KCOM Regulatory News (KCOM)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

3 June 2019

RECOMMENDED CASH OFFER

for

KCOM GROUP PUBLIC LIMITED COMPANY

by

MEIF 6 FIBRE LIMITED

a wholly-owned indirect subsidiary of Macquarie European Infrastructure Fund 6 SCSp (an investment fund managed by Macquarie Infrastructure and Real Assets (Europe) Limited)

to be implemented by means of a scheme of arrangement under Part 26 of the Companies Act 2006

Summary

· The boards of MEIF 6 Fibre Limited (MEIF 6 Fibre) and KCOM Group Public Limited Company (KCOM) are pleased to announce that they have reached agreement on the terms of a recommended cash offer, to be made by MEIF 6 Fibre, a wholly-owned indirect subsidiary of Macquarie European Infrastructure Fund 6 SCSp (an investment fund managed by Macquarie Infrastructure and Real Assets (Europe) Limited (MIRAEL)) (MEIF 6), for the entire issued and to be issued ordinary share capital of KCOM. It is intended that the Acquisition will be implemented by means of a scheme of arrangement under Part 26 of the Companies Act.

· Under the terms of the Acquisition, KCOM Shareholders will be entitled to receive:

for each KCOM Share 108 pence in cash

· The Acquisition Price represents:

o a premium of 49 per cent to the Closing Price of 72.5 pence for each KCOM Share on 23 April 2019 (being the last Business Day prior to commencement of the Offer Period);

o an increase of 11 pence to the USS Offer of 97 pence per KCOM Share;

o a premium of 52 per cent to the volume weighted average share price of 71.2 pence per KCOM Share in the 30 days prior to 23 April 2019 (being the last Business Day prior to commencement of the Offer Period); and

o an aggregate value of £563 million for KCOM's issued and to be issued share capital.

· If any dividend or other distribution or return of capital is authorised, declared, made or paid in respect of KCOM Shares on or after the date of this Announcement and prior to the Effective Date, MEIF 6 Fibre reserves the right to reduce the Acquisition Price by an amount up to the amount of such dividend or other distribution or return of capital for each KCOM Share, in which case eligible KCOM Shareholders will be entitled to receive and retain such dividend or other distribution or return of capital.

KCOM recommendation

· Pursuant to a firm offer announcement dated 24 April 2019, a cash offer was made for the acquisition of the entire issued and to be issued ordinary share capital of KCOM by Humber Bidco Limited, a wholly-owned indirect subsidiary of Universities Superannuation Scheme Limited (acting in its capacity as sole corporate trustee of Universities Superannuation Scheme) by way of a Court-sanctioned scheme of arrangement.

· In light of the superior proposal put forward by MEIF 6 Fibre as compared to the USS Offer, the KCOM Directors, who have been so advised by Rothschild & Co as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the KCOM Directors, Rothschild & Co has taken into account the commercial assessments of the KCOM Directors.

· Accordingly:

o the KCOM Directors intend to recommend unanimously that KCOM Shareholders vote in favour of the Scheme at the Court Meeting, and in favour of the General Meeting Resolution to be proposed at the General Meeting; and

o the KCOM Directors have withdrawn their recommendation of the USS Offer and the KCOM Board proposes to adjourn the USS Scheme Meetings convened for 5 June 2019 to consider the USS Offer.

Information on MEIF 6 Fibre and MIRA

· MEIF 6 Fibre is a wholly-owned indirect subsidiary of MEIF 6 (an investment fund managed by MIRAEL).

· Macquarie Infrastructure and Real Assets (MIRA) is one of the world's leading alternative asset managers. For more than two decades, MIRA has partnered with investors, governments and communities to manage, develop and enhance assets relied on by more than 100 million people each day. As at 31 December 2018, MIRA managed over €110 billion in assets that are essential to the sustainable development of economies and communities, including: 200 portfolio businesses, approximately 400 properties and over 4 million hectares of farmland.

· MIRA has been a leading owner and investor in critical telecommunications infrastructure since the early 2000s. Under MIRA's management, assets such as fibre and cable broadband networks, broadcast infrastructure, secure mobile networks, pay-TV, and mobile towers have provided services to millions of consumers and business customers.

· Some of MIRA's notable investments in the telecommunications sector include Arqiva (part of the UK's "critical national infrastructure" and serving all of the UK's major broadcasters and mobile networks), TDC (Denmark's leading telecommunications company), and INEA (a Polish provider of fibre-to-the-home broadband and cable TV).

Information on KCOM

· KCOM, a leading provider of IT and communications solutions to consumers and businesses across the UK, is one of the UK's longest-established communications companies, helping customers get connected since 1904. Throughout the decades, KCOM has stayed at the forefront of technology and communications. KCOM is focussed on three markets:

o Hull and East Yorkshire: KCOM provides voice and internet-based services to 140,000 consumers and businesses in the region;

o Enterprise: KCOM serves large enterprise and public sector organisations that need complex technology solutions to serve customers better and adapt to an ever-changing competitive and regulatory environment; and

o National Network Services: KCOM serves UK-based multi-site organisations that rely on connectivity as part of their business operations.

Further information on KCOM is available at www.kcomplc.com.

General

· It is intended that the Acquisition will be implemented by means of a Court-approved scheme of arrangement under Part 26 of the Companies Act. However, MEIF 6 Fibre reserves the right to elect (with the consent of the Panel and subject to the terms of the Co-operation Agreement) to implement the Acquisition by way of a Takeover Offer.

· The Acquisition will be subject to the approval of KCOM Scheme Shareholders at the Court Meeting and the passing of the General Meeting Resolution by KCOM Shareholders at the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of KCOM Scheme Shareholders, representing at least 75 per cent in value of the KCOM Scheme Shares held by those KCOM Scheme Shareholders present and voting, either in person or by proxy, at the Court Meeting. In addition, the General Meeting Resolution required to implement certain matters in connection with the Scheme must be passed by KCOM Shareholders representing at least 75 per cent of votes cast at the General Meeting.

· The Acquisition is subject to the Conditions and further terms set out in Appendix 1 and to be set out in the Scheme Document. It is expected that the Scheme will become Effective in mid-2019.

· It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting, will be published as soon as practicable and, in any event, within 28 days of this Announcement.

Commenting on the Acquisition, Patrick De Smedt, Interim Non-executive Chairman of KCOM, said:

"The Board of KCOM is pleased to recommend MEIF 6 Fibre's cash offer for KCOM which represents an increase of 11 pence to the USS Offer of 97 pence per KCOM Share and a 49 per cent premium to the undisturbed share price on 23 April 2019. This offer provides our shareholders with even greater value in cash for their shares, as well as providing KCOM with a strong partner as we work to maintain, build and enhance our offering and position."

Commenting on the Acquisition, Leigh Harrison, Head of MIRA EMEA, said:

"We are pleased that the KCOM Board is recommending our takeover offer. KCOM has a strong local heritage that has been developed over more than a century and is well-positioned to continue to meet the evolving telecommunications needs of the region, which is why we have made this compelling offer to shareholders at an attractive premium.

As an experienced, long-term telecommunications investor, we are committed to supporting KCOM's sustainable growth. We look forward to partnering with management to increase broadband take-up in its core region and beyond, enhancing the quality of service delivery while giving local businesses and residents greater access to the opportunities that high-speed broadband can provide."

This summary should be read in conjunction with, and is subject to, the full text of this Announcement and its Appendices. The Acquisition will be made subject to the Conditions and further terms set out in Appendix 1. The bases and sources of certain financial information contained in this Announcement are set out in Appendix 2. Certain definitions and terms used in this Announcement are set out in Appendix 3.

Enquiries:

Freshfields Bruckhaus Deringer LLP is retained as legal adviser to MEIF 6 (managed by MIRAEL) and MEIF 6 Fibre. Addleshaw Goddard LLP is retained as legal adviser to KCOM.

Further information

This Announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or invitation 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. The Acquisition will be made solely through the Scheme Document (and the accompanying Forms of Proxy), which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Acquisition. Any vote or other response to the Acquisition should be made only on the basis of the information in the Scheme Document.

MEIF 6 Fibre reserves the right to elect, with the consent of the Panel and subject to the terms of the Co-operation Agreement, to implement the Acquisition by way of a Takeover Offer. In such event, the Takeover Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to the Takeover Code and to any appropriate amendments to reflect, amongst other things, the change in method of implementing the Acquisition, and compliance with all applicable laws, including US securities laws.

Important notices relating to financial advisers

Barclays, which is authorised by the PRA and regulated in the United Kingdom by the FCA and the PRA, is acting exclusively for MEIF 6 Fibre and MEIF 6 (managed by MIRAEL) and no one else in connection with the matters described herein and will not be responsible to anyone other than MEIF 6 Fibre and MEIF 6 (managed by MIRAEL) for providing the protections afforded to clients of Barclays nor for providing advice in relation to the matters described herein or any other matter referred to herein. 

