The Offers expire at 15:00 hours, Amsterdam time (Y00 hours, New York time), on 7 Octohcr 2005, unless extcnded
OFFER MEMORANDUM Dated 14 September 2005
RECOMMENDED CASH OFFERS BY
TELE2 FINANCE B.V. (a private mmpany with limitcd liabiliq incorporateil in ihe Neiherlands)
FOR ALL THE ISSUED AND OUTSTANDING ORDINARY SHARES WITH A NOMINAL VALUE OF EUR 0.02 EACH
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AND ALL THE ISSUED AND OUTSTANDING 3.875 PER CENT. CONVERTIBLE SENIOR NOTES DUE 2011 CONVERTIBLE I N T 0 ORDINARY SHARES IN THE CAPITAL OF
ve rsa Fe I VERSATEL TELECOM INTERNATIONAL
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(a public company with iimited liability incorparatcd in the Netherlands)
'Thir offcr mcmorandum (ihe "Offeer Memorandum") contains the details of the recommended cash o f f m by Teie2 Finance B.V (the "Offeror") iu uil hulden of the issucd and outstanding ordinary shares in the capiial of Versatcl Telecom International N.V ("Verralel" OT the "Company", ihc urdinary shares bcing rcfcrrcd 10 as "Shares" and holden of such Shares heing refeircd tu as "Shareholders") and 10 al1 holders of ihe issued and outstiinding 3.875 pcr cent. convcrtiblr senior noles due 2011 convertible into Shares (ISIN: XS020175OOi4) (thr "Bonds"; holders of such Bonds bcing referred 10 as "Bundholdors"; Shareholders and Bondholders collectiurly referred 10 as '~Se<.untiei-holders") 10 purchase for cash the Shares and the Bonds (1ogcther"Seruritics") held hy ihcm, on the tcrms and subject 10 the conditions and restriction5 cuntained in this Offer Memorandum (thc offcr fur the Sharcs heing referred 10 as "Offer I", the offer for thï Bonds being referred 10 as "Offer 11". Offer I and Offer 11 heing ~ o i l ~ ~ t ireferred ~ c l y 10 8s [he "Offers"). Capitaliscd terms used in this Offer Memorandum have thc meiiningr as set out in Sectiun 2 (Definitions) or elsewhere in this Offer Memorandum. Sharehnlders tendering their Shares undcr Offer I wil1 be paid, on the term6 and suhjcct 10 [he condilions and restrictions comaincd in ihis Oficr in omsidertilion of cach Share vnlidly tendcrcd (or defectivcly iendcrcd provided that such defect ha5 heen wnived hy the Oïfcrur) und dclivcrcd @clwerd) a cash om
Bandhalders tendering their Bonds under Offer I1 wil1 be paid un the tcrms and subject 10 the canditirmr and rcslrictions coniaincd in this Offcr Memorandum, in consideratiun of each Band wlidly tendered (or defectively tendercd provided that such defect has bccn waived by thc Offeror) and dclivcrcd @&werd) a cash amount per Bond of EUR 132,273.61 Iess an amnunt of EUR 3,875 ifany intcrïst is paid or payahlï IU rhe Bondholder in respect uf thc annual interest pcriod cnded on 28 October 2005 (ihe 'Offer Prier per Bond"). The Offer Price per Bond is hascd on ihe cash equivalent wluc uf the Shares and calculated as follaws:
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(a) a conversion pricc of EUR 1.667 per Sharc. representing the convcrsion price thar wauld apply if convmion would take placc on or hefare 28 Octoher 'T 2005 in comection with a Change of Control as definrd in the Bonds Terms and Conditions, maning that each Bond c m he cunvorted inro
59,988 Shares: multiplied hy
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(c) an addiriimal incentive fee af 0.30 per cent. af thc principal amount of thc Bond, heing an amount of EUR 300.
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Thc Supervisory Board and thc Management Board unanimously recommend the Offers 10 the Shiirïhulders and the Bondholden respcctively for : , l l acceptance. SCC Scction 7 (Recommendaiion hy the Supervisoiy Board nnd the Management Bi8nrd).
The Acceptance Pcriud under the Offers bcgins i31 Y:U0 hours, Amstcrdani time (3:oO hours, Ncw York time), on 14 Septemhcr 2005 imd ends 81 15:tltJ hows, Amsterdam time (Y1111 houCS, New York lime), on 7 Octuber 2005, udess entended (the "Aeïepfance Ciorinp U a t ë ) . Acceptance undcr thc Oflus must he made in ihe mannrr specified in this Offer Memorandum. Sccurities tendered on or prior 10 thc Acccptance Clnsing Dilie may nol he withdrnwn. subject 10 thr right of withdrawal af any tender during any exlension of the Accrpiance Pcriod in accordance with ihc provisions of artide 90. paragriiph 5 of the Securities Markcts Supervision Decrec 1995 (Beslui1 loeichr effectenverkeer 1995. "Ble 1995"). ï'he Offeror rcscwes the righr 10 extcnd rhe Accept;incc Period. I f the Acceptmce Pcriod is entended, ihc Offcrrx wil1 make an mnuuncement 10 ihat elfcct hy n o later than 1500 hours. Ams1crd;im time (YUU hnurs, New York lime) on the third Business Day following thï Acceptance Closing Date in acrordancc with ihe provisions uf.article 90. paragraph 5 uf the Bte 1995. Sec Sectiun 6A (invitation to the Shareholders) and Section 6H (Invilaiion t o the üondhalders).
By n o later than I5:UU huurs, Amsterdam time ( Y 0 0 huurs, New York time) un ihe fifth Business Day following the Acceptancc Closing Daie, rhc Offcror wil1 announce whether the Offcrs are declared unconditional @siasrond worden gedaan) (the ''unconditionai Uaie"). The Ofïcrur reserves ihc right 10 waivc m y uf the Offer Conditions (as set out in Section 8.2). Als" see Sections hA.6 and 68.6 (Declaring thï Offers Unconditi
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(b) the Offer Price pcr Share; plus
'lalpa Capital B.V ("ialpa"), pruvided certain custumary conditions are met, has irrevocahly undertaken 10 tendcr al1 Shares held hy i1 under Offer I . This underiaking is in respect uf a total of 217,976,416 Shares with an aggregiite nomina1 value of E U R 4,359,529.52, representing approximately 41.65 per cent. of the total issued and outstanding sharc ciipital of Versatel at Y September 2005. 1
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I n the even1 ihat thï Offeror announces that thc Offers are declared uncondirional (Eesrand wrdengednan), thc Shurchulders tendering thcir Shares and the Bondholdcrs tendering their Bands for acceptance purruant tu rhe relevant Offcr wil1 receive within five Business Days following the Uncondiiionnl D i t e (the "Sertlrment Uale") the Offer Pricc per Share andinr thc Offer Price per Bond, in respect of cach Share andior each Bond validly tendcred (or defectively tendered pravided that such defect has been waived hy thc Offerur) and delivcrcd (Xelevwd) under thc ierms acid conditions of thc Offers.
At 10:UU huurs, Amsterdam time, o" 29 September 2005, ihe Extraordinary General Meeting of Shareholderr. 10 which the Bimdhoiders wil1 ulso he invitcd, wil1 bc convened at the Hilion Hutrl, Amsterdam, 81 which meeiing the Offers, among "thw miiiters, wil1 he discussed in accordance wirh the provisions uf imicle Yq, paragraph 1 of the Bte 1995. Sec Srction 14A (Diiraordinary General Mceting uf Shareholdcrs of Versatel). Suhject ti> the Offers hcing declared unconditional, a Meeting of Bondholders may he canvened upon the request uf the Company, at which meeting ;in ameiidmcntlo the Bunda Terms and Candiiions wil1 bc resolvrd upun. Should such amendmenr be approved, then the Company shdl pursuani 10 the reviscd Bonds Termi and Conditions, redcem illl Bonds. See Section 148 (Meeting of Bondhulders of Verratcl).
1. RESTRICTIONS
AND IMPORTANT INFORMATION
1.1 Restrictions The Offers are not heing made, and Securities wil1 not be accepted for purchase from or on behalf of any Securities-holders, in any jurisdiction in which the making or acceptance thereof would not he in compliance with the securities or other laws or regulations of such jurisdiction or would require any registration, approval or filing with any regulatory authority not expressly contemplated by the terms of this Offer Memorandum. Persons obtaining the Offer Memorandum are required to take due note and observe al1 such restrictions and ohtain any necessary authorisations, approvals or consents. Neither the Offeror, nor the Company, nor any of their advisers accepts any liahility for any violation by any person of any such restriction. Any person (including, without limitation, custodians, nominees and trustees) who would otherwise intend to forward this Offer Memorandum or any related document to any jurisdiction outside the Netherlands should carefully read this Section 1 (Restrictions and Important Information) before taking any action. Cana&, AustraIia anà Japan
The Offers are not heing made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, telephone, facsimile, telex or electronic transmission) of interstate or foreign commerce of, or of any faciliiy of a securities exchange of Canada, Australia or Japan, and the Offers cannot be accepted by any such use, means, instrumentality or facility or from within Canada, Australia or Japan. Accordingly, this Offer Memorandum and any related documents are not being and must not be mailed or otherwise distributed or sent in or into Canada, Australia or Japan and persons receiving such documents (inchding, without limitation, custodians, nominees and trustees) must not distribute or send them into such jurisdictions. Republic of Itaiy The Offers are not being made, directly or indirectly, in or into the Republic of Italy and have not been submitted to the clearance procedure of the Commissione Narionaie per le societa e la Borsa or the Bank of Italy pursuant to Italian laws and regulations. Accordingly, Securities-holders are hereby notified that, to the extent such Securities-holders are persons resident and/or located in the Republic of Italy, the Offers are not available to them and they may not accept the Offers and, as such, any tenders of Securities received from such persons shall be ineffective and void, and neither the Offer Memorandum nor any other offering material relating to the Offers or the Securities may be distributed or made available in the Republic of Italy.
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United Kingdom
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This Offer Memorandum is directed only at persons who (i) are persons falling within Article 49(2) (a) to (d) (“high net worth companies, unincorporated associations, etc.”) of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Order”) or (ii) are investment professionals as in the meaning of Article 19(5) of the Order or have professional experience in matters relating to investments or (iii) are outside the United Kingdom (al1 such persons together being referred to as “relevant persons”). This Offer Memorandum must not be acted on or relied on by persons who are not relevant persons. ”he Offers may only be accepted by, and any investment activity to which this communication relates is available only to and wil1 be engaged in only with, relevant persons. United States of America The Offers are being made for the securities of a Dutch company and this Offer Memorandum complies with Dutch disclosure requirements, and is in Dutch format and style, which may differ from U.S. disclosure requirements, format and style. Versatel’s consolidated financial information which is derived from the financial statements for the years 2004, 2003 and 2002 included or incorporated in this Offer Memorandum, has been prepared in accordance with Dutch generally accepted accounting principles. Versatel’s condensed consolidated financial information for the 6 months ended 30 June 2005 has been prepared in accordance with International Financial Reporting Standards (IFRS). Versatel’s condensed consolidated fjnancjal information for :he 6 months ended 30 June 2005 and consolidated financial information for the years 2004,2003 and 2002 thus may not be comparahle to financial statements of U.S. companies or companies whose financial statements are prepared in accordance with U.S. generally accepted accounting principles.
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Each of the Offeror and Versatel is incorporated under the laws of the Netherlands. Some or al1 of the officers and directors of each of the Offeror and Versatel are residents of countries other than the U.S. and al1 or a substantial proportion of the assets of the Offeror and Versatel are located outside the United States. As a result, it may not be possible for U.S. Securities-holders to effect service of process within the United States upon Versatel or the Offeror or such persons or to enforce against any of them judgments of U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. 1.2 Important Information This Offer Memorandum contains important information that should be read carefully before any decision is made to tender Securities in connection with the Offers. The Securities-holders are advised to seek independent advice where necessary. In addition, the Securities-holders may wish to consult with their tax advisers regarding the tax consequences of participating in the Offers. The information included in Sections 1, 2, 3, 4.1, 4.5, 4.6, 4.7, 4.8.3 to 4.8.6 (inclusive), 4.9, 4.10, 6A, 6B, 8.3, 8.8.3 to 8.8.6 (inclusive), 8.10 to 8.12 (inclusive), 10.1 and 15 of this Offer Memorandum has been solely provided by the Offeror. The information included in Sections 4.3, 4.4, 5, 7, 8.4, 8.5, 9 and 18 of this Offer Memorandum has been solely provided by Versatel. The information included in Sections 4.8.7, 8.1, 8.2, 8.8.7, 8.9, 12, 14A, 14B and 16.2 of this Offer Memorandum has been jointly provided by the Offeror and Versatel. The information included in Sections 4.2, 8.7, 16.1 and 16.3 of this Offer Memorandum has been jointly provided by the Offeror, Versatel and Apax. The information included in Sections 4.8.1, 4.8.2, 8.6, 8.8.1 and 8.8.2 of this Offer Memorandum has been jointly provided by the Offeror and Apax: The information included in Section 10.2 has been solely provided hy Apax. The information included in Section 13 of this Offer Memorandum has been extracted from www.bloomberg.com. The fairness opinion included in Section 11 of this Offer Memorandum has heen solely provided hy Lazard. The Offeror, Versatel and Apax are exclusively responsihle for the accuracy and completeness of the information provided in this Offer Memorandum, except for Section 11, for which fairness opinion Lazard is exclusively responsible, each with respect to such information as it has provided, and together with respect to the information they have provided jointly. Each of the Offeror and Versatel confirms, with respect to such information it has provided in this Offer Memorandum, that to the best of its knowledge and belief as of the date hereof the information contained in this Offer Memorandum is true and accurate in al1 material respects and there are no facts the omission of which would make any statement in this Offer Memorandum misleading in any material respect. Please he aware that certain financial and statistical information in this Offer Memorandum may be rounded up or down and should therefore not be regarded as definitive. The information included in this Offer Memorandum reflects the situation as at the date of this Offer Memorandum. Neither the issue nor the distrihution of this Offer Memorandum shall under any circumstances imply that the information contained herein is accurate and complete as of any time suhsequent to this date or that there has been no change in the information set out in this Offer Memorandum or in the affairs of Versatel and/or its affiliates since the date of this Offer Memorandum. The foregoing does not affect the obligation of both the Offeror and Versatel, each in so far as it concerns them, to make a public announcement pursuant to article 9b, paragraph 1 of the Bte 1995, if applicable.
No person, other than the Offeror and Versatel and without prejudice to the auditors’ reports issued by Ernst & Young and the faimess opinion for Offer 1 issued by Lazard included in this Offer Memorandum, is authorised in connection with the Offers to provide any information or to make any statements on behalf of the Offeror or Versatel in connection with the Offers or any information contained in this Offer Memorandum. If any such information or statement is provided or made by parties other than the Offeror or Versatel, such information or statements should not he relied upon as having been provided by or made by or on behalf of the Offeror or Versatel. Any information or representation not contained in this Offer Memorandum must not he relied upon as having been provided by or made by or on hehalf of the Offeror or Versatel. This Offer Memorandum and the Offers are, and any tender, purchase, acceptance or delivery of Securities wil1 be, governed by and construed in accordance with the laws of the Netherlands. The District Court of Amsterdam (Rechtbank Amsterdam) and its appellate courts are to have exclusive jurisdiction to settle any disputes which might arke out of or in connection with this Offer Memorandum, the Offers and/or any tender, purchase, acceptance or delivery of Securities. Accordingly, any legal action or proceedings arising out of or in connection with the Offer Memorandum, the Offers and/or any tender, purchase, acceptance or delivery of Securities must be hrought exclusively in such courts.
2
The Offer Memorandum is published in English and a Dutch summary is included as Section 17. In the event of any differences, whether or not in interpretation, between the English text of the Offer Memorandum and the Dutch summary thereof in this Offer Memorandum, the English text of the Offer Memorandum shall prevail. Copies of this Offer Memorandum, the Versatel Articles of Association as wel1 as the Proposed Versatel Articles of Association, which documents are incorporated hy reference in, and form an integral part of, this Offer Memorandum, are availahle free of charge at the offices of Versatel and the Settlement Agent and can be obtained by contacting Versatel or the Settlement Agent at the addresses below. Versatel Versatel Telecom International N.V. Attn. Investor Relations Department Hullenbergweg 101 1101 CL Amsterdam The Netherlands
The Settlement Agent ABN AMRO Bank N.V. Attn. Servicedesk MF 7020 Kemelstede 2 4817 ST Breda The Netherlands
P.O. Box 22697 1100 D D Amsterdam Z - O The Netherlands Tel: +31 (0)20 750 2362 Fax: +31 (0)20 750 1019 Email:
[email protected]
P.O. Box 3200 4800 D E Breda The Netherlands Tel: +31 (0)76 579 9455 Fax: +31 (0)76 579 9643 Email:
[email protected]
This Offer Memorandum includes forward-looking statements that involve risk and uncertainty. Generally, words such as may, will, expect, intend, estimate, anticipate, believe, plan, seek, continue or similar expressions identify forward-looking statements. Although each of the Offeror, Versatel and Apax, each with respect to the statements it has provided, believes the expectations reflected in such forwardlooking statements are hased on reasonable assumptions, no assurance can be given that such statements wil1 be fulfilled or prove to be correct, and no representations are made as to the accuracy and completeness of such statements. Any such forward-looking statements must he considered together with the fact that actual events or results may vary materially from such forward-looking statements due to, among other things, political, economic or legal changes in the markets and environments in which the Offeror andior Versatel does business, to competitive developments or risks inherent to Versatel's business plans and to uncertainties, risk and volatility in financial markets and other factors affecting the Offeror and/or Versatel. The Offeror and Versatel undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required hy applicahle laws and regulations or by any appropriate regulatory authority (such as the Euronext Rulebook, Book I and I1 of Euronext Amsterdam). Morgan Stanley is acting as financial adviser exclusively to the Offeror and to no-one else in connection with the Offers and wil1 not regard any other person (whether or not a recipient of this Offer Memorandum) as a client in relation to the Offers and will not be responsible to anyone other than the Offeror for providing the protections afforded to the clients of Morgan Stanley or for providing advice in relation to the Offers. Lazard is acting as financial adviser exclusively to Versatel and to no-one else in connection with the Offers and wil1 not be responsible to anyone other than Versatel for providing the protections afforded to the clients of Lazard or for providing advice in relation to the Offers. ABN AMRO is acting as financial adviser exclusively to Apax Partners Worldwide LLP, and as settlement agent exclusively to the Offeror and to no-one else in connection with the Offers and wil1 not regard any other person (whether or not a recipient of this Offer Memorandum) as a client in relation to the Offers and wil1 not be responsihle to anyone other than Apax or the Offeror respectively for providing the protections afforded to the clients of ABN AMRO or for providing advice in relation to the Offers.
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2.
DEFINITIONS
Defined terms used in this Offer Memorandum shall have the following meaning: ABN AMRO
ABN AMRO Bank N.V., a Dutch public limited liability company (naamloze vennootschap), with its statutory seat in Amsterdam, the Netherlands
Acceptance Closing Date
the time and date on which the Acceptance Period expires, being at 15:OO hours, Amsterdam time (9:00 hours, New York time), on 7 October 2005, unless extended in accordance with article 90, paragraph 5 of the Bte 1995, in which case the Acceptance Closing Date wil1 be such later time and date
Acceptance Period
the period during which the Securities-holders can tender their Securities to the Offeror, which begins on 14 September 2005 and ends on the Acceptance Closing Date
Admitted Institution(s)
admitted institution(s) (aangesloten instellingen) as defined in article 1 of the Securities Giro Act (Wet giraal efectenverkeer)
AFM
the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten)
APax
Apax Europe IV LP, Apax Europe VLA LP and Apax Europe VI-1 LP (individually and collectively)
Back to Back Agreement
the consortium and back to back agreement between (a group company of) the Offeror and Ganymed dated 8 July 2005 regarding the terms and conditions of the German Transaction
Benelux Business
thc business conductcd by Versatel Nederland B.V. and Versatel Belgium N.V. (and their directly and indirectly owned subsidiaries and participations)
Bond(s)
the issued and outstanding 3.875 per cent. convertible senior note(s) due 2011 convertible int0 ordinary shares in the capital of Versatel
Bondholder(s)
a holder of Bond(s) and in whose name such Bond(s) are registered or a beneficial owner of Bond(s) holding such Bond(s) in accounts with a Direct Participant acting on the beneficial owner's behalf
Bonds Terms and Conditions
the terms and conditions of the Bonds as set out in an Offering Circuiar of the Company dated 22 October 2004
Bte 1995
the Securities Markets Supervision Decree 1995 (Besluit toezicht efectenverkeer 1999, as amended from time to time
Business Day(s)
a day on which Euronext Amsterdam is open for trading
Call Option(s)
each of the cal1 option held by the Foundation Continuity to subscribe for a number of preference-B shares in the capital of Versatel, and the eall option held by the Foundation Priority to subscribe for a priority share in the capital of Versatel, collectively referred to as the Call Options
Clearstream Luxembourg
Clearstream Banking, société anonyme
Clearing Systems
Clearstream Luxembourg and Euroclear collectively
4
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Company
Versatel Telecom International N.V., a public limited liabiiity company (naamloze vennootschap) incorporated under Dutch law, with its statutory seat in Amsterdam, the Netherlands
Completion Distrihution
the distribution of freely distrihutahle reserves by Versatel to the Offeror and to Shareholders that have not tendered their Shares under Offer I on or after the Settlement Date in relation to the German Transaction, as set out in Section 8.8.1
Daily Official List
the Daily Official List (Oficiële hijscourant) of Euronext Amsterdam
Dealer Manager
Morgan Stanley & Co. Intemational Limited
Direct Participant
each person who is shown in the records of any of the Clearing Systems as a holder of Bond(s)
Electronic Acceptance Notice
a notice to accept Offer I1 in the manner specified in this Offer Memorandum
I
Electronic Withdrawal Instruction
a notice to withdraw an Electronic Acceptance Notice
Ernst & Young
Ernst & Young Accountants, Amsterdam, the Netherlands
EUR
Euro, the legal currency of the European Monetary Union
Euroclear
Euroclear Bank S.A./N.V. (as operator of the Euroclear System)
Euronext Amsterdam
Euronext Amsterdam N.V. or Eurolist hy Euronext Amsterdam, as appropriate
Executive Board
the board of executive officers of the Company comprising Mr. R.M. Raithatha, Mr. M. Lazar, Mr. M. van der Heijden, Mr. A. Beekhuis and Mr. J. van Berne
Extraordinary General Meeting of Shareholders
the extraordinary general meeting of Shareholders, to which the Bondholders wil1 also be invited, to be convened at 1000 hours, Amsterdam time, on 29 September 2005, at the Hilton Hotel, Amsterdam, at which meeting the Offers, among other matters (see Section 14A), wil1 he discussed, in accordance with the provisions of article 9q, paragraph 1 of the Bte 1995
Financial Year 2002
tbe financial year of Versatel ended on 31 December 2002
Financial Year 2003
the financial year of Versatel ended on 31 December 2003
Financial Year 2004
the financial year of Versatel ended on 31 December 2004
Financial Year 2005
the financial year of Versatel ending on 31 December 2005
Foundation Continuity
Stichting Continuiteit Versatel Telecom International, a foundation established under Dutch law, with its statutory seat in Amsterdam, the Netherlands
Foundation Priority
Stichting Prioriteit Versatel Telecom International, a foundation established under Dutch law, with its statutory seat in Amsterdam, the Netherlands
Ganymed
Ganymed 345. W GmbH, a wholly owned subsidiary of Apax Europe VI-A, L.P. and being a private limited company incorporated under German law, having its statutory seat in Frankfurt am Main, Germany
5
Drentestraat 20,
1083 HK
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German Business
the business conducted by Versatel Deutschland Holding GmbH (and its directly and indirectly owned subsidiaries and participations)
German Transaction
a transaction pursuant to which the shares in Versatel Deutschland Holding GmbH, along with certain intra-group loans, are sold and transferred to Ganymed as set out in Section 8.8.1
Issuing Entity
has the meaning as set out in Sections 4.8.4 and 8.8.4
Lazard
Lazard Frères S.A.S., a societe par actions simplifee, incorporated under the laws of France, with its registered office in Paris, France
Loan Note
has the meaning as set out in Section 4.8.1 and 8.8.1
Management Board
the management board (raad van bestuur) of Versatel
Material Adverse Change
any event or circumstance as referred to in Section 8.2(c) (Offer Conditions)
Meeting of Bondholders
the meeting of Bondholders to he convened in accordance with Section 14B
Merger Agreement
the merger agreement between Versatel Telecom International N.V. and Tele2 (Netherlands) B.V.
Minimum Acceptance Condition
has the meaning attrihuted to it in Section 4.6.3
Minority
has the meaning attributed to it in Section 4.8.1 and 8.8.1
Morgan Stanley
Morgan Stanley & Co. Limited, a private limited liability company incorporated under the laws of England and Wales
Offer I
the offer for the Shares described in this Offer Memorandum
Offer I1
the offer for the Bonds described in this Offer Memorandum
Offer Conditions
the conditions to the Offers as set out in Section 8.2 (Offer Conditions)
Offer Memorandum
this offer memorandum relating to the Offers
Offeror
Tele2 Finance B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law, with its statutory seat in Amsterdam, the Netherlands, being an indirectly wholly owned suhsidiary of Tele2 AB
Offer Price per Bond
a cash amount for each Bond validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd) under the terms and conditions of Offer I1 which wil1 be a sum per Bond of EUR 132,273.61 less an amount of EUR 3,875 if any interest is paid or payable to the Bondholder in respect of the annual interest period ended on 28 October 2005
Offer Price per Share
a cash amount of EUR 2.20 for each Share validly tendered (or defectively tendered provided that such defect has heen waived by the Offeror) and delivered (geleverd) under the terms and conditions of Offer I
Offers
Offer I and Offer I1 collectively
Options
the outstanding rights to suhscribe for the issue or delivery of ordinary shares by the Company under the Company’s employee stock option schemes
6
I
Proposed Versatel Articles of Association
the articles of association (statuten) of Versatel, which are subject to the Offers being declared unconditional and are to be submitted for adoption to the Extraordinary General Meeting of Shareholders and, if adopted, wil1 be effective at the Settlement Date
Securities
the Shares and Bonds collectively
Securities-holder(s)
the holder(s) of Securities
SEK
Swedish Kronen, the legal currency of Sweden
Settlement Agent
ABN AMRO
Settlement Date
the date on which, in accordance with the terms and conditions of the Offers, the Offeror shall pay (i) the Offer Price per Share to the Shareholders who have validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd) their Shares under Offer I and (ii) the Offer Price per Bond to the Bondholders who have validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd) their Bonds under Offer 11, in the case of both (i) and (ii) being no later than the fifth Business Day following the Unconditional Date
Share(s)
the issued and outstanding ordinary shares in the share capital of Versatel, with a nomina1 value of EUR 0.02 each
Sharehoider(s)
the holder(s) of one or more Share(s)
Supervisoiy Board
the supervisory board (raad van commissarissen) of Versatel
Talpa
Talpa Capital B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law with its corporate seat in Hilversum, the Netherlands
Tele2
Tele2 (Netherlands) B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law, with its statutory seat in Amsterdam, the Netherlands, being a directly wholly owned subsidiary of Tele2 AB
Tele2 AB
a public limited liability company incorporated under Swedish law, with its statutory seat in Stockholm, Sweden
Tender Agent
The Bank of New York and, where applicable, ING Bank N.V. as Dutch tender agent
Transaction
the transactions that wil1 result in the Offeror acquiring control over the Company and the German Transaction collectively
Unconditional Date
the date on which the Offeror publicly announces whether the Offers are declared unconditional (gestand worden gedaan), being by no later than 15:OO hours, Amsterdam time (9:OO hours, New York time) on the fifth Business Day foilowing the Acceptance Closing Date, in accordance with article 9t, paragraph 4 of the Bte 1995
U.S.
