TEG.L Regulatory News (TEG)

1 Feb 2005 07:06

Landsbanki Holdings (UK) Plc01 February 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN FOR IMMEDIATE RELEASE1 February 2005 RECOMMENDED CASH OFFER by HSBC Bank plc on behalf of Landsbanki Holdings (UK) plc a wholly-owned subsidiary of Landsbanki Islands hf. for Teather & Greenwood Holdings plc Summary • The Boards of Landsbanki Islands hf. ("Landsbanki") and Teather &Greenwood Holdings plc ("Teathers" or the "Company") announce that they haveagreed the terms of a recommended cash offer for the entire issued and to beissued share capital of Teathers not already owned by Landsbanki. • It is intended that, upon completion of the Offer, Teathers willcontinue to function independently as part of the Landsbanki Group. Accordingly,the Teather & Greenwood name will be preserved and the Company will retain itsexecutive management team. Lord Baker has agreed to continue as Chairman. The Offer • The Offer is 75 pence in cash for each Teathers Share and values theentire issued share capital of Teathers at approximately £42.8 million. • The Offer represents a premium of approximately: - 48.5 per cent. to the Closing Price of 50.5 pence for each TeathersShare on 25 January 2005, the last business day prior to the commencement of theOffer Period; and - 70.5 per cent. to the average Closing Price of 44.0 pence for eachTeathers Share for the three months to 25 January 2005. • The Offer is conditional upon, inter alia, Landsbanki or Landsbanki UKacquiring or agreeing to acquire (either pursuant to the Offer or otherwise)shares carrying over 50 per cent. of the voting rights attributable to theTeathers Shares. • A Loan Note Alternative is being made available to TeathersShareholders (except for certain overseas shareholders) under the Offer. Recommendation and shareholder support • The Teathers Directors, who have been so advised by Bridgewell,consider the terms of the Offer to be fair and reasonable and will unanimouslyrecommend the Offer to Teathers Shareholders. • Landsbanki owns, or has received irrevocable undertakings or a letterof intent to accept the Offer in respect of, in aggregate, 27,663,652 TeathersShares, representing approximately 48.5 per cent. of the existing issued sharecapital of Teathers. Transaction rationale • The directors of Landsbanki believe that the acquisition of Teathersby Landsbanki will: - enhance Teathers' offering to its clients, through access to a widerange of Landsbanki's corporate banking products and services; - provide capital to support Teathers' management in realising itsambitions for both organic and, should suitable opportunities arise,acquisition-led growth; - accelerate Landsbanki's ambition to develop its internationalinvestment banking offering to the small and mid-cap market; - provide Landsbanki with an established and reputable UK platform inits target market; - further diversify Landsbanki's income streams, whilst broadeningsector and geographic coverage; and - allow the creation of a partnership that will generate value throughthe combination of Teathers' long-established client relationships withLandsbanki's banking expertise, financial resources and broad product offering. Commenting on the Offer, the Group Managing Directors and Co-Chief ExecutiveOfficers of Landsbanki, Halldor J. Kristjansson and Sigurjon Th. Arnason, said: "We are delighted that the directors of Teathers will recommend our offer. Theacquisition of Teathers will be a significant milestone in our internationalexpansion strategy. Teathers is a well-established franchise in corporatebroking and advisory services to the UK small and mid-cap market and provides anideal platform from which Landsbanki can expand its activities into this market.We look forward to working with Teathers' existing management and employees,whom we hold in high regard and see as an integral part of the continuingsuccess of the business. We are also pleased that Lord Baker has kindly agreedto continue as Chairman of Teathers." Lord Baker, Chairman of Teathers, said: "Landsbanki's cash offer is at a significant premium to the share priceimmediately prior to the announcement that Teathers was in discussions with athird party. Landsbanki attributes great importance to the skills and experienceof Teathers' employees and the Teathers Board has been given assurances thatTeathers' management structure, management team and culture will be maintained.At the same time, Teathers will have access to additional capital and theTeathers Board, therefore, believes that the link-up will not only assistmanagement to increase the opportunities for growth but also benefit itscustomers." HSBC is acting as financial adviser to the Landsbanki Group in relation to theOffer. Bridgewell is acting as financial adviser to Teathers. ENQUIRIES:Landsbanki Teathers Halldor J. Kristjansson Ken FordSigurjon Th. Arnason Nick Stagg+ 354 410 4015 + 44 (0) 207 426 9000 HSBC BridgewellAlistair Hill Ben Money-CouttsEdward Griffin Stephen Cheung+44 (0) 20 7991 8888 +44 (0) 20 7003 3000 Finsbury BuchananMorgan Bone Richard DarbyNicola Hobday Nicola Cronk+44 (0) 20 7251 3801 +44 (0) 20 7466 5000 This summary should be read in conjunction with the full text of the followingannouncement which sets out further details of the Offer. The conditions andcertain further terms to the Offer are set out in Appendix I to thisannouncement. Appendix II contains definitions of certain terms used in thisannouncement. This announcement does not constitute an offer to sell, or an invitation topurchase, any securities or the solicitation of any vote or approval in anyjurisdiction. The Offer is being made solely by the Offer Document and the Formof Acceptance which contain the full terms and conditions of the Offer(including details of how it may be accepted) and which will be posted toTeathers Shareholders today. The availability of the Offer to Teathers Shareholders who are not resident inthe United Kingdom may be affected by the laws of the relevant jurisdictions inwhich they are located or of which they are citizens. Such persons should informthemselves of, and observe, any applicable requirements of those jurisdictions.Further details in relation to overseas shareholders are contained in the OfferDocument. The Offer is not being made, directly or indirectly, in or into Canada,Australia or Japan and the Offer is not capable of acceptance in or from Canada,Australia or Japan. In addition, the Offer is not being made, directly orindirectly, in or into or by use of the mails or by any means or instrumentality(including without limitation, by means of telephone, facsimile, telex, internetor other forms of electronic transmission) of interstate or foreign commerce of,or any facilities of a national securities exchange of, or in or into, theUnited States and, subject to certain exceptions, the Offer is not capable ofacceptance by any such use, means, instrumentality or facilities