N.M. Rothschild & Sons Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for KCOM and no one else in relation to the Acquisition and/or other matters set out in this Announcement and will not be responsible to anyone other than KCOM for providing the protections afforded to clients of Rothschild & Co or for providing advice in relation to the Acquisition, the contents of this Announcement or any other matter or arrangement referred to herein.

Peel Hunt LLP, which is authorised and regulated in the United Kingdom by the FCA, is acting for KCOM and no-one else in connection with the Acquisition and/or other matters set out in this Announcement and will not be responsible to anyone other than KCOM for the protections offered to its clients nor for providing advice in relation to the Acquisition or any matters referred to in this Announcement.

Investec Bank plc, which is authorised by the PRA and regulated in the United Kingdom by the FCA and the PRA, is acting exclusively for KCOM and no one else in relation to the Acquisition and/or other matters set out in this Announcement and will not be responsible to anyone other than KCOM for providing the protections afforded to the clients of Investec or for providing advice in relation to the Acquisition, the contents of this Announcement or any other matter or arrangement referred to herein.

Overseas Shareholders

The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom and the ability of KCOM Shareholders who are not resident in the United Kingdom to participate in the Acquisition may be restricted by laws and/or regulations in those jurisdictions and therefore any persons who are not resident in the United Kingdom or who are subject to the laws of any jurisdiction other than the United Kingdom (including Restricted Jurisdictions) should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to vote their KCOM Scheme Shares in respect of the Scheme at the Court Meeting or with respect to the General Meeting Resolution at the General Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting and/or the General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with applicable legal or regulatory requirements of any jurisdiction may constitute a violation of securities laws in that 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.

Unless otherwise determined by MEIF 6 Fibre or required by the Takeover 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 Acquisition by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail 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 or from within, a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.

This Announcement has been prepared for the purpose of complying with English law and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside England.

The Acquisition will be subject to the applicable requirements of English law, the Takeover Code, the Panel, the London Stock Exchange and the FCA.

Copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction or any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of acceptance of the Acquisition.

If the Acquisition is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation), the Takeover Offer may not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail 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.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Additional information for US Shareholders

KCOM Shareholders in the United States should note that the Acquisition relates to the securities of an English company and is proposed to be implemented pursuant to a scheme of arrangement provided for under English company law. A transaction implemented by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Acquisition will be subject to UK procedural and disclosure requirements and practices applicable to a scheme of arrangement involving a target company in England, which are different from the disclosure requirements of the US tender offer and proxy solicitation rules. The financial information included in this Announcement and other documentation relating to the Acquisition has been or will have been prepared in accordance with International Financial Reporting Standards and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. If MEIF 6 Fibre exercises its right, in the circumstances provided for in this Announcement, to implement the Acquisition by way of a Takeover Offer, such Takeover Offer will only be made in the United States in accordance with the US Exchange Act.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, MEIF 6 Fibre, certain affiliated companies and their respective nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, KCOM Shares, other than pursuant to the Acquisition, until the date on which the Takeover Offer and/or Scheme becomes Effective, lapses or is otherwise withdrawn. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Takeover Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act as exempt principal trader in KCOM securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

None of the securities referred to in this Announcement have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offence in the United States.

The receipt of cash pursuant to the Acquisition by a US Shareholder as consideration pursuant to the terms of the Acquisition may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each US Shareholder is urged to consult his or her independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him or her.

It may be difficult for US holders of KCOM Shares to enforce their rights and claims arising out of the US federal securities laws, since MEIF 6 Fibre and KCOM 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 KCOM Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of 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.

Forward-looking statements

This Announcement contains certain forward-looking statements with respect to MEIF 6 Fibre and KCOM. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as, without limitation, "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "aim", "will", "may", "hope", "continue", "would", "could" or "should" or other words of similar meaning or the negative thereof. Forward-looking statements include, but are not limited to, statements relating to the following: (a) future capital expenditures, expenses, revenues, economic performance, financial conditions, dividend policy, losses and future prospects, (b) business and management strategies and the expansion and growth of the operations of MEIF 6 Fibre or KCOM, and (c) the effects of government regulation on the business of MEIF 6 Fibre or KCOM. There are many factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among such factors are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or disposals. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Except as expressly provided in this document, they have not been reviewed by the auditors of MEIF 6 Fibre or KCOM. By their nature, these forward-looking statements involve known and unknown risks, uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this Announcement may cause the actual results, performance or achievements of any such person, or industry results and developments, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. No assurance can be given that such expectations will prove to have been correct and persons reading this Announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement. Neither MEIF 6 Fibre nor KCOM, nor their respective members, directors, officers or employees, advisers or any person acting on their behalf, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur.

None of MEIF 6 Fibre, KCOM or their respective members, directors, officers, employees, advisers and any person acting on behalf of one or more of them undertakes any intention or obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. All subsequent oral or written forward-looking statements attributable to MEIF 6 Fibre or KCOM or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above.

Neither MEIF 6 Fibre nor the KCOM Group, nor any of their respective associates, directors, officers, employees or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur.

No profit forecasts or estimates

Nothing in this Announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings for each KCOM Share, for the current or future financial years, will necessarily match or exceed the historical published earnings for each KCOM Share.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent 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 pm on the 10th Business Day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm 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 Takeover Code, any person who is, or becomes, interested in one per cent 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 pm 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 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 a website

This Announcement and the documents required to be published pursuant to Rule 26 of the Takeover Code will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on MIRA's website at www.macquarie.co.uk/mgl/uk/meif/meif6-fibre-offer and on KCOM's website at www.kcomplc.com promptly and in any event by no later than 12 noon on the Business Day following the date of this Announcement.

Neither the content of the websites referred to in this Announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this Announcement.

Request for hard copies

KCOM Shareholders may, subject to applicable securities laws, request a hard copy of this Announcement (and any information incorporated into it by reference to another source) by contacting Link Asset Services on 0371 664 0321 or by submitting a request in writing to Link Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TH, with an address to which the hard copy may be sent. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside of the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday, excluding public holidays in England and Wales. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Acquisition or give any financial. legal or tax advice. KCOM Shareholders may, subject to applicable securities laws, also request that all future documents, announcements and information to be sent in relation to the Acquisition should be in hard copy form.

Information relating to KCOM Shareholders

Please be aware that addresses, electronic addresses and certain information provided by KCOM Shareholders, persons with information rights and other relevant persons for the receipt of communications from KCOM may be provided to MEIF 6 Fibre during the Offer Period as required under section 4 of Appendix 4 to the Takeover Code.

Rounding

Certain figures included in this Announcement 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.

General

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Time

All times shown in this Announcement are London times, unless otherwise stated.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

3 June 2019

RECOMMENDED CASH OFFER

for

KCOM GROUP PUBLIC LIMITED COMPANY

by

MEIF 6 FIBRE LIMITED

a wholly-owned indirect subsidiary of Macquarie European Infrastructure Fund 6 SCSp (an investment fund managed by Macquarie Infrastructure and Real Assets (Europe) Limited)

to be implemented by means of a scheme of arrangement under Part 26 of the Companies Act 2006

1. Introduction

The boards of MEIF 6 Fibre and KCOM are pleased to announce that they have reached agreement on the terms of a recommended cash offer, to be made by MEIF 6 Fibre, a wholly-owned indirect subsidiary of Macquarie European Infrastructure Fund 6 SCSp (an investment fund managed by Macquarie Infrastructure and Real Assets (Europe) Limited), for the entire issued and to be issued ordinary share capital of KCOM. It is intended that the Acquisition will be implemented by means of a scheme of arrangement under Part 26 of the Companies Act.

2. The Acquisition

Under the terms of the Acquisition, which shall be subject to the Conditions and further terms set out in Appendix 1 and to be set out in the Scheme Document, KCOM Shareholders who are on the register of members of KCOM at the Scheme Record Time will be entitled to receive:

for each KCOM Share 108 pence in cash

The Acquisition Price represents:

· a premium of 49 per cent to the Closing Price of 72.5 pence for each KCOM Share on 23 April 2019 (being the last Business Day prior to commencement of the Offer Period);

· an increase of 11 pence to the USS Offer of 97 pence per KCOM Share;

· a premium of 52 per cent to the volume weighted average share price of 71.2 pence per KCOM Share in the 30 days prior to 23 April 2019 (being the last Business Day prior to commencement of the Offer Period); and

· an aggregate value of £563 million for KCOM's issued and to be issued share capital.

