GWR Group PLC
21 March 2005
For immediate release 21 March 2005
Capital Radio plc GWR Group plc
Update on proposed merger of Capital Radio plc and GWR Group plc
The Boards of Capital Radio plc (Capital Radio) and GWR Group plc (GWR) today
provided shareholdCers in both companies with an update on the proposed merger
(the 'Merger') of the two companies announced on 29 September 2004 and also on
current trading for both Groups.
Merger Update
• Proposed name of GCap Media plc for the Merged Group.
GCap Media will bring together the best of both companies and create the
UK's leading commercial radio group. GCap Media will be in a stronger
position to attract and retain the industry's best talent, obtain a greater
share of music industry content and will be able to compete more
effectively with BBC Radio.
Integration planning is well underway with the senior management team
confirmed.
• Formal documents relating to the Merger are being posted to Capital Radio
and GWR Shareholders today.
• The Merger is to be effected by way of a scheme of arrangement between
GWR and its shareholders under section 425 of the Companies Act 1985.
• The Merged Group expects to maintain Capital Radio's current dividend
levels and will seek to grow its dividend cover over time.
• The Merged Group intends to adopt a 31 March year-end.
• The Merged Group intends to publish its maiden interim statement for
the six months to 30 September 2005 in November 2005 and it is anticipated
that its first set of audited results for the year to 31 March 2006 will be
published in May 2006.
• Meetings of GWR Shareholders and Capital Radio Shareholders will be held on
15 April 2005 to approve the Merger and it is expected that the Court
will be asked to sanction the Scheme on 6th May.
• The Merger is expected to be implemented on 9 May 2005.
• It is anticipated that dealings in New Capital Radio Shares will commence
on 9 May 2005.
Summary Trading Updates
• Following the previously announced 4% decline in revenues from October
to December 2004, Capital Radio revenues are expected to increase modestly
in the January to March 2005 quarter, resulting in a 1% decrease for the
six months to 31 March 2005 year on year.
• GWR expects UK revenues to be flat for the 12 months ending 31 March 2005
compared with the previous year. In the quarter ended 31 March 2005
like-for-like revenues are forecast to be down 1% year-on-year.
Commenting on this important stage in the merger process, Ralph Bernard,
Executive Chairman of GWR said:
'We are close to completing the deal which will create the UK's leading radio
group. GCap Media will soon be seeking to compete head to head with the BBC for
audiences. This is a pivotal time for commercial radio as advances in digital
technology open up new opportunities. GCap Media will have greater scale and the
financial resources to put it in a position to take full advantage.'
David Mansfield, Chief Executive of Capital Radio said:
'During the past few months the senior management teams of Capital Radio and GWR
have been working hard developing our integration plans. Having now met many of
our new colleagues from GWR, it is clear that the breadth of talent, drive and
initiative of GCap Media's people will be the foundation of our future success.
We look forward to implementing our plans and launching the new business once
shareholder and Court approval has been secured.'
Enquiries:
Capital Radio GWR
Tel: +44 (0)20 7766 6240 Tel: +44 (0)1793 663081
David Mansfield Ralph Bernard
Peter Harris Wendy Pallot
Jane Wilson Simon Cooper
Finsbury College Hill
Tel: +44 (0)20 7251 3801 Tel: +44 (0)20 7457 2020
Rupert Younger Adrian Duffield
Julius Duncan Tom Baldock
Conference Call
There will be a conference call for analysts at 8.30 am on Tuesday 22 March.
Tel: 020 8515 2363 Password: GCap Media
Update on Proposed Merger of Capital Radio and GWR
Documents relating to the merger of the two companies have been posted to
shareholders today. Full details of the principal terms and structure of the
Merger are set out in the Scheme Document and the Listing Particulars.
The key information within the documents is as follows:
Proposed name for Merged Group
The proposed name for the Merged Group, agreed by the Boards of both Capital
Radio and GWR, is GCap Media plc (GCap Media). Shareholders of Capital Radio
will be asked to approve the name at the Extraordinary General Meeting on 15
April.