or from theUnited States. Accordingly, copies of this announcement are not being, and mustnot be, mailed or otherwise forwarded, distributed or sent in, into or from theUnited States, Canada, Australia or Japan. Persons receiving this announcement(including custodians, nominees and trustees) should observe these restrictionsand must not send or distribute this announcement in, into or from the UnitedStates, Canada, Australia or Japan, as doing so may invalidate any purportedacceptance of the Offer. The Loan Notes will not be listed on any stock exchange and have not been, andwill not be, registered under the United States Securities Act of 1933, asamended, or under any relevant securities laws of any state of the United Statesand the relevant clearances have not been, and will not be, obtained from theregulatory authority of any province or territory of Canada. In addition, noprospectus in relation to the Loan Notes has been, or will be, lodged with orregistered by the Australian Securities and Investments Commission and no stepshave been, nor will be, taken to enable the Loan Notes to be offered incompliance with the applicable securities laws of Japan or any other country orjurisdiction outside the United Kingdom. The Loan Notes will not be offered,sold, resold, delivered or distributed, directly or indirectly, in or into theUnited States, Canada, Australia or Japan or any other jurisdiction if to do sowould constitute a violation of the relevant laws in such jurisdiction. HSBC, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting for the Landsbanki Group and no one else inconnection with the Offer and will not be responsible to any other person forproviding the protections afforded to customers of HSBC, nor for providingadvice in relation to the Offer or any other matters referred to in thisannouncement. Bridgewell, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting for Teathers and no one else inconnection with the Offer and will not be responsible to any other person forproviding the protections afforded to customers of Bridgewell, nor for providingadvice in relation to the Offer or any other matters referred to in thisannouncement. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN FOR IMMEDIATE RELEASE 1 February 2005 RECOMMENDED CASH OFFER by HSBC Bank plc on behalf of Landsbanki Holdings (UK) plc a wholly-owned subsidiary of Landsbanki Islands hf. for Teather & Greenwood Holdings plc 1. Introduction The Boards of Landsbanki and Teathers are pleased to announce that they haveagreed the terms of a recommended cash offer to be made by HSBC on behalf ofLandsbanki Holdings (UK) plc ("Landsbanki UK"), a wholly-owned subsidiary ofLandsbanki, for the entire issued and to be issued share capital of Teathers notalready owned by Landsbanki. It is intended that, upon completion of the Offer,Teathers will continue to function independently, as part of the LandsbankiGroup. Accordingly, the Teather & Greenwood name will be preserved and theCompany will retain its executive management team. 2. The Offer The Offer, which is subject to the conditions and terms set out in Appendix I tothis announcement and to the further terms set out in the Offer Document and theForm of Acceptance, will be made on the following basis: for each Teathers Share 75 pence in cash The Offer values the entire issued share capital of Teathers at approximately£42.8 million. The Offer, which will be funded from Landsbanki's existing cash resources,represents a premium of approximately: - 48.5 per cent. to the Closing Price of 50.5 pence for each TeathersShare on 25 January 2005, the last business day prior to the commencement of theOffer Period; and - 70.5 per cent. to the average Closing Price of 44.0 pence for eachTeathers Share for the three months to 25 January 2005. The Offer includes a Loan Note Alternative which is being made available (exceptfor certain overseas shareholders) in respect of all or part of the cashconsideration available under the terms of the Offer. The Teathers Shares will be acquired by Landsbanki UK free from all liens,charges, encumbrances, rights of pre-emption and any other third party rights ofany nature whatsoever and together with all rights attaching thereto including,without limitation, the right to receive in full all dividends and otherdistributions declared, paid or made on or after the date of this announcement. Appendix II contains definitions of certain terms used in this announcement. 3. The Loan Note Alternative As an alternative to some or all of the cash consideration to which they wouldotherwise be entitled under the Offer, Teathers Shareholders (except for certainoverseas shareholders) who validly accept the Offer will be entitled to elect toreceive Loan Notes to be issued by Landsbanki UK on the following basis: for every £1 of cash consideration £1 nominal of Loan Notes The Loan Notes will be unsecured obligations of Landsbanki UK and will beissued, credited as fully paid, in amounts and multiples of £1 nominal value.The obligation of Landsbanki UK to make payments of principal and interest underthe Loan Notes will be guaranteed by Landsbanki. Entitlements to Loan Notes willbe rounded down to the nearest pound and the balance of the consideration willbe disregarded and not paid in cash. No application will be made for the LoanNotes to be listed or dealt in on any stock exchange and they will not betransferable. Unless Landsbanki UK otherwise determines, no Loan Notes will be issued unless,by the time the Offer becomes or is declared unconditional in all respects,valid elections for the Loan Note Alternative have been received which willresult in the issue of at least £1 million in nominal value of Loan Notes. Ifinsufficient elections are received, Teathers Shareholders who have validlyaccepted the Offer and who elect for the Loan Note Alternative will, instead,receive cash in accordance with the terms of the Offer. Subject to this, the Loan Note Alternative will remain open for acceptance forso long as the Offer remains open for acceptance. The Loan Note Alternative isconditional on the Offer becoming or being declared unconditional in allrespects. The Loan Notes will bear interest from the date of issue, payable in arrear(less any applicable tax), in half yearly instalments on 30 June and 31 Decemberin each year, at a rate equal to one per cent. per annum below LIBOR for sixmonth deposits. The first interest period will be in respect of the periodcommencing on the issue of a Loan Note up to (but excluding) 30 June 2005. Holders of the Loan Notes will have the option to redeem all or any part (being£1,000 nominal or any integral multiple thereof or any outstanding balance, tothe extent that it is less than £1,000) of their Loan Notes, commencing on 31December 2005 (provided that date is at least six months after issue of the LoanNotes) and at half yearly intervals on any subsequent interest payment date. Ifat any time following the first anniversary of the date of the Loan Notes thereis outstanding £1 million or less in nominal value of Loan Notes, the Loan Notesmay be redeemed by Landsbanki UK on not less than 30 days' notice. On 31 December 2009, all outstanding Loan Notes will be redeemed. An application for clearance will be made to the Inland Revenue under section138 of the Taxation of Chargeable Gains Act 1992. The Offer and the Loan NoteAlternative are not conditional on such clearance being obtained. Further details on the terms of the Loan Notes are contained in the OfferDocument. 