If any dividend or other distribution or return of capital is authorised, declared, made or paid in respect of KCOM Shares on or after the date of this Announcement and prior to the Effective Date, MEIF 6 Fibre reserves the right to reduce the Acquisition Price by an amount up to the amount of such dividend or other distribution or return of capital for each KCOM Share, in which case eligible KCOM Shareholders will be entitled to receive and retain such dividend or other distribution or return of capital.

It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting, will be published as soon as practicable and, in any event, within 28 days of this Announcement. It is further expected that the Scheme will become Effective in mid-2019.

3. Background to and reasons for the Acquisition

MIRA is one of the world's leading alternative asset managers. For more than two decades, MIRA has partnered with investors, governments and communities to manage, develop and enhance assets relied on by more than 100 million people each day. As at 31 December 2018, MIRA managed over €110 billion in assets that are essential to the sustainable development of economies and communities, including: 200 portfolio businesses, approximately 400 properties and over 4 million hectares of farmland.

MIRA has been a leading owner and investor in critical telecommunications infrastructure since the early 2000s. Under MIRA's management, assets such as fibre and cable broadband networks, broadcast infrastructure, secure mobile networks, pay-TV and mobile towers have provided services to millions of consumers and business customers.

MIRA believes the acquisition of KCOM, via MEIF 6 Fibre, represents an attractive opportunity given KCOM's strong position in the market and the community in which it operates. MIRA intends to work with KCOM management team with the aims of expanding the HEY network, increasing consumer choice and maximising network utilisation.

The specific attractions of KCOM to MIRA include:

(a) the HEY division's ownership of critical infrastructure and fibre roll-out initiative setting a stepping stone for local business growth and innovation. In the long term, MIRA aims to increase third party access to KCOM's network infrastructure to improve customer offerings, customer choice and retail competition;

(b) the opportunity to use additional investment to meaningfully expand fibre network beyond the current footprint of the HEY business. MIRA believes an expansion of KCOM's existing footprint will increase fibre accessibility, reduce digital exclusion and deliver the infrastructure needed for the economy to prosper in the region; and

(c) infrastructure funds managed by MIRA have invested into the region since 2017, in particular in renewable energy via Race Bank Offshore Wind Farm off the coast of Grimsby and the Humber port sector via HES Humber Bulk Terminal. MIRA therefore believes the acquisition of KCOM will be complementary to its existing investments as these organisations all provide infrastructure and employment opportunities that contribute to the ever-growing Northern Powerhouse.

4. Recommendation

Pursuant to a firm offer announcement dated 24 April 2019, a cash offer was made for the acquisition of the entire issued and to be issued ordinary share capital of KCOM by Humber Bidco Limited, a wholly-owned indirect subsidiary of Universities Superannuation Scheme Limited (acting in its capacity as sole corporate trustee of Universities Superannuation Scheme) by way of a court-sanctioned scheme of arrangement.

In light of the superior proposal put forward by MEIF 6 Fibre as compared to the USS Offer, the KCOM Directors, who have been so advised by Rothschild & Co as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the KCOM Directors, Rothschild & Co has taken into account the commercial assessments of the KCOM Directors.

Accordingly:

· the KCOM Directors intend to recommend unanimously that KCOM Shareholders vote in favour of the Scheme at the Court Meeting, and in favour of the General Meeting Resolution to be proposed at the General Meeting; and

· the KCOM Directors have withdrawn their recommendation of the USS Offer and the KCOM Board proposes to adjourn the USS Scheme Meetings convened for 5 June 2019 to consider the USS Offer.

5. Background to and reasons for the KCOM Directors' recommendation

Following the announcement of the USS Offer on 24 April 2019, KCOM received an approach from MIRA regarding a possible higher cash offer by MEIF 6 Fibre. MEIF 6 Fibre has now made an offer of 108 pence per KCOM Share in cash.

The offer from MEIF 6 Fibre announced today represents an increase of 11 pence to the USS Offer of 97 pence per KCOM Share. Following careful consideration, the KCOM Board concluded that the offer from MEIF 6 Fibre represented a superior offer for KCOM Shareholders as compared with the USS Offer and intends to recommend unanimously the Acquisition to KCOM Shareholders, as set out in paragraph 4 above.

6. Information on MEIF 6 Fibre and MIRA

MEIF 6 Fibre is a wholly-owned indirect subsidiary of Macquarie European Infrastructure Fund 6 SCSp (an investment fund managed by MIRAEL).

MIRA is one of the world's leading alternative asset managers. For more than two decades, MIRA has partnered with investors, governments and communities to manage, develop and enhance assets relied on by more than 100 million people each day. As at 31 December 2018, MIRA managed over €110 billion in assets that are essential to the sustainable development of economies and communities, including: 200 portfolio businesses, approximately 400 properties and over 4 million hectares of farmland.

MIRA has been a leading owner and investor in critical telecommunications infrastructure since the early 2000s. Under MIRA's management, assets such as fibre and cable broadband networks, broadcast infrastructure, secure mobile networks, pay-TV, and mobile towers have provided services to millions of consumers and business customers.

Some of MIRA's notable investments in the telecommunications sector include Arqiva (part of the UK's "critical national infrastructure" and serving all of the UK's major broadcasters and mobile networks), TDC (Denmark's leading telecommunications company), and INEA (a Polish provider of fibre-to-the-home broadband and cable TV).

7. Information on KCOM

KCOM, a leading provider of IT and communications solutions to consumers and businesses across the UK, is one of the UK's longest-established communications companies, helping customers get connected since 1904. Throughout the decades, KCOM has stayed at the forefront of technology and communications. KCOM is focussed on three markets:

· Hull and East Yorkshire: KCOM provides voice and internet-based services to 140,000 consumers and businesses in the region;

· Enterprise: KCOM provides support for large enterprise and public sector organisations that need complex technology solutions to serve customers better and adapt to an ever-changing competitive and regulatory environment; and

· National Network Services: KCOM serves UK-based multi-site organisations that rely on connectivity as part of their business operations.

Further information is available at www.kcomplc.com

8. Intentions of MEIF 6 Fibre

The acquisition of KCOM represents an attractive opportunity for MIRA, via MEIF 6 Fibre, given KCOM's strong position in the market and community in which it operates. MIRA is excited to be partnering with KCOM, which has historically been at the forefront of the digital evolution, offering high quality and high speed products. MIRA is confident in the overall prospects of KCOM's businesses and looks forward to working with the KCOM management team to grow the value of the business in the long-term.

As an important broadband provider in the region, MIRA believes KCOM is well positioned to be the stepping stone for the growth and innovation of local business and has demonstrated this by taking the lead with its fibre roll-out initiative. MIRA intends for KCOM to continue its strong local commitment and further strengthen its reach and offerings.

Under MIRA's stewardship, it is intended that KCOM will continue to deliver the digital infrastructure needed for the economy to prosper in the region. MIRA believes this will help fuel further growth in the local economy and minimise digital exclusion.

Prior to this Announcement, and consistent with market practice, MIRA has been granted access to certain KCOM information for the purposes of conducting a high level confirmatory due diligence exercise.

KCOM Review

MIRA is aware of KCOM's ongoing strategic review (the KCOM Review).

MIRA has not yet had the opportunity to work with management in order to formulate detailed plans or intentions regarding the impact of the Acquisition and the KCOM Review on KCOM and its businesses and employees, including any potential headcount reductions.

Based on a preliminary assessment of the KCOM Review findings, MIRA intends to increase the focus on KCOM's well-performing HEY business, with the possibility of expanding its existing footprint. MIRA will consider the other recommendations of the KCOM Review following the Effective Date, which will be implemented to the extent MIRA supports such recommendations.

MIRA's own plans

MIRA's own plans at this stage do not contemplate significant redundancies in the KCOM Group. However, as a result of the early stage of MIRA's work and KCOM's ongoing strategic review, MIRA has been unable to determine the precise impact on the KCOM Group's headcount going forwards.

Nevertheless, MIRA believes that the skills of the employees within the KCOM Group will be key to delivering high quality services to customers, and MIRA's vision for growth. MIRA believes that the expansion of KCOM's existing footprint will increase fibre accessibility to the region and contribute to the ever-growing "Northern Powerhouse". Following completion of the Acquisition, MIRA intends to:

· work with KCOM's management team to review the strategy of the HEY business with the aim of maximising network utilisation and consumer choice. MIRA is intending to work with KCOM to increase the number of households and businesses being served by its best in class network, by both increasing the number of customers buying KCOM's own retail offerings, and by increasing the amount of business with third party Internet Services Providers;

· work with KCOM's management to establish opportunities to use additional investment to expand the fibre network beyond the current footprint of the HEY business, to drive growth and employment opportunities. Whilst no decisions have yet been taken on whether additional investment would be made, if such additional investment was made, it would be funded from KCOM's existing cash resources, new equity from MEIF 6 Fibre, and/or third party debt;

· review initiatives to improve the performance of the National Network Services and Enterprise businesses to enhance customer experience, provide relevant and profitable services to customers, and improve platform efficiency to enhance margins;

· undertake a review of the strategic options for the National Network Services and Enterprise businesses. The review will focus on operating performance, viability of its offerings and long-term strategic fit in relation to MIRA's overall strategy. MIRA will work closely with management to evaluate different possible outcomes. At this stage, MIRA does not have sufficient insight to conclude on any outcomes, however it would expect potential options to include disposal of these businesses to a third party, refocusing of product catalogues, and integration into other business lines, among others; and

· work with KCOM's management to understand and implement any recommendations as to costs efficiencies, service improvements and organisational structure which result from the KCOM Review.

