8 Aug 2014 08:03
INFORMATION STATEMENT
August 8, 2014
Dear Global Depositary Receipt Holder:
Reference is hereby made to the Amended and Restated Deposit Agreement dated May 10, 2010 (the "Deposit Agreement") between Bank Audi S.A.L. (the "Bank") and Deutsche Bank Trust Company Americas, in its capacity as depositary (the "Depositary"), relating to Global Depositary Receipts (the "GDRs") issued in respect of common shares of the Bank with a nominal value of L.L. 1,299 per common share (the "Common Shares"). Each GDR represents one Common Share. Capitalized terms used herein without otherwise being defined shall have the respective meanings assigned thereto in the Deposit Agreement.
The Depositary, as the shareholder of record of Common Shares evidenced by GDRs, has received notice of the Extraordinary General Meeting of the Shareholders of the Bank to be held on August 26, 2014 (the "General Meeting"), at the Bank's head office in Beirut, which (among other things) sets forth the agenda for such General Meeting. References in this Information Statement (this "Information Statement") to the "Holder" of any GDR shall mean the person registered as the holder of such GDR on the books of the Depositary. In accordance with Clause 13 of the Deposit Agreement and Condition 23 of the GDRs, a copy of such notice and agenda is being sent hereby to each person who is a Holder on August 8, 2014, which is the record date (the "Record Date") established by the Depositary for this purpose (which is as near as practicable to August 25, 2014, being the corresponding record date set by the Bank in respect of the General Meeting).
As set forth in such notice, at the General Meeting, shareholders of the Bank, including the Depositary, will be asked to consider and vote upon the following agenda:
1. the increase of the Bank's capital through the issuance of 50,000,000 Common Shares (the "New Shares") and the determination of the amount, terms and conditions of said increase and its full, or partial, allocation;
2. the waiver of shareholders' pre-emptive rights in respect of (i) up to 10,000,000 New Shares to be allocated to new shareholders and (ii) unexercised Rights (as defined below), provided that, under this sub-clause (ii), shareholders will have pre-emptive rights in respect of the initial allocation of remaining New Shares pro rata to the number of Common Shares held by each shareholder;
3. the issuance of three warrants per New Share to purchase a share in the Bank's subsidiary Odea Bank A.Ş. ("Odeabank");
4. the listing of such newly-issued Common Shares on the Beirut Stock Exchange;
5. the amendment of the Bank's By-Laws (the "By-Laws"), including, in particular, Article 6 and Article 8 thereof, in order to reflect the actions described in items 1 and 4 above;
6. the submission of the actions described above for approval by the Lebanese regulatory authorities; and
7. the granting to the Board of Directors and to each of its Chairman and/or the CEO of the necessary powers to seek required approvals, to set deadlines and to perform all other procedures and acts in pursuit of all of the foregoing resolutions.
Each Holder is hereby requested to return to the Depositary voting instructions, as provided in this Information Statement, by which such Holder may give instructions to the Depositary to vote for or against each and any resolution specified in such agenda.
After careful consideration, the Board of Directors recommends a vote in favour of each such resolution.
Yours very truly,
Raymond Audi
Chairman - General Manager
INFORMATION STATEMENT
Table of Contents
Page
Available Information............................................................................................................................................................................. 3
Voting Rights of Holders....................................................................................................................................................................... 3
Summary Background Information....................................................................................................................................................... 3
Voting Instructions................................................................................................................................................................................. 6
Information regarding Bank Audi S.A.L.............................................................................................................................................. 7
AVAILABLE INFORMATION
No person has been authorized to give any information or to make any representation other than those contained in this Information Statement, and, if given or made, such information or representation must not be relied upon as having been authorized by the Bank or Odeabank. No delivery of this Information Statement nor any offer or distribution of any securities to which this Information Statement relates shall, under any circumstances, create any implication that there has been no change in the affairs of the Bank or Odeabank since the date of this Information Statement or that any information contained or referred to herein is correct as of any time subsequent to the date as of which it is given. This Information Statement does not constitute the solicitation of a proxy to or from any person in any jurisdiction to or from whom it is unlawful to make such offer or solicitation within such jurisdiction.
VOTING RIGHTS OF HOLDERS
In accordance with Condition 12 of the GDRs, the Depositary is seeking voting instructions from the Holders in order to exercise or cause to be exercised the voting rights in respect of the Deposited Shares as directed by such voting instructions to the extent permitted by Lebanese Law.
Common Shares which have been withdrawn from the deposit facility under the Deposit Agreement and transferred on the Bank's register of members to a person other than the Depositary or its nominee may be voted by the registered owner thereof; however, Holders may not receive sufficient advance notice of the General Meeting to enable them to withdraw Deposited Shares and vote at the General Meeting.