4. Background to the recommendation During the past six months, the Board of Teathers has received a number ofunsolicited and informal approaches to acquire the Company. None of these was ata level which the Board found acceptable or in the interests of either TeathersShareholders or other stakeholders until Teathers received an indicative cashoffer in January 2005 from Landsbanki of 75 pence for each Teathers Share. Thisoffer was confirmed following a period of due diligence. The Teathers Directors, who have been so advised by Bridgewell, consider theterms of the Offer to be fair and reasonable. In providing advice to theTeathers Directors, Bridgewell has taken account of the Teathers Directors'commercial assessments. Accordingly, the Teathers Directors will unanimously recommend that TeathersShareholders accept the Offer, as they have irrevocably undertaken to do (orprocure to be done) in respect of their own beneficial holdings of, inaggregate, 3,438,712 Teathers Shares, representing approximately 6.0 per cent.of the existing issued share capital of Teathers. 5. Irrevocable undertakings and market purchases Landsbanki has received irrevocable undertakings to accept the Offer from eachof the Teathers Directors, an immediate family member of a Teathers Director anda former director of Teathers in respect of, in aggregate, 5,148,001 TeathersShares, representing approximately 9.0 per cent. of the existing issued sharecapital of Teathers. These irrevocable undertakings will only cease to bebinding in the event that the Offer lapses or is withdrawn. In addition, Landsbanki has received irrevocable undertakings from otherTeathers Shareholders in respect of, in aggregate, 18,457,111 Teathers Shares,representing approximately 32.3 per cent. of the existing issued share capitalof Teathers. These irrevocable undertakings cease to be binding in the eventthat the Offer lapses or is withdrawn or in the event that a third partyannounces a competing offer with a value in excess of 82.5 pence for eachTeathers Share and Landsbanki UK has not announced a revised cash offer withinfive days of the announcement of the competing offer, which is equal to orexceeds the value to be offered under such competing offer. In addition, Landsbanki has received an irrevocable undertaking from OrbisTrustees Jersey Limited, the trustee of the Teathers employee benefit trust, inrespect of 658,580 Teathers Shares, representing approximately 1.2 per cent. ofthe existing issued share capital of Teathers. This irrevocable undertakingceases to be binding in the event that a third party announces a competing offerwith a value in excess of 75 pence for each Teathers Share and Landsbanki UK hasnot announced a revised cash offer within 14 days of the announcement of thecompeting offer, which exceeds the value to be offered under such competingoffer. Landsbanki has also received a letter of intent to accept the Offer in respectof a further 3,124,960 Teathers Shares, representing approximately 5.5 per cent.of the existing issued share capital of Teathers. As at the date of this announcement, Landsbanki owns, in aggregate, 275,000Teathers Shares, representing approximately 0.5 per cent. of the existing issuedshare capital of Teathers. Accordingly, Landsbanki owns, or has received irrevocable undertakings or aletter of intent to accept the Offer in respect of, in aggregate, 27,663,652Teathers Shares, representing approximately 48.5 per cent. of the existingissued share capital of Teathers. Further details of these irrevocable undertakings are set out in paragraph 4(b)of Appendix V to the Offer Document. 6. Acceptance condition The Offer is conditional upon, inter alia, Landsbanki or Landsbanki UK acquiringor agreeing to acquire (either pursuant to the Offer or otherwise) sharescarrying over 50 per cent. of the voting rights attributable to the TeathersShares. 7. Background to and reasons for the Offer Landsbanki has widely publicised its strategy to expand its business outside ofIceland. With limited domestic growth opportunities, the expansion of itsoperations overseas is a strategic priority. The focus of Landsbanki's strategyis to achieve diversification of income, whilst broadening sector and geographiccoverage and the generation of recurring revenues. Landsbanki's expansion goalsalso include achieving economies of scale with a positive impact on operationalcosts and funding, and the acquisition of high quality financial institutions inorder to achieve growth in Europe. Landsbanki views the acquisition of anestablished and reputable broking franchise in the UK such as Teathers as anexcellent opportunity to progress its international expansion strategy. Landsbanki intends to contribute significantly to the growth of Teathers throughproviding Teathers' clients with access to Landsbanki's broader range ofcorporate and investment banking products and services, including structuredfinance. If the Offer is successful and Landsbanki secures an established UK stockbroker,Landsbanki intends to provide the capital required to support Teathers'management in delivering its ambitious plans for growth. The combination ofTeathers' long-standing client relationships with Landsbanki's bankingexpertise, financial resources and broad range of products should alsocontribute to future expansion. 8. Information on Landsbanki Landsbanki is a universal bank, established in 1886, offering a wide range offinancial services including corporate investment, wholesale, commercial andretail banking, private banking and asset management. Landsbanki has a leadingposition in Iceland in banking, a well-established corporate client base and astrong domestic position in equity and fixed income funds. Landsbanki is a leading Icelandic bank with total assets of ISK 730.4billion(£6.2billion) and shareholders' equity of ISK 38.0 billion (£323.2million). Ithas a A3/P-1/C rating by Moody's and a A/F1 rating by Fitch. For the year ended31 December 2004, Landsbanki generated net operating revenues of ISK 33.6billion (£286.4 million) and profit before tax of ISK 14.7 billion (£125.0million). Outside Iceland, Landsbanki has since June 2000 owned and operated HeritableBank, a UK bank authorised by the FSA, which offers residential propertydevelopment financing, mortgage lending and wholesale and retail deposits. SinceJune 2003, Landsbanki has also owned and operated a bank in Luxembourg offeringprivate banking services and corporate lending. Landsbanki has been listed on the Iceland Stock Exchange since 1998 and has acurrent market capitalisation of ISK 113.4billion (£964.6million). It has adiversified shareholder base, including a strategic investor, Samson, which ownsapproximately 44.8 per cent. of the existing issued share capital of Landsbanki.Samson is an Icelandic investment company controlled by three Icelandicindividuals. Landsbanki was fully privatised by the Icelandic government inearly 2003. 