MIRA has not yet begun to carry out the detailed evaluation referred to in the paragraph above or made any decisions in relation to specific actions that may be taken as a result of this evaluation, including in relation to any impact on organisational structure and headcount. Independently of the KCOM Review, MIRA plans to carry out its own strategy review in close collaboration with KCOM management over three to six months following the Effective Date and expects to start implementation of any additional actions resulting from that review as soon as possible thereafter.

Once KCOM ceases to be a listed company, some central management, corporate and support functions, including PLC-related functions, may be reduced in scope, which is likely to require reduced headcount in these areas.

MIRA intends to safeguard the existing employment rights of the management and employees of the KCOM Group in accordance with applicable law and does not envisage any material change to the balance of skills and functions of existing employees and management of the KCOM Group, or in their conditions of employment (other than the possible implementation of incentivisation arrangements for certain members of management as described below).

MIRA confirms it is also fully supportive of KCOM's initiatives to help foster a diverse local employment pool by actively encouraging participation in STEM subjects. MIRA intends for KCOM to continue its current local initiative during its stewardship as the benefits of a diversified workforce are also a high priority to MIRA - both as an owner and employer.

The non-executive directors of KCOM have informed MIRA that they intend to resign as KCOM Directors with effect from completion of the Acquisition.

MIRA recognises the importance of the KCOM pension schemes to their members. MIRA confirms that it has no intention of changing members' pension rights under the schemes and that the current level of employer contributions under the schemes' existing funding arrangements will continue. Prior to this Announcement, MIRA engaged in an initial discussion with the chair of the trustees of KCOM's defined benefit pension schemes in relation to the upcoming triennial valuation process and the Acquisition. Following completion of the Acquisition, MIRA intends to continue such discussions with the trustees of KCOM's defined benefit pension schemes in respect of the triennial valuation, the Acquisition and the funding position of the schemes. The KCOM defined benefit pension schemes are closed to new members and to future accrual.

MIRA has not entered into, and has not had discussions on proposals to enter into, any form of incentivisation arrangements with members of KCOM's management team. Post completion of the Acquisition, MIRA would intend to develop incentive arrangements for certain members of the KCOM management team.

MIRA intends to maintain KCOM's corporate headquarters and headquarters' functions in Hull. MIRA does not intend to change the locations of the places of business of the KCOM Group; however, the places of business of the National Network Services and Enterprise businesses may be impacted by MIRA's and KCOM's strategic reviews and any potential disposal of these businesses, as referred to above. MIRA has no intention of redeploying the fixed assets of KCOM. KCOM has no dedicated research and development function.

KCOM is currently listed on the Official List and, as set out in paragraph 13, it is intended that an application will be made to the London Stock Exchange to cancel trading in KCOM Shares and de-list KCOM from the Official List, in each case to take effect on or shortly after the Effective Date.

9. KCOM LTIP

The Scheme will extend to any KCOM Shares unconditionally allotted, issued or transferred prior to the Scheme Record Time to satisfy the exercise of options granted under the KCOM LTIP.

Participants in the KCOM LTIP will receive a letter explaining the effects of the Acquisition on their options and the actions they may take in respect of their options.

The Scheme will not extend to KCOM Shares issued after the Scheme Record Time. However, it is proposed to amend KCOM's articles of association at the General Meeting to provide that, following completion of the Acquisition, any KCOM Shares issued to any person other than MEIF 6 Fibre or its nominees after the Scheme Record Time (including in satisfaction of an option exercised under the KCOM LTIP) will be automatically transferred to MEIF 6 Fibre in consideration for the payment by MEIF 6 Fibre to such persons of an amount equal to the Acquisition Price for each KCOM Share so transferred.

10. Financing of the Acquisition

MEIF 6 Fibre is financing the Acquisition through equity to be invested indirectly by MEIF 6. In due course after the Acquisition has completed, MEIF 6 Fibre will consider putting in place an appropriate capital structure for the business, which is likely to include third party debt.

Barclays is satisfied that resources available to MEIF 6 Fibre are sufficient to satisfy in full the cash consideration payable to KCOM Shareholders under the terms of the Acquisition.

11. Offer-related Arrangements

Confidentiality Agreement

MIRAEL and KCOM entered into a confidentiality agreement on 21 May 2019 (the Confidentiality Agreement) pursuant to which MIRAEL has undertaken to keep confidential information relating to KCOM and not to disclose it to third parties (other than permitted recipients) unless required by applicable law or regulation. These confidentiality obligations shall remain in force notwithstanding the completion or termination of discussions concerning the Acquisition between the parties, but will terminate on the date of completion of the Acquisition.

The Confidentiality Agreement also contains undertakings from MIRAEL to KCOM and from KCOM to MIRAEL that, for a period of 12 months from the date of the Confidentiality Agreement, neither party will solicit, employ or offer to employ officers, managers or senior employees of the other party.

Co-operation Agreement

MEIF 6 Fibre and KCOM have entered into the Co-operation Agreement, which records the intention of MEIF 6 Fibre and KCOM to implement the Acquisition by way of the Scheme. However, MEIF 6 Fibre may with the consent of the Panel implement the Acquisition by way of a Takeover Offer.

Pursuant to Clause 3 of the Co-operation Agreement, MEIF 6 Fibre and KCOM have agreed to co-operate in relation to any clearance as may be required from the FCA in connection with the Acquisition.

The Co-operation Agreement will terminate (a) if agreed in writing between MEIF 6 Fibre and KCOM; (b) if any condition to the Acquisition in Part A of Appendix 1 of this Announcement is or becomes incapable of satisfaction by the Long Stop Date (and MEIF 6 Fibre serves notice of termination); (c) if a third party announces a firm intention to make an offer which is recommended by the KCOM Directors (and MEIF 6 Fibre serves notice of termination); (d) if the KCOM Directors do not recommend, or withdraw, adversely qualify or adversely modify the recommendation of the Acquisition (and MEIF 6 Fibre serves notice of termination); or (e) unless the parties otherwise agree, if the Effective Date has not occurred by the Long Stop Date and in certain other circumstances specified in the Co-operation Agreement.

12. Structure of and conditions to the Acquisition

It is intended that the Acquisition will be implemented by means of a Court-approved scheme of arrangement between KCOM and KCOM Scheme Shareholders under Part 26 of the Companies Act.

The purpose of the Scheme is to provide for MEIF 6 Fibre to become the holder of the entire issued and to be issued ordinary share capital of KCOM. This is to be achieved by the transfer of the KCOM Shares to MEIF 6 Fibre, in consideration for which the KCOM Shareholders who are on the register of members at the Scheme Record Time will receive the Acquisition Price for each KCOM Share they hold.

Conditions to the Acquisition

The Scheme is subject to the Conditions and further terms set out in Appendix 1 and to be set out in the Scheme Document and will only become Effective if, among other things, the following events occur on or before the Long Stop Date or such later date as may be agreed in writing by MEIF 6 Fibre and KCOM (with the Panel's consent and as the Court may approve (if such approval(s) are required)):

· the approval of the Scheme by a majority in number of KCOM Scheme Shareholders, representing at least 75 per cent in value of the KCOM Scheme Shares held by those KCOM Scheme Shareholders present and voting, either in person or by proxy, at the Court Meeting;

· the General Meeting Resolution being duly passed by KCOM Shareholders representing 75 per cent or more of votes cast, whether in person or by proxy, at the General Meeting;

· the approval of the Scheme by the Court (with or without modification but subject to any modification being on terms acceptable to KCOM and MEIF 6 Fibre);

· the delivery of a copy of the Court Order to the Registrar of Companies; and

· all other Conditions to the Scheme, as set out in Appendix 1, being satisfied or (where applicable) waived.

Upon the Scheme becoming Effective, it will be binding on all KCOM Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting. The cash consideration payable under the Scheme will be despatched to KCOM Scheme Shareholders by MEIF 6 Fibre no later than 14 days after the Effective Date.