United States of America
Versatel
Versatel Telecom International N.V., a public limited liability company (naamloze vennootschap) incorporated under Dutch law, with its statutory seat in Amsterdam, the Netherlands
Versatel Articles of Association
the articles of association (statuten) of Versatel, as most recently amended on 8 June 2005
Warrants
the issued and outstanding warrants with rights to subscribe for ordinaq shares in the capital of Versatel
WMZ
Disclosure of Major Holdings in the Listed Companies Act 1996 (Wet melding zeggenschap in ter beurze genoteerde vennootschappen 1996), as amended from time to time
Wte 1995
the Securities Markets Supervision Act 1995 (Wet toezicht eflectenverkeer 1999, as amended from time to time
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3. TABLE OF CONTENTS Chapter ~
. . . . :. . , . . , . . , . . . . . . . . . . . . . . . . . . . . . . . . Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Tahle ofContents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Letter to the Securities-holders . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6A Invitation to the Shareholders . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6B Invitation to the Bondholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recommendation hy the Supervisory Board and the Management Board . . . . . . . . . . . . . . 7. Explanation of the Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Information regarding Versatel . , . . , . . , . . . . . , . . , , . , , . . , . . , . . , . . . , . . , , . . . . . . , 9. 10. Information on the Offeror and Apax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11. Fairness Opinion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Further Declarations pursuant to the Bte 1995 . . . , . . , . . , , . . , . . , . . . . . . . . . . . . . . . . 13. Share Prices of Versatel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14A. Extraordinary General Meeting of Shareholders of Versatel. . 14B. Meeting of Bondholders of Versatel . . . . . . . . . . . . . . . . . . . 15. Tax aspects of the Offers . . . , . . , . . , . . . . . . . . . . . . . . . . . 16. PressReleases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. Nederlandse samenvatting van de Biedingen . . . . . , . . . . . . , . . , . . , , . . , . . . . . . , . . . , , 1.
Restrictions and Important Information
18. Versatel Telecom International N.V.-Index
to consolidated Financial Information
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Wge -
1 4 9 10 20 23 26 31 32 42 49
50 52 53 54
55 56 61 70
1 . 2
a (1 113
90
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4.
SUMMARY
This summary is qualified in its entirety by, and should he read in conjunction with the more detailed information appearing elsewhere in this Offer Memorandum. Securities-holders are advised to review the Offer Memorandum in detail and to seek independent advice where appropriate in order to reach a reasoned judgement in respect of the contents of the Offer Memorandum and the Offers themselves. Unless the context requires othenvise, capitalised terms used in this Offer Memorandum shall have the meanings set out in Section 2 (Definitions). 4.1 The Offers
The Offeror is making Offer I to purchase from the Shareholders al1 the Shares and Offer I1 to purchase from the Bondholders al1 the Bonds, on the terms and subject to the conditions and restrictions contained in this Offer Memorandum. Shareholders tendering their Shares under Offer I wil1 be paid in cash the Offer Price per Share of EUR 2.20 in respect of each Share validly tendered (or defectively tendered provided that such defect has heen waived by the Offeror) and delivered (geleverd), subject to the Offers being declared unconditional. Bondholders tendering their Bonds under Offer I1 wil1 be paid the Offer Price per Bond for each Bond validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd) in a cash amount per Bond of EUR 132,273.61, less an amount of EUR 3,875 if any interest is paid or payahle to the Bondholder in respect of the annual interest period ended on 28 October 2005, subject to the Offers being declared unconditional. The Offer Price per Share represents a: (a) 14 per cent. premium over the closing Share price of EUR 1.93 on 15 July 2005, the last Business Day prior to the joint press release published by Versatel and the Offeror that announced that the expectation was justified that agreement could be reached in connection with the Offers; (b) 47 per cent. premium over the closing Share price of EUR 1.50 on 28 April 2005, the day prior to the first reports on discussions with Belgacom N.V. and Talpa; and (c) 29 per cent. premium over the average closing Share price of EUR 1.70 for the 12 montbs prior to, and including, 28 April 2005, the day prior to the first reports on discussions with Belgacom N.V. and Talpa. The Offer Price per Bond is based on the cash equivalent value of the Shares and calculated as follows: (a) a conversion price of EUR 1.667 per Share, representing the conversion price that would apply if conversion would take place on or before 28 Octoher 2005 in connection with a Change of Control as defined in the Bonds Terms and Conditions, meaning that each Bond can be converted into 59,988 Shares; multiplied by (b) the Offer Price per Share; plus (c) an additional incentive fee of 0.30 per cent. of the principal amount of the Bond, being an amount of EUR 300. See also Section 8.6 (Substantiation of the Offer Price) and Section 13 (Share Prices of Versatel). 4.2 Rationale for the Offers
Subject to the Offers being declared unconditional (gestanddoening), it is intended that the German Business wil1 he sold and transferred to Apax. The Offeror wil1 t h r h g h Versatel hold the Benelux Business. With regard to the Benelux Business, the main transaction rationale lies in the creation of a stronger platform which wik (i) achieve critical mass in the Benelux: the comhination of Tele2’s existing operations in the Benelux market area with the Benelux Business wil1 have pro forma revenues of approximately EUR 800 rnillion and EBITDA of approximately EUR 112 million (on the basis of 2004 financial data);
(ii) improve efficiencies of the comhined businesses hy integrating the Tele2 and Versatel operations and migrating Tele2’s clients and traffic onto Versatel’s network, thereby achieving significant synergies;
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(iii) contribute significant resources to further develop the business notably in the strategic broadband segment; and (iv) combine two complementary businesses to create additional possibilities to improve long term profitability by cross selling existing products to existing clients and to reduce businesslmarket risk. Apax wil1 further expand the German Business’ broadband business in tbe covered regions focusing
on both business and residential customers. Apax’ goal is to continue to invest in future growth and seek to participate in the consolidation of alternative carriers in Germany to create one of the leading operators in Germany. Apax envisages the German Business as the platform for further acquisitions in that market. Apax’ strategic goal is to consolidate the German alternative carrier market landscape and create a strong player to compete nationwide with, among otbers, Deutsche Telekom AG. Finally, the Offeror provides current Securities-holders the opportunity to sell their interest in Versatel at an attractive premium and realise immediate value in cash for their holdings. See also Section 8.6 (Substantiation of the Offer Prices), Section 8.7 (Transaction Rationale) and Section 8.8.2 (Strategy). 4.3 Recommendation by tbe Supervisory Board and the Management Board The Supervisory Board and the Management Board have duly considered the strategic, financial and social aspects of the Offers and have reached the conclusion that the Offers are in the best interests of Versatel, the Shareholders, Bondholders and other stakeholders in Versatel. The Supervisory Board and the Management Board are of the opinion that the Offers are reasonable and fair to tbe Shareholders and Bondholders. In this respect, reference is made to the fairness opinion rendered by Lazard in respect of Offer I, as included in Section 11 (Fairness Opinion). Therefore, the Supervisory Board and the Management Board support the Offers and unanimously recommend the Offers to the Shareholders and Bondholders for acceptance. See Section 7 (Recommendation by the Supervisory Board and the Management Board). 4.4 Shares and Options held by Members of tbe Supervisory Board and the Management Board
On the date of this Offer Memorandum, 1,624,979 Shares and 3,940,000 Options are held by Mr. R.M. Raithatha, sole member of the Management Board. According to the information from the public registers of tbe AFM on the date of this Offer Memorandum, no Shares or Options are held by any of the members of the Supervisory Board. 4.5 Irrevocable Undertaking
Talpa, provided certain customary conditions are met, has irrevocably undertaken to tender al1 Shares held by it under Offer I. This undertaking is in respect of a total of 217,976,476 Shares with an aggregate nomina1 value of EUR 4,359,529.52, representing approximately 41.65 per cent. of the total issued and outstanding share capital of Versatel at Y September 2005. 4.6 Offer Conditions, Acceptance Period, Declaring the Offers Unconditional, Extension and Settlement 4.6.1
Offer Conditions
The Offers shall be declared unconditional í@anddoening) if the Offer Conditions as set out in Section 8.2 (Offer Conditions) are fulfilled or, if relevant, waived by the party entitled to waive such conditions. 4.6.2 Acceptance Period
The Acceptance Period begins on 14 September 2005 and ends, subject to extension in accordance with Article 90, paragraph 5 of the Bte 1995, on 7 October 2005 at 15:OO hours, Amsterdam time (9:OO bours, New York time). If one or more of the Offer Conditions is not fulfilled by the Acceptance Closing Date, the Offeror may, from time to time, extend the Acceptance Period until al1 such Offer Conditions have been satisfied or waived. See also Section 6A.7 (Extension) and Section 6B.11 (Extension).
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Securities tendered on or prior to the Acceptance Closing Date may not he withdrawn, subject to the right of withdrawal of any tender during any extension of the Acceptance Period in accordance with the provisions of article 90, paragraph 5 of the Bte 1995. If al1 Offer Conditions are satisfied or, where appropriate, waived, the Offeror wil1 accept al1 Securities that have been validly tendered and not previously withdrawn pursuant to the terms of the Offers in accordance with, for the Shares, the procedures set forth in Section 6A.2 (Acceptance of Offer I) and for the Bonds, the procedures set forth in Section 6B.3 (Acceptance of Offer 11). 4.6.3 Declaring the Offers Unconditioml (gestanààoening) The Offers shall he subject to the fulfilment of the Offer Conditions, including, hut not limited to, the condition that at least 95 per cent. of al1 Shares and at least 85 per cent. of al1 Bonds have been tendered at the Acceptance Closing Date under the terms and conditions of tbe Offers as set out in Section 8.2(a) and 8.2(b) (the “Minimum Acceptance Condition”). The Offeror reserves the right to waive Offer Conditions. See Section 8.2 (Offer Conditions). The Offeror wil1 determine by no later than 15:OO hours, Amsterdam time (900 hours, New York time) on the fifth Business Day following the Acceptance Closing Date, such date being the Unconditional Date, whether the Offer Conditions have been fulfilled or are to he waived by the Offeror and wil1 announce whether (i) the Offers have been declared unconditional, (ii) there is still uncertainty as to the fulfilment of any of the Offer Conditions, or (iii) the Offers are terminated, as a result of the Offer Conditions not having been fulfilled or waived by the Offeror, al1 in accordance with article 9t, paragraph 4 of the Bte 1995. The announcement, if any, by the Offeror that there is still uncertainty as to the fulfillment of any of the Offer Conditions, does not mean that any Securities-bolder wil1 have the right to withdraw any tender of Securities or that any tender of Securities or, in the case of the Bonds, corresponding Electronic Acceptance, Notices shall he deemed to he automatically withdrawn. 4.6.4 Extension The Offeror may extend the Acceptance Period past the Acceptance Closing Date, in which case al1 references in this Offer Memorandum to “15:OO hours, Amsterdam time (9:OO hours, New York time), on 7 October 2005” shall, unless the context requires othenvise, he moved to the latest date and time to which the Acceptance Period has been so extended. If the Acceptance Period is extended, so that the obligation pursuant to article 9t of the Bte 1995 to announce whether the Offers have been declared unconditional is postponed, a public announcement to that effect shall he made not later than 15:OO hours, Amsterdam time (9:OO hours, New York time) on the third Business Day following the Acceptance Closing Date in accordance with the provisions of article 90, paragraph 5 of the Bte 1995. During any such extension of the Acceptance Period, any Securities previously tendered and not withdrawn wil1 remain subject to the Offers. 4.6.5 Seniement
In the event that the Offeror announces that the Offers are declared unconditional @estand worden gedaan), the Shareholders having tendered their Shares and the Bondholders having tendered their Bonds for acceptance wil1 receive within five Business Days following the Unconditional Date (the “Settlement Date”), the Offer Price per Share and/or the Offer Price per Bond, in respect of each Share and/or Bond validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd) under the terms and conditions of the Offers. 4.7 Offeror
The Offeror, a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid), with its statutory seat in Amsterdam, the Netherlands, was incorporated under Dutch law on 9 September 2005. The Offeror is an indirectly wholly owned subsidiary of Tele2 AB, a Swedish public limited liability company, having its statutory seat at Stockholm, Sweden. The Offeror is registered with the Commercial Register of the Chamber of Commerce and Industry of Amsterdam under no. 34232877. See Section 10 (Information on the Offeror and Apax). The Offeror wil1 finance acceptances under the Offers through a combination of financing provided pursuant to bank facilities, equity funding and a financing commitment of Ganymed under the Back to Back Agreement. See Section 8.8.1 (Divestiture of the German Business) and Section 8.10 (Financing of
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the Offers), Tele2 AB has given a binding financing commitment in respect of such funding, other than the funding to be provided by Ganymed, as further described in Section 8.8.1 (Divestiture of the German Business).
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4.8 Consequences of the Offers 4.8.1 Divestiture of the German Business It is intended that, subject to the Offers being declared unconditional kesranddoening), Versatel wil1 divest the German Business. The German Business wil1 be sold and transferred to Ganymed for an estimated price of approximately EUR 539 million (which is based on an enterprise value of EUR 565 million). The estimated price of approximately EUR 539 million wil1 be adjusted for, inter alia, changes in the halance of intra-group loans and distributions by the German Business to Versatel, in al1 cases subsequent to 31 March 2005. Apax may subsequently syndicate some of the equity in the German Business. The Offeror will, through Versatel, retain the Benelux Business as wel1 as those suhsidiaries of Versatel that do not form part of the German Business or Benelux Business. The divestment of the German Business wil1 be achieved by means of the sale and transfer of al1 of the shares in the capital of Versatel Deutschland Holding GmhH (the holding company of the German Business) along with al1 intra-group loans made hy Versatel or its suhsidiaries to the German Business. The sale and transfer wil1 occur simultaneously with, or immediately after, the settlement of the Offers. In anticipation of such sale and transfer Ganymed wil1 make a loan to the Offeror in an amount of approximately EUR 539 million to be paid out on the Settlement Date, which wil1 be used hy the Offeror, along with other funds available to it, to make the necessary payments to Securities-holders at the Settlement Date. The consideration for the German Business wil1 be payable in accordance with a loan note to be issued by Ganymed to Versatel (the “ b a n Note”). Subject to approval of the Extraordinary General Meeting of Shareholders (see Section 14A, Extraordinary General Meeting of Shareholders of Versatel), Versatel will distribute to the Offeror and the Shareholders that have not tendered their Shares under Offer I (the “Minority”) an amount per Share equivalent to (i) the principal amount of, plus any interest accrued on, the Loan Note divided by (ii) the number of Shares held by the Offeror at the time the distribution is declared (the distribution to the Offeror and the Minority is referred to as the “Completion Distribution”). The Offeror and Versatel have agreed that that portion of the Completion Distribution payable to the Offeror wil1 be settled by means of an assignment of the Loan Note. The Offeror and Ganymed intend that following such assignment the claim against Ganymed under the b a n Note be set-off against the claim by Ganymed against the Offeror under the loan to be provided by Ganymed in connection with the financing of the Offers. The payment of the relevant portion of the Completion Distribution to the Minority may be subject to dividend withholding tax. Whether and when such tau is recoverable wil1 depend upon the tax profile of each Shareholder that has not tendered its Shares under Offer I. See Section 15 (Tax Aspects of the Offers). The Shareholders wil1 be requested (at the Extraordinary General Meeting of Shareholders), inter alia, to (i) authorise the Management Board to enter into the German Transaction and (ii) to approve the Completion Distribution, both (i) and (ii) subject to the condition precedent that the Offers have been declared unconditional (gesrand zijn gedaan). See Section 14A (Extraordinary General Meeting of Shareholders of Versatel). 4.8.2 Strategy of P2rsaîel Benelux and the Benelux Business and German Business
Both the Offeror and Apax have endorsed the key elements of Versatel’s strategy in their respective markets. As such the strategy of Versatel in the Benelux and Germany wil1 remain substantially unchanged and the principal elements thereof wil1 remain to: ~
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(a) continue to connect customers to its network. Versatel intends to continue to seek to directly connect as many customers as possible to its network using its own fibre, DSL technology, wireless technology, ieased lines and other technologies to the extent such technologies hecome cost effective and available. Versatel believes directly connected customers represent a long-term asset. In addition, Versatel believes that it can better control the quality and profitability of its services and the amount and types of services that are provided to directly connected customers; (b) provide bundled services. Versatel intends to continue to provide bundled services (i.e., voice, data, internet and video) over a single connection. Versatel believes that providing multiple services over a single connection to a customer provides a competitive advantage in its target markets and allows Versatel to provide additional or enhanced services with limited incremental expenditures, which improves profitability and value for the customers;
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(c) maintain focus on target customer segment. In each of its core markets, Versatel aims to be a full service provider to business, residential and carrier customers. Prior to the construction of its infrastructure, Versatel focused on providing indirect access services to small- and medium-sized businesses. However, since 1999, Versatel has also been able to provide services to large husinesses with more sophisticated service requirements. Versatel believes it is wel1 positioned to successfully compete in the bidding processes generally conducted for these larger customers as a result of its service capabilities and the cost advantages associated with its dense local network. In addition, Versatel intends to continue to pursue the small-medium-sized business market with a bundled service offering. In order to appeal to the mass consumer market and to generate a large volume of sales, Versatel has focussed on providing broadband services over DSL technology. Versatel also intends to continue to leverage its network to provide services to other credihvorthy carriers; (d) leverage its existing nehvork. In addition to the deployment of a dense backbone and local access infrastructure network in the Netherlands, Germany and Belgium, Versatel has also made significant investments in Central Offices (“Cos”) for the deployment of DSL infrastructure. As at 30 June 2005 Versatel had approximately 310 COS operational in the Netherlands, covering approximately 65% of the Dutch market. As of 30 June 2005, Versatel operates 588 COS with ISDN and/or DSL infrastructure in Germany. In Belgium, Versatel has 57 operational COS. As a result, Versatel believes that it is wel1 positioned to deliver local access services cost effectively to a large segment of the business and residential market in the Netherlands, Germany and Belgium; and (e) focus on superior customer service. Versatel strives to maintain a competitive advantage by providing superior customer service in t e r m of responsiveness, accuracy and quality. Versatel believes that providing a high level of customer service is a key element to attracting and retaining customers. Therefore, Versatel continues to invest in its customer care and operational support systems in order to maintain its competitive advantage. With regard to the Benelux Business, the Offeror wil1 seek to integrate the existing Tele2 operations with the Versatel business. The combination of the Benelux Business and Tele2 wil1 create the leading alternative telecommunications operator in the Netherlands and Belgium. For Versatel customers in al1 segments, this combination wil1 help extract efficiencies of scale that wil1 lead to an optimum combination of high quality and innovative services, strong customer base and competitive prices. The Offeror intends to continue Versatel’s triple-play strategy in the Netherlands.
In respect of the German Business, Apax currently envisages that the German Business wil1 form the platform for further acquisitions in that market. Apax’ strategic goal is to consolidate the German alternative carrier market landscape and to create a strong player capable of competing with Deutsche Telekom AG, among others, on a national basis. 4.8.3 Liquidity and deüsting
The purchase of Securities by the Offeror pursuant to the Offers, among other things, wil1 reduce the number of Securities-holders and the number of Securities that are traded publicly thus adversely affecting the liquidity and market value of the Securities not tendered. Subject to the Offers heing declared unconditional, the Offeror further intends, in consuitation with Euronext Amsterdam, to terminate the listing of the Securities on Euronext Amsterdam as soon as possihle. This would further adversely affect the liquidity and market value of any Securities not tendered. Following the settlement of the Offers and subject to the provisions of Section 8.8.4 (Legal Structure of Versatel following the Offers), it is the Offeror’s intention that Versatel be converted into a private limited iiabiiity company (besloten vennootschap met beperkte aansprakelijkheid). Following such a conversion, the Shares wil1 not be freely transferable and the Bonds wil1 only be convertible into shares with such restricted transferability. 4.8.4 Legal Structure of Versatelfollowing the Offers
Legal Structure $Minimum Acceptance Condition in respect of the Shares fuljîlled In the event that upon the Settlement Date the Minimum Acceptance Condition in respect of the Shares has been fulfilled and the Offeror holds 95 per cent. or more of the Shares (excluding Shares held
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by Versatel andior its subsidiaries), the Offeror’s current intention is to acquire the remaining Shares not tendered (and not held hy Versatel or its suhsidiaries) hy means of a squeeze-out procedure in accordance with article 292a or 2201a of the Dutch Civil Code. The Offeror anticipates that the amount per Share payable to the Minority in the event of a squeeze-out procedure wil1 be equivalent to the Offer Price per Share less the amount of the Completion Distrihution per Share. See Section 8.8.1 (Divestiture of the German Business). Despite the Minimum Acceptance Condition in respect of the Shares heing fulfilled, the Offeror may also, and instead of proceeding with a squeeze-out, by a simple majority vote of the general meeting of shareholders of Versatel resolve that a legal merger (juridkchefwie) between the Offeror and Versatel wil1 be entered into in accordance with articles 2309 and 2334 of the Dutch Civil Code or take any of the other steps set out under “Additional Means of Acquiring Minority’s Shares” in Section 8.8.4. The legal consequences of a legal merger, including the possibility to pursue a squeeze out thereafter, are the same as set out helow under “Legal Structure if Minimum Acceptance Condition waived” in Section 8.8.4. Legal Structure if Minimum Acceptance Condition in respect of the Shares waived
In the event that the Offeror has waived the Minimum Acceptance Condition in respect of the Shares and declared the Offers unconditional, hut does not acquire 95 per cent. or more of the Shares (excluding Shares held by Versatel or its suhsidiaries) following the Settlement Date, the Offeror intends hy simple majority vote of the general meeting of shareholders of Versatel to effect a legal merger (juridischefisie) hetween the Offeror and Versatel in accordance with articles 2309 and 2334 of the Dutch Civil Code (which articles refer to a so called “triangular merger” pursuant to which the shareholders of the disappearing company wil1 become shareholders of a group company of the surviving company). Pursuant to any such legal merger, the Offeror would continue to exist and Versatel would cease to exist. The Minority would become, by operation of law, shareholders in Tele2 Netherlands Holdings B.V., the sole shareholder of both the Offeror and Tele2 (the “Issuing Entity”). The shares distributed to the Minority by the Issuing Entity pursuant to any such legal merger wil1 have, notwithstanding any dilution in the proportion of the aggregate voting rights exercisahle hy the Minority, a value equivalent to the value of the Shares held by the Minority as calculated immediately after completion of the German Transaction and distribution of the Completion Distribution. The composition of the share capital of the Issuing Entity is further descrihed below. The authorised share capital of the Issuing Entity consists of Wo separate classes of so called tracking shares, being ordinary shares A and ordinary shares B. The issued ordinary shares A are al1 held by Tele2 Europe S.A. and only give right to the value and profits of the Issuing Entity’s subsidiaries Tele2 and Tango S.A. The aggregate value of Tele2 and Tango S.A. is at present approximately EUR 303 million. The ordinary shares A give no right to the value and profits of Versatel and the leverage used to acquire Versatel. The ordinary shares B are only entitled to the value and profits of the Issued Entity’s leveraged interest (through the Offeror) in Versatel. The ordinary shares B give no right to the value and profits of Tele2 and Tango S.A. Upon such a legal merger, the percentage of ordinary shares B to he distributed to Minority shall be equal to the percentage of Shares held by the Minority immediately before the legal merger. l ~
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It is anticipated that the Offeror or the Issuing Entity wil1 utilise debt financing to satisfy its obligations under the Offers. As a result, the Minority may, upon a legal merger, acquire ordinary shares B of a separate sub-class whicb include preference rights. Such preference rights entitle the Minority to a dividend yield sufficient to prevent a shortfall hehveen the value of their Shares prior to the legal merger and their shares in the Issuing Entity. Because of the existing interests of the Issuing Entity in Tele2 and Tango S.A. and the use by the Offeror of debt financing to fund its ohligations under the Offers, the Minority’s percentage of the aggregate nominal value of al1 shares in the Issuing Entity (the issued ordinary shares A and ordinary shares B) wil1 reduce pursuant to such a legal merger, when compared to the percentage of the aggregate nominal value of the Shares held by Minority hefore the legal merger. By way of example, should the Minority hold 15 per cent. of the Shares prior to the legal merger, tbe Offeror anticipates that the Minority would hold less than 5 per cent. of the aggregate nominal value of the shares in the Issuing Entity following
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the legal merger. Accordingly, the voting rights exercisable by the Minority in the Issuing Entity would be less than 5 per cent. Furthermore, it is anticipated that any debt financing provided to the Issuing Entity wil1 in due course be converted, at fair value, into newly issued ordinary shares, in the sarne class as those held by the Minority, in the capital of the Issuing Entity. Such conversion would dilute the Minority’s shareholding in the Issuing Entity. Should the Minority at any time, including as a result of a legal merger and/or a conversion of debt financing in equity as described above, hold less than 5 per cent. of the aggregate nominal value of the shares in the capital of the Issuing Entity (the issued ordinary shares A and ordinary shares B) it would be possible for the other shareholders in the Issuing Entity to initiate a squeeze-out procedure in accordance with article 2201a of the Dutch Civil Code in order to acquire the remaining shares in the capital of the Issuing Entity.
As the Issuing Entity is a private limited company under Dutch law (besloten vennootschap met beperkte aansprakelijkheid) al1 shares distributed to the Minority by the Issuing Entity wil1 be unlisted registered shares and wil1 nat be freely transferable. Following a legal merger in which the Offeror is the surviving entity, any remaining Bondholders wil1 hold bonds convertible into shares in the capital of the Offeror, which are not freely transferable, and othenvise in accordance with the Bands Terms and Conditions. Should, as is anticipated, such shares represent less than 5 per cent. of the aggregate nominal value of the shares in the Offeror, it would be possible for the Issuing Entity to initiate a squeeze-out procedure in accordance with article 2:201a of the Dutch Civil Code. The Issuing Entity’s articles of association wil1 provide that the general meeting of shareholders of the Issuing Entity, with the approval of the holders of the class of shares concerned, by majority vote (upon a proposal from the management board of the Issuing Entity) may cancel each separate class of shares against (re)payment in accordance with the relevant provisions of the articles of association of the Issuing Entity. Should the class(es) of shares held by the Minority be cancelled, the Minority would cease to be shareholders in the Issuing Entity. For a period of six months after the legal merger becomes effective, the Minority shall have the right to sell and transfer their ordinary shares B in the Issuing Entity, while Tele2 Europe S.A. wil1 commit itself, for the Same six-month period to purchase and acquire the shares in the Issuing Entity held by the Minority should they elect to sell. The purchase price for such shares shall, during this limited period, be set at the Offer Price per’share as adjusted for the German Transaction, the distribution of the Completion Distribution and any distributions out of the distrihutahle reserves of the Issuing Entity that may have decreased the preference rights attached to the ordinary shares B held by the Minority, for one ordinary share B. Any Minority shareholder requesting an independent valuation of its shares during this six-month period shall maintain the right to offer their shares in the Issuing Entity in accordance with the articles of association of the Issuing Entity but shall forfeit their right to require Tele2 Europe S.A. to purchase such shares. The articles of association of the Issuing Entity, which are available from Tele2 and the Settlement Agent upon request, provide further detail with respect to the share transfer restrictions and the provisions with respect to requesting an independent evaluation.