9. Information on Samson Samson is an investment company established in 2002 by three Icelandicindividuals: Bjorgolfur Guomundsson, Thor Bjorgolfsson and Magnus Thorsteinsson.Samson owns 44.8 per cent. of Landsbanki's existing issued share capital, whichit acquired from the Icelandic government in early 2003. According to Samson'sarticles of incorporation, its only permitted activity is the shareholding inLandsbanki. The three owners of Samson are involved in various other investmentswhich include: - Burdaras, an investment company with total assets of ISK 52.8 billion(£450.0 million) as at 30 September 2004 and with a market capitalisation of ISK69.2 billion (£590.0 million); - Actavis, a generic drugs company with a market capitalisation of ISK123.0 billion (£1.0 billion); and - Avion Group, an international aircraft leasing company. The investment by Samson in Landsbanki was subject to approval by the FinancialSupervisory Authority in Iceland, which was granted in February 2003. Theapproval of the Financial Supervisory Authority was premised on, among otherthings, (a) the fact that Samson's sole object under its constitutionaldocuments is to own shares in Landsbanki and (b) a declaration by Samson thatonly one Samson shareholder would be nominated to the Landsbanki Board. MrBjorgolfur Guomundsson is the Samson nominee to, and Chairman of, the LandsbankiBoard. Accordingly, Samson will not nominate any other of its shareholders tothe Landsbanki Board. The Board of Landsbanki has formally adopted and complies fully with thecorporate governance principles of the Iceland Stock Exchange. These include arequirement for the majority of the board of directors to be independent of itsshareholders. 10. Information on Teathers Teathers is one of the UK's leading independent stockbrokers specialising ininstitutional stockbroking and corporate finance advisory services in the smalland mid-cap sectors and has a large-cap institutional agency business. Teathersis also active in the closed-end funds sector. The Teathers Group providesclients with a fully integrated service spanning corporate finance advice andexecution, equities research, institutional sales and market making. Itcurrently employs 119 people in offices in London and Edinburgh and advises 114companies, including 40 investment funds. For the year ended 30 April 2004, Teathers reported a profit on ordinaryactivities before tax of £1,336,000 (2003: loss £6,761,000) on turnover of£18,793,000 (2003: £18,745,000). Fully diluted earnings per share were 2.1 pence(2003: loss per share 21.8 pence). For the six months ended 31 October 2004, turnover from continuing activitieswas £9,625,000 (2003: £9,760,000) and profits before tax increased byapproximately 47 per cent. to £860,000 (2003: £585,000). Fully diluted earningsper share had grown by 87.5 per cent. to 1.5 pence. 11. Board, management and employees of Teathers Landsbanki has confirmed to the Teathers Directors that, upon the Offer becomingor being declared unconditional in all respects, the existing employment rights,including pension rights, of all employees of the Teathers Group will be fullysafeguarded. Landsbanki has a very high regard for the skills and experience of the currentmanagement team and employees of Teathers, a view which has been strengthened byTeathers' turnaround in financial performance over the past two years followingthe market downturn. Accordingly, Landsbanki intends that Teathers will maintainits operational independence and manage its future growth with a high level ofautonomy as part of the Landsbanki Group, with management remaining in the handsof the existing management team. The executive directors, Ken Ford and NickStagg, have agreed to remain on the Teathers Board following the acquisition byLandsbanki UK. Lord Baker has agreed to continue as Chairman, while the othernon-executive directors, Alan Barber and Robin Derville, will step down. 12. Financing the Offer The Offer will be financed from Landsbanki's existing cash resources. Themaximum cash consideration payable by Landsbanki UK under the terms of the Offer(assuming all outstanding options with an exercise price at or below the Offerprice are capable of being, and are, exercised) will be approximately £46million. 13. Teathers Share Option Schemes The Offer is being extended to any Teathers Shares which are issued orunconditionally allotted and fully paid (or credited as fully paid) while theOffer remains open for acceptance (or, subject to the City Code, by such earlierdate as Landsbanki UK may decide), including (without limitation) any TeathersShares issued pursuant to the exercise of options granted under the TeathersShare Option Schemes and any Teathers Shares which otherwise cease to be held astreasury shares while the Offer remains open for acceptance. If the Offer becomes or is declared unconditional in all respects, to the extentthat options remain unexercised, Landsbanki UK intends to make appropriateproposals to the holders of options granted under the Teathers Share OptionSchemes. It is currently intended that these proposals will seek to put thoseoptionholders in the same position as they would have been had they exercisedtheir options and accepted the Offer. 14. Compulsory acquisition, de-listing and cancellation of trading If the Offer becomes or is declared unconditional in all respects and sufficientacceptances are received under the Offer, it is Landsbanki UK's intention: (a) to apply the provisions of sections 428 to 430F (inclusive) of theCompanies Act to acquire compulsorily any remaining Teathers Shares to which theOffer relates on the same terms as the Offer; and (b) to procure that Teathers applies to the UKLA for cancellation of thelisting of the Teathers Shares on the Official List and to the London StockExchange for the cancellation of trading of Teathers Shares on the London StockExchange's market for listed securities. It is anticipated that the cancellation of Teathers' listing and admission totrading will take effect no earlier than the expiry of twenty business daysafter the date on which the Offer becomes or is declared unconditional in allrespects. De-listing would significantly reduce the liquidity and thereforemarketability of any Teathers Shares not assented to the Offer. It is also anticipated that Teathers will be re-registered as a private companyin due course. 