Upon the Scheme becoming Effective, the non-executive directors of KCOM will resign as KCOM Directors.

Further details of the Scheme, including an indicative timetable for its implementation, will be set out in the Scheme Document. It is expected that the Scheme Document and the Forms of Proxy accompanying the Scheme Document will be published as soon as practicable and, in any event, within 28 days of this Announcement. The Scheme Document and Forms of Proxy will be made available to all KCOM Shareholders at no charge to them.

The Scheme will be governed by English law and will be subject to the jurisdiction of the Court. The Scheme will also be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the FCA.

13. De-listing and re-registration

Prior to the Scheme becoming Effective, KCOM will make an application for the cancellation of the listing of KCOM Shares on the Official List and for the cancellation of trading of the KCOM Shares on the London Stock Exchange's main market for listed securities, in each case to take effect from or shortly after the Effective Date.

On the Effective Date, share certificates in respect of KCOM Shares will cease to be valid and entitlements to KCOM Shares held within the CREST system will be cancelled.

It is also proposed that, following the Effective Date and after its shares are de-listed, KCOM will be re-registered as a private limited company.

14. Dividends

If any dividend or other distribution or return of capital is authorised, declared, made or paid in respect of KCOM Shares on or after the date of this Announcement and prior to the Effective Date, MEIF 6 Fibre reserves the right to reduce the Acquisition Price by an amount up to the amount of such dividend or other distribution or return of capital for each KCOM Share, in which case the eligible KCOM Shareholders will be entitled to receive and retain such dividend or other distribution or return of capital.

15. Disclosure of interests in KCOM

As at the close of business on the Last Practicable Date, none of MEIF 6 Fibre or any of its directors or, so far as MEIF 6 Fibre is aware, any person acting, or deemed to be acting, in concert with MEIF 6 Fibre, had:

· an interest in, or right to subscribe for, relevant securities of KCOM;

· any short position in (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery of, relevant securities of KCOM;

· procured an irrevocable commitment or letter of intent to accept the terms of the Acquisition in respect of relevant securities of KCOM; or

· borrowed or lent any relevant securities of KCOM or entered into any financial collateral arrangements or dealing arrangements in respect of any KCOM Shares.

In the interests of secrecy prior to this Announcement, MEIF 6 Fibre has not made any enquiries in respect of the matters referred to in this paragraph of certain parties who may be deemed by the Panel to be acting in concert with MEIF 6 Fibre for the purposes of the Acquisition. Enquiries of such parties will be made as soon as practicable following the date of this Announcement, and MEIF 6 Fibre confirms that further disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8 of the Takeover Code will be made and included in the Scheme Document.

16. General

MEIF 6 Fibre reserves the right to elect, subject to the consent of the Panel and the terms of the Co-operation Agreement, to implement the Acquisition of the KCOM Shares by way of a Takeover Offer as an alternative to the Scheme. In such event, such Takeover Offer will be implemented on substantially the same terms and conditions, so far as applicable, as those which would apply to the Scheme subject to appropriate amendments, including (without limitation) an acceptance condition set at 90 per cent (or such other percentage (being more than 50 per cent) as MEIF 6 Fibre may decide (subject to the Panel's consent)) (i) in nominal value of the shares to which such Takeover Offer relates; and (ii) of the voting rights attaching to those shares.

The Acquisition will be made subject to the Conditions and further terms set out in Appendix 1 and to be set out in the Scheme Document. The bases and sources of certain financial information contained in this Announcement are set out in Appendix 2. Certain definitions and terms used in this Announcement are set out in Appendix 3.

Barclays, Rothschild & Co, Peel Hunt and Investec have each given and not withdrawn their consent to the publication of this Announcement with the inclusion herein of the references to their names in the form and context in which they appear.

17. Documents available on website

Copies of the following documents will, by no later than 12 noon (London time) on the Business Day following the date of this Announcement, be made available on MIRA's website at www.macquarie.co.uk/mgl/uk/meif/meif6-fibre-offer and KCOM's website at www.kcomplc.com until the end of the Offer Period:

· this Announcement;

· the Confidentiality Agreement;

· the Co-operation Agreement; and

· the Funding Letter.

Enquiries:

Freshfields Bruckhaus Deringer LLP is retained as legal adviser to MEIF 6 (managed by MIRAEL) and MEIF 6 Fibre. Addleshaw Goddard LLP is retained as legal adviser to KCOM.

Further information

This Announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or invitation 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. The Acquisition will be made solely through the Scheme Document (and the accompanying Forms of Proxy), which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Acquisition. Any vote or other response to the Acquisition should be made only on the basis of the information in the Scheme Document.

MEIF 6 Fibre reserves the right to elect, with the consent of the Panel and subject to the terms of the Co-operation Agreement, to implement the Acquisition by way of a Takeover Offer. In such event, the Takeover Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to the Takeover Code and to any appropriate amendments to reflect, amongst other things, the change in method of implementing the Acquisition, and compliance with all applicable laws, including US securities laws.

Important notices relating to financial advisers

Barclays, which is authorised by the PRA and regulated in the United Kingdom by the FCA and the PRA, is acting exclusively for MEIF 6 Fibre and MEIF 6 (managed by MIRAEL) and no one else in connection with the matters described herein and will not be responsible to anyone other than MEIF 6 Fibre and MEIF 6 (managed by MIRAEL) for providing the protections afforded to clients of Barclays nor for providing advice in relation to the matters described herein or any other matter referred to herein. 

N.M. Rothschild & Sons Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for KCOM and no one else in relation to the Acquisition and/or other matters set out in this Announcement and will not be responsible to anyone other than KCOM for providing the protections afforded to clients of Rothschild & Co or for providing advice in relation to the Acquisition, the contents of this Announcement or any other matter or arrangement referred to herein.

Peel Hunt LLP, which is authorised and regulated in the United Kingdom by the FCA, is acting for KCOM and no-one else in connection with the Acquisition and/or other matters set out in this Announcement and will not be responsible to anyone other than KCOM for the protections offered to its clients nor for providing advice in relation to the Acquisition or any matters referred to in this Announcement.

Investec Bank plc, which is authorised by the PRA and regulated in the United Kingdom by the FCA and the PRA, is acting exclusively for KCOM and no one else in relation to the Acquisition and/or other matters set out in this Announcement and will not be responsible to anyone other than KCOM for providing the protections afforded to the clients of Investec or for providing advice in relation to the Acquisition, the contents of this Announcement or any other matter or arrangement referred to herein.

Overseas Shareholders

The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom and the ability of KCOM Shareholders who are not resident in the United Kingdom to participate in the Acquisition may be restricted by laws and/or regulations in those jurisdictions and therefore any persons who are not resident in the United Kingdom or who are subject to the laws of any jurisdiction other than the United Kingdom (including Restricted Jurisdictions) should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to vote their KCOM Scheme Shares in respect of the Scheme at the Court Meeting or with respect to the General Meeting Resolution at the General Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting and/or the General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with applicable legal or regulatory requirements of any jurisdiction may constitute a violation of securities laws in that 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.

Unless otherwise determined by MEIF 6 Fibre or required by the Takeover 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 Acquisition by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail 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 or from within, a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.

This Announcement has been prepared for the purpose of complying with English law and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside England.

The Acquisition will be subject to the applicable requirements of English law, the Takeover Code, the Panel, the London Stock Exchange and the FCA.

Copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction or any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of acceptance of the Acquisition.

If the Acquisition is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation), the Takeover Offer may not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail 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.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Additional information for US Shareholders

KCOM Shareholders in the United States should note that the Acquisition relates to the securities of an English company and is proposed to be implemented pursuant to a scheme of arrangement provided for under English company law. A transaction implemented by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Acquisition will be subject to UK procedural and disclosure requirements and practices applicable to a scheme of arrangement involving a target company in England, which are different from the disclosure requirements of the US tender offer and proxy solicitation rules. The financial information included in this Announcement and other documentation relating to the Acquisition has been or will have been prepared in accordance with International Financial Reporting Standards and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. If MEIF 6 Fibre exercises its right, in the circumstances provided for in this Announcement, to implement the Acquisition by way of a Takeover Offer, such Takeover Offer will only be made in the United States in accordance with the US Exchange Act.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, MEIF 6 Fibre, certain affiliated companies and their respective nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, KCOM Shares, other than pursuant to the Acquisition, until the date on which the Takeover Offer and/or Scheme becomes Effective, lapses or is otherwise withdrawn. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Takeover Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act as exempt principal trader in KCOM securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

None of the securities referred to in this Announcement have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offence in the United States.

The receipt of cash pursuant to the Acquisition by a US Shareholder as consideration pursuant to the terms of the Acquisition may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each US Shareholder is urged to consult his or her independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him or her.