In the event of a legal merger and any subsequent squeeze-out or cancellation of a class of shares, the fair value of the Shares or shares in the Issuing Entity held by the Minority wil1 need to he determined. The Offeror anticipates that the fair value of such shares wil1 be deterrnined by reference to the Offer Price per Share as adjusted for the German Transaction, distribution of the Completion Distribution (see Section 8.8.1 (Divestiture of the German Business)) and any distributions out of the distributable reserves of the Issuing Entity that may have decreased the preference rights attached to the ordinary shares B held by the Minority. Additional means of acquiring Minority’s Shares The Offeror also reserves the right to use any other legally permitted method to obtain 100 per cent. of the Shares or othenvise obtain full ownership of the Versatel’s business, including by way of a liquidation, a de-merger as specified in article 2334a of the Dutch Civil Code, a sale of al1 or substantially al1 of the assets of Versatel or by way of a legal merger between Versatel and another member of Tele2 AB’s group. Finally, the Offeror and Versatel reserve the right to have the Offeror contribute assets to Versatel against the issuance of ordinary shares in the capital of Versatel, in which circumstances the
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pre-emptive rights (voorkeursrechten), if any, of other Shareholders would be excluded, al1 in accordance with Dutch law and Versatel's articles of association at that time. Actions to be taken in respect of the Bonds
In the event that the Offers are declared unconditional and following any conversion, redemption, repurchase or cancellation of al1 Bonds held by the Offeror, less than 15 per cent. of the aggregate principal amount of the Bonds originally issued would remain outstanding, Versatel would be entitled to redeem al1 Bonds outstanding thereafter at 100 per cent. of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption in accordance with the Bonds Terms and Conditions. It is also possible that, in the event that the Offers are declared unconditional, a Meeting of Bondholders may be convened upon the request of Versatel at which an amendment to the mandatory redemption date contained in the Bonds Terms and Conditions wil1 be resolved upon. See Section 14B (Meeting of Bondholders). In order to resolve as proposed above, the necessary quorum for the Meeting of Bondholders wil1 be one or more persons holding or representing not less than 66% per cent. of the principal amount of Bonds outstanding at such time. At the Meeting of Bondholders, a resolution to accept the proposal to amend the Bonds T e r m and Conditions may be passed if adopted by at least 66% per cent. of the votes validly cast at such meeting. The Offeror intends to vote al1 votes attaching to the Bonds tendered in Offer I1 in favour of such amendment. Following such an amendment of the Bonds Terms and Conditions, Versatel would be obliged to redeem al1 Bonds not converted, redeemed, repurchased or cancelied prior to the amended mandatory redemption date at 100 per cent. of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption as set out in Section 14B (Meeting of Bondholders). The Offeror also reserves the right to use, or procure the use of, any other legally permitted method to obtain, convert, redeem, repurchase or cancel any Bonds, or procure any of the aforementioned. Changes to Versatel Articles of Association and Struciure
In order to align the company structure of Versatel with the new holding and financing structure that wil1 exist if and once the Offers have been declared unconditional (gesimd zijn gedaan), the Offeror reserves the right to submit proposals to the Shareholders for one or several changes in Versatei's articles of association and company structure. 4.8.5 Dividend Policy
No dividend has been declared in respect of the Financial Year 2004. Following the settlement of the Offers and the completion of the divestment of tbe German Business, it is the intention that Versatel makes a distribution to the Shareholders in connection with the German Transaction. The Offeror furthermore intends to continue Versatel's dividend policy and may not pay (cash) dividends to the Shareholders in the future. 4.8.6 Social Consequences
The Offeror intends in due course to integrate the business operations of Versatel Benelux and Tele2. The details of such integration will, however, only be determined following the Settlement Date and once the Offeror has been able to better understand the consequences of such an integration. Positive advice has been obtained from the works council of Versatel Nederland B.V. in accordance with the Works Councils Act (Wei op de ondernemingsraden). The secretariat of the Social Economic Council (Sociaal-EconomischeRaad) has been informed of the Offers in accordance with the SER Merger Code 2000 (SER Fusiegedragsregels 2000). The group works council (Konzembetriebsrat) of the German Business of Versatel has been informed about the German Transaction. In addition, Versatel has informed the works council in its Belgian operations of the Transaction.
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4.8.7 Supervisory Board and Management Board
As from the Settlement Date, the Supervisory Board shall consist of four members, being Mr. J. Svedberg ( C O 0 of Tele2 AB), Mr. L.-J. Jarnheimer ( C E 0 of Tele2 AB), Mr. H. Zadler (CFO of Tele2 AB) and Mr. F. Berglund (President of Tele2 Sverige AB), The current Supervisory Board members Mr. L.W.A.M. van Doorne, Mr. H.H. Huber, Mr. L.M.H.A. Hermans, Mr. B.L.J.M. Beerkens and Mr. J.G. Drechsel intend to step down, effective upon the Settlement Date. Members of the Supervisory Board who step down wil1 receive their normal pre-determined compensation for the Financial Year 2005. No other compensation as meant in article 9i, paragraph p of the Bte 1995 wil1 be paid to resigning members of the Supervisory Board. Subject to the Offers heing declared unconditional, Mr. R.M. Raithatha, the sole member of the Management Board, will resign from the Management Board and Executive Board on or shortly after the Settlement Date, hut in any event no later than 31 December 2005. Subject to the same condition, Mr. R.M. Raithatha's employment agreement wil1 terminate on 31 December 2005, hut he wil1 in that case remain available as a consultant to Versatel and Tele2 until 30 June 2006. Subject to the same condition, the total compensation payahle to Mr. R.M. Raithatha in relation to the consultancy fees and the termination of his employment amounts to EUR 2,258,000. It is contemplated that Mr. P.G. Borgklint, the President of Tele2, wil1 succeed Mr. R.M. Raithatha as a sole member of the Management Board. 4.9 Announcernents Any announcement that is required to be made in relation to the Offers wil1 be issued by press release and wil1 be puhlished in at least Het Financieele Dagblad and the Daily Official List, as appropriate, and released to Dow Jones News Service. Subject to any applicable requirements of Dutch tender offer regulations and without limiting the manner in which the Offeror may choose to make any public announcement, the Offeror wil1 have no ohligation to communicate any public announcement other than as descrihed above 4.10 Indicative Tirnetable Expeeled Date and Time (ai1 times are Amsterdam time, New York time is six hours earlier)
FW"t
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09:OO hours, 13 September 2005.
,
09:OO hours, 14 September 2005.
, ,
10:OO hours, 29 September 2005. . .
15:OO hours, 7 Octoher 2005, subject to extension . . . . . . By no later than 15:OO hours, on the fifth Business Days following the Acceptance Closing Date. . .
Publication of the advertisement announcing the availability of the Offer Memorandum as from 14 September 2005 and the Offers, in accordance with article 90, paragraph 2 of the Bte 1995 Commencement of the Acceptance Period Extraordinary General Meeting of Shareholders, to which the Bondholders will be invited, at which meeting the Offers, among other matters (see Section 14A), wil1 he discussed in accordance with the provisions of article 9q, paragraph 1 of the Bte 1995 Acceptance Closing Date Deadline for Securities-holders wishing to tender Securities
.
Unconditional Date The date on which the Offeror shall puhlicly announce whether the Offers are declared unconditional (gestand worden gedaan) in accordance with article 9t, paragraph 4 of the Bte 1995
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Expected Date and Time (dl times are Amsterdam time, New York time is six hours earlier)
No later than five Business Days ~
following the Unconditional Date
EW"t
.
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Subsequent to the Settlement Date (if held) , . . , . . , . . , , . . , . . , . . .
Settlement Date The date on which, in accordance with the t e r m and conditions of the Offers, the Offeror shall pay (i) the Offer Price per Share to the Shareholders who have validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd) their Shares under Offer I and (ii) the Offer Price per Bond to the Bondholders who have validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geieverd) their Bonds under Offer I1 Meeting of Bondholders at which meeting an amendment to the Bonds Terms and Conditions wil1 he discussed and resolved upon (see Section 14B, Meeting of Bondholders of Versatel).
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5. LETTER TO THE SECURITIES-HOLDERS Dear Shareholder, Dear Bondholder, On 29 September 2005, an extraordinary general meeting of shareholders wil1 be held in which you, inter alia, wil1 be informed about the Offers. On 18 July 2005, Tele2 and Versatel jointly announced that the expectation was justified that an agreement regarding the Offers could be reached. With this letter, we would like to take the opportunity to address the background to the proposed Transaction. As you wil1 see, the Supervisory Board and Management Board have given the Transaction, as wel1 as the process to date, careful consideration. We have reached the conclusion that the Offers are in the best interests of Versatel, its Securitiesholders and its other stakeholders. We support the Offers and unanimously recommend the Offers to the Securities-holders for acceptance. The details of Offer I and Offer I1 are set out in Section 6A (Invitation to the Shareholders) and Section 6 8 (Invitation to the Bondholders). Background
In April 2005 we received an unsolicited expression of interest for Versatel from Belgacom N.V. and Talpa. Aìthough we had nat initiated a forma1 sale process we decided to pursue the discussion with Belgacom N.V. and Talpa after a thorough review of the contents of the proposal in which they expressed their interest.
Our review of the expression of interest from Belgacom N.V. and Talpa and any subsequent expressions of interest that we received from other parties, included, amongst others, a comparison to Versatel's current fully funded business plan and its associated execution risks and future financing requirements outside such business plan. Following market rumours and subsequent movement in the share price of Versatel, and pursuant to Euronext rules, the unsolicited approach by Belgacom N.V. and Talpa was made public on 2 May 2005. The press release issued by US on that date stated explicitly that the unsolicited approach could result in a public offer for Versatel, and market participants were therefore made aware of a potential acquisition of Versatel. We therefore decided, in accordance with our fiduciary duties, to explore various alternatives including the possihilities of effecting an alternative transaction with a number of other parties. We engaged Lazard as our financial advisers and instructed them to approach potential strategic partners andlor acquirors. From the first unsolicited approach by Belgacom N.V. and Talpa until the day prior to the announcement of 18 July 2005 that the expectation was justified that an agreement with Tele2 could be reached, we did nat enter into exclusivity arrangements, and Versatel and its advisers approached possible interested parties, subject to certain confidentiality undertakings and certain restrictions imposed by law. Telecom and cable operators with a presence in the Benelux or Germany, other telecom operators as wel1 as private equity funds were contacted. Pubiicly available information on Versatel was communicaied to some interested parties and we and our advisers offered assistance to some parties in understanding the business of Versatel based on public information. Parties more likely to he interested in one specific country were invited to partner with other potential buyers likely to be interested in other geographies. Tele2 and Apax were among the parties contacted. Potential bidders contacted were made aware of the possibility of an offer for Versatel by Belgacom N.V. and Talpa. Lazard reported regularly to US regarding interest from potential bidders. Al1 discussions with these potential interested parties, other than Tele2 and Apax and Belgacom N.V. and Talpa, regarding the scope and scale of a possible transaction, did nat lead to any interest which justified further pursuing these discussions. On 14 June 2005 we issued a press release announcing that the discussions with Belgacom N.V. and Talpa had terminated, while other discussions were continuing.
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On 18 July 2005 we announced that the expectation was justified that agreement could be reached with Tele2 on the Offers. It was also announced that Talpa had irrevocahly undertaken to tender al1 Shares held by it under Offer I. This undertaking is in respect of approximately 41.65 per cent. of the issued and outstanding share capital of Versatel at the date of this letter. I
'kansaction Rationale In recent years, Versatel has focused on expanding its business in its three core markets, the Netherlands, Belgium and Germany. While' continuing to build its strong corporate franchise in the Netherlands and pursuing an infrastmcture-based approach, Versatel has put a great emphasis on establishing its position in the growing residential hroadband market. The roll-out of triple play services in the Netherlands is at the heart of this strategy. At the Same time, Versatel has been successful in building its German operations. Despite the progress made, the consolidation taking place in the telecommunications market in Europe and the continued requirement for economies of scale have led US to the conclusion that Versatel and its stakeholders would strongly henefit from taking part in this consolidation. Following the completion of the Offers, the German Business wil1 he sold and transferred to Apax for an estimated consideration of EUR 539 million, which is based on an enterprise value of EUR 565 million as indicated in the press release of 18 July 2005, while Tele2 shall hold the Benelux Business through Versatel. See Section 8.8 (Consequences of the Offers). We believe that the Securities-holders, employees, customers and other stakeholders wil1 benefit from the Transaction for the following reasons: (i) The combination of Versatel's Benelux Business and Tele2 wil1 achieve critical mass in the Benelux and wil1 improve efficiencies of the combined husinesses by integrating the Tele2 and Versatel operations and migrating Tele2's clients and traffic onto Versatel's network, thereby achieving significant synergies. The combination wil1 contribute significant resources to further develop the business notahly in the strategic broadband segment and combine hvo complementary businesses creating additional possibilities to improve long term profitabiliîy by cross selling existing products to existing clients and reducing business/market risk. (ii) In Germany, Apax wil1 further expand in the broadband business in the covered regions focusing on hoth business and residential customers. It is Apax' intention to continue to invest in future growth and seek to participate in the consolidation of alternative carriers in Germany and to create one of the leading operators in Germany. Apax envisages the German Business as the platform for further acquisitions in that market. Apax' strategic goal is to consolidate the German alternative carrier market and to create a strong player to compete nationwide with Deutsche Telekom AG, amongst others; and (iii) the Offers provide the Securities-holders the opportunity to sell their Securities at an attractive premium and realise immediate value in cash for their holdings, taking into account the current risks associated with Versatel's current business plan.
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As part of its engagement as financial adviser to Versatel, Lazard provided an opinion to the Management Board and the Supervisory Board as to the fairness to the Shareholders, from a financial point of view, of the Offer Price per Share. This fairness opinion is contained in Section 11 (fairness opinion). As the Offer Price per Bond is hased on the cash equivalent value of the Shares, calculated at the Offer Price per Share, that the Bond could he converted into on the hasis of a conversion price of EUR 1.667 per Share as set out in the Bonds Terms and Conditions, increased with an incentive fee of 0.30 per cent. of the principal amount per Bond, heing an amount of EUR 300, no separate opinion in respect of the Offer Price per Bond has heen requested. Positive advice has been ohtained from the works council of Versatel Nederland B.V. in accordance with the Works Councils Act (Wet op de ondernemingsraden). The group works council (Konzernbettiebsraf) of Versatel Germany has been informed about the Transaction in accordance with applicable laws. In addition, Versatel has informed the works council in its Belgian operations of the Transaction. Als0 the secretariat of the Social Economic Council (Sociaal-Economische Raad) has been informed of the Offers in accordance with the SER Merger Code 2000 (SER-besluit Fusiegedragsregels 2000).
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Recommendation We support and unanimously recommend the Offers to the Securities-holders for acceptance. See Section 7 (Recommendation by the Supervisory Board and the Management Board). Actions to be taken The procedure for acceptance of the Offers is set out in Sections 6A.2 (Acceptance of Offer I), 6B.3 (Acceptance of Offer 11) and 6B.8 (Acceptance Procedure).
14 September 2005 Management Board
Supervisory Board
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6A. INVITATION TO THE SHAREHOLDERS The Shareholders are advised to review this Offer Memorandum (including al1 documents incorporated by reference herein) and in particular Section 1 (Restrictions and Important Information) thoroughly and completely and to seek independent advice where appropriate in order to reach a balanced judgement with respect to Offer I and the Offer Memorandum.
!
With due reference to al1 statements, terms, conditions and restrictions included in this Offer Memorandum, Shareholders are hereby invited to tender their Shares under Offer I in the manner and subject to the terms and conditions set out below. 6A.1 Offer Price per Share
For each Share tendered under the terms and conditions of Offer I, the Offeror offers the Offer Price per Share being an amount of EUR 2.20 in cash. 6A.2 Acceptance of Offer I
I
Shareholders who hold their Shares through an Admitted Institution are requested to make their acceptance known via their bank or stockbroker no later than 15:OO hours, Amsterdam time (9:OO hours, New York time) on 7 October 2005, unless the Acceptance Period is extended in accordance with Section 6A.7 (Extension). The Admitted Institutions may tender Shares for acceptance only to the Settlement Agent in Breda (Atin. Agency Services-Exchange Agency MF2020. Kemelstede 2, 4817 ST Breda, the Netherlands, fax +31 (0)76 5799620) and only in writing. In submitting the acceptance, the Admitted Institutions are required to declare that (i) they have the tendered Shares in their administration, (ii) each Shareholder who accepts Offer I irrevocably accepts and warrants that the Shares tendered by such Shareholder are being tendered in compliance with the restrictions set out in Section i (Restrictions and Important Information), and (iii) they undertake to transfer these Shares to the Offeror on the Settlement Date, provided the Offers have been declared unconditional (gestand rijn gedaan). Subject to article 90, paragraph 5 of the Bte 1995, the tendering of Shares in acceptance of Offer I shall constitute irrevocable instructions to block any attempt to transfer the Shares tendered, so that on or prior to the Settlement Date no transfer of such Shares may be effected (other than to the Settlement Agent on or prior to the Settlement Date if the Offers have been declared unconditional (gestand zijn gedaan) and the Shares have been accepted for purchase) and to debit the securities account in which such Shares are held on the Settlement Date in respect of al1 of the Shares tendered against payment by the Settlement Agent of the Offer Price per Share. Shareholders who hold their Shares in registered form and wish to accept Offer I in respect of such Shares must deliver a completed and signed acceptance form to the Settlement Agent in Breda (Artn. Agency Services-Exchange Agency MF2020. Kemelstede 2, 481 7 ST Breda, the Netherlands, fax +31 (0)76 5799620). In accordance with the t e r m and conditions of Offer I, the acceptance forms must he received by the Settlement Agent in Breda, not later than 15:OO h o m , Amsterdam time (9:OO hours, New York time) on the Acceptance Closing Date. The acceptance forms are available upon request from Versatel (Attn. Investor Relations Department) and the Settlement Agent. The acceptance form wil1 also serve as a deed of transfer (akte van levering) with respect to the Shares referenced therein. Each Shareholder tendering Shares pursuant to Offer I other than through an Admitted Institution, by such tender, undertakes, represents and warrants to the Offeror, on the date that such Shares are tendered through to and including the Settlement Date, subject to the proper withdrawal of any tender during any extension of the Acceptance Period, in accordance with article 90, paragraph 5 of the Bte 1995, that: (a) the tender of any Shares constitutes an acceptance by the Shareholder of Offer I, on and subject to the t e r m and conditions of Offer I; (b) such Shareholder has full power and authority to tender, sell and deliver (leveren), and has not entered into any other agreement to tender, sell or deliver (leveren) the Shares stated to have been tendered to any party other than the Offeror (together with al1 rights attaching thereto) and, when the same are purchased by the Offeror for cash, the Offeror wil1 acquire such Shares, with full title guarantee and free and clear of al1 third party rights and restrictions of any kind; and
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(c) such Shares are being tendered in compliance with the restrictions as set out in Section 1 (Restrictions and Important Information) and the securities and other applicable laws or regulations of the jurisdiction in which such Shareholder is located or of which it is a resident and rio registration, approval or filing with any regulatory authority of such jurisdiction is required in connection with the tendering of such Shares. 6A.3 Withdrawal Rights Shares tendered on or prior to the Acceptance Closing Date may not be withdrawn, subject to the right of withdrawal of any tender during any extension of the Acceptance Period in accordance with the provisions of article 90, paragraph 5 of the Bte 1995. During any such extension of the Acceptance Period, any Shares previously tendered and not withdrawn wil1 remain subject to Offer I. 6A.4 Conditions The Offers shall be declared unconditional Ipestunddoening) if the conditions as set out in Section 8.2 (Offer Conditions) are fulfilled or, if relevant, waived by the Offeror. 6A.S Acceptance Period The Acceptance Period begins at 9:OO hours, Amsterdam time (3:OO hours, New York time) on 14 September 2005 and ends, subject to extension in accordance with Article 90, paragraph 5 of the Bte 1995, on 7 October 2005 at 15:OO hours, Amsterdam time (9:OO hours, New York time). If one or more of the Offer Conditions set out in Section 8.2 (Offer Conditions) is not fulfilled by 15:OO hours, Amsterdam time (9:OO hours New York time) on the Acceptance Closing Date, the Offeror may, from time to time, extend the Acceptance Period until al1 such Offer Conditions have heen satisfied or waived. See also Section 6A.7 (Extension). During an extension of the Acceptance Period, any Shares previously tendered and not withdrawn wil1 remain subject to Offer I, subject to the right of each Shareholder to withdraw the Shares he or she has already tendered in accordance with article 90 paragraph 5 of the Bte 1995. If al1 Offer Conditions are satisfied or, where appropriate, waived, the Offeror wil1 accept al1 Shares that have been validly tendered and not previously withdrawn pursuant to the terms of Offer I in accordance with the procedures set forth in Section 6A.2 (Acceptance of Offer I). 6A.6 Declaring the Offers Unconditional (gestanddoening) The Offers shall be subject to the fulfilment of the Offer Conditions, including, but not limited to, the condition that at least 95 per cent. of al1 Shares has been tendered under Offer I, as set out in Section 8.2(a). The Offeror reserves the right to waive certain Offer Conditions. See Section 8.2 (Offer Conditions). By no later than 15:OO hours, Amsterdam time (9:OO hours, New York time) on the fifth Business Day following the Acceptance Closing Date, such date heing the Unconditional Date, the Offeror wil1 determine whether the Offer Conditions have been fulfilled or are to he waived by the Offeror and wil1 announce whether (i) the Offers have been declared unconditional, (ii) there is still uncertainty as to the fulfilment of any of the Offer Conditions, or (iii) the Offers are terminated, as a result of the Offer Conditions not having been fulfilled or waived by the Offeror, al1 in accordance with article 9t, paragraph 4 of the Bte 1995. The announcement, if any, by the Offeror that there is still uncertainty as to the fulfilment of any of the Offer Conditions, does not mean that any Shareholder wil1 have the right to withdraw any tender of Shares or that any tendered Share shall he deemed to he automatically withdrawn. 6A.l
Extension
The Offeror may extend the Acceptance Period past the Acceptance Closing Date, in which case al1 references in this Offer Memorandum to “15:OO hours, Amsterdam time ( 9 0 0 hours, New York time), on 7 October 2005” shall, unless the context requires othenvise, be moved to the latest date and time to which the Offers have been so extended. If the Acceptance Period is extended, so that the obligation pursuant to article 9t of the Bte 1995 to announce whether the Offers have heen declared unconditional is postponed, a public announcement to
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that effect shall be made not later than the third Business Day following the Acceptance Closing Date in accordance with the provisions of article 90, paragraph 5 of the Bte 1995. 6A.8 Settlement I
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In the event that the Offeror announces that the Offers are declared unconditional (gestand worden gedaan), the Shareholders having tendered their Shares for acceptance wil1 receive within five Business Days following the Unconditional Date (the “Settlement Date”), the Offer Price per Share, in respect of each Share validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd) under the t e r m and conditions of the Offers. 6A.9 Dividends
No dividend has been declared by the Company in respect of the Financial Year 2004. Following the settlement of the Offers and the completion of the divestment of the German Business, it is the intention that Versatel makes a distribution to the Shareholders in connection with the German Transaction. The Offeror furthermore intends to continue Versatel’s dividend policy and may nat pay (cash) dividends to the Shareholders in the future. I
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6A.10 Commission Admitted Institutions shall receive from the Settlement Agent on behalf of the Offeror a commission in the amount of EUR 0.00207 in respect of each Share validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) and delivered (geleverd),up to a maximum of EUR 10,000 per Shareholder tender. The commission must be claimed from the Offeror through the Settlement Agent within 30 days of the Unconditional Date. In principle, na casts wil1 he charged to the Shareholders by the Offeror or Versatel for the deliveiy and payment of the Shares. Shareholders may be charged certain costs hy their hanks. 6A.11 Restrictions The Offers are being made with due observance of such statements, conditions and restrictions as are included in the Offer Memorandum. The Offeror reserves the right to accept any tender under Offer I, which is made hy or on behalf of a Shareholder, even if it has nat been effectuated in such manner as set out above. 6A.12 Announcements Any announcement that is required to he made in relation to the Offers wil1 be issued by press release and wil1 be published in at least Het Financieele Dagblad and the Daily Official List, as appropriate, and released to Dow Jones News Service. Subject to any applicahle requirements of Dutch tender offer regulations and without limiting the manner in which the Offeror may choose to make any public announcement, the Offeror wil1 have no obligation to communicate any public announcement other than as described ahove.
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6B. INVITATION TO THE BONDHOLDERS The Bondholders should review this Offer Memorandum (including al1 documents incorporated by reference herein) and in particular Section 1 (Restrictions and Important Information) thoroughly and completely and seek independent advice where appropriate in order to reach a balanced judgement with respect to Offer I1 and the Offer Memorandum. With due reference to al1 statements, terms, conditions and restrictions included in this Offer Memorandum, Bondholders are hereby invited to tender their Bonds under Offer I1 in tbe manner and subject to the terms and conditions set out below. 6B.1 Size of Offer I1 Bondholders may accept Offer I1 for al1 or any part of the Bonds they hold, but only so long as their acceptance is for a principal amount of Bonds that is in the amount of EUR 100,000 or multiples thereof. Bondholders may accept Offer I1 in respect of several Bonds, so long as each acceptance satisfies the above criteria. 6B.Z Offer Price per Bond
For each Bond tendered under the terms and conditions of Offer 11, the Offeror offers a cash price per Bond which wil1 be a sum of EUR 132,273.61 less an amount of EUR 3,875 if any interest is paid or payable to the Bondholder in respect of the annual interest period ended on 28 October 2005 (the Offer Price per Bond). The Offer Price per Bond is based on the cash equivalent value of the Shares and calculated as follows: (a) a conversion price of EUR 1.667 per Share, representing the conversion price that would apply if conversion would take place on or before 28 October 2005 in connection with a Change of Control as defined in the Bonds Terms and Conditions, meaning that each Bond can be converted into 59,988 Shares; multiplied by (b) the Offer Price per Share; plus (c) an additional incentive fee of 0.30 per cent. of the principal amount of the Bond, being an amount of EUR 300. 68.3 Acceptance of Offer I1 Bondholders may contact the Tender Agent (The Bank of New York, Attn. Duniel Wynne, One Canada Square, London E14 SAL, United Kingdom, Tel +44 207 964 6337) for assistance in completing and delivering the Electronic Acceptance Notice and the Dealer Manager (Morgan Stanley & Co. ínfemational Limited, Attn. Liability Manugement Group, 25 Cabot Square, Cunary W a d London E14 4QA, United Kingdom, Tel. +44 207 677 5040) for answers to questions concerning the t e r m of Offer 11, in each case at the appropriate address and telephone number set out above. The acceptance of Offer II by a Bondholder constitutes a purchase agreement including the sale by the Bondholder and the purchase by the Offeror regarding the Bonds to which the acceptance of Offer I1 relates, subject to the t e r m and conditions set out in this Offer Memorandum, including the Offers being declared unconditional (gestanddoening). If the Offers are not declared unconditional, al1 accepiances and corresponding Electronic Acceptance Notices shall be deemed to be automatically withdrawn.
Bondholders not holding their Bonds through the Clearing Systems should contact the Tender Agent as to how to submit their Bonds for acceptance under Offer 11. 6B.4 Conditions The Offers shall be declared unconditional (gestanddoening) if the conditions as set out in Section 8.2 (Offer Conditions) are fulfilled or, if relevant, waived by the Offeror. 6B.5 Acceptance Period The Acceptance Period begins at 9:OO hours, Amsterdam Time (3:OO hours, New York time) on 14 September 2005 and ends, subject to extension in accordance with article 90, paragraph 5 of the Bte 1995, on 7 October 2005 at 15:OO hours, Amsterdam time (9:00 hours, New York time).
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If one ar more of the Offer Conditions set out in Section 8.2 (Offer Conditions) is not fulfilled by 15:OO hours, Amsterdam time (9:OO hours New York time) on the Acceptance Closing Date, the Offeror may, from time to time, extend the Acceptance Period until al1 such Offer Conditions have been satisfied or waived. See also Section 6B.11 (Extension). During an extension of the Acceptance Period, any Bonds previously tendered and not withdrawn wil1 remain subject to Offer 11, subject to the right of each Bondholder to withdraw the Bonds he or she has already tendered in accordance with Section 90, paragraph 5 of the Bte 1995. If al1 Offer Conditions are satisfied or, where appropriate, waived, the Offeror wil1 accept al1 Bonds that have heen validly tendered and nat previously withdrawn pursuant to the terms of Offer I1 in accordance with the procedures set forth in Section 6B.3 (Acceptance of Offer 11). 6B.6 Declaring the Offers Unconditional ígestanddoening) The Offers shall be subject to the fulfilment of the Offer Conditions, including, but nat limited to, the condition that at least 85 per cent. of al1 Bonds has been tendered under Offer 11, as set out in Section 8.2(b). The Offeror reserves the right to waive certain Offer Conditions. See Section 8.2 (Offer Conditions).
