Jpel Priv Eqty Regulatory News (JPEL)

18 Feb 2008 09:46

Bear Stearns Private Equity Limited18 February 2008 Company Bear Stearns Private Equity Limited Headline Bear Stearns Private Equity Limited to Acquire Macquarie Private Capital Group (ASX: MPG) Bear Stearns Private Equity LimitedSt. Martin's House, Le Bordage, St Peter Port, Guernsey GY1 4AN 18 February 2008 Regulatory News ServiceLondon Stock ExchangeLondonEC4M 7LS Guernsey - 18 February 2008 Bear Stearns Private Equity Limited to Acquire Macquarie Private Capital Group(ASX: MPG) Bear Stearns Private Equity Limited ("BSPEL") (LSE: BPLE) today announces thatit has signed a conditional agreement to acquire all of the issued andoutstanding stapled securities of Macquarie Private Capital Group ("MPCG") in anall cash take-private transaction (the "Transaction") valued at A$115.5 million(approximately US$104.9 million) which will be funded out of BSPEL's existingcash reserves and banking facilities. MPCG is an Australian Stock Exchange listed private equity fund (ASX: MPG) thatinvests in a broad range of unlisted companies and assets. The MPCG portfolioconsists of exposure to 44 private equity fund managers and over 300 underlyingportfolio companies. Approximately 62% of the underlying portfolio companies arelocated in Asia, 14% in Europe and 24% in North America. BSPEL's managersbelieve that this portfolio is extremely complementary to the existingportfolio, with approximately 60% of assets in Europe, 28% in North America, 9%in Asia, and 3% in other regions as at 31 December 2007. Under the terms of the Transaction, MPCG shareholders will receive A$1.062 incash for each security owned, representing a 4% discount to MPCG's net assetvalue as at 31 January 2008, a 56% premium to MPCG's last closing price ofA$0.68 per stapled security, and a 34% premium to MPCG's 6-month volume weightedaverage price of A$0.79 as at 15 February 2008. As part of the Transaction, thecurrent manager of MPCG, Macquarie Investment Management Limited ("MIML"), willbe retained as manager of MPCG post transaction. Troy Duncan, Manager of BSPEL commented: "the Transaction represents BSPEL'sfirst direct investment in the Australian market and continues to reinforceBSPEL's global approach to private equity investing. We believe that as aresult of the MPCG acquisition, BSPEL's portfolio will be well positioned tocapitalize on several favourable current macro trends in the Australian andAsian markets." "The complexities involved in privatizing listed private equity trusts requirecreative deal making capabilities that satisfy the requirements of a number ofconstituents. This is why these transactions seldom occur," commented GregGetschow, Manager of BSPEL. "We believe that our ability to execute atransaction of this kind demonstrates BSPEL's competitive advantage in theprivate equity secondary market." A copy of the announcement released by MPCG to the Australian Stock Exchangerelating to the Transaction is annexed hereto which sets out in further detailthe terms and conditions of the Transaction. BSPEL is being represented by Barwon Investment Partners as its financialadviser, Jones Day as its legal adviser and KPMG as its tax and accountingadvisor. MPCG is being represented by Rothschild Australia Limited as its financialadviser and Minter Ellison as its legal adviser. About Bear Stearns Private Equity Limited Bear Stearns Private Equity Limited ("BSPEL") is a London-quoted,Guernsey-registered, investment company that invests with the world's leadingprivate equity fund managers. BSPEL invests in seasoned private equity assetsthrough secondary purchases and direct investments in Europe, North America andAsia. BSPEL employs a global macro approach to private equity investingdesigned to generate superior risk adjusted returns and seeks to diversifyinvestments by manager, industry, geography, asset class, stage and vintageyear. BSPEL is managed by Bear Stearns Asset Management Inc. and Bear StearnsAsset Management Limited, each a wholly-owned subsidiary of The Bear StearnsCompanies Inc. For more information on BSPEL, please visit the Company's websiteat www.bspel.com About Macquarie Private Capital Group Macquarie Private Capital Group ("MPCG") is an ASX listed private equity group(ASX: MPG) that invests in a broad range of unlisted companies and assets,primarily through funds managed by a range of specialist private equity managerssuch as Quadrant Private Equity, Catalyst, Archer Capital, Blackstone, theCarlyle Group, Ironbridge, and Pacific Equity Partners. Private equityinvestments are made across a range of sectors including venture, expansion andbuy-out capital, infrastructure, property and commodities. MPCG's manager,Macquarie Investment Management Limited ("MIML"), is an