It may be difficult for US holders of KCOM Shares to enforce their rights and claims arising out of the US federal securities laws, since MEIF 6 Fibre and KCOM 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 KCOM Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of 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.

Forward-looking statements

This Announcement contains certain forward-looking statements with respect to MEIF 6 Fibre and KCOM. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as, without limitation, "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "aim", "will", "may", "hope", "continue", "would", "could" or "should" or other words of similar meaning or the negative thereof. Forward-looking statements include, but are not limited to, statements relating to the following: (a) future capital expenditures, expenses, revenues, economic performance, financial conditions, dividend policy, losses and future prospects, (b) business and management strategies and the expansion and growth of the operations of MEIF 6 Fibre or KCOM, and (c) the effects of government regulation on the business of MEIF 6 Fibre or KCOM. There are many factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among such factors are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or disposals. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Except as expressly provided in this document, they have not been reviewed by the auditors of MEIF 6 Fibre or KCOM. By their nature, these forward-looking statements involve known and unknown risks, uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this Announcement may cause the actual results, performance or achievements of any such person, or industry results and developments, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. No assurance can be given that such expectations will prove to have been correct and persons reading this Announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement. Neither MEIF 6 Fibre nor KCOM, nor their respective members, directors, officers or employees, advisers or any person acting on their behalf, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur.

None of MEIF 6 Fibre, KCOM or their respective members, directors, officers, employees, advisers and any person acting on behalf of one or more of them undertakes any intention or obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. All subsequent oral or written forward-looking statements attributable to MEIF 6 Fibre or KCOM or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above.

Neither MEIF 6 Fibre nor the KCOM Group, nor any of their respective associates, directors, officers, employees or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur.

No profit forecasts or estimates

Nothing in this Announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings for each KCOM Share, for the current or future financial years, will necessarily match or exceed the historical published earnings for each KCOM Share.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent 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 pm on the 10th Business Day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm 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 Takeover Code, any person who is, or becomes, interested in one per cent 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 pm 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 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 a website

This Announcement and the documents required to be published pursuant to Rule 26 of the Takeover Code will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on MIRA's website at www.macquarie.co.uk/mgl/uk/meif/meif6-fibre-offer and on KCOM's website at www.kcomplc.com promptly and in any event by no later than 12 noon on the Business Day following the date of this Announcement.

Neither the content of the websites referred to in this Announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this Announcement.

Request for hard copies

KCOM Shareholders may, subject to applicable securities laws, request a hard copy of this Announcement (and any information incorporated into it by reference to another source) by contacting Link Asset Services on 0371 664 0321 or by submitting a request in writing to Link Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TH, with an address to which the hard copy may be sent. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside of the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday, excluding public holidays in England and Wales. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Acquisition or give any financial. legal or tax advice. KCOM Shareholders may, subject to applicable securities laws, also request that all future documents, announcements and information to be sent in relation to the Acquisition should be in hard copy form.

Information relating to KCOM Shareholders

Please be aware that addresses, electronic addresses and certain information provided by KCOM Shareholders, persons with information rights and other relevant persons for the receipt of communications from KCOM may be provided to MEIF 6 Fibre during the Offer Period as required under section 4 of Appendix 4 to the Takeover Code.

Rounding

Certain figures included in this Announcement 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.

General

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Time

All times shown in this Announcement are London times, unless otherwise stated.

Appendix 1

Conditions and further terms of the Scheme and the Acquisition

The Acquisition will be subject to the Conditions and terms set out in this Appendix and in the Scheme Document.

Part A Conditions to the Scheme and Acquisition

1. The Acquisition will be conditional upon the Scheme becoming unconditional and Effective, subject to the Takeover Code, by no later than 11.59 pm on 31 October 2019, or such later date (if any) as MEIF 6 Fibre and KCOM may, with the consent of the Panel, agree and (if required) the Court may approve.

Scheme approval

2. The Scheme will be conditional upon:

(a) approval of the Scheme at the Court Meeting (or at any adjournment thereof, provided that the Court Meeting may not be adjourned beyond the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course or such later date (if any) as MEIF 6 Fibre and KCOM may agree) by a majority in number of the KCOM Scheme Shareholders present and voting, either in person or by proxy, representing three-quarters or more in value of the KCOM Scheme Shares held by those KCOM Scheme Shareholders;

(b) all resolutions in connection with or required to approve and implement the Scheme as set out in the notice of the General Meeting (including, without limitation, the General Meeting Resolution) being duly passed by the requisite majority at the General Meeting (or at any adjournment thereof, provided that the General Meeting may not be adjourned beyond the 22nd day after the expected date of the General Meeting to be set out in the Scheme Document in due course or such later date (if any) as MEIF 6 Fibre and KCOM may agree); and

(c) the sanction of the Scheme without modification or with modification on terms acceptable to MEIF 6 Fibre and KCOM, provided that the Court Hearing may not be adjourned beyond the 22nd day after the expected date of the Court Hearing to be set out in the Scheme Document in due course or such later date (if any) as MEIF 6 Fibre and KCOM may agree); and

(d) the delivery of an office copy of the Court Order to the Registrar of Companies.

3. In addition, MEIF 6 Fibre and KCOM have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless such conditions (as amended, if appropriate) have been satisfied or, where relevant, waived:

FCA approvals

(a) In respect of each notice under section 178 of FSMA which MEIF 6 Fibre or any other person who has decided to acquire control pursuant to the Acquisition over any member of the KCOM Group which is a UK authorised person (as such term is defined in section 191G of FSMA) is under a duty to give in connection with the proposed implementation of the Acquisition:

(i) the FCA having given notice in writing pursuant to section 189(4)(a) of FSMA that it has determined unconditionally to approve each such acquisition pursuant to section 185 of FSMA;

(ii) in relation to such acquisition, the FCA having given notice in writing pursuant to section 189(7) of FSMA subject to condition(s) specified in the decision notice and such condition(s) being satisfactory to the section 178 notice-giver, acting reasonably; or

(iii) the FCA being treated, under section 189(6) of FSMA, as having approved each such acquisition,

where for the purposes of this Condition 3(a), "control" shall be construed in accordance with the provisions of Part XII of FSMA (read, as appropriate, with the FSMA (Controllers) (Exemption) Order 2009).

Third Party clearances

(b) No Third Party having given written notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision, order or change to published practice, or having taken any other steps (in each case, not having withdrawn the same) (in each case which would be material in the context of the Wider MEIF 6 Fibre Group or Wider KCOM Group, as the case may be, taken as a whole) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:

(i) make the Acquisition, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider KCOM Group by any member of the Wider MEIF 6 Fibre Group void, illegal and/or unenforceable under the laws of any jurisdiction, or otherwise directly or indirectly prevent, prohibit, or restrain, restrict, impede, materially challenge, delay or otherwise interfere with the implementation of, or impose additional material conditions or material obligations with respect thereto or otherwise challenge or interfere therewith;

(ii) impose any material limitation on, or result in a material delay in, the ability of any member of the Wider MEIF 6 Fibre Group directly or indirectly to acquire or hold or to exercise effectively, directly or indirectly, all or any rights of ownership in respect of shares or loans or other securities convertible into shares or any other securities (or the equivalent) in KCOM (or any member of the Wider KCOM Group) or to exercise management control over, any member of the Wider KCOM Group to an extent which is material in the context of the Wider KCOM Group taken as a whole;

(iii) require, prevent or delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the Wider KCOM Group of all or any part of their respective businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their respective businesses (or any part thereof) or to own, control or manage any of their respective assets or properties or any part thereof which, in any such case, is material in the context of the Wider KCOM Group taken as a whole;

(iv) other than pursuant to sections 974 to 991 of the Companies Act, require any member of the Wider MEIF 6 Fibre Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider KCOM Group owned by any third party (other than in the implementation of the Acquisition);

(v) result in any member of the Wider KCOM Group ceasing to be able to carry on business under any name under which it presently does so (in each case to an extent which is material in the context of the Wider KCOM Group taken as a whole;

(vi) impose any material limitation on, or result in any delay of, the ability of any member of the Wider MEIF 6 Fibre Group or any member of the Wider KCOM Group to integrate or co-ordinate all or any part of their respective businesses with all or any part of the business of any other member of the Wider MEIF 6 Fibre Group and/or the Wider KCOM Group in a manner which is material in the context of the Wider MEIF 6 Fibre Group and/or the Wider KCOM Group, in each case taken as a whole; or

(vii) otherwise adversely affect the business, assets, value, profits, prospects or operational performance of any member of the Wider KCOM Group to an extent which is material in the context of the Wider KCOM Group taken as a whole, and all applicable waiting or other time periods (including any extensions thereof) during which a Third Party could take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Acquisition or proposed acquisition of any KCOM Shares having expired, lapsed or been terminated.