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By no later tban 15:OO hours, Amsterdam time (9:OO hours, New York time) on the fifth Business Day following the Acceptance Closing Date, such date being the Unconditional Date, the Offeror wil1 determine whether the Offer Conditions have been fulfilled or are to be waived by the Offeror and wil1 announce whether (i) the Offers have been declared unconditional, (ii) there is still uncertainty as to the fulfilment of any of the Offer Conditions, a r (iii) the Offers are terminated, as a result of the Offer Conditions not having been fulfilled or waived by the Offeror, al1 in accordance with article 9t, paragraph 4 of the Bte 1995. The announcement, if any, hy the Offeror that there is still uncertainty as to the fulfilment of any of the Offer Conditions does not mean that any Bondholder wil1 have the right to withdraw any Electronic Acceptance Notices ar that any such Electronic Acceptance Notices shall be deemed to be automatically withdrawn. 6B.7 Settlement In al1 cases, payment by tbe Tender Agent for Bonds purchased pursuant to the Offer I1 wil1 be made only after timely receipt by the Tender Agent of (a) confirmation of blocking of such Bonds into tbe holder’s accounts at Euroclear a r Clearstream Luxembourg pursuant to an Electronic Acceptance Notice given by or on behalf of the relevant Bondholder as described in Section 6B.8 (Acceptance Procedure); (h) a duly completed and duly executed Electronic Acceptance Notice; and (c) any other documents required hy the Electronic Acceptance Notice.
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Under na circumstances wil1 interest on the Offer Price per Bond (ar accrued interest) be paid by the Offeror by reason of any delay in making payment beyond the Settlement Date, other than a delay caused by the Offeror’s failure to deposit the Offer Price per Bond with the Tender Agent on or prior to the Settlement Date.
In order to receive the Offer Price per Bond for tendered Bonds, Bondholders must deliver to the Offeror a r its agents full title to their Bonds free and clear of al1 third party rights and restrictions of any kind. 6B.8 Acceptance Procedure A Bondholder wishing to participate in Offer I1 must suhmit, a r arrange to have submitted on its behalf, at a r before the Acceptance Closing Date and hefore the deadlines set by each Clearing System a duly completed Electronic Acceptance Notice to the relevant Clearing System for Offer I1 in the manner specified hereafter. I
The submission of Bonds by a Bondholder wil1 be deemed to have occurred upon receipt hy the relevant Clearing System of a valid Electronic Acceptance Notice in accordance with the requirements of such Clearing System. The receipt of such Electronic Acceptance Notice by the relevant Clearing System wil1 be acknowledged in accordance with the standard practices of such Clearing System and wil1 result in
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the blocking of Bonds in the relevant Clearing System so that no transfers may he effected in relation to such Bonds. A Bondholder must take the appropriate steps through the relevant Clearing System so that no transfers may be effected in relation to such hlocked Bonds at any time after such date, in accordance with the requirements of the relevant Clearing System and the deadlines required hy such Clearing System. By blocking such Bonds in the relevant Clearing System, each Bondholder wil1 be deemed to consent to have the relevant Clearing System provide details concerning such Bondholder’s identity to the Tender Agent. Only Direct Participants may submit Electronic Acceptance Notices. If a Bondholder is not a Direct Participant, it must arrange for the Direct Participant through which it holds the Bonds to suhmit an Electronic Acceptance Notice on its hehalf to the relevant Clearing System prior to the deadlines specified by the relevant Clearing System. Direct Participants are solely responsible for meeting, and should satisfy themselves with, the applicahle deadlines in order to ensure timely tender of the relevant Bonds. Bondholders and Direct Participants are solely responsible for the observance of and compliance with procedures and deadlines applicable to the submission of the Bonds. A Bondholder who holds Bonds that are held in the name of a broker, dealer, bank, trust offeror or other nominee or custodian should contact such person or entity sufficiently in advance of the Acceptance Closing Date if they wish to accept Offer I1 and procure that the Bonds are hlocked in accordance with the normal procedures of the relevant Clearing System and the deadlines imposed by such Clearing System. By suhmitting a valid Electronic Acceptance Notice to the relevant Clearing System in accordance with the standard procedures of the relevant Clearing System, a Bondholder and the relevant Direct Participant on its behalf shall be deemed to acknowledge, represent, warrant and undertake to the Offeror, the Dealer Manager and the Tender Agent the following from the date on which the Electronic Acceptance Notice has been submitted to the relevant Clearing System through to and including the Settlement Date (if the relevant Bondholder and the relevant Direct Participant on its behalf is unable to give these representations, warranties and undertakings, such Bondholders or the relevant Direct Participant on its hehalf should contact the Dealer Manager immediately):
(a) Such Bondholder has received, reviewed and aceepted the terms of the Offer Memorandum. (h) By hlocking Bonds in the relevant Clearing System, such Bondholder wil1 he deemed to consent to have the relevant Clearing System provide details concerning its identity to the Tender Agent. (c) Upon the terms and subject to the conditions of Offer 11, such Bondholder hereby accepts Offer I1 in respect of the principal amount of Bonds in its account blocked in the relevant Clearing System. Subject to and effective upon delivery to the Offeror of the Bonds blocked in the relevant Clearing System, such Bondholder hereby renounces al1 right, title and interest in and to al1 such Bonds and waives and releases any rights or claims it may have against the Offeror or the Company with respect to any such Bonds. (d) Al1 authority conferred or agreed to he conferred pursuant to such Bondholder’s representations, warranties and undertakings and al1 of its obligations shall he binding upon its successors, assigns, heirs, executors, trustees in bankruptcy and legal representatives and shall not he affected by, and shall survive, its death or incapacity. (e) No information (other than as set out in this Offer Memorandum) has heen provided to such Bondholder by the Offeror with regard to the tax consequences to Bondholders arising from the sale of the Bonds, and such Bondholder acknowledges that it is solely liable for any taxes and similar or related payments imposed on it under the laws of any applicahle jurisdiction as a result of its acceptance of Offer I1 and agrees that it will not have and does not have any right of recourse (whether hy way of reimbursement, indemnity or othenvise) against the Offeror, the Dealer Manager, the Company and the Tender Agent or any other person in respect of such taxes and payments.
(0
Such Bondholder is not a person to whom it is unlawful to make Offer I1 under applicable securities laws.
(8) Such Bondholder has full power and authority to tender and transfer the Bonds hereby tendered and such Bonds wil1 be transferred to the Offeror with full title free from al1 hens, charges and encumbrances, not subject to any adverse claim and together with al1 rights attached thereto. Such Bondholder will, upon request, execute and deliver any additional documents and/or do
28
such other things deemed by the Offeror to be necessary or desirable to complete the transfer of the relevant Bonds or to evidence such power and authority.
I
(h) Such Bondholder holds and wil1 hold, until the time of settlement on the Settlement Date, the Bonds hlocked in the relevant Clearing System and, in accordance with the requirements of the relevant Clearing System and hy the deadline required by the relevant Clearing System, such Bondholder has submitted, or has caused to he submitted, an Electronic Acceptance Notice to the relevant Clearing System, as the case may be, to authorise the hlocking of the tendered Bonds with effect on and from the date thereof so that, at any time pending the transfer of such Bonds on the relevant Settlement Date to the Offeror or on its behalf, no transfers of such Bonds may be effected. (i) Al1 the information given by or on behalf of such Bondholder in any Electronic Acceptance Notice, or othenvise to the Offeror in connection with Offer 11, is true and accurate in al1 material respects.
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The receipt of an Electronic Acceptance Notice hy the relevant Clearing System wil1 constitute instructions to debit such Bondholder’s securities account on the Settlement Date in respect of al1 of the Bonds that it has tendered under Offer 11, upon receipt by the relevant Clearing System of an instruction from the Tender Agent to receive those Bonds for the account of the Offeror and payment by the Offeror of the Offer Price per Bond subject to the automatic withdrawal of those instructions in the event that the Offers are terminated hy the Offeror on or prior to the Settlement Date or the withdrawal of such Bondholder’s Electronic Acceptance Notice or an Electronic Withdrawal Instruction in accordance with the procedure set out in this Offer Memorandum. Al1 questions as to the validity, form and eligihility (including time of receipt) of any Electronic Acceptance Notice or an Electronic Withdrawal Instruction wil1 be determined solely by the Offeror. The Offeror’s determination as to whether or when an Electronic Acceptance Notice or an Electronic Withdrawal Instruction is received, whether it is duly completed or whether acceptance is validly revoked shall he final and binding. None of the Offeror, the Dealer Manager or the Tender Agent wil1 be responsible for the communication of tender acceptances and corresponding Electronic Acceptance Notices by: beneficia1 owners to the Direct Participant through which they hold Bonds;
01
the Direct Participant to the Tender Agent or the relevant Clearing System If a Bondholder holds its Bonds through a Direct Participant, it should contact that Direct Participant to discuss the manner in which tenders and transmission of the corresponding Electronic Acceptance Notice and, as the case may be, transfer instructions may be made on its behalf. In the event that the Direct Participant through which a Bondholder holds its Bonds is unable to submit an Electronic Acceptance Notice on such Bondholder’s behalf, such Bondholder should telephone the Tender Agent for assistance. If a Bondholder holds Bonds or accepts Offer I1 through a Direct Participant, such Bondholder should consult with that Direct Participant as to whether it wil1 charge any service fees in connection with the participation in Offer 11. Each Electronic Acceptance Notice shall be governed by and construed in accordance with the laws of the Netherlands. By suhmitting an Electronic Acceptance Notice, Bondholders irrevocably and unconditionally agree for the benefit of the Offeror, the Company and the Tender Agent that the courts of the Netherlands are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Offers or any of the documents referred to above and that, accordingly, any suit, action or proceedings arising out of or in connection with the foregoing must exclusively be brought in such courts. If a Bondholder needs assistance with respect to the procedure relating to the acceptance of Offer 11, it should please contact the Tender Agent (The Bank of New York, attn. Mr Daniel Wynne, One Canada Square, London E14 5AL, United Kingdom, El. +44 207 964 6337). Bondholders not holding their Bonds through the Clearing Systems should contact the Tender Agent as to how to submit their Bonds for acceptance under Offer 11.
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68.9 Withdrawal Rights Bonds tendered on or prior to the Acceptance Closing Date may not he withdrawn, subject to the right of withdrawal of any tender during any extension of the Acceptance Period in accordance with the provisions of article 90, paragraph 5 of the Bte 1995. During such extension of the Acceptance Period, any Bonds previously tendered and not withdrawn wil1 remain subject to Offer I1 and the Bonds wil1 remain hlocked in the relevant Clearing System, subject to the right of each Bondholder to withdraw the Bonds it has already tendered.
68.10 Irregularities Al1 questions as to the validity, form and eligibility (including time of receipt) of any Electronic Acceptance Notice or revocation or revision thereof or as to the acceptance or delivery of Bonds, wil1 he determined hy the Offeror in its sole discretion, which determination wil1 he final and binding. The Offeror reserves the absolute right to reject any and al1 Electronic Acceptance Notices not in proper form or for which any corresponding agreement by the Offeror to purchase would, in the opinion of the Offeror’s counsel, he unlawful. The Offeror also reserves the absolute right to waive any defects in an Electronic Acceptance Notice with regard to any Bonds. None of the Offeror, the Dealer Manager or the Tender Agent shall be under any duty to give notice to Bondholders of any irregularities in an Electronic Acceptance Notice or the Offers, nor shall any of them incur any liahility for failure to give such notice. 6B.11 Extension The Offeror may extend the Acceptance Period past the Acceptance Closing Date, in which case al1 references in this Offer Memorandum and the Electronic Acceptance Notice to “ E 0 0 hours, Amsterdam time (900 hours, New York time), on 7 Octoher 2005” shall, unless the context requires othenvise, he moved to the latest date and time to which the Offers have been so extended. If the Acceptance Period is extended so that the obligation pursuant to article 9t of the Bte 1995 to announce whether the Offers have been declared unconditional is postponed, a puhlic announcement to that effect shall he made not later than the third Business Day following the Acceptance Closing Date in accordance with the provisions of article 90, paragraph 5 of the Bte 1995. 6B.12 Participation by the Dealer Manager The Dealer Manager may accept Offer I1 for its own account and can tender the Bonds on hehalf of other Bondholders. 68.13
Restrictions
The Offers are heing made with due ohservance of such statements, conditions and restrictions as are included in tbe Offer Memorandum. The Offeror reserves the right to accept any tender under Offer 11, which is made by or on hehalf of a Bondholder, even if it has not been effectuated in such manner as set out ahove. 68.14 Announcements Any announcement that is required to be made in relation to the Offers wil1 he issued by press release and wil1 he puhlished in at least Het Financieele Dagblad and the Daily Official List, as appropriate, and released to Dow Jones News Service. Subject to any applicable requirements of Dutch tender offer regulations and without limiting the manner in which the Offeror may choose to make any puhlic announcement, the Offeror wil1 have no ohligation to communicate any puhlic announcement other than as described above. 68.15 Meeting of Bondholders Subject to the Offers heing declared unconditional, a Meeting of Bondholders may be convened upon request of the Company, during which a proposal to amend the Bonds T e r m and Conditions wil1 he resolved upon in compliance with the provisions of condition 13 of the Bond Terms and Conditions. See Section 14B (Meeting of Bondholders).
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I. RECOMMENDATION BY THE SUPERVISORY BOARD AND THE MANAGEMENT BOARD The Supervisory Board and the Management Board have duly considered the strategie, financial and social aspects of the Offers and have reached the conclusion that the Offers are in the best interests of Versatel, the Shareholders, the Bondholders and other stakeholders in Versatel. I
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1 I
The Supewisory Board and the Management Board are of the opinion that the Offers are reasonable and fair to the Shareholders and the Bondholders. In this respect, reference is made to the fairness opinion in respect of Offer I rendered by Lazard, as included in Section 11 (Fairness Opinion). The Supervisory Board and Management Board therefore support the Offers and unanimously recommend the Offers to the Shareholders and the Bondholders for acceptance.
Supervisory Board'") H.H. Huber B.L.J.M. Beerkens L.M.H.A. Hermans J.G. Drechsel
Management Board R.M. Raithatha
(x) As Mr. L.W.A.M. van Doorne is currently not an active member of the Supervisoiy Baard, he has not taken any part in the
decisions referred to above and has taken no position as regards the Offers.
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8. EXPLANATION OF THE OFFERS 8.1 Introduetion
On 18 July 2005, Tele2 and Vcrsatel jointly announccd that thc expectation was justificd that agreement could be rcachcd in connection with an offer hy the Offeror for the Shares and the Bonds, subject to thc fulfilmcnt of ccrtain conditions. In a further prcss release datcd 17 August 2005, Telc2 and Versatcl jointly announced that the preparations of the Offers werc wel1 under way. See Scction 16 (Pycss Releases). Since this time, definitivc agreement has bccn reached with respect to thc Offers and ccrtain terms of this agreement are reflected in this Offer Memorandum. 8.2 Offer Conditions Notwithstanding any other provisions of the Offers, thc obligation of the Offcror to declare the Offers unconditional (jpestanddoening)shall he suhjcct to thc following conditions precedent bcing satisficd on or beforc the Acceptance Closing Date: (a) thc number of Shares that is tendcred for acceptancc undcr Offer I and, togcthcr with thc Shares which are held at that time hy the Offeror, represents at least 95 per cent. (ninety-five per cent) of al1 Shares at the Acccptance Closing Date; (h) the number of Bonds that is tendcred for acccptancc under Offer I1 and, togcther with thc Bonds which are held at that time by the Offeror, represents at least 85 per cent. (eighty-five per cent) of al1 Bonds at the Acceptance Closing Date; (c) no Material Adverse Change has occurred or become known to the Offcror; whercas a “Material Adverse Change” means any cvent or circumstance that results in, or could rcasonably be expccted to have, a material adverse effect on Versatel and/or its group companies, such that the Offeror cannot reasonably bc cxpected to continue with the Offers or dcclare thc Offers unconditional and that does not arise as a result of (i) a gcncral cconomic decline in thc communications business gcncrally affecting companies in this sector such as Vcrsatel, thc Offcror and thcir group companies; (ii) any evcnt or circumstance: (a) known to the Offeror from information filed or made public by the Company as a matter of puhlic record or pursuant to applicahlc rulcs of Euronext Amsterdam; or (b) discloscd in the writtcn information furnished hy Versatcl to the Offeror and its advisors in the course of the due diligence investigation and any oral information providcd in management presentations held in comection with thc Offers for thc benefit of the Offeror prior to the date of the Merger Agreement;
(iii) the announccment, making and implementation of the Offers (except to the extent arising in comection with change of control provisions in agreements cntered into by Versatel or any of its group companies other than those disclosed to the Offeror or its advisors prior to the date of the Merger Agreement); (d) no puhlic announcement has been made indicating for the first time that a third party is announcing a public offer for al1 or part of the Shares, the Bonds, thc Warrants, the Options, shares or securities convertible into shares in the capital of Versatel or any of its subsidiaries or any material part of thc undcrtaking, business or assets of Versatel, or that a third party has ohtaincd thc right to suhscribe or has agrecd to subscribe for any of thc aforcmcntioned securities; (e) neither the Foundation Continuity nor the Foundation Priority has excrcised (whether in part or completcly) any of the Cal1 Options and both have unconditionally and irrevocably tcrminated al1 of their Cal1 Options with effect of the Unconditional Date; ( f ) Versatel has not breached the Merger Agreement to the extent that such breach could rcasonably
bc cxpected to constitute a material advcrse effect on Vcrsatel, the Offeror, Apax (but only in connection with thc Transaction), Telc2 AB (but only in comection with the Transaction), the Offers or the Transaction and which is of such matcrial nature that it cannot in al1 reasonableness bc expcctcd that the Offeror dcclarcs the Offers unconditional;
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(g) no notification has heen received from the AFM stating that Offer I and/or Offer I1 have heen made in violation of Chapter IIA of the Wte 1995, in which case, pursuant to article 32a of the Bte 1995, the securities institutions (effecteninsteíhgen, as defined in the Wte 1995) would not he allowed to give their co-operation to the settlement of the Offers; and
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(h) no order, stay, judgement or decree is issued hy any court, arbitral trihunal, government, governmental authority or other regulatory or administrative authority and is in effect, or any statute, rule, regulation, governmental order or injunction shall have heen enacted, enforced or deemed applicahle to the Offers, any of which restrains, prohibits or delays the consummation of the Offers in any material respect. The Offer Conditions in Section 8.2(a) up to and including Section 8.2(f) and Section 8.2(h) are for the benefit of Offeror and may he waived hy Offeror (either in whole or in part) at any time hy written notice to Versatel. The Offer Condition in Section 8.2(g) cannot he waived.
8.3 Irrevocable Undertaking
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Talpa, provided certain customary conditions are met, has irrevocahly undertaken to tender al1 Shares held by it under Offer I. This undertaking is in respect of a total of 217,976,476 Shares with an aggregate nomina1 value of EUR 4,359,529.52, representing approximately 41.65 per cent. of the total issued and outstanding share capital of Versatel on 9 September 2005. 8.4 Shareholdings of Members of the Supervisory Board and the Management Board
On the date of this Offer Memorandum, 1,624,979 Shares are held hy Mr. R.M. Raithatha, the sole memher of the Management Board. According to the information from the public registers of the AFM, no Shares are held hy any of the memhers of the Supervisory Board. 8.5 Options of Memhers of the Supervisory Board and the Management Board
On the date of this Offer Memorandum, Mr. R. Raithatha holds 3,940,000 Options. According to the information from the puhlic registers of the AFM, no memher of the Supervisory Board holds Options. 8.6 Substantiatioo of the Offer Prices In estahlishing the Offer Price per Share and the Offer Price per Bond, the Offeror has carefully considered the history and prospects of Versatel, including through an analysis of historic and potential future developments in profitahility, cash flows and balance sheet. Furthermore, account has been taken of the historic market valuation of the Shares and the Bonds. The Offer Price per Share and the Offer Price per Bond have heen based on careful financial analyses, including, among others: (a) a discounted cash flow analysis hased on historic and expected developments in the operational and financial performance of Versatel; and (h) a trading multiple analysis hased on the financial performance of Versatel and the prices and trading activity of the Shares compared with those of certain other comparahle puhlicly-traded companies and their securities; and (c) a transaction multiple analysis based on the financial terms, to the extent puhlicly availahle, of certain comparable acquisition transactions; and (d) an analysis of bid premiums in recent puhlic offers for companies listed on Euronext Amsterdam.
In addition, certain publicly available financial statements and other information of Versatel have been reviewed, such other analyses have heen performed, and such other factors have been considered as were availahle to the Offeror and its advisers. The Offer Price per Share represents a: (a) 14 per cent. premium over the closing Share price of EUR 1.93 on 15 July 2005, the last Business Day prior to the joint press release puhlished hy Versatel and the Offeror that announced that the expectation was justified that agreement could be reached in connection with the Offers;
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(b) 47 per cent. premium over the closing Share price of EUR 1.50 on 28 April 2005, the last Business Day prior to the first reports on discussions between Versatel, Belgacom N.V. and Talpa; (c) 29 per cent. premium over the average closing Share price of EUR 1.70 for the 12 months prior to, and including, 28 April 2005, the last Business Day prior to the first reports on discussions between Versatel, Belgacom N.V. and Talpa. See Section 13 (Share Prices of Versatel).
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The Offer Price per Bond is based on the cash equivalent value of the Shares and calculated as follows:
I
(a) at a conversion price of EUR 1.667 per Share representing the conversion price that would apply if conversion would take place on or before 28 October 2005 in connection with a Change of Control as defined in the Bonds Terms and Conditions, meaning that each Bond can be converted into 59,988 Shares; multiplied by (b) the Offer Price per Share; plus (c) an additional incentive fee of 0.30 per cent. of the principal amount of the Bond, being an amount of EUR 300. The Offer Price per Bond amounts to EUR 132,273.61, which includes interest per Bond for the interest period ending on 28 October 2005 in the amount of EUR 3,875. Bondholders who tender their Bonds under Offer I1 before the Acceptance Closing Date wil1 receive the total consideration of EUR 132,273.61 irrespective of the Settlement Date, provided that this wil1 be reduced by the interest (in an amount of EUR 3,875) per Bond in respect of the annual interest period ended on 28 October 2005, i.e. to an amount of EUR 128,398.61 per Bond, if the Bondholder has received or wil1 receive such aforementioned interest. Any distribution on the Shares received after the Acceptance Closing Date by a Shareholder who did not tender its Shares under Offer I on or before the Acceptance Closing Date wil1 be deducted from the Offer Price per Share payable to such Shareholder in respect of Shares tendered after the Acceptance Closing Date. In the event of a squeeze-out or a legal merger the Offeror anticipates that the fair value per Share shall he equivalent to the Offer Price per Share less the amount of such distribution. See Section 8.8.4 (Legal Structure of Versatel following the Offers). On 14 September 2005, Lazard rendered its fairness opinion in respect of Offer I in writing to the Supervisory Board and Management Board. Such fairness opinion is reproduced in Section 11 (Fairness Opinion). As at the date of such opinion, and based upon and subject to the factors and assumptions referred to in such opinion, Lazard considers the Offer Price per Share to be fair, from a financial point of view, to the Shareholders. Given that the Offer Price per Bond is calculated based on the number of Shares into which a Bond can be converted pursuant to the conversion price that would apply in case of conversion on or hefore 28 October 2005 in connection with a Change of Control as defined in the Bonds Terms and Conditions, multiplied by the Offer Price per Share, plus an additional incentive fee of 0.30 per cent. of the principal amount per Bond, no separate fairness opinion in respect of the Bonds has been requested by the Supervisory Board and the Management Board. 8.7 'kansaction Rationale
In recent years, Versatel has focused on expanding its business in its three core markets: the Netherlands, Belgium and Germany. While continuing to build its strong corporate franchise and pursuing its infrastructure-based approach, Versatel has put a great emphasis on establishing its position in the growing residential broadband market. The roll-out of triple play services in the Netherlands is at the heart of this strategy. At the Same time, Versatel has been highly successful in building its German operations which accounted for approximately 50 per cent. of its consolidated EBITDA in the first half of the Financial Year 2005. Despite the progress made, the consolidation taking place in the telecommunications market in Europe and the continued requirement for economies of scale have led Versatel to the conclusion that it would strongly benefit from taking part in this consolidation. Subject to the Offers being declared unconditional (gestunddoening), it is intended that the German Business wil1 be sold and transferred to Apax. The Offeror wil1 through Versatel hold the Benelux Business. See Section 8.8 (Consequences of the Offers).
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With regard to the German Business, Apax wil1 further expand the German Business’ broadband business in the regions currently covered, focusing on both business and residential customers. Apax’ goal is to continue to invest in future growth and seek to participate in the consolidation of alternative carriers in Germany to create one of the leading operators in Germany. Apax envisages the German Business as the platform for further acquisitions in tbat market. Apax’ strategic goal is to consolidate the German alternative carrier market landscape and create a strong player to compete nationwide, among others, with Deutsche Telekom AG.
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With regard to the Benelux Business, the main transaction rationale lies in the creation of a stronger platform which will: (i) achieve critical mass in the Benelux: the combination of Tele2’s existing operations in the Benelux market area with tbe Benelux Business wil1 have pro forma revenues of approximately EUR 800 million and an EBITDA of approximately EUR 112 million (on the basis of 2004 financial data); (ii) improve efficiencies of the combined businesses by integrating the Tele2 and Versatel operations and migrating Tele2’s clients and traffic onto Versatel’s network, thereby achieving significant synergies; (iii) contribute significant resources to further develop the business notably in the strategic broadband segment; and (iv) combine two complementary businesses creating additional possibilities to improve long term profitability by cross selling existing products to existing clients and reducing husiness/market risk. Finally, the Offeror provides current Securities-holders the opportunity to sell their interest in Versatel at an attractive premium and realise immediate value in cash for their holdings. 8.8
Consequences of the Offers
8.8.1 Divestiiure of the German Business
It is intended that, subject to the Offers being declared unconditional kestunddoening), Versatel wil1 divest the German Business. The German Business wil1 he sold and transferred to Ganymed for an estimated price of approximately EUR 539 million (which is based on an enterprise value of EUR 565 million). The estimated price of approximately EUR 539 million wil1 he adjusted for, inter alia, changes in the balance of intra-group loans and distributions by the German Business to Versatel, in al1 cases subsequent to 31 March 2005. Apax may subsequently syndicate some of the equity in the German Business. The Offeror will, through Versatel, retain the Benelux Business as wel1 as those subsidiaries of Versatel that do not form part of the German Business or Benelux Business. The divestment of the German Business wil1 be achieved by means of the sale and transfer of al1 of the shares in the capital of Versatel Deutscbland Holding GmhH (the holding company of the German Business) along with al1 intra-group loans made hy Versatel or its subsidiaries to the German Business. The sale and transfer will occur simultaneously with, or immediately after, the settlement of the Offers. In anticipation of such sale and transfer Ganymed will make a loan to the Offeror in an amount of approximately EUR 539 million to be paid out on the Settlement Date, which will be used by the Offeror, along with other funds availahle to it, to make the necessary payments to Securities-holders at the Settlement Date.
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The consideration for the German Business wil1 he payable in accordance with a loan note to he issued by Ganymed to Versatel (the “Loan Note”). Subject to approval of the Extraordinary General Meeting of Shareholders (see Section 14A, Extraordinary General Meeting of Shareholders of Versatel), Versatel will distribute to the Offeror and the Sharebolders that have not tendered their Shares under Offer I (the “Minority”) an amount per Share equivalent to (i) the principal amount of, plus any interest accrued on, the Loan Note divided by (ii) the number of Shares held by the Offeror at the time the distribution is declared (the distribution to the Offeror and the Minority is referred to as the “Completion Distribution”). The Offeror and Versatel have agreed that that portion of the Completion Distribution payahle to the Offeror wil1 be settled by means of an assignment of the Loan Note. The Offeror and Ganymed intend that following such assignment the claim against Ganymed under the Loan Note he set-off against the claim by Ganymed against the Offeror under the loan to be provided by Ganymed in connection with the financing of the Offers.