15. Overseas shareholders The availability of the Offer to Teathers Shareholders who are not resident inthe United Kingdom may be affected by the laws of the relevant jurisdictions inwhich they are located or of which they are citizens. Such persons should informthemselves of, and observe, any applicable legal or regulatory requirements ofthose jurisdictions. Further details in relation to overseas shareholders arecontained in the Offer Document. The Offer is not being made, directly or indirectly, in or into Canada,Australia or Japan and the Offer is not capable of acceptance in or from Canada,Australia or Japan. In addition, the Offer is not being made, directly orindirectly, in or into or by use of the mails or by any means or instrumentality(including without limitation, by means of telephone, facsimile, telex, internetor other forms of electronic transmission) of interstate or foreign commerce of,or any facilities of a national securities exchange of, or in or into, theUnited States and, subject to certain exceptions, the Offer is not capable ofacceptance by any such use, means, instrumentality or facilities or from theUnited States. Accordingly, copies of this announcement are not being, and mustnot be, mailed or otherwise forwarded, distributed or sent in, into or from theUnited States, Canada, Australiaor Japan. Persons receiving this announcement(including custodians, nominees and trustees) should observe these restrictionsand must not send or distribute this announcement in, into or from the UnitedStates, Canada, Australia or Japan, as doing so may invalidate any purportedacceptance of the Offer. The Loan Notes will not be listed on any stock exchange and have not been, andwill not be, registered under the United States Securities Act of 1933, asamended, or under any relevant securities laws of any state of the United Statesand the relevant clearances have not been, and will not be, obtained from theregulatory authority of any province or territory of Canada. In addition, noprospectus in relation to the Loan Notes has been, or will be, lodged with orregistered by the Australian Securities and Investments Commission and no stepshave been, nor will be, taken to enable the Loan Notes to be offered incompliance with the applicable securities laws of Japan or any other country orjurisdiction outside the United Kingdom. The Loan Notes will not be offered,sold, resold, delivered or distributed, directly or indirectly, in or into theUnited States, Canada, Australia or Japan or any other jurisdiction if to do sowould constitute a violation of the relevant laws in such jurisdiction. 16. General Save as disclosed in paragraph 5 above, neither Landsbanki nor, so far asLandsbanki is aware, any party acting in concert with Landsbanki, owns orcontrols any Teathers Shares or securities convertible or exchangeable intoTeathers Shares or any rights to subscribe for or purchase, or holds any optionsin respect of, or derivatives referenced to, any such shares ("TeathersSecurities") nor does any such person have any arrangement in relation toTeathers Securities. For these purposes, "arrangement" includes any indemnity oroption arrangement, any agreement or understanding, formal or informal, ofwhatever nature, relating to Teathers Securities which may be an inducement todeal or refrain from dealing in such securities. This announcement does notconstitute an offer or an invitation to purchase any securities. The Offer is subject to the requirements of the City Code. The Offer Documentand the Form of Acceptance containing the full terms and conditions of the Offer(including details of how it may be accepted) will be posted to TeathersShareholders (other than to any Teathers Shareholders with addresses in theUnited States, Canada, Australia or Japan) and, for information only, toparticipants in the Teathers Share Option Schemes today. In deciding whether or not to accept the Offer in respect of their TeathersShares, Teathers Shareholders should rely on the information contained in, andfollow the procedures described in, the Offer Document and Form of Acceptance. Copies of the Offer Document and the Form of Acceptance are available fromComputershare Investor Services PLC, P O. Box 859, The Pavilions, BridgwaterRoad, Bristol, BS99 1XZ. HSBC, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting for the Landsbanki Group and no one else inconnection with the Offer and will not be responsible to any other person forproviding the protections afforded to customers of HSBC, nor for providingadvice in relation to the Offer or any other matters referred to in thisannouncement. Bridgewell, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting for Teathers and no one else inconnection with the Offer and will not be responsible to any other person forproviding the protections afforded to customers of Bridgewell, nor for providingadvice in relation to the Offer or any other matters referred to in thisannouncement. APPENDIX I Conditions and certain further terms of the Offer The Offer is subject to the following conditions: (a) valid acceptances of the Offer being received (and not, wherepermitted, withdrawn) by 3.00 p.m. (London time) on the first closing date ofthe Offer (the First Closing Date) or such later time(s) and/or date(s) asLandsbanki UK may, subject to the City Code, decide in respect of such number ofTeathers Shares which, when aggregated with any Teathers Shares acquired oragreed to be acquired as principal by or on behalf of Landsbanki or LandsbankiUK, together amount to more than 50 per cent. of the voting rights normallyexercisable at a general meeting of Teathers including for this purpose (i) (to the extent, if any, required by the Panel) any such voting rights attaching toany Teathers Shares that are unconditionally allotted or issued whether pursuantto the exercise of any outstanding subscription or conversion right or otherwiseand (ii) any such voting rights attaching to any Teathers Shares which cease tobe held as treasury shares, in each case before the Offer becomes or is declaredunconditional as to acceptances, and for the purposes of this condition TeathersShares which have been unconditionally allotted but not issued shall be deemedto carry the voting rights they will carry on issue; (b) the UK Financial Services Authority having granted consent to theacquisition by Landsbanki UK (and all other persons who, as a result of theOffer becoming or being declared unconditional in all respects, will acquiredirect or indirect control of Teathers) of control (as defined in Part XII ofthe Financial Services and Markets Act 2000) of Teathers and, where relevant,any other member of the Teathers Group either: (i) unconditionally in writing ; or (ii) subject to conditions which are reasonably satisfactory toLandsbanki UK, in each case in accordance with section 184 of the Financial Services andMarkets Act 2000, as amended from time to