23 Aug 2017 07:00
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
23 August 2017
RECOMMENDED CASH ACQUISITION
of
JIMMY CHOO PLC
by
MICHAEL KORS HOLDINGS LIMITED
to be effected
by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006
FINANCING UPDATE
On 25 July 2017, Jimmy Choo PLC ("Jimmy Choo") and Michael Kors Holdings Limited ("Michael Kors") announced that they had reached agreement on the terms of a recommended cash acquisition by which the entire issued and to be issued ordinary share capital of Jimmy Choo will be acquired by JAG Acquisitions (UK) Limited ("Michael Kors Bidco"), a wholly-owned subsidiary of Michael Kors (the "Acquisition"). The Acquisition is to be effected by means of a Court approved scheme of arrangement under Part 26 of the Companies Act 2006 (the "Scheme"). On 21 August 2017, the scheme document in relation to the Scheme (the "Scheme Document") was published by Jimmy Choo.
As more fully described in the Scheme Document, Michael Kors and certain other members of the Michael Kors group have entered into the Bridge Credit Agreement. As of 22 August 2017, the commitments under the Bridge Credit Agreement have been reduced to £344,189,745.19 following the entry by Michael Kors and certain other members of the Michael Kors group into a $1 billion Term Loan Credit Facility, which is provided as a separate tranche under Michael Kors' existing revolving credit facility pursuant to the Second Amended and Restated Credit Agreement dated as of 22 August 2017 with, among others, JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA. JPMorgan Chase Bank, N.A. acts as Lead Arranger and Goldman Sachs Bank USA, as Joint Lead Arranger, with JPMorgan Chase Bank, N.A. as Administrative Agent and Goldman Sachs Bank USA as Syndication Agent, with respect to the fully committed term loan financing provided thereunder (the "Term Loan Credit Facility").
Subject to certain conditions, the commitments under the Term Loan Credit Facility will be available until the earlier of the date which is 120 days after completion of the Acquisition and 31 January 2018, to be used to fund in part the cash consideration payable by Michael Kors Bidco to eligible Jimmy Choo shareholders in connection with the Acquisition.
The Term Loan Credit Facility is divided into two tranches, a $600 million tranche that matures on the third anniversary of the initial borrowing date (the "Tranche A-1 Term Loans") and a $400 million tranche that matures on the fifth anniversary of the initial borrowing date (the "Tranche A-2 Term Loans"). Borrowings under the Term Loan Credit Facility will be repayable in equal quarterly instalments in an annual amount equal to 10 per cent. of the original amount of the term loans, with any principal amount outstanding due and payable on the applicable maturity date. The Term Loan Credit Facility is unsecured and is guaranteed by the same members of the Michael Kors group that provide guarantees with respect to the Bridge Credit Agreement. Such obligations and guarantees may be required to be secured by security granted by such credit parties in the event that Michael Kors does not obtain or maintain investment grade credit ratings from at least two of Fitch, Moody's and Standard & Poor's.
The rate of interest payable on borrowings under the Term Loan Credit Facility is, at Michael Kors' election, equal to: (a) the aggregate of: (i) an applicable spread (ranging from 1.00 per cent. per annum to 2.00 per cent. per annum based on Michael Kors' credit ratings); and (ii) LIBOR; or (b) the aggregate of: (i) an applicable spread (ranging from 0 to 1.00 per cent per annum based on Michael Kors' credit ratings); and (ii) the greater of: (A) JPMorgan Chase Bank, N.A.'s Prime Rate; (B) the greater of the US federal funds effective rate and the US overnight bank funding rate, plus 0.5 per cent.; and (C) one month LIBOR plus 1.00 per cent. An agency fee, commitment fee, arrangement fee and upfront fee are also payable under the terms of the Term Loan Credit Facility.
The Term Loan Credit Facility contains warranties, representations, covenants and events of default (subject to agreed exceptions, materiality tests, carve outs and grace periods) that are customary for a credit agreement of this nature. These include restrictions on indebtedness, liens, disposals, acquisitions, guarantees and distributions, a leverage covenant, and a cross default event of default.