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The payment of the relevant portion of the Completion Distribution to the Minority may be subject to dividend withholding tax. Whether and when such tax is recoverable wil1 depend upon the tax profile of each Shareholder that has not tendered its Shares under Offer I. See Section 15 (Tau Asperts of the Offers). The Shareholders wil1 be requested (at the Extraordinary General Meeting of Shareholders), inter alia, to (i) authorise the Management Board to enter into the German Transaction and (ii) to approve the Completion Distrihution, hoth (i) and (ii) subject to the condition precedent that the Offers have been declared unconditional @esestand zijn gedaan). See Section 14A (Extraordinaxy General Meeting of Shareholders of Versatel). 8.8.2 Strategv of Versatel Benelux and the Benelux Business and G e m n Business
Both the Offeror and Apax have endorsed the key elements of Versatel’s strategy in their respective markets. As such the strategy of Versatel in the Benelux and Germany wil1 remain substantially unchanged and the principal elements thereof wil1 remain to: (a) continue to connect customers to its nehvork. Versatel intends to continue to seek to directly connect as many customers as possible to its network using its own fibre, DSL technology, wireless technology, leased lines and other technologies to the extent such technologies hecome cost effective and available. Versatel believes directly connected customers represent a long-term asset. In addition, Versatel believes that it can better control the quality and profitability of its services and the amount and types of services that are provided to directly connected customers; (b) provide bundled services. Versatel intends to continue to provide bundled services (i.e., voice, data, internet and video) over a single connection. Versatel believes that providing multiple services over a single connection to a customer provides a competitive advantage in its target markets and allows Versatel to provide additional or enhanced services with limited incremental expenditures, which improves profitability and value for the customers; (c) maintain focus on target customer segment. In each of its core markets, Versatel aims to be a full service provider to business, residential and carrier customers. Prior to the construction of its infrastructure, Versatel focused on providing indirect access services to small- and medium-sized businesses. However, since 1999, Versatel has also been able to provide services to large businesses with more sophisticated service requirements. Versatel believes it is wel1 positioned to successfully compete in the bidding processes generally conducted for these larger customers as a result of its service capabilities and the cost advantages associated with its dense local nehvork. In addition, Versatel intends to continue to pursue the small-medium-sized business market with a bundled service offering. In order to appeal to the mass consumer market and to generate a large volume of sales, Versatel has focussed on providing broadband services over DSL technology. Versatel also intends to continue to leverage its network to provide services to other creditworthy carriers; leverage its existing network. In addition to the deployment of a dense backbone and local access infrastructure nehvork in the Netherlands, Germany and Belgium, Versatel has also made significant investments in Central Offices (“Cos”) for the deployment of DSL infrastructure. As at 30 June 2005 Versatel had approximately 310 COS operational in the Netherlands, covering approximately 65% of the Dutch market. As of 30 June 2005, Versatel operates 588 COS with ISDN and/or DSL infrastructure in Germany. In Belgium, Versatel has 57 operational COS. As a result, Versatel believes that it is wel1 positioned to deliver local access services cost effectively to a large segment of the business and residential market in the Netherlands, Germany and Belgium; and (e) focus on superior customer service. Versatel strives to maintain a competitive advantage by providing superior customer service in term of responsiveness, accuracy and quality. Versatel believes that providing a high level of customer service is a key element to attracting and retaining customers. Therefore, Versatel continues to invest in its customer care and operational support systems in order to maintain its competitive advantage. With regard to the Benelux Business, the Offeror wil1 seek to integrate the existing Tele2 operations with the Versatel business. The combination of the Benelux Business and Tele2 wil1 create the leading alternative telecommunications operator in the Netherlands and Belgium. For Versatel customers in al1 segments, this combination wil1 help extract efficiencies of scale that wil1 lead to an optimum combination
36
of high quality and innovative services, strong customer base and competitive prices. The Offeror intends to continue Versatel’s triple-play strategy in the Netherlands.
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In respect of the German Business, Apax currently envisages that the German Business wil1 form the platform for further acquisitions in that market. Apax’ strategie goal is to consolidate the German alternative carrier market landscape and to create a strong player capable of competing on a national basis, among others, with Deutsche Telekom AG. 8.8.3 LìquidiQ and deiistìng
The purchase of Securities by the Offeror pursuaiit to the Offers, among other things, wil1 reduce the number of Securities-holders and the number of Securities that might othenvise trade publicly thus adversely affecting the liquidity and market value of the Securities not tendered. Subject to the Offers being declared unconditional, the Offeror further intends, in consultation with Euronext Amsterdam, to terminate the listing of the Securities on Euronext Amsterdam as soon as possible. This would further adversely affect the liquidity and market value of any Securities not tendered. Following the settlement of the Offers and subject to the provisions of Section 8.8.4 (Legal Structure of Versatel following the Offers), it is the Offeror’s intention that Versatel be converted into a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid). Following such a conversion, Shares wil1 not be freely transferable and Bonds wil1 only be convertible into Shares with such restricted transferability. 8.8.4 Legai Strucíure of Versateifoiiowìng the Offers
Legal Structure if Minimum Acceptance Condition in respect of the Shares fulfïlled In the event that upon the Settlement Date the Minimum Acceptance Condition in respect of the Shares has been fulfilled and the Offeror holds 95 per cent. or more of the Shares (excluding Shares held by Versatel or its subsidiaries), the Offeror’s current intention is to acquire the remaining Shares not tendered (and not held by Versatel or its subsidiaries) by means of a squeeze-out procedure in accordance with article 2:92a or 2:201a of the Dutch Civil Code.
The Offeror anticipates that the amount per Share payable to the Minority in the event of a squeeze-out procedure wil1 be equivalent to the Offer Price per Share less the amount of the Completion Distribution per Share. See Section 8.8.1 (Divestiture of the German Business). Despite the Minimum Acceptance Condition in respect of the Shares being fulfilled, the Offeror may also, and instead of proceeding with a squeeze-out, by a simple majority vote of the general meeting of shareholders of Versatel resolve that a legal merger íjuridischefwiie) behveen the Offeror and Versatel wil1 be entered into in accordance with articles 2309 and 2334 of the Dutch Civil Code or take any of the other steps set out under ‘Additional Means of Acquiring Minority’s Shares” in Section 8.8.4. The legal consequences of a legal merger, including the possibility to pursue a squeeze out thereafter, are the same as set out below under “Legal Structure if Minimum Acceptance Condition waived” in this Section 8.8.4. Legal Stmcture if Minimum Acceptance Condition in respect of the Shares waìved In the event that the Offeror has waived the Minimum Acceptance Condition in respect of the Shares and declared the Offers unconditional, but does not acquire 95 per cent. or more of the Shares (excluding Shares held by Versatel or its subsidiaries) following the Settlement Date, the Offeror intends by simple majority vote of the general meeting of shareholders of Versatel to effect a legal merger (iuridischefrcsie) behveen the Offeror and Versatel in accordance with articles 2309 and 2334 of the Dutch Civil Code (which articles refer to a so called “triangular merger” pursuant to which the shareholders of the disappearing company wil1 become shareholders of a group company of the surviving company).
Pursuant to any such legal merger, the Offeror would continue to exist and Versatel would cease to exist. The Minority would become, by operation of law, shareholders in Tele2 Netherlands Holdings B.V., the sole shareholder of hoth the Offeror and Tele2 (the “Issuing Entity”). I
The shares distributed to the Minoriiy by the Issuing Entity pursuant to any such legal merger wil1 have, nohvithstanding any dilution in the proportion of the aggregate voting rights exercisable by the Minority, a value equivalent to the value of the Shares held by the Minority as calculated after completion
37
of the German Transaction and distrihution of the Completion Distribution. The composition of the share capital of the Issuing Entity is further descrihed helow. The authorised share capital of the Issuing Entity consists of two separate classes of so called tracking shares, heing ordinary shares A and ordinaiy shares B. The issued ordinary shares A are al1 held hy Tele2 Europe S.A. and only give right to the value and profits of the Issuing Entity’s suhsidiaries Tele2 and Tango S.A. The aggregate value of Tele2 and Tango S.A. is at present approximately EUR 303 million. The ordinary shares A give no right to the value and profits of Versatel and the leverage used to acquire Versatel. The ordinaiy shares B are only entitled to the value and profits of the Issued Entity’s leveraged interest (through the Offeror) in Versatel. The ordinaiy shares B give no right to the value and profits of Tele2 and Tango S.A. Upon such a legal merger, the percentage of ordinary shares B to be distrihuted to Minority shall be equal to the percentage of Shares held hy the Minority immediately hefore the legal merger.
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It is anticipated that the Offeror or the Issuing Entity wil1 utilise deht financing to satisfy its obligations under the Offers. As a result, the Minority may, upon a legal merger, acquire ordinary shares B of a separate sub-class which include preference rights. Such preference rights entitle the Minority to a dividend yield sufficient to prevent a shortfall between the value of their Shares prior to the legal merger and their shares in the Issuing Entity. Because of the existing interests of the Issuing Entity in Tele2 and Tango S.A. and the use hy the Offeror of debt financing to fund its obligations under the Offers, the Minority’s percentage of the aggregate nominal value of al1 shares in the capital of the Issuing Entity (the issued ordinaiy shares A and ordinary shares B) wil1 reduce pursuant to such a legal merger, when compared to the percentage of the aggregate nominal value of the Shares held by Minority hefore the legal merger. By way of example, should the Minority hold 15 per cent. of the Shares prior to the legal merger, the Offeror anticipates that the Minority would hold less than 5 per cent. of the aggregate nominal value of the shares in the capital of the Issuing Entity following the legal merger. Accordingly, the voting rights exercisable by the Minority in the Issuing Entity would be less than 5 per cent. Furthermore, it is anticipated that any debt financing provided to the Issuing Entity wil1 in due course be converted, at fair value, int0 newly issued ordinary shares, in the same class as those held by the Minority, in the capital of the Issuing Entity. Such conversion would dilute the Minority’s shareholding in the capital of the Issuing Entity. Should the Minority at any time, including as a result of a legal merger and/or a conversion of debt financing in equity as described ahove, hold less than 5 per cent. of the aggregate nominal value of the shares in the Issuing Entity (the issued ordinaiy shares A and ordinaiy shares B) it would he possihle for the other shareholders in the Issuing Entity to initiate a squeeze-out procedure in accordance with article 2:201a of the Dutch Civil Code in order to acquire the remaining shares in the Issuing Entity.
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As the Issuing Entity is a private limited company under Dutch law (besloten vennootschap met beperkte aansprakelijkheid) al1 shares distrihuted to the Minority by the Issuing Entity wil1 he unlisted registered shares and wil1 not he freely transferable. Following a legal merger in which the Offeror is the surviving entity, any remaining Bondholders wil1 hold bonds convertible int0 shares in the capital of the Offeror, which are not freely transferable, and othenvise in accordance with the Bonds Terms and Conditions. Should, as is anticipated, such shares represent Iess than 5 per cent. of the aggregate nominal value of the shares in the Offeror, it would be possihle for the Issuing Entity to initiate a squeeze-out procedure in accordance with article 2201a of the Dutch Civil Code.
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The Issuing Entity’s articles of association wil1 provide that the general meeting of shareholders of the Issuing Entity, with the approval of the holders of the class of shares concerned, by majority vote (upon a proposal from the management board of the Issuing Entity) may cancel each separate class of shares against (re)payment in accordance with the relevant provisions of the articles of association of the Issuing Entity. Should the class(es) of shares held by the Minority he cancelled, the Minority would cease to be shareholders in the Issuing Entity. For a period of six months after the legal merger becomes effective, the Minority shall have the right to sell and transfer their ordinary shares B in the Issuing Entity, while Tele2 Europe SA wil1 commit itself,
38
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for the Same six-month period to purchase and acquire the shares in the Issuing Entity held by the Minority should they elect to sell. The purchase price for such shares shall, during this limited period, be set at the Offer Price per Share as adjusted for the German Transaction, the distribution of the Completion Distribution and any distributions out of the distributable reserves of the Issuing Entity that may have decreased the preference rights attached to the ordinary shares B held by the Minority, for one ordinary share B. Any Minority shareholder requesting an independent valuation of its shares during this six-month period shall maintain the right to offer their shares in the Issuing Entity in accordance with the articles of association of the Issuing Entity but shall forfeit their right to require Tele2 Europe S.A. to purchase such shares. The articles of association of the Issuing Entity, which are available from Tele2 and the Settlement Agent upon request, provide further detail with respect to the share transfer restrictions and the provisions with respect to requesting an independent evaluation. In the event of a legal merger and any subsequent squeeze-out or cancellation of a class of shares, the fair value of the Shares or shares in the Issuing Entity held by the Minority wil1 need to be determinea. The Offeror anticipates that the fair value of such shares wil1 be determined by reference to the Offer Price per Share as adjusted for the German Transaction, distribution of the Completion Distribution (see Section 8.8.1 (Divestiture of the German Business)) and any distributions out of the distributable reserves of the Issuing Entity that may have decreased the preference rights attached to the ordinary shares B held by Minority. Additional means of acquinng Minority’s Shares The Offeror also reserves the right to use any other legally permitted method to obtain 100 per cent.
of the Shares or otherwise obtain full ownership of the Versatel’s business, including by way of a liquidation, a de-merger as specified in article 2:334a of the Dutch Civil Code, a sale of al1 or substantially al1 of the assets of Versatel or by way of a legal merger between Versatel and another member of Tele2 AB’s group. Finally, the Offeror and Versatel reserve the right to have the Offeror contribute assets to Versatel against the issuance of ordinary shares in the capital of Versatel, in which circumstances the pre-emptive rights (voorkeursrechten), if any, of other Shareholders would be excluded, al1 in accordance with Dutch law and Versatel’s articles of association at that time. Actions to be taken in respect of the Bonds In the event that the Offers are declared unconditional and following any conversion, redemption, repurchase or cancellation of al1 Bonds held by the Offeror, less than 15 per cent. of the aggregate principal amount of the Bonds originally issued would remain outstanding, Versatel would be entitled to redeem al1 Bonds outstanding thereafter at 100 per cent. of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption in accordance with the Bonds T e r m and Conditions.
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It is also possible that in the event that the Offers are declared unconditional, a Meeting of Bondholders may be convened upon the request of Versatel at which an amendment to the mandatory redemption date contained in the Bonds Terms and Conditions wil1 be resolved upon. See Section 14B (Meeting of Bondholders). In order to resolve as proposed above, the necessary quorum for the Meeting of Bondholders wil1 be one or more persons holding or representing not less than 66% per cent. of the principal amount of Bonds outstanding at such time. At the Meeting of Bondholders, a resolution to accept the proposal to amend the Bonds Terms and Conditions may be passed if adopted by at least 66% per cent. of the votes validly cast at such meeting. The Offeror intends to vote al1 votes attaching to the Bonds tendered in Offer I1 in favour of such amendment. Following such an amendment of the Bonds Terms and Conditions, Versatel would be obliged to redeem al1 Bonds not converted, redeemed, repurchased or cancelled prior to the amended mandatory redemption date at 100 per cent. of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption as set out in Section 14B (Meeting of Bondholders). The Offeror also reserves the right to use, or procure the use of, any other legally permitted method to obtain, convert, redeem, repurchase or cancel any Bonds, or procure any of the aforementioned. Changes to Versatel Articles of Association and Structure
In order to align the company structure of Versatel with the new holding and financing structure that wil1 exist if and once the Offers have been declared unconditional (gestand rijn gedaan), the Offeror
39
reserves the right to submit proposals to the Shareholders for one or several changes in Versatel’s articles of association and company structure. 8.8.5 Dividend Poücy
No dividend has been declared in respect of the Financial Year 2004. Following the settlement of the Offers and the completion of the divestment of the German Business, it is the intention that Versatel makes the Completion Distribution to the Shareholders in connection with the German Transaction. The Offeror furthermore intends to continue Versatel’s dividend policy and may not pay (cash) dividends to the Shareholders in the future.
8.8.6 Social Consequences The Offeror intends in due course to integrate the business operations of Versatel Benelux and Tele2. The details of such integration will, however, only be determined following the Settlement Date and once the Offeror has been abie to better understand the consequences of such an integration. Positive advice has been obtained from tbe works council of Versatel Nederland B.V. in accordance with the Works Councils Act (Wet op de ondernemingsraden). The secretariat of the Social Economic Council (Sociaal-EconomischeRaad) has been informed of tbe Offers in accordance with the SER Merger Code 2000 (SER-besluit Fusiegedragsregels 2000). The group works council (Konzembefriebsrat)of tbe German Business of Versatel has been informed about the German Transaction. In addition, Versatel has informed the works council in its Belgian operations of the Transaction.
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8.8.7 Supervisorj Board and Management Board As from the Settlement Date, the Supervisory Board shall consist of four members, being Mr. J. Svedberg ( C O 0 of Tele2 AB), Mr. L.-J. Jarnheimer ( C E 0 of Tele2 AB), Mr. H. Zadler (CFO of Tele2 AB) and Mr. F. Berglund (President of Tele2 Sverige AB). The current Supervisory Board members Mr. L.W.A.M. van Doome, Mr. H.H. Huber, Mr. L.M.H.A. Hermans, Mr. B.L.J.M. Beerkens and Mr. J.G. Drechsel intend to step down, effective upon tbe Settlement Date. Members of the Supervisory Board who step down wil1 receive their normal pre-determined compensation for the Financial Year 2005. No other compensation as meant in article 9i, paragraph p of the Bte 1995 wil1 be paid to resigning members of the Supervisory Board. Subject to the Offers being declared unconditional, Mr. R.M. Raithatha, sole member of the Management Board, wil1 resign from the Management Board and Executive Board on or shortly after the Settlement Date, but in any event no later than 31 December 2005. Subject to the same condition, Mr. R.M. Raithatha’s employment agreement wil1 terminate on 31 December 2005, but he wil1 in that case remain available as a consultant to Versatel and Tele2 until 30 June 2006. Subject to the same condition, the total compensation payable to Mr. R.M. Raithatha in relation to the consultancy fees and the termination of his employment amounts to EUR 2,258,000. It is contemplated that Mr. P.G. Borgklint, the President and C E 0 of Tele2, wil1 succeed Mr. R.M. Raithatha as a sole member of the Management Board. 8.9 Certain arrangements beween the Offeror and Versatel
The Offeror and Versatel have entered into arrangements pursuant to which Versatel has agreed to compensate the Offeror for costs incurred by the Offeror by payment of a fee of EUR 10 million, in the event that the Offers are not consummated as a result of a termination of the Merger Agreement in connection with a competing offer as defined in the Merger Agreement. Under the same arrangement, the Offeror and Ganymed have agreed to reimburse the fees incurred by Versatel by way of a payment of liquidated damages in an amount equal to EUR 10 million, in the event that the Offers are not consummated as a result of a termination of the Merger Agreement in connection with a failure to honour certain commitments with respect to the financing of the Offers as set out in the Merger Agreement.
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8.10 Financing of the Offers
extent that any Options have not been exercised or purchased during the Acceptance Period, the Offeror intends to purchase any Options still outstanding following Settlement. 8.12 Weatment of Warrants
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9. INFORMATION REGARDING VERSATEL 9.1 Overview
Versatel was incorporated under the laws of the Netherlands on 10 October 1995, as a private company with limited liability, referred to as besloten vennootschap met beperkte aansprakelijkheid or a B.V. Versatel converted its legal structure from a B.V. to a public company with limited liability, referred to as naamloze vennootschap or a N.V., on 15 October 1998. "he Company started as a switchless reseller of voice telecommunications services in the Netherlands. In 1998 Versatel started the build-out of its broadband fibre nehvork designed to provide high quality, broadband services over its own local access infrastructure to customers throughout its target market. 9.2 History Prior to May 1998, Versatel financed its infrastructure build and growth primarily through equity and subordinated loans from its shareholders. Behveen then and April 2000, Versatel raised an aggregate of approximately EUR 2.6 billion in proceeds, net of offering expenses, in a series of debt and equity offerings which included an initia1 public offering in July 1999. On Y October 2002, Versatel completed its financial restructuring by paying approximately EUR 342.8 million in cash and issuing approximately 365 million new ordinary shares to its former senior notes holders in consideration for eliminating al1 of its outstanding high yield and convertible debt. Following the completion of its financial restructuring in 2002, the issuance of the Bonds and the continued evolution of its business plan, Versatel believes it currently has a fully funded business plan without the need for additional third party financing.
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9 3 Group Structure
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Versatel is a holding company that conducts its business operations through its principal direct and indirectly held material subsidiaries included below:
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Country of Incorporation
Name -
Versatel Versatel Versatel Versatel Versatel Versatel
Nederland B.V.('). . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Netherlands Siid-Deutschland GmbH(*) . . . . . . . . . . . . . . . . . . . . . . Germany Berlin GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany Germany West-Deutschland GmbH & Co. KG . . . . . . . . . . . . . . Nord-Deutschland GmbH . . . . . . . . . . . . . . . . . . . . . . Germany Belgium N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium
Percentage of Ownership
100% 100% 100%
100% 92.5% 100%
( I ) Z o n Nederland N.V. amalgamated into Versatel Nederland B.V. as per 1 January 2005
(2) On i August 2005, Versatel Germany GmbH amalgamated into Versatel Sud-Deutschland GmbH with rctro-actiw effect as of 1 January 2005.
9.4 Business 9.4.1
Overview
Versatel is an alternative broadband telecommunications and media service provider in its target markets of the Netherlands, Germany and Belgium. Its objective is to become the leading alternative provider of fiied telecommunications and media services, including voice, data, internet and video services. Versatel provides services to business and residential customers as wel1 as other telecommunications, data and internet service providers in its target markets. Versatel serves these customers through two different types of access methods: (a) Direct Access Services. High bandwidth services that are provided through direct connections to its network by way of Versatel's own fibre, DSL technology, other copper access technologies, wireless technology or leased lines; and (b) Indirect Acces Services. Services that are provided through indirect connections to Versatel's nehvork by way of carrier pre-selection or its carrier select codes. 9.4.2
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Strategy
It is Versatel's objective to become the leading alternative provider of fixed telecommunications and media services, including voice, data, internet and video services, to business and residential customers as
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wel1 as other telecommunications, data and internet service providers in its target markets. The principal elements of its strategy are to: (a) continue to connect customers to its network. Versatel intends to continue to seek to directly connect as many customers as possible to its nehvork using its own fihre, DSL technology, wireless technology, leased lines and other technologies to the extent such technologies become cost effective and availahle. Versatel believes directly connected customers represent a long-term asset. In addition, Versatel believes that it can better control the quality and profitability of its services and the amount and types of services that are provided to directly connected customers; (b) provide bundled services. Versatel intends to continue to provide bundled services (i.e., voice, data, internet and video) over a single connection. Versatel believes that providing multiple services over a single connection to a customer provides a competitive advantage in its target markets and allows Versatel to provide additional or enhanced services with limited incremental expenditures, which improves profitability and value for the customers; (c) maintain focus on target customer segment. In each of its core markets, Versatel aims to be a full service provider to business, residential and carrier customers. Prior to the construction of its infrastructure, Versatel focused on providing indirect access services to small- and medium-sized businesses. However, since 1999, Versatel has also been able to provide services to large businesses with more sophisticated service requirements. Versatel believes it is wel1 positioned to successfully compete in the bidding processes generally conducted for these larger customers as a result of its service capabilities and the cost advantages associated with its dense local network. In addition, Versatei intends to continue to pursue the small-medium-sized business market with a bundled service offering. In order to appeal to the mass consurner market and to generate a large volume of sales, Versatel has focussed on providing broadband services over DSL technology. Versatel also intends to continue to leverage its nehvork to provide services to other creditworthy carriers; (d) leverage its existing nehvork. In addition to the deployment of a dense backbone and local access infrastructure network in the Netherlands, Germany and Belgium, Versatel has also made significant investments in Central Offices (“Cos”) for the deployment of its DSL infrastmcture. As at 30 June 2005 Versatel had approximately 310 COSoperational in the Netherlands, covering approximately 65% of the Dutch market. As of 30 June 2005, Versatel operates 588 COSwith ISDN andior DSL infrastructure in Germany. In Belgium, Versatel has 57 operational COS. As a result, Versatel believes that it is wel1 positioned to deliver local access services cost effectively to a large segment of the business and residential market in the Netherlands, Germany and Belgium; and (e) focus on superior customer service. Versatel strives to maintain a competitive advantage by providing superior customer service in t e r m of responsiveness, accuracy and quality. Versatel believes that providing a high level of customer service is a key element to attracting and retaining customers. Therefore, Versatel continues to invest in its customer care and operational support systems in order to maintain its competitive advantage. 9.4.3 New Initiatives
In December 2004, Versatel announced that it won the bid for the live pay-TV rights of the Dutch Eredivisie football matches (including Ajax, Feyenoord, PSV and the 15 other teams of the Dutch premier football league) for the next three seasons. Starting with the new football season, which began on 12 August 2005, it wil1 pay the Eredivisie CV EUR 30.5 million for these rights per season. As a result of winning the live pay-TV rights for the Eredivisie, Versatel accelerated its plans to roll-out triple play services (voice, internet and video) in the Netherlands in 2005. Versatel had originally planned to launch triple play services in Germany first. However, with the opportunity to obtain unique content in the form of Eredivisie football, it diverted the initia1 triple play roll-out plans to the Netherlands. As a result of the launch of triple play services, Versatel expects 2005 to continue to be a transforming year for its Dutch residential business. Versatel believes that basic internet and voice services have become a commodity in the Netherlands, and therefore has decided to offer unique content in the form of live Eredivisie football and video services in combination with its internet and voice offering to the residential market. By doing so, Versatel can increase its revenue per customer and broaden the appeal of its
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products. By offering a unique service, with a different look and fee1 than the traditional service offering in the Netherlands, Versatel expects to take advantage of the continued convergence of traditional telecommunications and media revenue streams. Versatel’s target is to ohtain 100,000 suhscrihers for its video services hy year-end 2005, and 500,000 subscribers hy the end of the football license in August 2008. On 31 July 2005, Versatel recorded approximately 20,000 orders for its football product, comprising approximately 19,000 over ADSL 2+ and approximately 1,000 over satellite. Approximately 62 per cent. of the ADSL 2 f orders came from new customers. Accordingly, in order to roll-out these services Versatel has estimated a Dutch triple play capital expenditure budget of approximately EUR 170 million for the year 2005. Included in this figure are the necessary IP related investments in our network for approximately 1,000,000 customers, as wel1 as direct customer related investments in consumer premises equipment (“CPEs”), DSLAM ports, and the necessary media farm and soft switch platforms for approximately 300,000 subscribers to ensure that Versatel has sufficient stock for the near term. Versatel has launched its triple play offering to the Dutch market through a building block model, with broadband internet as a foundation. Voice and video (Tv, video-on-demand, football) services have and wil1 continue to be layered on top of this platform. Versatel’s video services wil1 continue to be offered exclusively to its customers and wil1 he provided over the customer’s current television set and/or PC. Although the hundled service offering ensures the highest value proposition to the customer, Versatel believes the huilding block approach lowers the decision hurdle for the customers because they then control the timing of when to switch video and telephony services from their current provider. To that end, Versatel’s C P E s wil1 he pre-configured to allow for the remote addition of voice and/or TV (and the respective revenue increase) at a later stage so no additional CPE, significant capital expenditures or site visit wil1 be required and upgrading can be achieved easily and quickly.