time; (c) Fjarmalaeftirlitid (the Icelandic financial services regulator) notprohibiting or otherwise imposing a material limitation on the ability ofLandsbanki UK to acquire Teathers; (d) save as disclosed by or on behalf of Teathers prior to the date ofthis announcement, no government or governmental, quasi-governmental,supranational, statutory or regulatory body or association, institution oragency (including any trade agency) or any court or other similar body(including any professional or environmental body) or person in any jurisdiction(each a Relevant Authority) having given notice of a decision to take,instituted or threatened any action, proceeding, suit, investigation, enquiry orreference or enacted, made or proposed and there not continuing to beoutstanding any statute, regulation, order or decision that would or might bereasonably expected to: (i) make the Offer or the acquisition or the proposedacquisition of any shares in, or control of, Teathers by any member of theLandsbanki Group void, unenforceable or illegal or directly or indirectlyprohibit or otherwise materially restrict, delay or interfere with theimplementation of, or impose additional conditions or obligations with respectto, or otherwise challenge, the Offer, its implementation or the acquisition ofany shares in, or control of, Teathers by any member of the Landsbanki Group; (ii) result in a material delay in the ability of Landsbanki UKor any member of the Landsbanki Group, or render Landsbanki UK or any member ofthe Landsbanki Group unable, to acquire such Teathers Shares as are required tosatisfy the condition set out in paragraph (a) above or require a divestiture byLandsbanki UK or any member of the Landsbanki Group of any Teathers Shares; (iii) require the divestiture by the Landsbanki Group or theTeathers Group of all or any part of their respective businesses, assets orproperties or impose any limitation on their ability to conduct all or any partof their respective businesses and to own any of their respective assets orproperties in each case to an extent which is material in the context of theLandsbanki Group taken as a whole or, as the case may be, the Teathers Grouptaken as a whole; (iv) impose any material limitation on, or result in anymaterial delay in, the ability of any member of the Landsbanki Group to acquireor hold or to exercise effectively, directly or indirectly, all or any rights ofownership of shares or other securities (or the equivalent) in, or to exercisemanagement control over, any member of the Teathers Group or on the ability ofany member of the Teathers Group to hold or exercise effectively, directly orindirectly, all or any rights of ownership of shares or other securities (or theequivalent) in, or to exercise management control over, any other member of theTeathers Group; (v) result in any member of the Teathers Group ceasing to beable to carry on business under any name which it presently does so to an extentwhich is material in the context of the Teathers Group taken as a whole; (vi) require any member of the Landsbanki Group or of theTeathers Group to acquire or offer to acquire any shares or other securities (orthe equivalent) in any member of the Teathers Group or any member of theLandsbanki Group owned by any third party (other than in the implementation ofthe Offer); (vii) impose any material limitation on the ability of anymember of the Landsbanki Group or the Teathers Group to integrate or co-ordinateits business, or any part of it, with the businesses or any part of thebusinesses of any other member of the Landsbanki Group and/or the Teathers Groupwhich is material in the context of the Teathers Group or the Landsbanki Grouptaken as a whole; or (viii) otherwise adversely affect the business, assets, financialor trading position or profits of any member of the Landsbanki Group or of theTeathers Group in a manner which is adverse to and material in the context ofthe Teathers Group taken as a whole or, as the case may be, the Landsbanki Grouptaken as a whole, and all applicable waiting and other time periods during which any such RelevantAuthority could take, institute or threaten any such action, proceeding, suit,investigation, enquiry or reference having expired, lapsed or been terminated; (e) all necessary filings having been made and all appropriate waitingperiods (including any extensions thereof) under any applicable legislation orregulation of any jurisdiction having expired, lapsed or been terminated in eachcase in respect of the Offer and the acquisition of any shares in, or controlof, Teathers by Landsbanki UK and all authorisations, orders, grants,recognitions, confirmations, licences, consents, clearances, permissions andapprovals (authorisations) reasonably deemed necessary by Landsbanki UK in anyjurisdiction for, in respect of, or resulting from, the Offer, itsimplementation and the proposed acquisition of any shares in, or control of,Teathers (or any member of the Teathers Group) by Landsbanki UK (or any memberof the Landsbanki Group) being obtained in terms and in a form reasonablysatisfactory to Landsbanki UK from appropriate Relevant Authorities or from anypersons or bodies with whom any member of the Landsbanki Group or the TeathersGroup has entered into contractual arrangements and such authorisations,together with all authorisations necessary or appropriate for any member of theTeathers Group to carry on its business, remaining in full force and effect (ineach case where the consequence of a failure to obtain such authorisation wouldhave a material adverse effect on the Teathers Group taken as a whole) and nointimation of any intention to revoke, suspend, restrict or modify or not torenew any of the same having been made and all necessary statutory or regulatoryobligations in any jurisdiction having been complied with (in each case wherethe consequence of a failure to obtain such authorisation would have a materialadverse effect on the Teathers Group taken as a whole); (f) except as disclosed in Teathers' annual report and accounts for theyear ended 30 April 2004 or in Teathers unaudited interim results for the sixmonths ended 31 October 2004 or as publicly announced by or on behalf ofTeathers (by the delivery of an announcement to a Regulatory InformationService) prior to the date of this announcement or save as fairly disclosed byor on behalf of Teathers to Landsbanki prior to the date of this announcement,there being no provision of any agreement, arrangement, licence or otherinstrument to which any member of the Teathers Group is a party or by or towhich any such member or any of its assets is or may be bound, entitled orsubject which, as a result of the making or implementation of the Offer or theacquisition or proposed acquisition by Landsbanki UK of any shares in, or changein the control or management of, Teathers or otherwise, would or mightreasonably be expected to result in to an extent which is material in