Michael Kors has entered into a forward contract with JPMorgan Chase Bank, N.A. for delivery of sterling in the amount of $1.45 billion. The forward contract will enable Michael Kors to convert its US dollar borrowings under the Term Loan Credit Facility and the proceeds of debt securities issued prior to the Effective Date into the sterling funds required to fund the cash consideration payable to Scheme Shareholders under the terms of the Acquisition.
It is currently contemplated that the commitments under the Bridge Credit Agreement will be further reduced or refinanced by the issuance of debt securities prior to the Effective Date.
A copy of the Term Loan Credit Facility will be available at http://investors.michaelkors.com.
Terms defined in the Scheme Document have the same meanings in this announcement.
Enquiries:
Michael Kors
Christina Coronios +1 201 691 6133
InvestorRelations@MichaelKors.com
ICR, Inc.
Jean Fontana (investor relations) +1 203 682 8200
jean.fontana@icrinc.com
Alecia Pulman (media) +1 646 277 1231
KorsPR@icrinc.com
Goldman Sachs (lead financial adviser to Michael Kors)
David Friedland +1 212 902 1000
Jennifer Davis
Nick Harper +44 (0) 20 7774 1000
J.P. Morgan (financial adviser to Michael Kors)
Nikolas Johnston +1 212 270 6000
Lorenzo Colonna di Paliano
Dwayne Lysaght +44 (0) 207 742 4000
Adam Laursen
Further information
This Announcement is for information purposes only and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Jimmy Choo in any jurisdiction in contravention of applicable law. The Acquisition will be made solely by means of the Scheme Document or Offer Document or any document by which the Acquisition is made, which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Acquisition. Any vote in respect of the Scheme or other response in relation to the Acquisition should be made only on the basis on the information contained in the Scheme Document.
Please be aware that addresses, electronic addresses and certain other information provided by Jimmy Choo Shareholders, persons with information rights and other relevant persons for the receipt of communications from Jimmy Choo may be provided to Michael Kors Bidco during the offer period as required under Section 4 of Appendix 4 of the City Code to comply with Rule 2.11(c).
Goldman Sachs, which is authorised by the PRA and regulated by the FCA and the PRA in the UK, is acting exclusively for Michael Kors and Michael Kors Bidco in connection with the matters set out in this Announcement and for no one else and will not regard any other person as its client in relation to the Acquisition and the other matters referred to in this Announcement and will not be responsible to anyone other than Michael Kors and Michael Kors Bidco for providing the protections afforded to clients of Goldman Sachs or for providing advice in connection with the Acquisition and any other matter referred to in this Announcement.
J.P. Morgan Securities LLC, together with its affiliate J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove and which is authorised in the United Kingdom by the PRA and regulated in the United Kingdom by the PRA and the FCA) ("J.P. Morgan"), is acting exclusively for Michael Kors and Michael Kors Bidco in connection with the matters set out in this Announcement and for no one else and will not be responsible to anyone other than Michael Kors and Michael Kors Bidco for providing the protections afforded to their clients, or for giving advice in connection with any matter referred to in this Announcement.
Overseas jurisdictions
The release, publication or distribution of this document in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom to vote their Jimmy Choo Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This document has been prepared for the purposes of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside of England and Wales.
Unless otherwise determined by Michael Kors Bidco or required by the City Code, and permitted by applicable law and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Scheme by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this document and all documents relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this document and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction. If the Acquisition is implemented by way of Takeover Offer, unless otherwise permitted by applicable law or regulation, the Takeover Offer may not be made, directly or indirectly, in or into or by use of mail or any other means or instrumentality (including, without limitation, facsimile, email or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Takeover Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.
The availability of the Acquisition to Jimmy Choo Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.
Additional information for US investors
The Acquisition relates to the shares of an English company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. Neither the proxy solicitation rules nor the tender offer rules under the US Securities Exchange Act of 1934, as amended (the "US Exchange Act"), will apply to the Acquisition. Moreover, the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom and under the City Code to schemes of arrangement, which differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules. If, in the future, Michael Kors exercises the right to implement the proposed acquisition by way of a Takeover Offer, the proposed acquisition will be made in compliance with applicable U.S. laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder. Financial information included in this document has been prepared, unless specifically stated otherwise, in accordance with accounting standards applicable in the UK and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US.