experienced manager witha strong track record in private equity funds management. As at 30 September2007, MIML managed or advised clients representing approximately $3 billion ofprivate equity investments. For more information on MPCG, please visit theCompany's website at www.macquarie.com.au/au/mpg BSPEL: MPCG: Rosemary DeRise Colin RichardsonBear Stearns Asset Management Marcus Wyborn+1 212 272 8756 Rothschild Australia Limitedrderise@bear.com +61 2 9323 2000 18 February 2008 ASX ANNOUNCEMENT Macquarie Private Capital Group announces a recommended acquisition proposal from Bear Stearns Private Equity Limited • Cash offer of $1.062 per security(1)• Offer premium of 56% to last closing security price• Unanimous recommendation from the Independent Board Committee in the absence of a superior proposal and subject to the opinion of an Independent Expert• Transaction supported by major shareholder• Transaction to be implemented by Schemes of Arrangement and Trust Scheme Macquarie Private Capital Group ("MPCG") (ASX: MPG) today advises that it hassigned a Scheme Implementation Agreement with Bear Stearns Private EquityLimited ("BSPEL") (LSE: BPLE) in relation to a proposal ("BSPEL Proposal") toacquire all the stapled securities in MPCG by way of interconditional Schemes ofArrangement and Trust Scheme ("Scheme"). Under the terms of the BSPEL Proposal, MPCG securityholders will receive a totalcash payment of $1.062 per security (subject to adjustment for movements in thepost-tax NAV before securityholders vote on the Scheme1). The cashconsideration will include a fully franked special distribution of up to $0.068per security expected to be paid on or before the implementation date for theScheme, but only if the Scheme is approved and the Scheme conditions aresatisfied. For those securityholders who are able to fully utilise the frankingcredits, the value of the BSPEL Proposal is $1.091 per security (subject toadjustment for movements in the post-tax NAV before securityholders vote on theScheme1). In addition to the consideration outlined above, securityholders who weresecurityholders at the record date of 28 December 2007 will also continue toreceive the estimated $0.02 cash distribution per security being paid on 14March 2008 as outlined in the market announcement on 13 December 2007. The $1.062 cash per stapled security (ex franking credit benefit) offer price(subject to adjustment for movements in post-tax NAV) represents: • A 56% premium to MPCG's closing security price of $0.68 on 15February 2008; • A 42% premium to MPCG's 3 month volume weighted average price forMPCG stapled securities of $0.75 as at 15 February 2008; • A 34% premium to MPCG's 6 month volume weighted average price forMPCG stapled securities of $0.79 as at 15 February 2008; and • A 2% discount to MPCG's post-tax NAV per security of $1.087 as at31 December 2007 (excluding franking benefits) and a discount of 4% (excludingfranking benefits) to the 31 January 2008 post-tax NAV of $1.106 (1% discountincluding the full franking credit benefit). The transaction will be implemented by interconditional Schemes of Arrangementand a Trust Scheme (reflecting MPCG's corporate and trust structure) and will besupported by the opinion of an Independent Expert as to whether the Scheme is inthe best interests of MPCG securityholders. The Scheme is subject to approvalsfrom MPCG securityholders and the Court (amongst other conditions). The Independent Board Committee of MPCG(2) intend to unanimously recommend thatMPCG securityholders approve the Scheme, in the absence of a superior proposaland if the Independent Expert opines that the BSPEL Proposal is in the bestinterests of securityholders and is fair and reasonable. The other members ofMPCG's board support the decision of the Independent Directors. Macquarie Select Opportunities Trust, as 47.9% securityholder, has indicated tothe Independent Directors that it supports the BSPEL Proposal and that itspresent intention is to vote in favour of the Scheme, in the absence of asuperior proposal and subject to satisfaction of relevant legal obligations andthe conclusion of the Independent Expert. As part of the BSPEL Proposal, the current manager of MPCG, Macquarie InvestmentManagement Limited ("MIML"), will be retained as manager of MPCG posttransaction. The commercial arrangements of the proposed management agreementwill be on arms-length terms as negotiated between BSPEL and MIML, and will besummarised in the Scheme Booklet. Commenting on the proposal, Neil Tomlin, MPCG Independent Director, said: "The Independent Directors believe the cash offer of $1.0621 per stapledsecurity represents a significant premium to the trading price of MPCG over anextended period and is an attractive opportunity for securityholders