GCap Media will bring together the best of both companies to create radio's
digital future. At a pivotal time for commercial radio as advances in digital
technology open up new opportunities, GCap Media will have greater scale and the
financial resources to be in a position to take full advantage of these
opportunities, with an exciting portfolio of radio brands. As the UK's leading
commercial radio group, it will seek to compete head to head with the BBC for
audiences.
Terms of the Merger
Under the terms of the Merger, GWR Shareholders who are on the register of
members of GWR at the Scheme Record Time (currently expected to be 6.00 p.m. on
6 May 2005) will receive from Capital Radio:
for every 100 GWR Shares 60.236 New Capital Radio Shares
and so in proportion for any other number of GWR Shares held. No fractions of a
New Capital Radio share will be allotted to GWR Shareholders pursuant to the
Merger. The New Capital Radio Shares representing the aggregate of these
financial entitlements will be sold in the market and the net cash proceeds will
be distributed pro rata to the GWR Shareholders entitled thereto, except that
individual entitlements of less than £3.00 will be retained for the benefit of
the Merged Group.
The Merger remains subject to the satisfaction or waiver of the conditions set
out in Part V of the Scheme Document and Part IV of the Listing Particulars.
In order to become effective, the Scheme must be approved by GWR Shareholders
and the Court.
Due to the size of GWR relative to that of Capital Radio, the Listing Rules
require, inter alia, that the Merger be approved by a resolution of Capital
Radio Shareholders. Such approval will be sought at the Capital Radio
Extraordinary General Meeting.
Capital Radio trading update
Capital Radio today announces a trading update for the six months ending 31st
March 2005, ahead of the results due to be released on 9 May 2005.
Following the previously announced 4% decline in revenues from October to
December 2004, radio revenues are expected to increase modestly in the January
to March 2005 quarter, resulting in a 1% decrease for the six months to 31st
March 2005 year on year.
Having experienced tough advertising conditions in the past six months, the
Capital Radio Board continues to take a cautious view on market conditions and
visibility remains limited.
Easter falling in March this year has affected booking patterns. Currently,
demand for airtime in April is considerably weaker than the equivalent period
last year.
GWR trading update
GWR expects UK revenues to be flat for the 12 months ending 31 March 2005
compared with the previous year. In the quarter ended 31 March 2005
like-for-like revenues are forecast to be down 1% year-on-year compared with a
fall of 3% year-on-year during the quarter to 31 December 2004.
The Local Radio Group, which generates approximately 70% of the GWR's revenues,
forecasts total like-for-like revenues to be down by 1% year-on-year in the last
quarter. National revenues in the quarter are forecast to increase by 2%
year-on-year. Locally sourced revenue is forecast to be down 5% year-on-year,
following a strong quarter last year.
Classic FM like-for-like revenues are forecast to be down by 6% in the quarter
to 31 March 2005 following growth of 16% in the same quarter last year.
GWR remains cautious on the overall trading outlook.
GWR profit forecast
In the announcement of GWR's preliminary results for the year ended 31 March
2004, published on 26 May 2004, and in which GWR reported underlying profit
before tax of £16.5 million, the 'Outlook' section stated that the Board
expected the GWR Group to show continued improvement in its revenue and profit
performance over the coming year.
The GWR directors now forecast that, in the absence of unforeseen circumstances
and on the bases of preparation and principal assumptions set out in the Scheme
Document and the Listing Particulars, the current year underlying profit before
tax will not be less than £16.4 million.
GWR defines underlying profit before tax as profit before tax excluding goodwill
amortisation, exceptional items and discontinued items.
Part VIII of the Scheme Document and Part III(C) of the Listing Particulars
contain further information on the profit forecast, including the supporting
reports from GWR's auditors, Deloitte and Touche LLP, in the Scheme Document and
the Listing Particulars, GWR's financial advisers, UBS Limited and Bridgewell
Limited, in the Scheme Document and Capital Radio's sponsor, Credit Suisse First
Boston (Europe) Limited in the Listing Particulars.