It may be difficult for US holders of Jimmy Choo Shares to enforce their rights and claims arising out of the US federal securities laws, since Michael Kors, Michael Kors Bidco and Jimmy Choo are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US holders of Jimmy Choo Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement.
The receipt of cash pursuant to the Acquisition by a US holder as consideration for the transfer of its Scheme Shares pursuant to the Scheme will likely be a taxable transaction for United States federal income tax purposes and potentially under any applicable United States state or local, as well as foreign and other, tax laws. Each Jimmy Choo Shareholder is urged to consult his or her independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him or her.
Forward looking statements
This document (including information incorporated by reference in this document), oral statements made regarding the Acquisition, and other information published by Michael Kors, Michael Kors Bidco and Jimmy Choo contain statements which are, or may be deemed to be, "forward-looking statements". Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Michael Kors, Michael Kors Bidco and Jimmy Choo about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. The forward-looking statements contained in this document include statements relating to the expected effects of the Acquisition on Michael Kors, Michael Kors Bidco and Jimmy Choo, the expected timing and scope of the Acquisition and other statements other than historical facts. All statements other than statements of historical facts included in this document may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "should", "could", "would", "may", "anticipates", "estimates", "synergy", "cost-saving", "projects", "goal", "strategy", "budget", "forecast" or "might", or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Jimmy Choo's and Michael Kors' operations and benefits from the Acquisition; and (iii) the effects of government regulation on Michael Kors', Michael Kors Bidco's or Jimmy Choo's business.
These forward-looking statements are not guarantees of future financial performance. Except as expressly provided in this document, they have not been reviewed by the auditors of Michael Kors or Jimmy Choo or their respective financial advisers. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. These factors include the satisfaction of the Conditions, as well as additional factors such as: Michael Kors' ability to integrate the businesses successfully and to achieve anticipated benefits of the acquisition; the risk of disruptions to Michael Kors' or Jimmy Choo's businesses; the negative effects of the announcement of the Acquisition or the consummation of the Acquisition on the market price of the Michael Kors' ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Acquisition; fluctuations in demand for Jimmy Choo's and Michael Kors' products; changes in consumer traffic and retail trends; loss of market share and industry competition; fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions, as well as those risks set forth in the reports that Michael Kors files from time to time with the U.S. Securities and Exchange Commission. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither Michael Kors nor Michael Kors Bidco, nor Jimmy Choo, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. All subsequent oral or written forward looking statements attributable to Michael Kors, Michael Kors Bidco or Jimmy Choo or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. Unless otherwise required by applicable law, Michael Kors, Michael Kors Bidco and Jimmy Choo disclaim any obligation to update or revise any forward looking or other statements contained herein other than in accordance with their legal and regulatory obligations.
Rounding
Certain figures included in this document have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them
No profit forecasts or estimates
No statement in this document, or incorporated by reference into this document, is intended to be or is to be construed as a profit forecast or estimate for any period and no statement in this document should be interpreted to mean that earnings or earnings per share for Michael Kors, Michael Kors Bidco or Jimmy Choo, as appropriate, for the current or future financial years, or those of the Combined Group, would necessarily match or exceed the historical published earnings or earnings per share for Michael Kors, Michael Kors Bidco or Jimmy Choo, as appropriate.
Disclosure requirements of the City Code
Under Rule 8.3(a) of the City Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the Business Day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Publication on website and availability of hard copies
A copy of this announcement and the documents required to be published by Rule 26 of the City Code will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Michael Kors' website at http://investors.michaelkors.com. For the avoidance of doubt, the contents of this website are not incorporated into and do not form part of this document.
Electronic communications
Please be aware that addresses, electronic addresses and other information provided by Jimmy Choo Shareholders, persons with information rights and other relevant persons for the receipt of communications from Jimmy Choo may be provided to Michael Kors during the Offer Period as required under Section 4 of Appendix 4 of the City Code.