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9.4.4 Versalel’s Nehuork
Versatel’s Network in the Netherlands and in Belgium was designed to pass through al1 the major business centres and to connect city centres, business parks and huildings along its route. In Germany, Versatel has acquired several networks and, therefore, was not involved in the original network construction. Due to the integration of these networks, Versatel’s current network design is similar, although not as dense, compared to those constructed in the Netherlands and in Belgium. Versatel’s network design comprises three fuily integrated elements: (a) Backbone Infrastructure. Multiple, integrated fihre optic rings connecting major population and business centres in Versatel’s target markets;
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(b) Local Access Infrastructure. Fibre Optic business park rings, city rings and near overlay a section as wel1 as DSL technology, ISDN infrastructure and points of presence that allows Versatel to cost-effectively connect customers directly to its network utilising its own fibre, DSL technology, wireless technology and leased lines; and (c) International Infrastructure. Fibre optic rings connecting Versatel’s network with points of presence in large cities, including London, Düsseldorf, Frankfurt and Paris. Versatel’s high handwidth network has been designed and huilt to provide flexihle, broadband local access services to major business customers and population centres in the Netherlands, Germany and Belgium and to several international destinations. Versatel’s network carries voice, data and internet traffic and supports al1 major protocols, including Frame Relay, Asynchronous Transfer Mode (“ATM”) and Internet Protocol (“IP’). In general, IP is most efficient in transporting voice and data (including internet and video services) and Versatel believes IP wil1 be dominant in the telecommunications industry for the foreseeahle future. Therefore, the majority of the new technology investments in our network are related to Versatel’s IP network. For example, the investments in Versatel’s network related to the roll-out of triple play services are fully IP-hased. 9.5 9.5.1
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Results from 2005 Operations The s i r months ended 30 June 2005 compared to ihe six monlhs ended 30 June 2004
Revenues increased by EUR 89.0 million to EUR 368.5 million for the six months ended 30 June 2005 from EUR 279.5 million for the six months ended 30 June 2004, representing an increase of 31.8 per cent. This increase is due to autonomous growth and the consolidation of BerliKomm (BerliKomm was
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subsequently renamed to Versatel Berlin) which was acquired at the end of the third quarter of 2004 and consolidated as of 1 September 2004. New revenues were generated primarily through the provisioning of new corporate customers, increased sales to existing customers and residential broadband subscriber growth in Versatel’s core markets of The Netherlands, Germany and Belgium. Excluding the German acquisition, revenue increased by EUR 57.8 million, representing an organic growth of 20.7 per cent. The following table sets out the Company’s revenues presented on a geographical basis for the six months ending 30 June 2005 and 2004.
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30 June 2005
30 June 2004
146,398 36,184 185,932
129,916 28,157 121,446
368,514
279,519
(EUR fhousandsJ
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
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Direct cost of revenues increased by EUR 31.5 million to EUR 162.9 million for the six months ended 30 June 2005 from EUR 131.4 million for the six months ended 30 June 2004. Excluding the German acquisition, direct cost of revenues grew by EUR 23.2 million to EUR 154.6 million, representing an increase of 17.7 per cent. This increase, which is lower than the organic revenue growth rate, is the result of a more favorable mix in on-net traffic, regulatory improvements bringing down fixed and variable costs and the provisioning of higher margin bundled services. However, this is negatively affected in The Netherlands by a further churn of dial-up internet revenues and an increase in fixed network costs as capacity is upgraded on the MDF back-haul for triple play services. Selling, general and administrative expenses increased by EUR 31.7 million to EUR 127.2 million for the six months ended 30 June 2005 from EUR 95.5 million for the six months ended 30 June 2004, representing an increase of 33.2%. Excluding the German acquisition, selling, general and administrative expense (SG&A) increased by EUR 18.0 million to EUR 113.5 million, representing an increase of 18.8%. This is the result of an increase in cost of staff (including temporary personnel) in the areas of sales and marketing, network operations, customer service, and an increase in marketing related expenses due to the launch of new products and increased maintenance costs associated with more customers connected to our network. EBITDA consists of earnings (loss) before interest expense, interest- and other income, income tares, depreciation and amoriisation. EBITDA is included because management believes it is a useful indicator of a company’s ability to generate cash. EBITDA should not be considered as a substitute for operating earnings, net income, cash flow or other statements of operations or cash flow data computed as a measure of the results of operations of the Company or its liquidity. Because al1 companies do not calculate EBITDA identically, the presentation of EBITDA contained herein may not be comparable to other similarly titled measures of other companies. Due to the integrated nature of Versatel’s activities a meaningful breakdown of EBITDA between services or per customer type is not presented here.
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The following table sets out the Versatel’s EBITDA presented on a geographical basis for the six months ending 30 June 2005 and 2004. 30 June 2005
30 June 2004
(EUR fhousnnhJ
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,325 4,420 40,710
34,200 (440) 18,845
...............................
78,455
52,605
Total consolidated EBITDA
I
Depreciation and amortization expenses increased by EUR 11.8 million to EUR 76.9 million for the six months ended 30 June 2005 from EUR 65.1 million for the six months ended 30 June 2004. Depreciation of fixed assets increased to EUR 76.7 million for the six months ended 30 June 2005 from EUR 65.1 million for the six months ended 30 June 2004. Excluding BerliKomm, depreciation increased by EUR 7.3 million to EUR 72.4 million. Amortization of intangible fixed assets increased to EUR 0.2 million for the six months ended 30 June 2005 from EUR 0.0 million for the six months ended 30 June 2004.
45
Inierest- and other income incrcased by EUR 1.1 million to EUR 2.4 million for the six months cnded 30 Junc 2005, from EUR 1.3 million for the six months cnded 30 June 2004. This incrcasc is primarily the rcsult of a higher cash balancc duc to thc issue of a EUR 125 million in principle amount of convertible senior notcs at 3.875% on 22 Octobcr 2004.
I
Interest expense increased by EUR 5.9 million to EUR 7.7 million for the six months ended 30 June 2005, from EUR 1.8 million for the six months endcd 30 June 2004. This incrcasc is primarily thc rcsult of interest cxpenses relating to the issue of a EUR 125 million in principle amount of convertible senior notes at 3.875% on 22 Octobcr 2004.
Curency exchange result, net, incrcased by EUR 1.1 million to a gain of EUR 1.6 million for thc six months ended 30 Junc 2005, from a gain of EUR 0.5 million for the six months cnded 30 Junc 2004. The gains rclate to thc exchange rcsult on US dollar dcnominated cash. Creditfrom income l u e s incrcased to EUR 1.4 million for thc six months cndcd 30 Junc 2005, from a charge of EUR 0.1 million for thc six months endcd 30 June 2004. This primarily rclates to the subsequcnt losses of thc Dutch fiscal unity, which are recognizcd and taken against thc deferrcd tax iiability at the Dutch corporate income tax ratc. Thc dcferred tax liability is the rcsult of the gain related to thc completion of the 2002 restructuring. Minonty interest dccrcased to EUR 0.0 million for the sk months endcd 30 Junc 2005, from
EUR 1.3 miliion for the six months endcd 30 Junc 2004. This rclates to the rclative share of the minority sharcholdcr, Tclco Executive, in thc cquity of Versatcl Deutschland Holding, which was subsequcntly purchased by Versatcl Telecom International on 16 August 2004. 9.5.2 Liquidio and Capita1 Resources
Versatel has incurrcd significant operating losses and ncgativc cash flows as a result of thc dcvelopmcnt of our business and network. Prior to May 1998, Versatel financed its growth primarily through cquity and subordinated loans from its sharcholders. Sincc thcn until the financial rcstructuring, Versatcl has raised an aggregate of approximatcly EUR 2.6 billion in procccds, net of offering cxpenses, in a series of dcbt and cquity offcrings. On Y October 2002 Versatcl completed its financial rcstructuring by paying approximately EUR 342.8 million in cash and issuing approximatcly 365 million new ordinary shares to its former senior notcs holdcrs in consideration for eliminating al1 of its outstanding high yicld and convertible debt. On 22 Octobcr 2004 Versatel has issucd un-subordinated convertible senior notcs of EUR 125 million in principle amount with a 3.875% annual interest ratc. Versatel has used a significant amount of thc net procccds of these dcbt and cquity offcrings to make capital expcnditures rclated to thc cxpansion and dcvelopmcnt of its network, to acquire various companies, to fund operating losses and for othcr gcneral corporate purposcs. Versatel's capital cxpenditurc for cach of thc sk months cnded 30 Junc 2005 and 2004 was EUR 128.5 million and EUR 49.7 million rcspcctivcly. At 30 Junc 2005, Versatel had negative working capital (excluding cash and cash cquivalcnts) of EUR 167.5 million. In the futurc Vcrsatel expccts its working capital needs to incrcasc. This is largely due to its growth driven by the long-term expansion of Versatel's core business. These invcstments include both short-term invcstments, as cvidcnced by thc upgrade of its DSL nctwork, as wcll as long-tcrm invcstments, including among other areas, its mobile, wireless local loop and voice-over-IP initiatives. As of 30 Junc 2005, Versatel's cash and cash-equivalents halance amounted to EUR 252.8 million. Versatcl believes that its organic business plan, including the roll-out of our triple play plan in The Ncthcrlands, is fully funded without a nced for third party financing. The gcncral ratc of inflation has been low in Thc Ncthcrlands, Germany and Bclgium in recent ycars. Versatel does not expcct that infiationary pressures in thc futurc, if any, wil1 have a material impact on its results of operations or financial condition. Net cash provided by operating activitics was EUR 85.7 million for the six months ended 30 June 2005, compared to net cash provided by opcrating activities of EUR 35.3 million for thc six months ended 30 June 2004. This improvemcnt was primarily thc result of an increasc in accounts payable and accrued liabilitics as a result of higher capital expcnditures. Net cash used in investing activitics was EUR 128.5 million for thc six months cndcd 30 June 2005, solcly rclatcd to capital cxpenditures. Approximately EUR 45.8 million is directly relatcd to the rol1 out of
46
I
Versatel's triple play product in The Netherlands. Net cash used in investing activities for the six months ended 30 June 2004 of EUR 49.7 million was solely related to capital expenditures.
~
,
Net cash provided hy financing activities was EUR 26.2 million for the six months ended 30 June 2005, compared to net cash used in financing activities of EUR 0.8 million for the six months ended 30 June 2004. The net cash provided hy financing activities for the six months ended 30 June 2005, primarily relates to the deferred payment t e r m that were agreed with vendors of some of Versatel's triple play equipment. 9.5.3 Financial Outlook for 2005
1
Versatel's current financial expectations for 2005 are set out in the table below. Versatel reiterates its financial and operational guidance for the current year 2005, as given on 2 March 2005, when Versatel issued its 2004 financial results, reiterated on 4 May 2005, when Versatel issued its first quarter results, which expectations were reiterated again on 3 August 2005, when Versatel issued its second quarter results. 2005
(EUR millions)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Free Cash Flow (EBITDA less Capex) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I
i
720 - 740 110 - 120 (180) - (200)
In the second half of 2005, Versatel expects a further increase in expenses directly related to its consumer segment. Versatel wil1 increase its marketing program, but wil1 also incur costs for the broadcast of live Eredivisie football and other entertainment content. Therefore Versatel expects EBITDA to decline sequentially from current levels during the rest of 2005.
In addition, given the accelerated investments for triple play in the Netherlands that wil1 continue in the second half of the year, we expect Free Cash Flow to remain significantly negative in 2005. Subsequently, Versatel's cash balance wil1 substantially decrease over the next hvo quarters as EBITDA levels decline and the capital investments hecome operational and invoices are received. Additionally, Versatel also reiterates its triple play customer targets of 100,000 at the end of 2005 and 500,000 at the end of the 2007-2008 football season. These fonvard looking statements are based on Versatel's current expectations. Actual results may differ materially. 9.6 Dividend
w
Versatel has historically not paid dividends to its shareholders. Also in respect of the Financial Year 2004, no dividend has heen declared. Versatel does currently not expect this policy to change, except for a distrihution to the Shareholders in connection with the German Transaction following the settlement of the Offers and the completion of the divestment of the German Business. See Section 8.8.2.
4-
9.7 Supervisory Board, Management Board and Executive Board The members of the Supervisory Board, the Management Board and the Executive Board of the Company and their respective ages and positions are set forth below.
R.M. Raithatha is the sole managing director (statutair directeur) of the Company. The business address of the Management Board is Versatel Telecom International N.V., Hullenbergweg 101, 1101 CL Amsterdam-Zuidoost, the Netherlands. I
9.7.1 Supervisoy Board Name -
Mr. Mr. Mr. Mr. Mr.
H.H. Huber B.L.J.M. Beerkens J.G. Drechsel L.M.H.A. Hermans L.W.A.M. Van Doorne('1
52 42 50 54 46
Nationality
Dak of Appointment
Position
German Dutch Dutch Dutch Dutch
12 May 2004 12 May 2004 6 November 2002 12 May 2004 1 December 1995
Chairman Vice Chairman Member Member
-
(1) As Mr. L.W.A.M. van Doome is currently not an activc memher of the Supervisory Board, he has nat taken any part in the decisions referred ahove and has taken no position as regards the Offers.
47
I I'
IT' -,i'
b-1
c3 c3 LI1
9.7.2 Management Board Name
-
%
Naiionality
Date of Appointmeni
Position
Mr. R.M. Raithatha
43
British
29 September 2000
Managing Director and Chief Executive Officer
Naiionality
Date o f Appointmeni
Position
Managing Director and Chief Executive Officer Chief Financial Officer Chief Operations Officer Chief Development Officer and General Counsel Chief Regulatory Officer and Vice President Public Affairs
9.7.3 Executive Board Name -
Mr. R.M. Raithatha
43
British
29 September 2000
Mr. M.R. Lazar Mr. A.T. Beekhuis Mr. J.A. van Berne
31 58 42
American Dutch Dutch
1 January 2002 1 March 2000 1 September 2000
Mr. A.J.M. van der Heijden
46
Dutch
1 June 1998
9.8 Major Shareholders
At Y September 2005, 523,312,696 Shares were issued and outstanding. As of this date, none of the preference shares nor the priority share were issued and outstanding. Al1 Shareholders are entitied to one vote per Share. There are no cumulative voting rights. Based on notices received by the AFM pursuant to article 2 of the WMZ and the information provided by Versatel, the following Shareholders with an interest in excess of 5 per cent. or more are known to Versatel: Percentage o f Shares Outstanding
Shareholder
J.H.H. de Mol (Talpa Capital B.V) Centaurus Alpha Master
41 .65%(’).(’) 5.0066%(L)(z)(3)
(1) ï ñ i s approximate percentage is calculated by the Company and based upon the notifications under article 2 of the W M Z and article 46b of the Wte 1995.
(2) This percentage is not caiculated on a fully diluted basis. (3) This approximate percentage does not take into account any subsequent dilution.
Disclosures pursuant to the WMZ listed above may differ from the actual interests of the Shareholders named here for the following reasons. Only those acquisitions and disposals need he disclosed that move a shareholder’s capital interest or voting rights to a different percentage range. The relevant percentage ranges referred to in the WMZ are O - 5%, 5 - 10%, 10 - 25%, 25 - 50%. 50 - 66%%, and 66%% - 100%. Furthermore, only those changes in capital interest or voting rights to a different range as a consequence of the shareholder’s own actions have to be disclosed.
48
10. INFORMATION ON THE OFFEROR AND APAX 10.1 Information on the Offeror
The Offeror, a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid), with its statutory seat in Amsterdam, the Netherlands, was incorporated under Dutch law on 9 September 2005. Tbe Offeror is a wholly owned subsidiary of Tele2 Netherlands Holdings B.V., which in turn is an indirect wholly owned subsidiary of Tele2 AB. The Offeror is registered with the Commercial Register of the Chamber of Commerce of Amsterdam under no. 34232877. The statutory directors of the Offeror are Mr. L.-J. Jarnheimer ( C E 0 of Tele2 AB), Mr. P.G. Borgklint (President of Tele2) and Mr. C. Veltman (CFO of Tele2). The Offeror does not have a supervisory board.
1
Teie2 AB is Europe's leading alternative telecom operator. Tele2 AB had 29.4 million customers in 25 countries at the end of June 2005. The company offers products and services in fixed and mobile telephony, internet access, data networks, cable TV and content services. Tele2 AB's main competitors are the former government monopolies. Tele2 AB was founded in 1993 by Jan Stenbeck and has been listed on Stockholmsbörsen since 1996. In 2004 it had operating revenue of SEK 43 billion and reported a profit (EBITDA) of SEK 6.6 billion.
~
10.2 Information on Apax
I
I
Apax Partners, which includes Apax Partners Worldwide LLP, Apax Partners Inc. and their affiliates, is one of the world's leading private equity investment advisory groups, operating across Europe, the U.S., Israel, and Asia. With more than 30 years of direct investment experience, Apax Partners focuses on the following industry sectors: media; retailiconsumer; telecommunications; information technology; healthcare; and financialbusiness services. Funds advised by Apax Partners invest in companies at al1 stages of development from late-stage venture capital to buy-out. Apax Partners manages and advises funds of approximately USD 20 billion (EUR 16 billion).
49
11. FMRNESS OPINION
Versatel Telecom International N.V. Management Board (Bestuur) and Supervisoxy (Raad van Commissarissen) Hullenbergweg 101 1101 CL Amsterdam 14 September 2005
Dear Memhers of the Management Board and the Supervisory Board,
!
We understand that Tele2 Finance B.V., (the “Bidder”) a wholly owned suhsidiaxy of Tele2 AB, has launched a puhlic offer dated as of 14 September 2005 (the “Offer”) for al1 outstanding ordinary, with a nomina1 value of EUR 0.02, shares of Versatel Telecom International N.V. (the “Company”). While certain provisions of the Offer are summarized herein, the terms and conditions of the Offer are in the Offer Memorandum (biedingsbericht) dated 14 September 2005 (the “Offer Memorandum”).
As is set forth in the Offer Memorandum, the Off& consists of EUR 2.20 in cash for each ordinary share in the Company (the “ûffer Price’’).
You have requested the opinion of Lazard Frères S.A.S. (“Lazard”) as to the fairness, from a financial point of view, to the shareholders of the Company of the Offer Price. In connection with this opinion, we have:
I
(i) Reviewed the financial terms and conditions of the Offer and the Offer Memorandum; (ii) Analyzed certain historical business and financial information relating to the Company, including the annual reports of the Company for the three years ended 31 December 2004,2003 and 2002, and the quarterly reports for the quarters ended 30 June 2005 and 31 March 2005; (iii) Reviewed various financial forecasts and other data provided to US hy the Cornpany relating to its business; (iv) Held discussions with members of the senior management of the Company with respect to the business and prospects of the Company; (v) Reviewed puhlic information with respect to certain other companies in lines of business we helieve to he generally comparahle to the business of the Company; (vi) Reviewed the financial terms of certain transactions involving companies in lines of husinesses we helieve to he generally comparable to those of the Company and Tele2 AB and in other industries generally; (vii) Reviewed the historica1 stock prices and trading volumes of the Company’s stock; and
I
(viii)Conducted such other financial studies, analyses and investigations as we deemed appropriate. In preparing this opinion we have assumed and relied upon, without independent verification, the accuracy and completeness of al1 of the foregoing information, including, without limitation, al1 the financial and other information and reports provided, and al1 representations made, to US by the Company. We have not undertaken any independent investigation or appraisal of such information, reports or representations. We have not provided, obtained or reviewed on your hehalf any specialist advice, including but not limited to, legal, accounting, actuarial, environmental, information technology or tax advice, and accordingly our opinion does not take into account the possihle implications of any such specialist advice. We have assumed that the valuation of assets and liahilities and the profit and cash flow forecasts, including future capital expenditure projections made hy the management of the Company are fair and reasonahle. We have not independently valued the principal assets or liabilities of the Company. With respect to the financial forecasts and projections provided to US, we have assumed that they have been reasonahly prepared hased on assumptions reflecting the best currently availahle estimates and judgments of the management of the Cornpany as to the expected future results of operations and financial condition of the Company to which such forecasts and projections relate.
50
i
We do not accept or assume any liability or responsihility whatsoever for the foregoing information, forecasts and projections and do not express any view thereto or the assumptions on which such forecasts and projections are made.
I
I I
~
I
In preparing our opinion, we have assumed that the Offer wil1 be consummated on the terms and subject to the conditions descrihed in the Offer Memorandum without any modification of any of its material t e r m or conditions. We have also assumed that al1 material governmental, regulatory or other approvals and consents required in connection with the consummation of the Offer wil1 he ohtained without any reduction in the benefits of the Offer. Further, our opinion is necessarily based on the economic, monetary, market and other conditions as in effect on, and the information made availahle to US as of, the date hereof. Events occurring after the date hereof may affect this opinion and the assumptions used in preparing it, and we do not assume any ohligation to update, revise or reaffirm this opinion. In addition, changes in the telecoms sector and the laws and regulations applicahle to such sector could affect the financial forecasts of the Company. We are acting as financial advisor to the Company in connection with the Offer and wil1 receive a fee for our services. In addition, certain companies affiliated with Lazard may trade shares and other securities of the Company andior Tele2 AB for their own account and for the accounts of their customers. This opinion is being provided solely for the benefit of the Management Board and Supervisory Board of the Company in connection with, and for the purposes of, its consideration, in its sole independence of judgment, of the Offer and is not on behalf of, and shall not confer rights or remedies on any shareholder of the Company, the Bidder or any other person or be used for any other purpose. This opinion does not constitute a recommendation to any person as to whether such person should tender shares pursuant to
the Offer. This opinion is confidential and may not be used or relied upon, or disclosed, referred to or communicated by you (in whole or in part) to any third party for any purpose whatsoever without our prior written authorization. Notwithstanding the foregoing, this opinion may, for information purposes only, he reprinted in whole (but not in part) in the Offer Memorandum.
1
Based on and subject to the foregoing, we are of the opinion, as of the date hereof, that the Offer Price is fair, from a financial point of view, to the shareholders of the Company. Veiy truly yours, Lazard Freres S.A.S.
51
12. FURTHER DECLARATIONS PURSUANT TO THE BTE 1995
In addition to the other statements set out in this Offer Memorandum, the management board of the Offeror with regard to subject (ii), the management board of the Offeror and the Supervisory Board and the Management Board jointly with regard to subjects (i), (iii), (iv), (v) and (vi), hereby declare as follows: (i) There have been consultations between the Offeror and Versatel regarding the Offers, which have resulted in agreement regarding the Offers. Discussions regarding the Offer Price per Share and the Offer Price per Bond, the financing of the Offers and the conditions to the Offers have taken place between tbe Offeror and the Management Board and their representatives. Discussions regarding the future strategy of Versatel have taken place between the Offeror and the Management Board. (ii) With due observance of and without prejudice to the restrictions referred to in Section 1 (Restrictions and Important Information), the Offers concern al1 outstanding ordinary shares in Versatel and al1 the issued and outstanding 3.875 per cent. convertible senior notes due 2011 convertible into ordinary shares in the capital of Versatel and apply on an equal basis to al1 Shares and Shareholders and al1 Bonds and Bondholders. (iii) No transactions have taken place or wil1 take place on the basis of concluded agreements with individuals andior legal persons within the meaning of article Yi, paragraph s and/or t and/or u of the Bte 1995, other than with Talpa. See Section 8.3 (Irrevocable Undertaking). (iv) At the date of this Offer Memorandum, the Offeror has no interest in the share capital of Versatel, whether directly or indirectly, and Versatel has no interest in the share capital of the Offeror or Tele2 AB, whether directly or indirectly. (v) The information referred to in article 9p paragraph 1 and 2 of the Bte 1995, to the extent required, has been provided to the AFM. (vi) The AFM and Euronext Amsterdam have been informed of the Offers
52
13. SHARE PRICES OF VERSATEL I
The table below sets forth, for tbe periods indicated, the reported high and low closing prices per Ordinary Share on Euronext Amsterdam. Eumnexi Amsterdam pnce per Ordinsiy Share (EUR)
Period
High
LaW
January2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fehruary 2004 . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 2004 . . , , . , . . . . . , . . , . . . . . . . . , . . , . . . . . . . . , , . . . . . . . . . . . May2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . August2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 2004 . . , . . , . , . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . Octoher2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 2005 . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M a c h 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . August 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.19 2.33 2.30 1.98 1.87 1.61 1.50 1.56 1.66 1.64 2.01 2.40 2.15 2.03 1.95 1.77 2.19 2.04 2.19 2.28
1.66 2.13 1.73 1.79 1.43 1.46 1.29 1.34 1.51 1.35 1.51 2.01 1.89 1.90 1.71 1.50 1.91 1.82 1.84 2.19
~-
1
1
i
Source: Bloomberg 22 Janiiniv zoo4
2.6 2,4
1I iLL'
I
verq-a1.el
in A~~
11 December 2004
18 July 2005
Talpa announces 42% stake
Tele2/Apax intended offer announced
10 November 2004 Talpa announces 25%
2.2 2.0 1.8
1.6
Discussions with 1.4
I
1.0
4
January 2004
April 2004
-Versatel
October 2004 -AEX Index
July 2004
Source: Bloomberg
53
January 2005
April 2005
-MSCI Europe
July 2035
Telecom
14A. EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF VERSATEL At 1O:OO hours, Amsterdam time, on 29 September 2005, the Extraordinary General Meeting of Shareholders wil1 be convened at The Hilton Hotel, Apollolaan 138, 1077 BG, Amsterdam, the Netherlands to which the Bondholders wil1 also be invited, during which, among other agenda items, the Offers wil1 be explained and discussed in compliance with the provisions of article 9q of the Bte 1995. The information necessary for the Shareholders to adequately assess Offer I and for the Bondholders to adequately assess Offer 11, as meant in article 9q of the Bte 1995, is included in this Offer Memorandum. In addition, inter alia, the following proposals shall he put on the agenda for adoption hy the general meeting of Shareholders with effect as of the Settlement Date, subject to the condition precedent that the Offers have been declared unconditional (gesrand zijn gedaan): (i) the changes to the composition of the Supervisory Board and Management Board, consisting of
-
the appointments of Mr. J. Svedberg ( C O 0 and employee of Tele2 AB), Mr. L.-J. Jarnheimer (CE0 and employee of Tele2 AB), Mr. H. Zadler (CFO and employee of Tele2 AB) and Mr. F. Berglund (President of Tele2 Sverige AB), as memhers of the Supervisory Board; and the appointment of Mr. P.G. Borgklint (President and employee of Tele2), which appointment wil1 also be subject to the resignation of Mr. R.M. Raithatha.
(ii) the authorisation of the Management Board to enter into the German Transaction; (iii) the approval of a distribution out of the freely distributable resemes in relation to the German Transaction; and (iv) the amendment of the Versatel Articles of Association reflecting: (a) the removal of preference shares and priority shares from the authorised capital of Versatel (anti-takeover measures); and (b) certain 0 t h changes. Notice of the Extraordinary General Meeting of Shareholders wil1 be given in accordance with the Versatel Articles of Association.
54
14B. MEETING OF BONDHOLDERS OF VERSATEL Subject to the Offers being declared unconditional, a Meeting of Bondholders may be convened upon the request of the Company, during which a proposal to amend the Bonds T e r m and Conditions wil1 be placed on the agenda for adoption by the Meeting of Bondholders in compliance with the provisions of condition 13 of the Bonds T e r m and Conditions (‘Amendment”).
1
I
i
The amendment of the Bonds Terms and Conditions wil1 reflect a change of the maturiîy of the Bonds. Such amendment shall state that, unless previously redeemed, converted, repurchased or cancelled, the Company wil1 redeem each Bond at its principal amount, together with accrued and unpaid interest to, but excluding, a date of redemption falling within three months of the date of the Meeting of Bondholders.
In order to resolve as proposed above, the necessary quorum for the Meeting of Bondholders wil1 be one or more persons holding or representing not less than 66% per cent. of the principal amount of Bonds outstanding at such time. At the Meeting of Bondholders, a resolution to accept the proposal to amend the Bonds Terms and Conditions as set out above may be passed if adopted by at least 66% per cent. of the votes validly cast at such meeting. The Offeror intends to vote al1 votes attaching to the Bonds tendered in Offer 11 in favour of such amendment. Notice of the Meeting of Bondholders wil1 be given in accordance with condition 11 (“Notices”) and 13(3) of the Bonds Terms and Conditions and the terms of the agency agreement dated 28 October 2004, entered into between the Company, JP Morgan Chase Bank and ING Bank N.V.
55
15.