Proposed dividend policy
Following completion of the Merger, the Merged Group intends to adopt a 31 March
year-end. The Merged Group expects to pay an interim dividend in July 2005 in
respect of the six months ended 31 March 2005, and a second interim dividend in
respect of the six months ended 30 September 2005, followed by a final dividend
in respect of the twelve months ended 31 March 2006.
The Merged Group expects to maintain current Capital Radio dividend levels and
will seek to grow its dividend cover over time.
Proposed divestment of 106 Century FM
On 22 December 2004 the Office of Fair Trading announced that it would not refer
the proposed Merger between Capital Radio and GWR to the Competition Commission.
This decision was subject to satisfactory undertakings being given to address
competition concerns identified in relation to the supply of local radio
advertising in the East Midlands. After a period of public consultation, we now
have formal acceptance of the form of undertakings and have appointed advisers
to effect the divestment of 106 Century FM in the East Midlands.
Proposed year-end and financial calendar
31 March Proposed year-end
9 May 2005 Capital Radio interim results announced
June 2005 Merged Group intends to publish 12-month pro forma figures
for the year to 31 March 2005, based on pro forma figures
for Capital Radio and full year figures for GWR
November 2005 Interim statement for the six months to 30 September 2005
May 2006 Preliminary results for the year to 31 March 2006
Indicative completion timetable
21 March 2005 Posting of documents to GWR Shareholders and Capital Radio
Shareholders
15 April 2005 GWR Court Meeting and GWR EGM
15 April 2005 Capital Radio EGM
6 May 2005* Court hearing (to sanction the Scheme)
6 May 2005* Last day of dealings in GWR Shares
9 May 2005* Effective Date of the Scheme
Commencement of dealings in the New Capital Radio Shares issued to GWR
Shareholders under the Scheme
* These dates are indicative only.
The London Stock Exchange and the UK Listing Authority will be requested
respectively to cancel trading in GWR Shares on the London Stock Exchange's
market for listed securities with effect from the close of business on 6 May
2005 and the delisting of GWR Shares from the Official List with effect from
8.00a.m on the Effective Date.
Documents posted to shareholders
Further to the announcements dated 29 September 2004, 22 December 2004 and 18
February 2005 regarding the recommended Merger of Capital Radio and GWR, the
Boards of Capital Radio and GWR announce that the formal documents relating to
the Merger are being posted to shareholders today. The posting of documents also
follows the announcement by the Office of Fair Trading ('OFT') on 8 March that
it has accepted undertakings by Capital Radio and GWR to divest 106 Century FM.
As previously advised, the Merger is to be effected by way of a scheme of
arrangement between GWR and its shareholders under section 425 of the Companies
Act 1985.
Capital Radio Shareholders will receive a circular convening an Extraordinary
General Meeting of Capital Radio Shareholders on 15 April 2005 to approve the
Merger, together with Listing Particulars containing financial information
relating to Capital Radio and GWR.
GWR Shareholders will receive a Scheme Document containing details of the scheme
of arrangement and notices of a meeting of GWR Shareholders convened by the
court to approve the Scheme and an Extraordinary General Meeting of GWR
Shareholders to approve certain other matters in relation to implementation of
the Merger. GWR Shareholders will also receive a copy of the Capital Radio
Listing Particulars referred to above.
Copies of the GWR Scheme Document, the Capital Radio Circular and the Capital
Radio Listing Particulars will be available shortly for inspection by the public
at the UK Listing Authority's Document Viewing Facility which is situated at:
Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14
5HS (tel. no. +44 (0) 20 7676 1000) during normal business hours any weekday
(Saturdays, Sundays and public holidays excepted) until the Merger becomes
effective.
Unless the context otherwise appears, terms defined in the Scheme Document and
the Listing Particulars have the same meaning in this announcement.