(c) Other than as contemplated by Condition 3(a) above, all notifications, filings or applications which are necessary under applicable legislation or regulation of any relevant jurisdiction having been made in connection with the Acquisition and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with in respect of the Scheme and the Acquisition; and

(d) All Authorisations which are necessary in any jurisdiction for or in respect of the Acquisition or the proposed acquisition of any shares or other securities in, or control of, KCOM by any member of the Wider MEIF 6 Fibre Group having been obtained in terms and in a form reasonably satisfactory to MEIF 6 Fibre from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider KCOM Group has entered into contractual arrangements and all such Authorisations which are necessary for any member of the Wider KCOM Group to carry on its business in any jurisdiction having been obtained in each case where the consequence of a failure to make such notification or filing or to wait for the expiry, lapse or termination of any such waiting or other time period or to comply with such obligation or obtain such Authorisation would be unlawful in any relevant jurisdiction or have a material adverse effect on the Wider KCOM Group, any member of the MEIF 6 Fibre Group or the ability of MEIF 6 Fibre to implement the Scheme and all such Authorisations remaining in full force and effect at the time at which the Scheme becomes otherwise unconditional and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations.

Confirmation of absence of adverse circumstances

(e) Except as Disclosed, there being no provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider KCOM Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject or any event or circumstance which, in each case as a consequence of the Acquisition or the proposed acquisition by any member of the Wider MEIF 6 Fibre Group of any shares or other securities in KCOM or because of a change in the control or management of any member of the Wider KCOM Group or otherwise, would or might reasonably be expected to result in (in each case to an extent which is, or would be, material in the context of the Wider KCOM Group as a whole, or in the context of the Scheme):

(i) any monies borrowed by, or any other indebtedness or liabilities (including, without limitation, guarantees, letters of credit and hedging contracts), whether actual or contingent, of, or any grant available to, any member of the Wider KCOM Group being or becoming repayable, or capable of being declared repayable immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) any such arrangement, agreement, licence, permit, lease or instrument, or the rights, liabilities, obligations or interests of any member of the Wider KCOM Group thereunder being or becoming capable of being terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken or arising thereunder;

(iii) any such member of the Wider KCOM Group ceasing to be able to carry on business under any name under which it presently does so;

(iv) any assets or interests of, or any asset the use of which is enjoyed by, any member of the Wider KCOM Group being or falling to be disposed of or charged or ceasing to be available to any member of the Wider KCOM Group or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any member of the Wider KCOM Group otherwise than in the ordinary course of business;

(v) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider KCOM Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen), becoming enforceable;

(vi) business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider KCOM Group being materially prejudiced or adversely affected;

(vii) the creation or acceleration of any material liability (actual or contingent) by any member of the Wider KCOM Group, other than trade creditors or other liabilities incurred in the ordinary course of business; or

(viii) any liability of any member of the Wider KCOM Group to make any severance, termination, bonus or other payment to any of its directors or other officers, and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider KCOM Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, could result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this Condition, in each case to an extent which is material in the context of the Wider KCOM Group taken as a whole.

No material transactions, claims or changes in the conduct of the business of the KCOM Group

(f) Except as Disclosed, no member of the Wider KCOM Group having since 30 September 2018:

(i) save as between KCOM and wholly-owned subsidiaries of KCOM or for KCOM Shares issued pursuant to the exercise of options or vesting of awards granted in the ordinary course under, or any other issue of KCOM Shares in the ordinary course pursuant to, the KCOM Share Schemes, issued or agreed to be issued or authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities;

(ii) other than to another member of the KCOM Group and the interim dividend of £0.01 for each KCOM Share paid on 1 February 2019, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus issue, dividend or other distribution (whether payable in cash or otherwise);

(iii) save for transactions between KCOM and its wholly-owned subsidiaries, or between its wholly-owned subsidiaries or transactions in the ordinary course of business, merged or demerged with any body corporate or acquired or disposed of any body corporate, partnership or business or acquired or disposed of, or transferred, mortgaged or charged or created any security interest over, any assets or any right, title or interest in any asset (including shares and trade investments) or authorised, proposed or announced any intention to do so, in each case, other than in the ordinary course of business (in each case to an extent which is material in the context of the Wider KCOM Group taken as a whole);

(iv) made, authorised, proposed or announced an intention to propose any change in its loan capital in each case, to the extent which is material in the context of the Wider KCOM Group taken as a whole;

(v) issued, authorised or proposed or announced an intention to authorise or propose the issue of, or made any change in or to the terms of, any debentures or, save in the ordinary course of business, incurred or increased any indebtedness or become subject to any contingent liability which in any case is material in the context of the Wider KCOM Group as a whole;

(vi) entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary, any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is outside the ordinary course of business or is of a long-term, unusual or onerous nature, or which involves or could reasonably be expected to involve an obligation of a nature or magnitude and which, in any such case, is material in the context of the Wider KCOM Group or in the context of the Acquisition, or which is or is reasonably likely to be restrictive on the business of any member of the Wider KCOM Group taken as a whole;

(vii) disposed of intellectual property rights of any member of the Wider KCOM Group which is material in the context of the Wider KCOM Group taken as a whole or which is other than in the ordinary course of business;

(viii) entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary the terms of or made any offer (which remains open for acceptance) to enter into or vary the terms of, any contract, commitment, arrangement or any service agreement with any director or senior executive of the Wider KCOM Group;

(ix) proposed, agreed to provide or modified to a material extent the terms of the KCOM Share Schemes or any share option scheme, incentive scheme, or other benefit relating to the employment or termination of employment, of any employee of the Wider KCOM Group;

(x) procured the trustees of any Relevant Pension Plan, or any such trustees having taken any action since 30 September 2018, to:

(I) make or agree to any material change to: (a) the terms of the trust deeds, rules, policy or other governing documents constituting any Relevant Pension Plan; (b) the basis on which benefits accrue, pensions which are payable or the persons entitled to accrue or be paid benefits, under any Relevant Pension Plan; (c) the basis on which the liabilities of any Relevant Pension Plan are funded or valued; or (d) the basis or rate of employer contribution to a Relevant Pension Plan, in each case other than as required by applicable law;

(II) carry out any act: (a) which would or could reasonably be expected to lead to the commencement of the winding-up of any Relevant Pension Plan; (b) which would or is reasonably likely to create a material debt owed by an employer to any Relevant Pension Plan; (c) which would or might accelerate any obligation on any employer to fund or pay additional contributions to any Relevant Pension Plan, in each case other than as required by applicable law;

(xi) entered into, implemented or effected, or authorised, proposed or announced its intention to implement or effect, any joint venture, asset or profit sharing arrangement, partnership, composition, assignment, reconstruction, amalgamation, commitment, scheme or other transaction or arrangement other than the Scheme;

(xii) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(xiii) waived, compromised or settled any claim (whether actual or threatened) otherwise than in the ordinary course of business and which is material in the context of the Wider KCOM Group taken as a whole;

(xiv) save as is envisaged by the Acquisition, made any material alteration to its articles of association or other constitutional documents;

(xv) (other than in respect of a member of the Wider KCOM Group which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of any administrator, receiver, manager, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed (in each case to an extent which is material in the context of the Wider KCOM Group when taken as a whole);

(xvi) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business (in each case to an extent which is material to the Wider KCOM Group when taken as a whole);

(xvii) entered into any material contract, commitment, agreement or arrangement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition and which is material in the context of the Wider KCOM Group taken as a whole or in the context of the Acquisition;

(xviii) terminated or varied the terms of any agreement or arrangement between any member of the Wider KCOM Group and any other person in a manner which would or would reasonably likely to be expected to have a material adverse effect on the financial position of the Wider KCOM Group taken as a whole; or

(xix) other than with the consent of MEIF 6 Fibre, having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of KCOM Shareholders at the General Meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code.

No material adverse change

(g) Except as Disclosed, since 30 September 2018:

(i) there having been no adverse change or deterioration in the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider KCOM Group which, in any such case, is material in the context of the Wider KCOM Group taken a whole or in the context of the Acquisition and no circumstances have arisen which would or might reasonably be expected to result in any such adverse change;

(ii) no material litigation, arbitration proceedings, prosecution or other material legal proceedings including, without limitation, with regard to intellectual property rights used by the Wider KCOM Group to which any member of the Wider KCOM Group is or may become a party (whether as claimant or defendant or otherwise) and no enquiry, review, investigation or enforcement proceedings by, or complaint or reference to, any Third Party against or in respect of any member of the Wider KCOM Group having been threatened, announced or instituted by or against, or remaining outstanding in respect of, any member of the Wider KCOM Group in each case which is material in the context of the Wider KCOM Group taken as a whole;

(iii) no contingent or other liability having arisen, increased or become apparent which would reasonably be likely adversely to affect the business, assets, financial or trading position, profits, prospects or operational performance of any member of the Wider KCOM Group to an extent which is material to the Wider KCOM Group taken as a whole or in the context of the Acquisition; and

(iv) no steps having been taken and no omissions having been made which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider KCOM Group, which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which is material and reasonably likely to have an adverse effect on the Wider KCOM Group taken as a whole or in the context of the Acquisition.