TAX ASPECTS OF THE OFFERS
15.1 Dutch Tax Aspects of the Offers 15.1.1 General
The following summary descrihes the principal Dutch tax consequences of (i) a disposal of the Shares and the Bonds under the Offers, and (ii) a distribution of freely distributahle reserves hy Versatel on or around the Settlement Date in relation to the German Transaction. This summary does not purport to be a comprehensive description of al1 Dutch tax considerations that may he relevant to a Shareholder or a Bondholder in relation to the decision to dispose of the Securities or that may he relevant to a Securitiesholder in light of its particular circumstances or to a Securities-holder subject to a special regime, such as the exempt status of a qualifying pension fund. Furthermore, this summary does not address the Dutch tax consequences to holders of stock options in relation to Shares. Each Securities-holder should consult a professional tax adviser with respect to the tax consequences of a disposal of the Securities. The discussion of certain Dutch taxes set out below is included for general information only. This summary is based on the tax legislation, published case law, treaties, rules, regulations and similar documentation, in force as of the date of this Offer Memorandum, without prejudice to any amendments introduced at a later date and implemented with retroactive effect. This summary does not address the
taY
consequences of the Offers for:
(i) a Securities-holder that is a corporate entity, holding a qualifying participation in Versatel within the meaning of article 13 of the Dutch Corporate Income Tax Act 1969 (deelnemingsvnjstelling). Generally speaking, a Securities-holder who is a corporate entity, owns a qualifying participation in Versatel if it owns 5 per cent. or more of the nomina1 paid-in Share capital of Versatel; (ii) a Securities-holder that is a corporate entity, holding Bonds that would entitle it to acquire Shares in Versatel upon a conversion, which, whether or not together with Securities already owned by this Security-holder, wil1 be considered a qualifying participation, within the meaning of article 13 of the Dutch Corporate Income Tax Act 1969; (iii) a Securities-holder who is a private individual and, alone, or together with his or her partner (statutory defined term) or certain other related persons, holds, directly or indirectly, a “suhstantial interest” (aanmerkelijk belang) in Versatel, within the meaning of article 4.3 of the Income Tàx Act 2001. Generally speaking, such Securities-holder holds a substantial interest in Versatel, if such Securities-holder, alone or together with his or her partner (statutory defined term) or certain other related persons, directly or indirectly, holds (a) an interest of 5 per cent. or more of the issued capital of Versatel or of 5 per cent. or more of the issued capital of a certain class of Shares, (b) rights to acquire, directly or indirectly, such interest, or (c) profit sharing rights (winstbewijzen) in Versatel that relate to 5 per cent. or more of the annual profit of Versatel or to 5 per cent. or more of the liquidation proceeds of Versatel; and (iv) a Securities-holder that is a corporate entity and a non-resident of the Netherlands, holding a “suhstantial interest”, as descrihed under (iii) above, in Versatel; and (v) a Securities-holder for whom the sale proceeds and/or Completion Distribution qualifies as employment income.
15.1.2 Dutch Dividend T a Wirhholding requirement
No Dutch dividend tax (dividendbelasting) is due upon a disposal of the Securities under the Offers. The Completion Distribution to the Minority may be subject to a 25 per cent. Dutch dividend tax. Residenfs of the Netherlands The Dutch dividend tax that may need to be withheld with respect to the Completion Distribution wil1 be creditable for Dutch corporate income tax or Dutch income tax purposes in the hands of the beneficial owner thereof, or, subject to certain conditions, may be recoverable in whole or in part by the Dutch resident beneficial owner of such Completion Distrihution. On request and if certain conditions are met, a
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refund of the Dutch dividend tax applies to Dutch qualifying pension funds, certain exempt entities and Dutch investment institutions as defined in article 28 of the Dutch Corporate Income TU Act 1969. Non-residents of the Netherlands If a Shareholder is resident of a country other than the Netherlands for Dutch tax purposes and if a treaty for the avoidance of double taxation with respect to taxes on income is in effect between the Netherlands and that country, and such holder is the beneficial owner of the Completion Distribution and a qualifying resident for purposes of such treaty, such Shareholder will, depending on the terms of that particular treaty, qualify for full or partial relief at source or for a refund in whole or in part of the Dutch dividend tax (if any).
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Beneficia1 owner The recipient of the Completion Distribution wil1 not be entitled to any (partial) refund or credit of any dividend tax withheld if such recipient is not considered the beneficial owner of the Completion Distribution. At least this is the case if the following cumulative conditions are met: (i) the recipient paid, directly or indirectly, a consideration in relation to the receipt of the Completion Distribution and the consideration forms part of a series of related transactions; (ii) the consideration mentioned under (i) above has been paid t o a person 01 entity that is entitled to a less favourable tax treatment (including but not limited to a less favourable exemption, reduction, refund, or credit of dividend tax) than the recipient of the Completion Distribution; and (iii) the person or the entity, that has received the consideration, mentioned under (i) above, retains, directly or indirectly a position in the company that is comparable to its position therein before the series of related transactions were entered into. 15.1.3 Corporate Income T a and Individual Income TU
Residents of the Netherlands If a Securities-holder is a corporate entity that is subject to Dutch corporate income tax (vennootschapsbelasting) and the Securities are attributed or (deemed) attributable to its business assets, the gains realised upon the disposal of the Securities under the Offers and the Completion Distribution are generally taxable in the Netherlands. If a Securities-holder is a private individual and a resident or a deemed resident of the Netherlands tax (inkomstenbelasting) purposes (including a private individual who has opted to be taxed as a resident of the Netherlands), the gains realised upon the disposal of the Securities under the Offers are taxable in the Netherlands at the progressive rates of the Income Tax Act 2001, i f
for Dutch income
(i) the Securities-holder has an enterprise or an interest in an enterprise, to which enterprise the Securities are attributable; or I
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(ii) such gains qualify as “income from miscellaneous activities” (resultaat uit overige werkraamheden) within the meaning of article 3.4 of the Income Tax Act 2001, which include activities with respect to the Securities that exceed “regular, active portfolio management” (normaal, actief vermogensbeheer). If neither condition (i) nor condition (ii) applies to the Securities-holder who is a private individual, the actual gains realised upon the disposal of the Securities under the Offers and the Completion Distribution wil1 not be taxable. Instead, such Securities-holder will be taxed at a flat rate of 30 per cent. on deemed income from “savings and investments” (sparen en beleggen) within the meaning of article 5.1 of the Income Tau Act 2001. This deemed income amounts to 4per cent. of the average of the private individual’s “yield basis” (rendementsgrondsíag) within the meaning of article 5.3 of the Income Tax Act 2001 at the beginning of the calendar year and the private individual’s yield basis at the end of the calendar year, insofar as the average exceeds a certain threshold. The fair market value of the Securities wil1 he included in the individual’s yield basis. Individuals who owned Securities on 1 January 2005 wil1 therefore be required to include the fair market value of these Securities in the calculation of their 2005 yield basis.
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Non-residents of the Netherlands Capital gains realised upon a disposal of the Securities under the Offers and the Completion Distribution received by a Securities-holder that is not a resident, nor deemed to be a resident of the Netherlands for Dutch tax purposes are taxable in the Netherlands only if (i) the Securities-holder has an enterprise or an interest in an enterprise that is carried on through a permanent establishment or a permanent representative in the Netherlands to which permanent establishment or permanent representative, the Securities are attributable; or (ii) with respect to a Securities-holder who is a private individual, such capital gains qualify as “income from miscellaneous activities” (resultaat uit overige werkraamheden) within the meaning of article 3.4 of the Income Tax Act 2001, which includes activities in the Netherlands with respect to the Securities that exceed “regular, active portfolio management” (normaal, actief vermogensbeheer); and (iii) The Securities-holder has a share in the profit in an enterprise effectively managed in the Netherlands, other than as holder of securities. 15.1.4 Value Added TU
No Dutch value added tax (omzetbelasting) wil1 arke in relation to the disposal of Securities under the Offers and the Completion Distribution.
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15.1.5 Other Taxes and Duties
No Dutch capital duty, registration tax, customs duty, transfer tax, stamp duty or any other similar documentary tax or duty, wil1 be due by a Securities-holder in the Netherlands in respect of or in connection with the Offers and the Completion Distribution. 15.2
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U.S. Federal Tax Aspects of the Offers
15.2.1 General
Any United States federal tax discussion in this Offer Memorandum was not written and is not intended to be used and cannot be used by any taxpayer for purposes of avoiding United States federal income tax penalties that may be imposed on the taxpayer. Any such tax discussion was written to support the promotion or marketing of the Offers pursuant to this Offer Memorandum. Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. The following summary describes certain material U S . federal income tax consequences to U.S. Holders (as defined below) of Shares resulting from the acceptance of Offer 1. This summary addresses only U.S. federal income tax considerations of U S . Holders that hold the Shares as capital assets. It does not purport to be a comprehensive description of al1 the tax considerations that may be relevant to a decision to accept the Offer. In particular, this summary does not address tax considerations applicable to U.S. Holders that may be subject to special tax rules including, without limitation, the following: (a) financial institutions; (b) insurance companies; (c) dealers or traders in securities or currencies or notional principal contracts; (d) tax-exempt entities; (e) persons that wil1 hold the Shares as part of a “hedging” or “conversion” transaction or as a position in a “straddle” or as part of a “synthetic security” or other integrated transaction for U.S. federal income tax purposes; (0 persons that have a “functional currency” other than the U.S. dollar; (8) persons that own (or are deemed to own) 10 per cent. or more (by voting power) of Versatei’s share capital; (h) regulated investment companies; (i) real estate investment trusts; and 0) partnersbips, pass-through entities, 01 persons who hold any of the Shares througb partnersbips or other pass-through entities. Furtber, this summary does nat address alternative minimum tax consequences.
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This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury Regulations and judicia1 and administrative interpretations thereof, in each case as in effect and available on the date of this document. Al1 of the foregoing is subject to change, which change could apply retroactively and could affect the tax consequences described below. Each U.S. Holder should consult its own tax adviser with respect to the federal, state, local, foreign and other tax consequences to them of accepting Offer I.
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For purposes of this summary, a “U.S. Holder” is a beneficial owner of Shares that is, for U.S. federal income tax purposes: (a) a citizen or resident of the United States; (b) a corporation, or other entity treated as a corporation, created or organised in or under the laws of the United States or any state thereof (including the District of Columbia); (c) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or (d) a trust if (i) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control al1 of the substantial decisions of such trust or (ii) it has a valid election in effect under the applicable Treasury Regulations to he treated as a U.S. person. I
A ‘‘Non4J.S. Holder” is a beneficial owner of the Shares that is not a U.S. Holder. If a partnership holds a Share, tbe consequences to a partner wil1 generally depend upon the status of the partner and upon the activities of the partnership. A partner of a partnership holding Shares should consult its tax adviser.
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15.2.2 Acceptance of Offer I
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Accepting Offer I wil1 constitute a sale or exchange for U.S. federal income tax purposes. Subject to the discussion below under “Passive foreign investment company considerations”, a U.S. Holder wil1 generally recognise gain or loss for U.S. federal income tax purposes upon the sale or exchange of Shares in an amount equal to the difference between tbe U.S. dollar value of the amount realised from such s a k or exchange and the U.S. Holder’s adjusted tax basis in such Shares. Any gain or loss recognised on a Share wil1 be a capital gain or loss and wil1 be long-term capital gain (taxable at a reduced rate for individuals, trusts or estates) if the Shares were held for more than one year. Any such gain or loss wil1 generally be treated as from sources within the United States. The deductibility of capital losses is subject to significant liinitations. A U.S. Holder that receives euros on the sale or other disposition of the Shares wil1 realise an amount equal to the U.S. dollar value of the euros on the date of s a k (or in the case of cash basis and electing accrual basis taxpayers, the U.S. dollar value of the euros on the settlement date). Gain or loss, if any, recognised on the subsequent sale, conversion or disposition of such euros wil1 be ordinary income or loss, and wil1 generally be income or loss from sources within the United States for foreign tax credit limitation purposes. However, if such euros are converted into U.S. dollars on the date received by the U S . Holder, a cash basis or electing accrual U.S. Holder should not recognise any gain or loss on such conversion. Subject to the discussion below under “Backup withholding and information reporting”, a Non-U.S. Holder generally wil1 not be subject to U.S. federal income or withholding tax on any gain realised on the sale or exchange of the Shares unless: (i) that gain is effectively connected with the conduct by that Non-U.S. Holder of a trade or business in the United States, (ii) in the case of any gain realised by an individual Non-U.S. Holder, that holder is present in the United States for 183 days or more in the taxable year of the s a k or exchange and certain other conditions are met, or (iii) the Non-U.S. Holder is subject to tax pursuant to provisions of the Code applicable to certain expatriates.
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15.2.3 Passive Foreign Investment Company Considerations
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It is possible that Versatel has, for U.S. federal income tax purposes, been a passive foreign investment company (a “PFIC’) in prior taxable years. However, even if Versatel did not constitute a PFIC in any particular year, because this is a factual determination made annually at the end of the taxable year, there can be no assurance that Versatel wil1 be not considered a PFIC for the current taxable year. If Versatel was a PFIC in any year, special, possibly materially adverse, consequences would (as discussed below) result for U.S. Holders. A corporation organised outside the United States generally wil1 be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which either: (i) at least 75 per cent. of its gross income is “passive income”, or (ii) on average at least 50 per cent. of the gross value of its assets is attributable to assets that produce “passive income” or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. In determining whether it is a PFIC a foreign corporation is required to take into account a pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25 per cent. interest. I
If Versatel was a PFIC in any year during which a U.S. Holder owns Shares, the U.S. Holder wil1 be subject to additional taxes on any gain realised from the sale or other disposition of the Shares (whether or not Versatel is currently a PFIC). To compute the taxon any gain, (i) the gain is allocated rateably over the
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U.S. Holder’s holding period, (ii) the amount allocated to the current taxahle year and any year before Versatel hecame a PFIC is taxed as ordinary income in the current year, and (iii) the amount allocated to other taxahle years is taxed at the highest applicable marginal rate in effect for each year and an interest charge is imposed to recover the deemed benefit from the deferred payment of the tax attrihutahle to each year. Some of the adverse tax consequences with respect to dispositions of PFIC stock described above may be avoided if a U.S. Holder was eligible for and has made certain elections. U.S. Holders should consult their own tax advisers with respect to the PFIC stock (such as a markto-market election or a qualified electing fund election) regarding whether their investment in the Shares should he treated as an investment in PFIC stock and the consequences of an investment in and disposition of a PFIC. 15.2.4 Backup Withholding and Information Reporting
Backup withholding and information reporting requirements may apply to certain payments to U.S. Holders of the proceeds of a sale or exchange of a Share. The Offeror (or its paying agent) may be required to withhold tax from any payment that is subject to hackup withholding of such payment if the U.S. Holder fails (i) to furnish the U.S. Holder’s taxpayer identification number, (ii) to certify that such U.S. Holder is not subject to backup withholding or (iii) to othenvise comply with the applicahle requirements of the backup withholding rules. Certain U.S. Holders (including, among others, corporations) are not subject to the hackup withholding and information reporting requirements. Non-U.S. Holders who hold their Shares through a U.S. broker or agent or through the U.S. office of a non-U.S. broker or agent may he required to comply with applicahle certification procedures to establish that they are not U.S. Holders in order to avoid the application of such information reporting requirements and backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the hackup withholding rules from a payment to a U.S. Holder generally may he claimed as a credit against such U.S. Holder’s U.S. federal income tax liability provided that the required information is furnished to the U.S. Internal Revenue Service (the “IRS”). Prospective investors should consult their own tax advisers as to their qualification for exemption from backup withholding and the procedure for obtaining this exemption. U S . Holders of Shares should properly complete, including furnishing a taxpayer identification number, the Substitute Form W-9 accompanying the acceptance forms sent to holders of Shares with addresses in the United States. Any U.S. Holder who does not provide a correct taxpayer identification number may be subject to a U.S. $50 penalty hy the IRS and the cash payments that are made to such holder with respect to the tendered Shares may be subject to backup withholding. If you are a U.S. Holder and have not received a Suhstitute Form W-9, you may obtain one by contacting Versatel (Attn. Investor Relations) and the Settlement Agent as detailed in the acceptance forms. 15.2.5 IRS Disclosure Reporting Requirements
Recently promulgated U.S. Treasury Regulations (the “Disclosure Regulations”) meant to require the reporting of certain tax shelter transactions (“Reportable ’Itansactions”) could be interpreted to cover transactions generally not regarded as tax shelters. Under the Disclosure Regulations it may be possible that certain transactions with respect to the Shares may be characterized as Reportable Transactions requiring a holder to disclose such transaction, such as a sale, exchange, retirement or other taxable disposition of a Share that results in a loss that exceeds certain thresholds and other specified conditions are met. Shares-holders should consult with their own tax advisers to determine the tax return obligations, if any, with respect their investment in the Shares and the acceptance of Offer I, including any requirement to file an Internal Revenue Service Form 8886 (Reportable Transaction Statement).
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16.
PRESS RELEASES
16.1 Press Release of 18 July 2005
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Apax
PARTNERS
July 18, 2005
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TELE2 AND APAX INTEND TO ACQUIRE VERSATEL TELEZ INTENDS TO MAKE A RECOMMENDED CASH OFFER AT EUR 2.20 PER SHARE FOR VERSATEL TELECOM INTERNATIONAL N.V. AND A SIMULTANEOUS CASH OFFER FOR ALL ITS OUTSTANDING CONVERTIBLE NOTES * FUNDS ADVISED BY APAX PARTNERS (“APAX”) INTEND TO ACQUIRE VERSATEL’S GERMAN
OPERATIONS IMMEDIATELY AFTER COMPLETION OF THE OFFERS * THE SUPERVISORY BOARD AND EXECUTIVE BOARD OF VERSATEL UNANIMOUSLY SUPPORT
THE INTENDED OFFERS AND RECOMMEND THESE TO THE SHAREHOLDERS AND NOTEHOLDERS OF VERSATEL
* A N IRREVOCABLE UNDERTAKING HAS BEEN OBTAINED FROM THE HOLDER OF APPROXIMATELY 42% OF THE OUTSTANDING SHARES OF VERSATEL, TO TENDER ITS SHARES UNDER THE OFFERS * THE PROPOSED OFFER PRICE REPRESENTS A
14% PREMIUM OVER THE CLOSING PRICE OF EUR 1.93 ON JULY 15,2005; * 47% PREMIUM OVER THE CLOSING PRICE OF EUR 1.50 ON APRIL 28, 2005, THE DAY
PRIOR TO THE FIRST REPORTS ON DISCUSSIONS WITH BELGACOM. Versatel Telecom International N.V. (“Versatel” or the “Company”) and Tele2 Netherlands B.V. (“Offeror”), a wholly owned subsidiary of Tele2 AB (“TeleY), jointly announce that the expectation is justified that an agreement can be reached in connection with the public offers for al1 outstanding ordinary shares at an offer price of EUR 2.20 in cash per ordinary share (the “Offer Share Price”) and al1 outstanding convertible notes at an offer price equal to the sum o f (i) the cash equivalent value of the shares that noteholders have the right to convert into and (ii) 30 bps of the principal amount of the notes in cash per convertible note, which amounts to approximately EUR 132,274 per note (collectively the “Offers”). Tele2, Apax and Versatel have also reached an understanding that, upon completion of the Offers, Apax wil1 acquire Versatel’s German operations from the Offeror, for an anticipated consideration of EUR565 million on an enterprise value basis. The Supervisory Board and the Management Board of Versatel, after giving due consideration to the strategic, financial and social aspects of the proposed transactions, unanimously support the intended Offers and conclude that the Offers are in the best interest of the customers, employees, shareholders, noteholders and al1 other stakeholders of Versatel and recommend that shareholders and noteholders accept the intended Offers when made. Versatel and the Offeror expect to reach a definitive agreement on the intended Offers over the next few weeks, subject, inter alia, to consultation with, and when applicable, advice from the relevant works councils of Versatel, as weli as approval from the competition authorities. It is currently expected that the Offers wil1 be made and that consequently an Offer Memorandum wil1 be published in the course of September 2005.
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Offer Highlights The intended Offers wil1 he full cash offers for al1 the issued and outstanding ordinaty shares and convertible notes in the capital of Versatel. The combined value of the Offers represents approximately EUR 1,340 million assuming 100% acceptance (on a fully diluted hasis). Based on the Offer Share Price, Versatel is valued at approximately EUR 1,130 million on an enterprise value hasis (based on Versatel’s net cash position on March 31, 2005). The Offer of EUR 2.20 per Share represents a: 14% premium over the closing price of EUR 1.93 on July 15, 2005; 47% premium over the closing price of EUR 1.50 on April 28,2005, the day prior to the first reports on discussions with Belgacom. Background to the Intended Offers
In recent years, Versatel has focused on expanding its business in its three core markets, the Netherlands, Belgium and Germany. While continuing to huild its strong corporate franchise and pursuing its infrastructure-hased approach, Versatel has put a great emphasis on establishing its position in the growing residential hroadhand market. The roll-out of triple play services is at the heart of this strategy. At the same time, Versatel has been highly successful in huilding its German operations which accounted for approximately 47% of its consolidated EBITDA in Ql 2005. Given the consolidation that is taking place in the telecommunications market in Europe and the continued requirement for economies of scale, Versatel helieves that it would strongly benefit from the comhination with Tele2’s operations in Belgium and the Netherlands. and from Apax’ support in the continued growth of its German operations.
In that context, the intended Offers and intended suhsequent sale of Versatel Germany wil1 have a numher of advantages for Versatel, its shareholders, employees, customers and other stakeholders: * Tele2 and Apax wil1 contribute significant resources towards Versatel’s future development; * Tele2 and Apax fully endorse the infrastructure-hased strategy of Versatel and support the dual husiness/
residential focus of Versatel; Tele2 is fully committed to the triple play strategy of Versatel in the Netherlands; * Comhining Versatel’s Benelux operations with those of Tele2 wil1 create a stronger platform, with over
2.6 million residential customers in the Netherlands and Belgium; Customers of Versatel in the Benelux wil1 henefit from having access to strengthened platforms. Investment Rationale Through this proposed transaction, Tele2 is suhstantially increasing the size of its operations in the Benelux. The comhination of Tele2’s existing operations in the Benelux market area (excluding UK and Ireland) with Versatel Benelux wil1 have pro forma revenues of approximately EUR 800 million and EBITDA of approximately EUR 112 million (on the basis of full year 2004 data). The migration of Tele2’s traffic on Versatel’s network and the integration process are expected to produce annual run-rate EBITDA synergies in the area of EUR 50 million. Tele2 is pursuing its strategy of hackward integration into infrastructure in markets where it has a critical mass of customers. Owning local access infrastructure is increasingly important in the growing ADSL market to ensure higher margins on access, hetter control of customers and ahility to deliver higher margin services. Tele2 fully endorses Versatel’s triple play strategy and wil1 aim to leverage this expertise to later introduce these services in other core markets.
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Commenting on the intended Offers, Lars-Johan Jarnheimer, C E 0 of Tele2 said; “I am excited by the opportunity this acquisition gives US. The combination of our existing business and that of Versatel in the Benelux region wil1 enable US to continue to provide our customers with the best prices along with improved product offers. As I have said hefore, when we reach a certain scale and when it hecomes cost justifiahle, then we wil1 consider hackward integration. The Benelux region is an excellent example of such a case and this acquisition immeasurahly strengthens our position in this market.” Commenting on the intended Offers, Torsten Krumm, Partner of Apax said; “We are delighted to take part in the consolidation of the alternative telecom market in Germany and to have the opportunity to
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assist Versatel Germany further develop its growth strategy as an alternative player in the German market.” Future of Versatel With regards to Versatel Benelux, Tele2 will, upon completion of the Offers, seek to integrate its existing operations with Versatel’s Dutch and Belgian operations. The combination of Versatel and Tele2 creates the leading alternative operator in the Netherlands and Belgium, serving both residential, business and carrier customers. Tele2 wil1 pursue a strategy focused on growth opportunities notably in the fixed broadband market and on improving profitahility. Tele2 is committed to Versatel’s strategy in the large corporate and business segments and will continue to devote substantial resources to these segments as Versatel has done historically. Tele2 has extensive experience in Scandinavia of managing a corporate franchise and wil1 rely on Versatel’s existing footprint in the Benelux to grow the business in the future.
In the residential segment, Tele2 will continue the push in hroadband. In the Netherlands in particular, Tele2 wil1 continue to roll-out ADSL2+ and further build the triple play offer with the Eredivisie foothall and other content as planned by Versatel. At the same time, Tele2 wil1 aim to achieve synergies from the integration of Teleïs operations with Versatel Benelux. These will largely come from migrating Teleïs existing traffic onto Versatel’s network but wil1 also come from revenue synergies as wel1 as casts reductions. With regard to Versatel Germany, Apax will, after the purchase of Versatel Germany, continue the broadband penetration in the covered region focusing on hoth business and residential customers. The strategic goal is to continue the investments and growth as wel1 as the consolidation of alternative carriers in Germany to create one of the leading operators in the country. For Versaiel’s customers in the large corporate, business, residential and carrier segments, this combination will help extract scale efficiencies that wil1 lead to the best combination of high quality and innovative services, strong customer service and competitive prices. Raj Raithatha, Chief Executive Officer of Versatel, commented: “I have been a big heliever that consolidation is an important element of the alternative carrier strategy in today’s telecommunication markets and we therefore believe the merger of our operations with Tele2 and the sak to Apax is a great opportunity for Versatel and is in the best interest of its stakeholders. The combination of the businesses makes a very good fit as they are largely complementary. Versatel wil1 benefit from higger scale and therefore an increased leverage of its network, leading to an even stronger position in each of its existing markets. Consequently, it wil1 be business as usual for Versatel’s customers, employees and other partners, with the same high quality services, but better efficiencies and a stronger, more flexible company. Versatel’s current shareholders and noteholders have the possihility to directly henefit from the value creation of this opportunity by selling their interest in Versatel at an attractive premium and realising immediate value in cash for their investments”. (7,
Furîher Process
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After completion of full agreement on the intended Offers and subject to, inter alia, competition clearance, forma1 Offers wil1 be made to Versatel’s shareholders and noteholders. When made, the intended Offers will he honoured subject to customary conditions, including the condition that such number of Versatel shares are tendered that these together with the shares directly or indirectly held by the Offeror at closing of the Offers, represent at least 95% of the outstanding share capital of Versatel. As to the intended Offer for the convertible notes, a threshold of 85% wil1 be applied. The offer memorandum, containing the terms and conditions of the Offers, is currently expected to be published in the course of September 2005. Following the puhlication of the offer memorandum, Versatel wil1 convene an extraordinary general meeting of shareholders to, amongst other things, discuss the Offers. If the intended Offers are declared unconditional, it is intended that Versatel’s listing on the Official Market of Euronext Amsterdam wil1 be terminated as soon as possible. The Netherlands Authority for the Financial Markets (Aufo&eif Financiële Markten), Euronext Amsterdam and the Social Economic Council (Sociaal-Economische Raad) have been informed of the
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intended Offers. Versatel’s works councils in The Netherlands and Germany have also been informed of the proposed transaction. Indicative Timetable July 26, 2005 August 3, 2005 September 2005
Notification merger control authorities Versatel’s second quarter report Publication of the Offer Memorandum
Morgan Stanley & Co. Limited acts as financial advisor to Tele2 AB and ABN AMRO Bank N.V. acts as financial advisor to Apax. Lazard acts as financial advisor to Versatel. This announcement is a public announcement pursuant to section 9b paragraph 2a of the Dutch Securities Markets Supervision Decree (Besluit toezicht effectenverkeer 1995). Profile of Versatel Versatel Telecom International N.V. is a telecommunications company that primarily focuses on the Dutch, Belgium and German market. Versatel’s headquarters are located in Amsterdam and the company has multiple offices in Belgium and Germany. Versatel owns an extensive telecommunication network that uses the latest technologies to provide business and residential customers with voice, data and internet services. Versatel was founded in October 1995. Currently, the company has approximately 1 million customers and approximately 1,900 employees. Versatel is a publicly traded company on the Euronext Amsterdam under the symbol “VRSA”. Versatel Key Financials 2003 and 2004 (FY end 31 December)
_2003 _ - 2004
(EUR MM)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %,argin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %Morgin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDAGermany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . % Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %ofRevenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA-Capex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Cash Balance
...................................................