to lock invalue for their holdings in MPCG. Consistent with our announced strategy, theBoard has actively considered a range of possible options to deliver value tosecurityholders and assist in the reduction of the discount to NAV which MPCGhas consistently traded at since mid 2005. The BSPEL proposal has beenconsidered as part of this process." Commenting on the proposal, Troy Duncan, Manager of BSPEL said: "The MPCG transaction represents BSPEL's first direct investment in theAustralian market and continues to reinforce our macro approach to privateequity investing. We believe that the MPCG portfolio will enhance thediversification of BSPEL's overall portfolio by adding exposure to theAustralian and Asian markets." Greg Getschow, Manager of BSPEL added: "We have analysed a number of opportunities in the listed private equity marketin both Europe and Asia and we are delighted to be able to announce our intentto acquire MPCG." The Scheme is subject to the Court convening meetings of MPCG's securityholders.At the Scheme meetings, a majority in number of those voting and who representat least 75% of the votes cast must approve the Scheme. If the requisitesecurityholder approval is obtained, the Scheme will then need to be approved bythe Court at a second Court hearing. If the Court approves the Scheme, theScheme will be binding on all securityholders. The detailed terms and conditions of the BSPEL Proposal are contained in theScheme Implementation Agreement, a copy of which is attached to thisannouncement. The Scheme Implementation Agreement includes a non-solicitationobligation (but this obligation does not prevent MPCG from responding to asuperior proposal) and a break fee of $1,155,000 payable by MPCG to BSPEL incertain circumstances. A reverse break fee of the same amount may be payable byBSPEL to MPCG in the event of a material breach of the Scheme ImplementationAgreement. The Scheme Booklet containing full details of the BSPEL Proposal, including acopy of the Independent Expert's Report, is expected to be sent to MPCGsecurityholders in late March. The Scheme meeting is expected to be held in lateApril or early May. The specific dates will be announced after the dispatch ofthe Scheme Booklet and are subject to change. If the Scheme is approved by securityholders and all conditions are satisfied,BSPEL will acquire all MPCG securities and MPCG will be de-listed. Theconditions of the Scheme are set out in the Scheme Implementation Agreement andsummarised in the attachment to this announcement. The MPCG portfolio has an approximate 40% exposure to foreign currencies. Thestrategy announced to the market has been to hedge its foreign currencyexposures so that the exposure to foreign currencies does not materially exceed25% of Net Assets. To neutralise the potential impact of the completionadjustment as it relates to movements in foreign currency, MPCG will enter intoshort-term foreign exchange hedging arrangements. MPCG securityholders should consult their stockbroker, accountant or financialadviser if they are uncertain about the impact of the offer on their particularinvestment objectives. MPCG is being advised by Rothschild Australia Limited as its financial adviserand Minter Ellison as its legal adviser. For further information, please contact: MPCG Colin Richardson / Marcus Wyborn Rothschild Australia Limited +61 2 9323 2000 About Macquarie Private Capital Group Macquarie Private Capital Group ("MPCG") is an ASX listed private equity group(ASX: MPG) that invests in a broad range of unlisted companies and assets,primarily through funds managed by a range of specialist private equity managerssuch as Quadrant Private Equity, Catalyst, Archer Capital, Blackstone, theCarlyle Group, Ironbridge, and Pacific Equity Partners. Private equityinvestments are made across a range of sectors including venture, expansion andbuy-out capital, infrastructure, property and commodities. MPCG seeks to deliver long term returns in excess of the Australian share marketprimarily through capital growth over a 5 to 10 year investment period byinvesting in private equity across a diversified and established portfolio ofprivate equity investments. MPCG's Net Asset Value ("NAV") as at 31 December 2007 was $118m, representing$1.087 NAV per security on a post tax basis. Since listing in March 2005 to 31December 2007, MPCG delivered a return of 8.3% per annum on a post-tax basis and10.7% per annum on a pre tax basis. MPCG's manager, Macquarie Investment Management Limited ("MIML"), is anexperienced manager with a strong track record in private equity fundsmanagement. As at 30 September 2007, MIML managed or advised clientsrepresenting approximately $3bn of private equity investments. For more information on MPCG, please visit