thecontext of the Teathers Group taken as a whole: (i) any moneys borrowed by or any other indebtedness (actualor contingent) of any such member of the Teathers Group becoming repayable orcapable of being declared repayable immediately or earlier than the statedrepayment date or the ability of such member to borrow monies or incur anyindebtedness being withdrawn or inhibited; (ii) the creation or enforcement of any mortgage, charge orother security interest over the whole or any material part of the business,property or assets of any such member of the Teathers Group or any such securityinterest (whenever arising or having arisen) becoming enforceable; (iii) any material assets or interest of any such member of theTeathers Group being or falling to be disposed of or charged or any rightarising under which any such asset or interest could be required to be disposedof or charged, other than in the ordinary course of business; (iv) the interest or business of any such member of theTeathers Group in or with any other person, firm or company (or any agreementsor arrangements relating to such interest or business) being terminated oradversely affected; (v) any such member of the Teathers Group ceasing to be ableto carry on business under any name under which it presently does so; (vi) the value of any such member or its financial or tradingposition or prospects being prejudiced or adversely affected; (vii) any such agreement, arrangement, licence or otherinstrument being terminated or adversely modified or any onerous obligationarising or any adverse action being taken or arising thereunder; or (viii) the creation of any material liabilities (actual orcontingent) by any such member other than in the ordinary course of business, no event having occurred which, under any provision of any agreement,arrangement, licence or other instrument to which any member of the TeathersGroup is a party or by or to which any such member or any of its assets may bebound or be subject, could result in any events or circumstances as are referredto in sub-paragraphs (i) to (viii) of this paragraph (f) (in any case to anextent which is material in the context of the Teathers Group taken as a whole); (g) since 30 April 2004 (except as disclosed in the annual report andaccounts of Teathers for the year ended 30 April 2004 or in Teathers unauditedinterim results for the six months ended 31 October 2004 or as publiclyannounced to a Regulatory Information Service prior to the date of thisannouncement by or on behalf of Teathers or as otherwise fairly disclosed by oron behalf of Teathers to Landsbanki UK prior to the date of this announcement)no member of the Teathers Group having: (i) issued or agreed to issue or authorised the issue ofadditional shares of any class, or securities convertible into, or rights,warrants or options to subscribe for or acquire, any such shares or convertiblesecurities (save as between Teathers and wholly-owned subsidiaries of Teathersor upon the exercise of rights to subscribe for Teathers Shares pursuant tooptions granted under the Teathers Share Option Schemes); (ii) recommended, declared, paid or made any bonus issue,dividend or other distribution, whether payable in cash or otherwise, other thana distribution by any wholly-owned subsidiary of Teathers; (iii) implemented or authorised any merger or demerger oracquired or disposed of or transferred, mortgaged or charged, or created anyother security interest over, any asset or any right, title or interest in anyasset; (iv) implemented or authorised any reconstruction,amalgamation, scheme or other transaction or arrangement; (v) purchased, redeemed or repaid any of its own shares orother securities or reduced or made or authorised any other change in its sharecapital (save for any matters referred to in sub-paragraph (i) of this paragragh(g)); (vi) made or authorised any change in its loan capital orissued or authorised the issue of any debentures or (save as between Teathersand wholly-owned subsidiaries of Teathers) incurred or increased anyindebtedness or contingent liability; (vii) entered into, varied or terminated, or authorised theentry into, variation or termination of, any contract, commitment or arrangement(whether in respect of capital expenditure or otherwise) which is outside theordinary course of business or which is of a long term, onerous or unusualnature or magnitude or which involves or could reasonably be expected to involvean obligation of a nature or magnitude which is material; (viii) entered into any contract, commitment or arrangement whichwould be restrictive on the business of any member of the Teathers Group or anymember of the Landsbanki Group (as appropriate); (ix) been unable, or admitted in writing that it is unable, topay its debts or having stopped or suspended (or threatened to stop or suspend)payment of its debts generally or ceased or threatened to cease carrying on allor a substantial part of its business; (x) taken any corporate action or had any legal proceedingsstarted or threatened against it for its winding-up (voluntary or otherwise),dissolution or reorganisation (or for any analogous proceedings or steps in anyjurisdiction) or for the appointment of a receiver, administrator,administrative receiver, trustee or similar officer (or for the appointment ofany analogous person in any jurisdiction) of all or any of its assets andrevenues; (xi) waived, compromised or settled any material claimotherwise than in the ordinary course of business; (xii) entered into or varied the terms of any service agreementor arrangement with any director or senior executive of Teathers; (xiii) made or consented to any significant change to the termsof the trust deeds constituting the pension schemes established for itsdirectors and/or employees and/or their dependants or to the benefits whichaccrue, or to the pensions which are payable thereunder, or to the basis onwhich qualification for or accrual or entitlement to such benefits or pensionsare calculated or determined, or to the basis upon which the liabilities(including pensions) of such pension schemes are funded or made, or agreed orconsented to, any change to the trustees; or (xiv) entered into any contract, commitment or arrangement orpassed any resolution or made any offer (which remains open for acceptance) withrespect to, or proposed or announced any intention to effect or propose, any ofthe transactions, matters or events referred to in this condition, in any case to an extent which is material in the context of the Teathers Grouptaken as a whole; (h) since 30 April 2004 (except as disclosed in the annual report andaccounts of Teathers for the year ended 30 April 2004 or in Teathers unauditedinterim results for the six months ended 31 October 2004 or as publiclyannounced to a Regulatory Information Service prior to the date of thisannouncement by or on behalf of Teathers or as fairly disclosed by or on behalfof