SUMMARY BACKGROUND INFORMATION
I. Issuance of Common Shares
In its meeting held on July 4, 2014, the Board of Directors took note of the management's preliminary proposal to increase the Bank's capital through the issuance of Common Shares, a portion of which would be offered to investors that are not current shareholders. In preparation of said issuance and offer to non-shareholders and in application of Article 113 of the Lebanese Commercial Law, the Board resolved to apply for the appointment of an expert (the "Expert") by the commercial court, to be charged with the preparing a report containing a valuation of the Bank (the "Expert Report"). The issuance of the New Shares is subject, among other things, to receipt of an appropriate Expert Report, which is expected to be issued on or before of the date of the General Meeting.
On August 6, 2014, the court-appointed Expert submitted the Expert Report valuing the Bank's Common Share at U.S.$6.09.
In its meeting held on August 7, 2014, the Board of Directors, pursuant to a recommendation of its Group Executive Committee, determined that it would be beneficial to proceed with a capital increase through the issuance of new Common Shares (the "New Shares"), together with three Warrants (as defined below) per New Share.
In making such determination, the Board of Directors considered: (i) the structure of the Bank's current share capital; (ii) the Bank's expected growth; (iii) the current results and prospects of Odeabank and of the other entities of the Bank; (iv) the current market conditions for the issuance of New Shares; (v) the market price of the Common Shares, including the last 2 years' weighted average listed price of the Common Shares on the Beirut Stock Exchange (U.S.$6.04 per Common Share) and the GDRs on the London Stock Exchange and the Beirut Stock Exchange (U.S.$6.38 per GDR); and (vi) the aforementioned Expert Report.
The Board of Directors noted that, if the issuance of New Shares is approved by the shareholders and by the Lebanese regulatory authorities, the net proceeds thereof will be used to strengthen the Bank's regulatory capital and to fund the Bank's expansion within and outside Lebanon.
Accordingly, the Board of Directors resolved to propose to the General Meeting to proceed with a capital increase (the "Capital Increase") as per the following terms:
Issue Size............................................... | The Capital Increase is expected to be comprised of the First Capital Increase and the Second Capital Increase. 50,000,000 New Shares are expected to be issued in the Capital Increase, together with three Warrants (as defined below) per New Share. The "First Capital Increase" is initially reserved to existing shareholders (including Holders of the GDRs) by way of an issue of rights (the "Rights"), together with three Warrants per New Share. Each existing shareholder shall be allocated Rights pro rata to the number of shares held by such shareholder. The "Second Capital Increase" is expected to be comprised of the issuance of up to 10,000,000 New Shares, together with three Warrants per New Share, reserved to new investors (provided that the shareholders of the Bank, acting by way of one or more Extraordinary General Meetings, have waived pre-emptive rights in respect thereof). |
Issue Price............................................. | U.S.$6.00 per New Share. The Warrants will be issued at no additional consideration. (The New Shares and the Warrants are referred to together as the "Securities".) |
Warrants................................................ | Each Warrant will entitle the holder, during the Warrant Exercise Period, to purchase a share in the Bank's subsidiary, Odeabank. |
Warrant Exercise Price...................... | U.S.$0.95 per share of Odeabank (each, an "Odeabank Share") (provided that a 10:1 reverse stock split of the shares of Odeabank has occurred). The Warrant Exercise Price will be subject to adjustment in the event of changes to the par or nominal value of Odeabank Shares (i.e., as a result of any additional stock splits, reverse stock splits or similar events). There will be no adjustment of the Warrant Exercise Price in the event of the issuance of new Odeabank Shares whether issued at, below or above par value. |
Warrant Exercise Period.................... | Expected to be a 30-day period commencing on May 15, 2019. The Bank will use its reasonable endeavours to procure a listing of the Odeabank Shares on the Istanbul Stock Exchange or another international stock exchange prior to the beginning of the Warrant Exercise Period. |
Unexercised Rights.............................. | Securities relating to unexercised Rights (the "Residual Securities"), including unexercised Rights allocated to the Holders of GDRs representing shares of the Bank, will be allocated by the Bank in its sole discretion. Holders of the GDRs may request an allocation of Residual Securities, although there is no assurance that Residual Securities will be allocated to such Holders. |
Listings.................................................. | Application shall be made to list the New Shares on the Beirut Stock Exchange. GDRs representing New Shares shall be listed on the London Stock Exchange under the Bank's existing block listing, and will also be listed on the Beirut Stock Exchange. The Warrants will not be listed. However, the Bank is expected to appoint one or more Lebanese financial institutions to make a market in the Warrants, although no assurance can be made that the market for the Warrants will be liquid or that a market will develop at all. |
Ranking of the New Shares................ | Upon issue, the New Shares shall rank pari passu with all other issued and outstanding common shares of the Bank. The New Shares shall rank junior to all issued and outstanding Preferred Shares of the Bank in respect of the right to receive distributions of assets payable in respect of the net profits of the Bank and the right to receive payments out of assets of the Bank upon a voluntary or involuntary liquidation or winding up of the Bank. The New Shares will also rank junior to debt and other similar obligations of the Bank, such that, in the event of the liquidation, dissolution or winding up of the Bank, the holders of debt instruments and other similar obligations of the Bank would be entitled to be repaid prior to the payment of any amounts to holders of the New Shares. |
The above is an indicative summary of certain terms and conditions proposed to be applicable to the Capital Increase. Neither the terms and conditions set forth above nor this Information Statement shall constitute an offer of, or an invitation to subscribe for or purchase, any Securities.