No discovery of certain matters

(h) Except as Disclosed, since 30 September 2018 MEIF 6 Fibre not having discovered:

(i) that any financial, business or other information concerning the Wider KCOM Group publicly announced or disclosed to any member of the Wider MEIF 6 Fibre Group at any time by or on behalf of any member of the Wider KCOM Group or to any of their advisers is materially misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make that information not materially misleading; or

(ii) that any member of the Wider KCOM Group is subject to any material liability, contingent or otherwise, other than in the ordinary course of business; or

(iii) there is any information which affects the import of any information publicly announced prior to the date of this Announcement by or on behalf of any member of the Wider KCOM Group and which is material in the context of the Wider KCOM Group taken as a whole.

Intellectual Property

(i) Save as Disclosed, no circumstance having arisen or ceasing to exist, or no event having occurred, in each case, in relation to any intellectual property owned or used by any member of the Wider KCOM Group which would have a material adverse effect on the Wider KCOM Group taken as a whole.

Anti-corruption and sanctions

(j) Save as Disclosed, MEIF 6 Fibre not having discovered that:

(i) any past or present member, director, officer or employee of the Wider KCOM Group or any person that performs or has performed services for or on behalf of any such company is or has at any time engaged in any activity, practice or conduct (or omitted to take any action) in connection with the performance of such services which would constitute an offence under the UK Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977, Part 3 of the Criminal Finances Act 2017 (each as amended) or any other applicable anti-corruption or anti-tax-evasion legislation; or

(ii) any past or present member, director, officer or employee of the Wider KCOM Group or any person who has performed services for and on behalf of any such company has engaged in any activity or business with, or made any investments in, or made any funds or assets available to or received any funds or assets from: (i) any government, entity or individual in respect of which US or EU persons, or persons operating in those territories, are prohibited from engaging in activities or doing business, or from receiving or making available funds or economic resources, by US or EU laws or regulations, including the economic sanctions administered by the HM Treasury & Customs, the United Nations or the EU (or any of their respective member states) or the United States Office of Foreign Assets Control; or (ii) any government, entity or individual targeted by any of the economic sanctions of the United Nations, the United States, the EU or any of its member states, in each case to an extent which is material in the context of the Wider KCOM Group taken as a whole; or

(iii) any member of the KCOM Group has been engaged in any transaction which would cause MEIF 6 Fibre to be in breach of any applicable law or regulation upon its acquisition of KCOM, including the economic sanctions of the United States Office of Foreign Assets Control, or HM Treasury & Customs, or any government, entity or individual targeted by any of the economic sanctions of the United Nations, the United States, the EU or any of its member states.

No criminal property

(k) Save as Disclosed, MEIF 6 Fibre not having discovered that any material asset of any member of the Wider KCOM Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition).

Part B Waiver and Invocation of the Conditions

1. The Scheme will not become Effective unless the Conditions have been fulfilled or (if capable of waiver) waived or, where appropriate, have been determined by MEIF 6 Fibre to be or remain to be satisfied by no later than the Long Stop Date.

2. MEIF 6 Fibre reserves the right in its sole discretion (subject to the requirements of the Takeover Code and the Panel) to waive:

(a) those parts of all or any of the Conditions set out in paragraph 2 of Part A of this Appendix 1 relating to the deadlines for the Court Meeting, General Meeting and/or the Court Hearing. If any such deadline is not met, MEIF 6 Fibre shall make an announcement by 8.00 a.m. on the Business Day following such deadline confirming whether it has invoked the relevant Condition, waived the relevant deadlines or agreed with KCOM to extend the relevant deadline; or

(b) in whole or in part, all or any of Conditions 3(a) to (k) of Part A of this Appendix 1 above.

3. MEIF 6 Fibre shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of the Conditions in Part A above by a date earlier than the latest date specified above for the fulfilment of that condition, notwithstanding that the other Conditions may at such earlier date have been waived or fulfilled and that there are, at such earlier date, no circumstances indicating that any Condition may not be capable of fulfilment.

4. Under Rule 13.5(a) of the Takeover Code, MEIF 6 Fibre may not invoke a Condition to the Acquisition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the Condition are of material significance to MEIF 6 Fibre in the context of the Acquisition. Conditions 2(a), 2(b) and 2(c) and 2(d) and if applicable, any acceptance condition if the Acquisition is implemented by means of a Takeover Offer, are not subject to this provision of the Takeover Code.

Part C Implementation by way of Takeover Offer

1. MEIF 6 Fibre reserves the right to elect, subject to the consent of the Panel and the terms of the Co-operation Agreement, to implement the Acquisition by way of a Takeover Offer. In such event, such Takeover Offer will be implemented on substantially the same terms and conditions, so far as applicable, as those which would apply to the Scheme subject to appropriate amendments, including (without limitation) an acceptance condition set at 90 per cent (or such other percentage (being more than 50 per cent) as MEIF 6 Fibre may decide (subject to the Panel's consent)) (i) in nominal value of the shares to which such Takeover Offer relates; and (ii) of the voting rights attaching to those shares.

Part D Certain further terms of the Acquisition

1. The availability of the Acquisition to persons not resident in the UK may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the UK should inform themselves about, and observe, any applicable requirements. Further information in relation to Overseas Shareholders will be contained in the Scheme Document.

2. If MEIF 6 Fibre is required by the Panel to make an offer for KCOM Shares under the provisions of Rule 9 of the Takeover Code, MEIF 6 Fibre may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.

3. The KCOM Shares will be acquired by MEIF 6 Fibre fully paid and free from all liens, charges, equities, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature whatsoever and together with all rights attaching to them as at the date of this Announcement or subsequently attaching or accruing to them including, without limitation, voting rights and the right to receive and retain, in full, all dividends and other distributions (if any), declared, made or paid, or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the date of this Announcement and before the Effective Date.

4. If any dividend or other distribution or return of capital is authorised, declared, made or paid in respect of the KCOM Shares on or after the date of this Announcement and prior to the Effective Date, MEIF 6 Fibre reserves the right to reduce the Acquisition Price by an amount up to the amount of such dividend or other distribution or return of capital for each KCOM Share. If MEIF 6 Fibre exercises this right or makes such reduction in respect of a dividend or other distribution that has not been paid, KCOM Shareholders will be entitled to receive and retain that dividend or other distribution or return of capital.

5. The Acquisition will lapse and the Scheme will not become Effective if the European Commission either initiates proceedings under Article 6(1)(c) of the EU Merger Regulation in respect of the Acquisition, or makes a referral to the competent UK authority (being the Competition and Markets Authority) under either Article 4(4) or Article 9(1) of the EU Merger Regulation and there is then a CMA Phase 2 Reference in respect of the Acquisition, before 11.59 p.m. on the date immediately preceding the date of the Court Meeting.

6. The Scheme will be governed by the laws of England and Wales and be subject to the jurisdiction of the Court and to the Conditions and further terms set out in this Announcement and to be set out in the Scheme Document. The Acquisition will comply with the applicable requirements of the FCA, the London Stock Exchange and the Court, as well as with the Takeover Code.

7. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

Appendix 2

Sources of information and bases of calculation

1. As at close of business on the Last Practicable Date, KCOM had 516,603,910 KCOM Shares in issue.

2. The value placed by the Acquisition on the existing issued and to be issued ordinary share capital of KCOM has been calculated on the basis of:

(a) 516,603,910 KCOM Shares in issue on the Last Practicable Date; and

(b) Up to 4,688,855 KCOM Shares which may be issued on or after the date of this Announcement on the exercise of options or vesting of awards under the KCOM LTIP (taking into account the exercise by KCOM's remuneration committee of applicable discretions). 

3. Unless otherwise stated, all prices quoted for KCOM Shares are Closing Prices.

4. Volume-weighted average prices have been derived from Bloomberg and have been rounded to the nearest one decimal place.

Appendix 3

Definitions

The following definitions apply throughout this Announcement unless the context otherwise requires:

All references in this Announcement to any statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as amended, consolidated, extended, modified, replaced or reenacted from time to time and all statutory instruments, regulations and orders from time to time made thereunder or deriving validly therefrom.