UBS Limited and Bridgewell Limited are each acting exclusively for GWR in
connection with the Merger and no-one else and will not be responsible to anyone
other than GWR for providing the protections afforded to their respective
clients, nor for providing advice in relation to the Merger, the contents of
this announcement or any transaction or arrangement referred to herein.
Credit Suisse First Boston (Europe) Limited, which is regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Capital
Radio and no-one else in connection with the Merger and will not be responsible
to anyone other than Capital Radio for providing the protections afforded to
clients of Credit Suisse First Boston (Europe) Limited or for providing advice
in relation to the Merger, the contents of this announcement or any transaction
or arrangement referred to herein.
Anthony Fry, who is a Managing Director of Lehman Brothers International
(Europe), is acting as a special adviser to the Board of Capital Radio and
no-one else in connection with the Merger and will not be responsible to anyone
other than Capital Radio for providing the protections afforded to clients of
Lehman Brothers International (Europe) or for providing advice in relation to
the Merger, the contents of this announcement or any transaction or arrangement
referred to herein.
Barclays, HSBC and Lloyds TSB have provided the debt finance facilities as part
of the Merger.
Securities may not be offered or sold in the United States unless they are
registered under the US Securities Act of 1933, as amended, (the 'US Securities
Act') or exempt from such registration. The New Capital Radio Shares to be
issued to GWR Shareholders under the Scheme have not been and will not be
registered under the US Securities Act (nor under the securities laws of any
state of the United States), but will be issued in reliance upon the exemption
from the registration requirements of the US Securities Act provided by section
3(a)(10) thereof. GWR Shareholders (whether or not US persons) who are or will
be 'affiliates' of GWR or Capital Radio prior to, or of Capital Radio after, the
Effective Date will be subject to certain US transfer restrictions relating to
New Capital Radio Shares received under the scheme of arrangement. These
transfer restrictions are explained in paragraph 18 of Part III of the Scheme
Document and paragraph 18 of Part I of the Listing Particulars. Neither the SEC
nor any US state securities commission has approved or disapproved of the New
Capital Radio Shares or passed upon the adequacy or accuracy of this document.
Any representation to the contrary is a criminal offence in the United States.
The relevant clearances have not been, nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus has
been lodged with, or registered by, the Australian Securities and Investments
Commission or the Japanese Ministry of Finance; and the New Capital Radio Shares
have not been, nor will they be, registered under or offered in compliance with
applicable securities laws of any state, province, territory or jurisdiction of
Canada, Australia or Japan. Accordingly, the New Capital Radio Shares may not
(unless an exemption under relevant securities laws is applicable) be offered,
sold, resold or delivered, directly or indirectly, in or into Canada, Australia
or Japan or any other jurisdiction if to do so would constitute a violation of
the relevant laws of, or require registration thereof in, such jurisdiction or
to, or for the account or benefit of, any Canadian, Australian or Japanese
person.
This announcement contains certain statements that are or may be
forward-looking. These statements typically contain words such as 'intends', '
expects', 'anticipates', 'estimates' and words of similar import. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements. These factors include, but are not limited to, factors identified
elsewhere in this document as well as the following possibilities: future
revenues are lower than expected; costs or difficulties relating to the
integration of the businesses of GWR and Capital Radio, or of other future
acquisitions, are greater than expected; expected cost savings from the
transaction or from other future acquisitions are not fully realised or are not
realised within the expected time frame; competitive pressures in the industry
increase; general economic conditions or conditions affecting the relevant
industries, whether internationally or in the places GWR and Capital Radio do
business, are less favourable than expected; and/or conditions in the securities
market are less favourable than expected. Neither GWR nor Capital Radio
undertakes any obligation to update the forward looking statements to reflect
actual results, or any change in events, conditions or assumptions or other
factors, unless required to do so by the City Code or the Listing Rules.
The GCap Media logo, developed in-house by the Capital Radio Creative Team, can
be viewed at www.gcapmedia.com.
This information is provided by RNS
The company news service from the London Stock Exchange