Holders will be offered the opportunity to participate in the offering during the Offering Period that will be announced in due course and to review the complete terms and conditions of the Capital Increase.
The issuance of the New Shares is subject to the approval of the Central Bank of Lebanon and, where applicable, the Capital Markets Authority of Lebanon.
The Extraordinary General Meeting is invited to approve the aforementioned issue of the Securities pursuant to the Capital Increase, as per the above terms.
II. Waiver of Preemptive RightsThe Extraordinary General Meeting is invited to waive shareholders' pre-emptive rights in respect of (i) up to 10,000,000 New Shares to be allocated to new shareholders and (ii) unexercised Rights, provided that, under this sub-clause (ii), shareholders will have pre-emptive rights in respect of the initial allocation of remaining New Shares pro rata to the number of Common Shares held by each shareholder;
III. Amendments to the By-Laws
Pursuant to applicable regulations, the approval of the actions described under section I above necessitates resulting amendments to the Bank's By-Laws.
Accordingly, in its meeting held on August 7, 2014, the Board of Directors also resolved to propose to the General Meeting to approve, upon its approval of the action described above, the amendment of Articles 6 and 8 of the By-Laws to reflect the matters specified under section I above.
IV. Grant of Power
In its meeting held on August 7, 2014, the Board of Directors noted that the actions described under sections I, II and III above require the obtaining of certain authorizations and the completion of certain other acts. Accordingly, the Board of Directors resolved to propose to the Extraordinary General Meeting to approve, upon its approval of the actions described under sections I, II and III, to empower the Board of Directors and each of its Chairman and/or the Group CEO to seek all necessary authorizations (including, in particular, the approval of the Central Bank of Lebanon acting through its Central Council) and to perform all acts as may be necessary or advisable in the completion of such matters as are approved.
V. Summary of Matters Submitted to the General Meeting for Approval
Further to the above, the Board of Directors has convened the General Meeting to consider and approve the following resolutions:
1. the increase of the Bank's capital through the issuance of 50,000,000 Common Shares and the determination of the amount, terms and conditions of said increase and its full, or partial, allocation;
2. the waiver of shareholders' pre-emptive rights in respect of (i) up to 10,000,000 New Shares to be allocated to new shareholders and (ii) unexercised Rights, provided that, under this sub-clause (ii), shareholders will have pre-emptive rights in respect of the initial allocation of remaining New Shares pro rata to the number of Common Shares held by each shareholder;
3. the issuance of three warrants per New Share to purchase a share in the Bank's subsidiary Odea Bank A.Ş.;
4. the listing of such newly-issued Common Shares on the Beirut Stock Exchange;
5. the amendment of the Bank's By-Laws, including, in particular, Article 6 and Article 8 thereof, in order to reflect the actions described in items 1 and 4 above;
6. the submission of the actions described above for approval by the Lebanese regulatory authorities; and
7. the granting to the Board of Directors and to each of its Chairman and/or the CEO of the necessary powers to seek required approvals, to set deadlines and to perform all other procedures and acts in pursuit of all of the foregoing resolutions.
VOTING INSTRUCTIONS
Each Holder is hereby requested to return to the Depositary voting instructions, in the form provided separately by the Depositary for this purpose, by which such Holder may give instructions to the Depositary to vote for or against each and any resolution specified in the agenda for the General Meeting.
In order for a voting instruction to be valid, the above-mentioned form of voting instructions must be completed and duly signed by the respective Holder (or in the case of instructions received from the clearing systems should be received by authenticated SWIFT message or market standard authenticated message format) and returned to the Depositary by the date that the Depositary shall specify in such form of voting instructions.
INFORMATION REGARDING BANK AUDI S.A.L.
For information regarding the Bank, Holders are advised to review the following documents:
· the Bank's Annual Report for 2013;
· Odeabank's Annual Report for 2013;
· the audited financial statements of the Bank (prepared in accordance with International Financial Accounting Standards) as of, and for the year ended, December 31, 2013 and the accompanying notes and auditors' report;
· the audited financial statements of Odeabank (prepared in accordance with International Financial Accounting Standards) as of, and for the year ended, December 31, 2013 and the accompanying notes and auditor's report; and
· the consolidated unaudited financial statements of the Bank as at June 30, 2014.
The above documents (in Arabic or English, or both, as the case may be) may be obtained free of charge from the Bank and the Depositary at the addresses set forth below:
The Depositary:
Deutsche Bank Trust Company Americas
Winchester House
1 Great Winchester Street
London EC2N 2DB
Attn: Mr. Stanley Jones
The Bank:
Bank Audi S.A.L.
Bab IdrissOmar Daouk StreetBanque Audi Plaza, P.O. Box 11-2560BeirutLebanon
Attn: The Corporate Secretary