Teathers to Landsbanki UK prior to the date of this announcement): (i) no adverse change having occurred in the business, assets,financial or trading position or profits of any member of the Teathers Groupwhich is material in the context of the Teathers Group taken as a whole; (ii) no litigation, arbitration proceedings, prosecution orother legal proceedings having been threatened, announced, instituted orremaining outstanding by, against or in respect of any member of the TeathersGroup or to which any member of the Teathers Group is a party (whether asplaintiff or defendant or otherwise) and no investigation by any RelevantAuthority or other investigative body against or in respect of any member of theTeathers Group having been threatened, announced, instituted or remainingoutstanding by, against or in respect of any member of the Teathers Group whichwould or might reasonably be expected to materially and adversely affect theTeathers Group taken as a whole; and (iii) no contingent or other liability having arisen which wouldor might reasonably be expected to materially and adversely affect the TeathersGroup taken as a whole; and (i) save as fairly disclosed to Landsbanki UK prior to the date of thisannouncement or as publicly announced to a Regulatory News Service by or onbehalf of Teathers prior to the date of this announcement, Landsbanki UK nothaving discovered that: (i) any financial, business or other information publiclydisclosed at any time by any member of the Teathers Group which is material inthe context of the Offer is materially misleading, contains a misrepresentationof fact or omits to state a fact necessary to make the information containedtherein not materially misleading and which was not subsequently corrected priorto the date of this announcement by disclosure either publicly or otherwise toLandsbanki UK; (ii) any member of the Teathers Group is subject to anyliability, contingent or otherwise, which is not disclosed in the annual reportand accounts of Teathers for the year ended 30 April 2004 or in Teathersunaudited interim results for the six months ended 31 October 2004 and which ismaterial in the context of the Teathers Group taken as a whole; or (iii) there is or is likely to be any material obligation orliability (whether actual or contingent) to make good, repair, re-instate orclean up any property now or previously owned, occupied, operated or made use ofor controlled by any past or present member of the Teathers Group under anyenvironmental legislation, regulation, notice, circular or order of any RelevantAuthority in any jurisdiction in each case to an extent which is material in thecontext of the Teathers Group taken as a whole. The Offer will be governed by English law and be subject to the jurisdiction ofthe English courts. Landsbanki UK reserves the right to waive all or any of conditions (b) to (i)inclusive, in whole or in part. The Offer will lapse unless all the aboveconditions are fulfilled or (if capable of waiver) waived or, where appropriate,determined by Landsbanki UK to have been or remain satisfied by midnight on theday which is 21 days after the later of the First Closing Date and the date onwhich the Offer becomes or is declared unconditional as to acceptances (or suchlater date as Landsbanki UK may, with the consent of the Panel, decide).Landsbanki UK shall be under no obligation to waive or treat as fulfilled any ofconditions (b) to (i) inclusive by a date earlier than the date specified abovefor the fulfilment thereof notwithstanding that the other conditions of theOffer may at such earlier date have been waived or fulfilled and that there areat such earlier date no circumstances indicating that any of such conditions maynot be capable of fulfilment. If Landsbanki UK is required by the Panel to make an offer for Teathers Sharesunder Rule 9 of the City Code, Landsbanki UK may make such alterations to theabove conditions as are necessary to comply with that Rule. The Offer will lapse (unless the Panel otherwise consents) if, before the FirstClosing Date or the date when the Offer becomes or is declared unconditional asto acceptances (whichever is the later), the Offer, or any aspect of it, isreferred to the Competition Commission or the European Commission eitherinitiates proceedings under Article 6(1)(c) of Council Regulation (EEC) 4064/89or, following a referral by the European Commission to a competent authority inthe United Kingdom under Article 9(1) of that Regulation, there is a subsequentreference to the Competition Commission. APPENDIX II Definitions The following definitions apply throughout this announcement unless the contextotherwise requires: Australia the Commonwealth of Australia, its states, territories and possessionsBoard the board of directors of Teathers, Landsbanki or Landsbanki UK (as the case may be)Bridgewell Bridgewell Limited of Old Change House, 128 Queen Victoria Street, London, EC4V 4BJbusiness day a day (excluding Saturdays, Sundays and public holidays) on which banks are open for business in the City of LondonCanada Canada, its provinces and territories and all areas subject to its jurisdictionCity Code the City Code on Takeovers and MergersClosing Price the closing middle-market quotation of a Teathers Share on a particular day as derived from the Daily Official ListCompanies Act the Companies Act 1985 (as amended)Daily Official List the daily official list of the London Stock ExchangeForm of Acceptance the form of acceptance, authority and election relating to the Offer accompanying the Offer DocumentHSBC HSBC Bank plc of 8 Canada Square, London E14 5HQISK Icelandic Krona, the lawful currency of IcelandJapan Japan, its cities and prefectures, territories and possessionsLandsbanki Landsbanki Islands hf. (corporate ID number 540291-2259)Landsbanki Group Landsbanki and its subsidiary undertakingsLandsbanki UK means Landsbanki Holdings (UK) plc (registered number 5346514), a wholly-owned subsidiary of LandsbankiListing Rules the listing rules of the UKLALIBOR London Inter Bank Offered Rate for sterling deposits and, more specifically, the rate (as quoted to the Offeror at its request) at which HSBC Bank plc offers six month sterling deposits of £1 million to lending banks in the London InterBank Market at or about 11.00a.m. on the first business day of the relevant periodLoan Notes the guaranteed unsecured loan notes due 2009 to be issued by Landsbanki UK pursuant to the Loan Note Alternative under the Offer, having the rights and being subject to the restrictions to be set out in the instrument constituting the Loan NotesLoan Note Alternative the alternative available under the Offer whereby Teathers Shareholders (other than certain overseas shareholders) who validly accept the Offer may elect to receive Loan Notes instead of all or part of the cash consideration to which they would otherwise be entitled under the OfferLondon Stock Exchange London Stock Exchange plc