the Company's website atwww.macquarie.com.au/au/mpg About Bear Stearns Private Equity Limited Bear Stearns Private Equity Limited ("BSPEL") is a London-quoted, Guernsey-registered, investment company that invests with the world's leading privateequity fund managers. BSPEL invests in seasoned private equity assets primarilythrough secondary purchases and direct investments in Europe, North America andAsia. BSPEL employs a global macro approach to private equity investingdesigned to generate superior risk adjusted returns and seeks to diversifyinvestments by manager, industry, geography, asset class, stage and vintageyear. BSPEL is managed by Bear Stearns Asset Management Inc. ("BSAM Inc.") and BearStearns Asset Management Limited, each a wholly-owned subsidiary of The BearStearns Companies Inc. BSAM Inc. currently manages private equity portfoliosthat include over 175 separate private equity funds with total commitments ofapproximately US $1.8 bn. BSPEL's unaudited Net Asset Value per share ("NAV") as at 31 December 2007 wasUS $1.70. Since inception on 30 June 2005, BSPEL has delivered a total return of67.7%, representing an annualised return of 22.7% to shareholders. The Bear Stearns Companies Inc. is a publicly listed company on the New YorkStock Exchange under the symbol BSC. The Bear Stearns Companies Inc., throughits subsidiaries and affiliates, employs approximately 14,000 individuals andhas 19 offices worldwide. The Bear Stearns Companies Inc. had approximately US $80.3 bn in total capitalas at 30 November 2007, making it among the top ten largest US securities firmsin terms of total capital. Annexure to announcement The BSPEL Proposal is subject to a number of conditions that are set out in fullin clause 3.1 of the attached copy of the Scheme Implementation Agreement. Insummary, those conditions relate to the following matters: • MPCG securityholder approval; • no injunction or other legal restraint or prohibitionrestraining or prohibiting the Scheme is in effect; • no MPCG prescribed occurrence occurs (as defined in clause1 of the Scheme Implementation Agreement); • Foreign Investment Review Board ("FIRB") approval; • Court approval; • there being no material adverse change to MPCG resulting ina reduction of its post-tax NAV of 22.5% (reciprocal right to terminate ifcondition not satisfied); and • there being no decline in the S&P/ASX 200 of more than22.5% below its starting level for more than 8 consecutive trading days(reciprocal right to terminate if condition not satisfied). -------------------------- (1) The final consideration will be adjusted to reflect movements in post-taxNAV referable to the last ASX announced post-tax NAV before the Scheme Meetings,against the post-tax NAV at 31 December 2007 of $1.087 per security (ex theestimated $0.02 distribution). Where post-tax NAV per security last announcedprior to the Scheme Meetings (a) decreases below $1.087, the cash considerationunder the BSPEL Proposal will be reduced by the amount of that decrease, or (b)increases above $1.087, the cash consideration under the BSPEL Proposal will beincreased by the amount of such increase but only to the extent that theincrease is greater than a threshold of $0.018 per month multiplied by thenumber of months (rounded down to the nearest calendar month) in the periodbetween 31 December 2007 and the day which is ten business days before theScheme Meetings. For the purposes of the completion adjustment mechanism, MPCGsecurityholders will not be affected by costs associated with the transactionper the Scheme. (2) The Independent Board Committee comprises the Independent Directors NeilTomlin and Andre Morony. Following indications from BSPEL that it intended toretain the current manager of MPCG, Macquarie Investment Management Limited ("MIML"), as manager of MPCG on arms-length terms to be negotiated between BSPELand MIML, the MPCG Board established protocols and procedures to ensure thatconsideration of any proposals from parties, including BSPEL, to enter intocontrol transactions with MPCG were undertaken free from influence, or theappearance of influence, from parties associated with MIML or Macquarie GroupLimited, and that the disclosure of confidential information to any potentialacquirer of MPCG or its assets was subject to appropriate controls. Under thatprotocol, Richard Sheppard and Timothy Downing, each of whom are or considerthemselves associated with Macquarie Group, excluded themselves from beingpresent at, participating in, or voting on, any board consideration of ornegotiations in relation to proposals including the BSPEL Proposal. Informationon these protocols will be included in the Scheme Booklet. This information is provided by RNS The company news service from the London Stock Exchange