemed at 100% of their principal amount and are expected to pay a coupon of between 3.625% and 4.125% per annum, payable semi-annually in arrear. The conversion price is expected to be set at a premium of between 25% and 30% above the volume weighted average price of 3i's ordinary shares (the "Ordinary Shares") during the placement (the "Market Reference Price"). The terms of the Bonds provide that the exercise of each Bond's conversion right will be settled by a cash payment as detailed in the terms and conditions of the Bonds. In no circumstances will Ordinary Shares be issued or delivered to holders of the Bonds upon conversion thereof. The number of Ordinary Shares notionally underlying the Bonds will be approximately 38.27 million Ordinary Shares, representing approximately 10% of 3i's current issued Ordinary Share capital.
The final terms of the Bonds are expected to be announced later today with settlement expected on or around 29th May 2008.
3i will also enter into certain agreements (the "Call Spread Overlay") with Dresdner Kleinwort and Lehman Brothers, who are acting as joint bookrunners (the "Joint Bookrunners") of the Offering, in order to offset 3i's exposure in relation to the Bonds and to raise the effective conversion premium to approximately 60% above the Market Reference Price. These agreements include (i) the purchase by 3i of cash-settled call options at the conversion price of the Bonds from the Joint Bookrunners relating to approximately 38.27m Ordinary Shares (the "Lower Call Options") and (ii) the sale to the Joint Bookrunners of call options over approximately 38.27m Ordinary Shares at the higher effective conversion premium (the "Upper Call Options"). The Lower Call Options are cash settled throughout their life. The Upper Call Options will initially be 50 per cent cash settled and 50 per cent physically settled by the issue of shares by 3i on any exercise of these options. However, 3i may elect, subject to obtaining appropriate authority from its shareholders, that the Upper Call Options will be 100 per cent physically settled by the issue of shares on any exercise. The effective conversion premium will be announced with the final terms of the Bonds. The Joint Bookrunners are expected to acquire Ordinary Shares in order to hedge their exposure under the Call Spread Overlay, which may result in significant volumes of trading in 3i's Ordinary Shares.
The Joint Bookrunners may stabilise the Offering in accordance with the stabilisation rules of the Financial Services Authority. Application will be made to the UK Listing Authority to list the Bonds on the Professional Securities Market of the London Stock Exchange.
3i Group plc
Maureen Rawlins (Group Treasurer) - 020 7975 3115
Jonathan Roe / Ken Robins - 020 7623 8000
Stephen Pull / Arshad Ghafur - 020 7102 1000
Dresdner Bank AG London Branch, which is authorised by BAFin and by the Financial Services Authority and which is regulated by the Financial Services Authority for the conduct of designated investment business in the United Kingdom, is acting for 3i Group plc and for no-one else in connection with the contents of this document and will not be responsible to anyone other than 3i Group plc for providing the protections afforded to clients of Dresdner Bank AG London Branch, or for affording advice in relation to the contents of this document or any other matters referred to herein.
Lehman Brothers International (Europe), which is authorised and regulated by the Financial Services Authority for the conduct of designated investment business in the United Kingdom, is acting for 3i Group plc and for no-one else in connection with the contents of this document and will not be responsible to anyone other than 3i Group plc for providing the protections afforded to clients of Lehman Brothers International (Europe), or for affording advice in relation to the contents of this document or any other matters referred to herein.
This announcement does not constitute or form part of an offer to sell or the solicitation of an offer to subscribe for or otherwise acquire any securities.
The Bonds and the Ordinary Shares have not been and will not be registered under the US Securities Act of 1933 and are subject to US tax law requirements. Accordingly, these securities may not be offered, sold or delivered in the United States or to US persons and this notice is not an offer of the securities.
In connection with the issue of the Bonds, Dresdner Kleinwort Securities Limited or any agent of Dresdner Kleinwort Securities Limited (the "Stabilising Manager") may over-allot Bonds or effect transactions with a view to supporting the market price of the Bonds and the Ordinary Shares at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) will undertake stabilisation action. Such stabilisation, if begun, may be ended at any time, and must be brought to an end after a limited period. Any stabilisation action or over-allotment must be conducted by the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) in accordance with all applicable laws and rules.
This press release is for information only and does not constitute an offer to sell, purchase, exchange or transfer any securities or a solicitation of any such offer. This communication is directed only at persons who (i) are outside the United Kingdom or (ii) have professional experience in matters relating to investments or (iii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc") of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.