462.1 600.7 90.0 118.1 19.5% 19.7% 58.3 72.5 25.9% 27.2% 31.9 43.5 16.8% 15.9% -0.2 2.0 -0.4% 3.4% (32.9) (24.4) 89.0 135.4 19.3% 22.5% 1.0 (17.4) 158.9
269.5
Profile of Tele2 AB Tele2 is Europe’s leading alternative telecom operator. Tele2 always strives to offer the market’s best prices. With its unique values, Tele2 provides cheap and simple telecoms for al1 Europeans. Tele2 has 28.7 million customers in 25 countries. Tele2 offers products and services in fured & mobile telephony, internet, data network services, cable TV and content services. Tele2’s main competitors are the former government monopolies. Tele2 was founded in 1993 by Jan Stenbeck and has been listed on Stockholmsbörsen since 1996. In 2004, Tele2 had an operating revenue of SEK 43 billion and an EBITDA of SEK 6.6 billion. Profile of Apax Partners Apax Partners is one of the world‘s leading private equity investment groups, operating across Europe, Israel and the United States. With over 30 years of direct investing experience, Apax Partners’ Funds provide long-term equity financing to build and strengthen world-class companies. It pursues a balanced equity portfolio strategy, investing in late venture, growth capital and buy-outs. Apax Partners’ Funds invest in companies across its 6 chosen global sectors of information technology, telecornmunications, healthcare, media, financial services, retail and consumer. Some of Apax Partners’
64
Funds recent technology and telecommunications investments include Corvil, Dialog Semiconductor, Fractus, Kabel Deutschland, Inmarsat, Red-M, Systemonic, Preventsys, Sonim Technologies and Wisair. I
Further information can be obtained from:
I
For Versatel Wouter van de Putte Investor Relations
Telephone:
+ 31 (0)20 750 2362
For Apax Ira Wülfing Communication
Telephone:
+ 49 89 200030 33
For Tele2 Lars-Johan Jarnheimer President and CE0
Telephone:
+ 46 8562 640 00
Hakan Zadler CFO
Telephone:
+ 46 8562 640 00
Per Borgklint Market Area Director Benelux
Telephone:
+ 31 20 702 02 02
Dwayne Taylor Investor Relations London
Telephone:
+ 44 20 7321 5038
Lena Krauss Investor Relations Stockholm
Telephone:
+ 46 8 562 000 45
I
I I
,
I
This press release appears in Swedish also. In the event of any inconsistency, the English version wil1 prevail above the Swedish version.
65
16.2
Press Release of 17 August 2005
w
Apax ve x a t-ei
PARTNERS
PRESS RELEASE
17 August 2005 This is a joint press release of lèle2 Netherlands B.% (Offeror), a wholiy owned subsidiary of W e 2 A B (Tele2) and Versatel lèlecom International N. i! (Versatel)). This announcement and related matenals do not constitute an offer to purchase nor a solicitation of an offer to sell the shares andlor convertible n o t a in Versatel and is an announcement pursuant to article 9g paragraph l a of the Dutch Decree on the Supervision of the Securities Pade 1995 (Besluit toezicht effectenverkeer 1995), pursuant to which Offeror is required to make a public announcement within 30 days of the initialpress release of 18 July 2005. Any offers wil1 be made only by means of an offer document to be issued prior to the commencement of the offer period. Offeror and Versatel coufirrn that the preparations are well under way for Offerar’s intended recommended simultaneous puhlic cash offers (hereafter collectively referred to as the Offers) for al1 outstanding Versatel shares for a consideration per share of EUR 2.20 (the Offer Price per Share) and for al1 outstauding Versatel convertible notes, assumiug that the notes are tendered on or before 28 Octoher 2005, for a consideration per note equivalent to the sum OE (i) assuming a conversion price of EUR 1.667 per share, the cash equivalent value of the shares, calculated at the Offer Price per Share, that the note could be converted into and (ii) an additional incentive fee of 0.30 per cent. of the principal amount of the notes tendered. As indicated in the press release of July 18, 2005, this amounts to approxirnately EUR 132,274 per note. In conformity with the press release dated 18 July 2005, Tele2, Offeror and Versatel jointly announce that the preparations of the intended Offers are wel1 under way and that Offeror currently expects subject, inter alia, to consultation with, and when applicable, advice from the relevant works council of Versatel as well as the approval from the competition authorities, to make the Offers in the course of September 2005. Profile of Tele2 Tele2 is Europe’s leading alternative telecom operator. Tele2 always strives to offer the market’s best prices. With its unique values, Tele2 provides cheap and simple telecom for al1 Europeans. Tele2 has 29.4 million customers in 25 countries. Tele2 offers products and services in fixed & mobile telephony, Internet, data nehvork services, cable TV and content services. Tele2’s main competitors are the former government monopolies. Tele2 was founded in 1993 by Jan Stenbeck and has been listed on Stockholmbörsen since 1996. In 2004, Tele2 had operating revenue of SEK 43 billion and EBITDA of SEK 6.6 billion. Profile of Versatel Versatel is a telecommunications company that primarily focuses on the Dutch, Belgium and German market. Versatel’s headquarters are located in Amsterdam and the company has. multiple offices in Belgium and Germany. Versatel owns an extensive telecommunications nehvork that uses the latest technologies to provide business and residential customers with voice, data and internet services. Versatel was founded in October 1995. Currently, the company has approximately 1 million customers and approximately 1,900 employees. Versatel is a publicly traded company on Euronext Amsterdam under the symbol “VRSA”.
i
, !
I
Profile of Apax Partners Apax Partners is one of the world’s leading private equity investment groups, operating across Europe, Israel and the United States. With over 30 years of direct investing experience, Apax Partners’ Funds
I
!
66 I
~
1,
provide long-term equity financing to build and strengthen world-class companies. It pursues a balanced equity portfolio strategy, investing in late venture, growth capital and buy-outs. Apax Partners’ Funds invest in companies across its 6 chosen global sectors of information technology, telecommunications, healthcare, media, financial services, retail and consumer. Some of Apax Partners’ Funds recent technology and telecommunications investments include Corvil, Dialog Semiconductor, Fractus, Kabel Deutschland, Inmarsat, Red-M, Systemonic, Preventsys, Sonim Technologies and Wisair. Restrictions and Legal Information
’
~
1 I
The distribution of the Offer Memorandum and any separate documentation regarding the Offers and the making of the Offers may, in some jurisdictions, be restricted by law. These Offers are not being made, directly or indirectly, in or into, and may not be accepted from within, any jurisdiction in which the making of these Offers or the acceptance of the offers would not be in compliance with the laws of that jurisdiction. Persons who come into possession of the Offer Memorandum or any separate documentation regarding the Offers should inform themselves of and observe any of these restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of that jurisdiction. None of Tele2, Offeror, Versatel, Apax Partners or any of their advisers assumes any responsibility for any violation by any person of any of these restrictions. Any Versatel shareholder who is in any doubt as to his position should consult an appropriate professional adviser without delay. Forward-iaoking Statements
I
This press release includes statements that may constitute forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially. Words such as may, will, expect, are in the process of, preparations are under way, and similar expressions identify forwardlooking statements. Although each of the Offeror and Versatel, each with respect to the statements it has provided, believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, no assurance can be given that such statements wil1 be fulfilled or prove to be correct, and no representations are made as to the accuracy and completeness of such statements. Any such forwardlooking statements must be considered together with the fact that actual events or results may vary materially from such forward-looking statements due to, among other things, political, economic or legal changes in the markets and environments in which the Offeror andior Versatel does business, to competitive developments or risks inherent to Versatel‘s business plans and to uncertainties, risk and volatility in finaricial markets and other factors affecting the Offeror andior Versatel.
k“.
.i>.
67
16.3 Press Release of 8 September 2005
?EI.li2.
Apax ve rsa f-ei
PARTNERS
, I
This is a joint press release of Versatel Telecom International N. V (Versatel), Teie2 (Netherlands) B. V (TeIe2), a wholiy owned subsidiary of Telei AB, and finds advised by A p m Partners (Apar). PRESS RELEASE TELE~,APAX AND VERSATEL GET THE GO-AHEAD FROM T m EUROPEAN COMMISSION
I
8 September 2005
Tele2, Versatel and Apax announce that the European Commission has granted clearance under the EU Merger Regulation to the acquisition of sole control of Versatel’s Benelux business by Tele2 and to the acquisition of sole control of Versatei’s German business by Apax. Tele2 and Versatel confirm that the preparations are wel1 under way for Telers intended recommended simultaneous public cash offers for al1 outstanding Versatel shares and convertible notes. Tele2 and Versatel currently expect that the Offers wil1 be made in mid September 2005. This announcement and related materials do not constitute an offer to purchase nor a solicitation of an offer to sell Versatel shares and convertible notes. This announcement is a public announcement as meant within article 9b paragraph 1 of the Bte 1995.
68
I
Further information can be obtained from:
For Tele2 Lars-Johan Jarnheimer President and CE0
Telephone:
+ 46 8562 640 O0
Hikan Zadler CFO
Telephone:
+ 46 8562 640 O0
Per Borgklint Market Area Director Benelux
Telephone:
+ 31 20 702 02 O2
Dwayne Taylor Investor Relations London
Telephone:
+ 44 20 7321 5038
Lena Krauss Investor Relations Stockholm
Telephone:
+ 46 8 562 O00 45
Sarah Hamilton
Telephone:
+ 44 78 36 295 291
Nick Fox M.Communications, London
Telephone:
+ 44 77 11 727 618
Anne Louise Van Lynden
Telephone:
Carina Hamaker Investor Voice, Amersterdam
Telephone:
+ 31 65 4315 549 + 31 65 3749 959
For Apax Ira Wülfing Communication
Telephone:
+ 49 89 200030 33
For Versatel Wouter van de Putte Investor Relations
Telephone:
+ 31 20 750 2362
Telephone:
+ 31 20 750 1318
Cilesta van Doorn Corporate Communications
This press release appears in Swedish also. In the event of any incansistency, the English version wil1 prevaii above the Swedish version.
69
17. NEDERLANDSE SAMENVATTING VAN DE BIEDINGEN
Restricties en B e h n g r j h Informatie
in dit Hoofdstuk 17 wordt een samenvatting gegeven van een aantal elementen uit het Biedingsbericht. Deze Nederlandse samenvatting maakt deel uit van het Biedingsbericht, maar vervangt deze niet. Deze Nederlandse samenvatting is niet volledig en bevat niet alle informatie die voor de Effectenhouders van belang is om een afgewogen oordeel te kunnen vormen over de Biedingen. Het bestuderen van deze Nederlandse samenvatting mag derhalve niet worden beschouwd als een alternatief voor het bestuderen van het volledige Biedingsbericht. De Effectenhouders wordt geadviseerd het volledige Biedingsbericht (inclusief alle documenten die daarin door middel van verwijzing (“incoiporation by reference’y zijn opgenomen) zorgvuldig te bestuderen en zo nodig onafhankelijk advies in te winnen teneinde zich een afgewogen oordeel te kunnen vormen over de Biedingen en de beschrijving daarvan in het Biedingsbericht. In geval van verschillen tussen deze Nederlandse samenvatting en de Engelre tekst van het Biedingsbericht prevaleert de Engelse tekst van het Biedingsbericht (inclusief alle documenten die daarin door middel van Verwijzing (“incoiporation by reference’y zijn opgenomen). Het uitbrengen van de Biedingen, de verkrijgbaarstelling van het Biedingsbericht en deze Nederlandse samenvatting, ahmede verspreiding van enige andere informatie met betrekking tot de Biedingen, kunnen in bepaalde jurisdicties aan bepaalde restricties onderhevig zijn. Deze Biedingen worden niet, direct of indirect, gedaan in en mogen niet worden geaccepteerd door of namens Effectenhouders vanuit enige jurisdictie waarin het doen van de Biedingen of het accepteren daarvan niet in overeenstemming is met de in die jurisdictie geldende wet- en regelgeving of waarvoor enige registratie,goedkeuring of neerlegging bij enige toezichthoudende instantie vereist is die niet uitdrukkelijk in dit Biedingsbericht is voorzien. Personen die dit Biedingsbericht onivangen dienen zorgvuldig kennis te nemen van en te handelen in overeenstemming met zulke restricties en iedere noodzakelijke autorisatie, goedkeuring of instemming te verkrijgen. Het niet voldoen aan deze restricties kan een overtreding van de effectenwet- en regelgeving van de betreffende jurisdictie opleveren. De Bieder en Versatel en hun adviseurs sluiten iedere aansprakelijkheid terzake van overtredingen van voornoemde restricties uit. De Effectenhouders dienen zo nodig onverwijld onafhankelijk advies in te winnen over hun positie. Voor de restricties van de Biedingen wordt tevens venvezen naar Hoofdstuk I (Restrictionsand Important information). Enige persoon (inclusief maar niet beperkt tot bewaarders, gevolmachtigden en beheerders) die dit Biedingsbericht of enig verwant document naar enige jurisdictie buiten Nederland wenst door te sturen of van plan zou zijn dit te doen dient zorgvuldig Hoofdstuk I (Restrictions and Important Information) te lezen voor enige actie wordt ondernomen. De informatie in de Hoofdstukken 1, 2, 3, 4.1, 4.5, 4.6, 4.7, 4.8.3 tof en met 4.8.6, 4.9, 4.10, 6A, 6B, 8.3, 8.8.3 tot en met 8.8.6, 8.10 tot en met 8.12, 10.1 en 15 van dit Biedingsbericht is uitsluitend verschaft door de Bieder: De informatie in de Hoofdstukken 4.3, 4.4, 5, 7, 8.4, 8.5, 9 en 18 van dit Biedingsbericht is uitsluitend verschaft door Versatel. De informatie in de Hoofdstukken 4.8.7, 8.1, 8.2, 8.8.7, 8.9, 12, 14A, 14B en 16.2 van dit Biedingsbericht is door de Bieder en Versatelgezamenlijk verschaft. De informatie in Hoofdstukken 4.2, 8.7, 16.1 en 16.3 van dit Biedingsbericht is door de Biedet; Versatel en Apux gezamenlijk verschaft. De informatie in de Hoofdstukken 4.8.1, 4.8.2, 8.6, 8.8.1 en 8.8.2 van dit Biedingsbericht is door de Bieder en Apuxgezamenlijk verschaft. De informatie in Hoofdstuk 10.2 van dit Biedingsbericht is uitsluitend verschaft door Apux. De informatie in Hoofdstuk 13 van dit Biedingsbencht is aan www,bloomberg.comontleend. De fairness opinie in Hoofdstuk I1 van dit Biedingsbencht is uitsluitend verschaft door Lazard. Deze Nederlandse samenvatting van het Biedingsbericht (Hoofdstuk 17) is opgesteld door de Bieder en Versatel gezamenlijk op basis van de infomatie in de overige hoofdstukken van het Biedingsbericht. De Bieder; Versatel en A p u zijn uitsluitend verantwoordelijk voor de juistheid en compleetheid van de informatie die in dit Biedingsbericht verschafl wordt, behalve met betrekking tot Hoofdstuk 11, voor welke fairness opinie uitsluitend Lazard verantwoordelijk is, ieder afzonderlijk voor de informatie die door hen zelf is verschaf! en gezamenlijk voor de informatie die door hen gezamenlijk is verschaft. De Bieder en Versatel verklaren beide, ieder voor de informatie die door hen in dit Biedingsbericht is verschaft, dat de informatie in dit Biedingsbericht op de publicatiedatum van dit Biedingsbericht naar hun beste weten in elk wezenlijk opzicht juist en in overeenstemming met de werkelijkheid is, en dat er geen informatie achterwege is gelaten waardoor enige verklaring in de Biedingsbericht in enig wezenlijk opzicht misleidend zou worden. Bepaalde financiële en statistische informatie in dit Biedingsbericht kan naar boven of beneden afgerond zijn en dient derhalve niet als definitief te worden beschouwd. De informatie in dit Biedingsbericht geeft de situatie weer op de datum van dit Biedingsbericht. Onder geen beding houdt de verspreiding van dit Biedingsbericht in dat de hierin opgenomen informatie ook na de publicatiedatum van dit Biedingsbericht juist en volledig is of dat er sinds deze datum geen wijziging is
70
i
opgetreden in de in het Biedingsbericht uiteengezette informatie of in de gang van zaken bij Versatel enlof haar dochtermaatschappijen. Hei voorgaande laat echter onverlet de verplichting van zowel de Bieder ais Versatei om, indien zulh van toepassing is, een publieke aankondiging te doen ingevolge arrikel 9b lid I van het Bte 1995, voor zover van toepassing.
17.1 Nederlandse Definities Gedefinieerde termen in deze Nederlandse samenvatting zullen de volgende betekenis hebben: Aandeelhouder(s)
houder(s) van één of meer Aandelen
Aande(e)l(en)
de uitgegeven en geplaatste gewone Aande(e)l(en) in het aandelenkapitaal van Versatel, met een nominale waarde van EUR 0,02 per Aandeel
Aangesloten Instelling(en)
heeft de betekenis zoals daaraan is toegekend in artikel 1 van de Wet giraal effectenverkeer
Aanmeldingstermijn
de periode, gedurende welke de Effectenhouders hun Effecten bij de Bieder kunnen aanmelden, beginnend op 14 september 2005 en eindigend op de Sluitingsdatum
ABN AMRO
ABN AMRO Bank N.V., een naamloze vennootschap, met statutaire zetel in Amsterdam, Nederland
AFM
Stichting Autoriteit Financiële Markten
APa
Apax Europe IV LP, Apax Europe VLA LP en Apax Europe VI-1 LP (zowel individueel als tezamen)
Back to Back Overeenkomst
de consortium en back to back overeenkomst gesloten tussen (een groepsmaatschappij van) de Bieder en Apax d.d. 8 juli 2005, inzake de voorschriften en voorwaarden voor de Duitse Transactie
Belangrijke Negatieve Verandering
enige gebeurtenis of omstandigheid zoals omschreven in Hoofdstuk 17.7.1
Bestuur
de raad van bestuur van Versatel
Bieder
Tele2 Finance B.V., een besloten vennootschap met beperkte aansprakelijkheid, opgericht naar Nederlands recht, met statutaire zetel in Amsterdam, Nederland, zijnde een indirecte volle dochtennaatschappij van Tele2 AB
Biedingen
Bod I en Bod I1 tezamen
Biedingsbericht
dit biedingsbericht (zijnde de Engelse tekst en de Nederlandse samenvatting) met betrekking tot de Biedingen
Biedprijs per Aandeel
een bedrag in contanten van EUR 2,20 per Aandeel dat op geldige wijze is aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding daarvan desalniettemin heeft aanvaard) en geleverd onder de voorwaarden van Bod I
Biedprijs per Obligatie
een bedrag in contanten voor iedere Obligatie die op geldige wijze is aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding daarvan desalniettemin heeft aanvaard) en geleverd onder de voorwaarden van Bod 11, van EUR 132.273,61 per Obligatie minus een bedrag van EUR 3.875 als enige rente is betaald of nog betaald moet worden aan een Obligatiehouder met betrekking tot de jaarlijkse renteperiode die eindigt op 28 oktober 2005
71
Buitengewone Vergadering van Aandeelhouders
de buitengewone vergadering van Aandeelhouders, waarvoor Obligatiehouders ook uitgenodigd zullen worden, die wordt gehouden op 29 september 2005, om 10:00 uur, Amsterdamse tijd, in het Hilton Hotel, Amsterdam, tijdens welke vergadering, onder andere (zie Hoofdstuk 14A) de Biedingen zullen worden besproken, overeenkomstig het bepaalde in artikel 9q lid 1 Bte 1995
Bod I
het bod op de Aandelen zoals in dit Biedingsbericht beschreven
Bod I1
het bod op de Obligaties zoals in dit Biedingsbericht beschreven
Boekjaar 2004
het boekjaar van Versatel eindigend o p 31 december 2004
Boekjaar 2005
het boekjaar van Versatel eindigend op 31 december 2005
Bte 1995
Besluit toezicht effectenverkeer 1995, zoals van tijd tot tijd gewijzigd
Cal1 Opties
ieder van (i) de cal1 optie die door de Stichting Continuïteit wordt gehouden en die het recht geeft om een aantal preferente Baandelen in het kapitaal van Versatel te verwerven, alsmede (ii) de cal1 optie die door de Stichting Prioriteit wordt gehouden en die het recht geeft om een prioriteitsaandeel in het kapitaal van Versatel te verwerven, tezamen aangeduid als de Cal1 Opties
Clearing Systemen
Clearstream Luxembourg en Euroclear gezamenlijk
Clearstream Luxembourg
Clearstream Banking, societé anonyme
Completion Uitkering
de uitkering van vrij uitkeerbare reserves door Versatel aan de Bieder en aan de Aandeelhouders die niet hun Aandelen onder Bod I hebben aangemeld op of na de Dag van Betaling in verband met de Duitse Transactie, zoals uiteengezet in Hoofdstuk 8.8.1
Dag van Betaling
de datum waarop de Bieder, in overeenstemming met de voorschriften en voonvaarden van de Biedingen, zal betalen (i) de Biedprijs per Aandeel aan de Aandeelhouders die op geldige wijze hun Aandelen hebben aangemeld (ofop ongeldige wijze, mits de Bieder de aanmelding daarvan desalniettemin heeft aanvaard) en hebben geleverd onder Bod I, en (ii) de Biedprijs per Obligatie aan de Obligatiehouders die op geldige wijze hun Obligaties hebben aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding daarvan desalniettemin heeft aanvaard) en hebben geleverd onder Bod 11; zowel (i) en (ii) vinden niet later dan de vijfde Werkdag na de Gestanddoeningsdatum plaats
Dealer Manager
Morgan Stanley & Co. International Limited
Directe Participant
iedere persoon die in de gegevens van een of meerdere van de Clearing Systemen als houder van (een) Obligatie(s) wordt aangeduid
Duitse Business
de onderneming gevoerd door Versatel Deutschland Holding GmbH (en haar direct en indirect gehouden dochtermaatschappijen en deelnemingen)
Duitse Transactie
de transactie als gevolg waarvan de aandelen in Versatel Deutschland Holding GmbH, tezamen met enkele intragroep leningen, worden verkocht en overgedragen aan Ganymed, zoals uiteengezet in Hoofdstuk 8.8.1
72
Effecten
Aandelen en Obligaties gezamenlijk
Effectenhouder(s)
houder(s) van Effecten
Elektronisch Aanmeldingsformulier
een formulier voor aanvaarding van Bod I1 op de wijze zoals voorgeschreven in dit Biedingsbericht
EUR
Euro, het wettig betaalmiddel van de Europese Monetaire Unie
Euroclear
Euroclear Bank S.A./N.V. (als exploitant van het Euroclear Systeem)
Euronext Amsterdam
Euronext Amsterdam N.V. of Eurolist bij Euronext Amsterdam, afhankelijk van de context
Fusieovereenkoinst
de fusieovereenkomst tussen Versatel Telecom International N.V. en Tele2 (Netherlands) B.V.
Ganymed
Ganymed 345. VV GmbH, een indirecte volledige dochtermaatschappij van Apax Europe VI-A, L.P., zijnde een besloten vennootschap met beperkte aansprakelijkheid, opgericht naar Duits recht, met statutaire zetel in Frankfurt am Main, Duitsland
Gestanddoeningsdatum
de datum waarop de Bieder publiekelijk aankondigt of de Biedingen gestand worden gedaan, zijnde niet later dan de vijfde Werkdag na de Sluitingsdatum om 15:OO uur, Amsterdamse tijd overeenkomstig artikel 9t lid 4 Bte 1995
Lazard
Lazard Frères S.A.S., een societe par actions simplifee, opgericht naar Frans recht, met statutaire zetel in Parijs, Frankrijk
Leningsdocument
heeft de betekenis als daaraan toegekend in Hoofdstuk 17.9.1 (Afitoting van Duitse Business)
Minderheid
heeft de betekenis als daaraan toegekend in Hoofdstuk 17.9.1 (Afstofingvan Duitse Business)
Minimum Acceptatie Voorwaarde
heeft de betekenis als daaraan toegekend in Hoofdstuk 17.7.3 (Gestanddoening)
Obligatie(s)
de uitgegeven en geplaatste 3,875 procent converteerbare obligatie(s), aflopend in 2011 en converteerbaar in (een) gewo(o)n(e) aande(e)l(en) in het kapitaal van Versatel
Obligatiehouder(s)
een houder van (een) Obligatie(s) in wiens naam deze Obligatie(s) (is) (zijn) geregistreerd of een economisch eigenaar van (een) Obligatie(s) die zulke Obligatie(s) houdt op rekeningen bij een Directe Participant die optreedt namens de economisch eigenaar
Obligatie Voorwaarden
de voorwaarden met betrekking tot de Obligaties, zoals uiteengezet in een Prospectus van Versatel van 22 oktober 2004
Opties
de uitstaande rechten tot verwerving van uit te geven of te leveren gewone aandelen door Versatel onder Versatel's optieregeling voor werknemers
Raad van Commissarissen
de raad van commissarissen van Versatel
Settlement Agent
ABN AMRO
Sluitingsdatum
het tijdstip en datum waarop de Aanmeldingstermijn eindigt, te weten op 7 oktober 2005 om 15:OO uur, Amsterdamse tijd,
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behoudens verlenging met inachtneming van artikel 90 lid 5 Bte 1995, in welk geval de Aanmeldingstermijn op die latere datum eindigt Stichting Continuïteit
Stichting Continuiteit Versatel Telecom International, een stichting opgericht naar Nederlands recht, met statutaire zetel in Amsterdam, Nederland
Stichting Prioriteit
Stichting Prioriteit Versatel Telecom International, een stichting opgericht naar Nederlands recht, met statutaire zetel in Amsterdam, Nederland
Talpa
Talpa Capital B.V., een besloten vennootschap met beperkte aansprakelijkheid, opgericht naar Nederlands recht, met statutaire zetel in Hilversum, Nederland
Tele2
Tele2 (Netherlands) B.V., een besloten vennootschap met beperkte aansprakelijkheid, opgericht naar Nederlands recht, met statutaire zetel in Amsterdam, Nederland, zijnde een volle dochtermaatschappij van Tele2 AB
Tele2 AB
een naamloze vennootschap, opgericht naar Zweeds recht, met statutaire zetel in Stockholm, Zweden
Tender Agent
The Bank of New York en, waar van toepassing, ING Bank N.V. als Nederlandse Tender Agent.
Transactie
de transacties die tot gevolg hebben dat de Bieder controle verwerft over Versatel en de Duitse Transactie gezamenlijk
Uitgevende Entiteit
heeft de betekenis als daaraan toegekend in Hoofdstuk 17.9.4 (Juridische Stmctuur van Kersatel na de Biedingen)
Uitvoerende Raad
de. aecutive board van Versatel, bestaande uit de heer R.M. Raithatha, de heer M. Lazar, de heer M. van der Heijden, de heer A. Beekhuis en de heer J. van Berne
Vergadering van Obligatiehouders
de vergadering van Obligatiehouders, welke bijeen zal worden geroepen in overeenstemming met Hoofdstuk 14.B
Versatel
Versatel Telecom International N.V., een naamloze vennootschap, opgericht naar Nederlands recht, met statutaire zetel in Amsterdam, Nederland
Versatel Statuten
de statuten van Versatel, zoals meest recentelijk gewijzigd op 8 juni 2005
Voorgestelde Versatel Statuten
de statuten van Versatel waarover gestemd zal worden op de Buitengewone Vergadering van Aandeelhouders en die, indien aangenomen, zullen gelden vanaf de Dag van Betaling
Voorwaarde(n)
de voorwaarden met betrekking tot de Biedingen zoals uiteengezet in Hoofdstuk 8.2 (Offer Conditions) en Hoofdstuk 17.7.1 (Voorwaarden)
Warrants
de uitgegeven en geplaatste warrants welke het recht geven gewone aandelen in Versatel te verwerven
Werkdag(en)
(een) dag(en) waarop Euronext Amsterdam open is voor handel
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17.2 De Biedingen Onder verwijzing naar de mededelingen, voorwaarden en restricties zoals opgenomen in dit Biedingsbericht worden de Effectenhouders hierbij uitgenodigd om hun Effecten aan te bieden aan de Bieder op de wijze en onder de voorwaarden zoals in dit Biedingsbericht beschreven. Indien de Biedingen gestand worden gedaan, zal aan de Aandeelhouders die hun Aandelen onder Bod I aanmelden, betaling in contanten plaatsvinden van de Biedprijs per Aandeel ten bedrage van EUR 2,20 voor elk Aandeel dat op geldige wijze is aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding daarvan desalniettemin heeft aanvaard) en geleverd. Indien de 13iedingen gestand worden gedaan, zal aan de Obligatiehouders die hun Obligaties onder Bod 11 aanmelden, betaling plaatsvinden van de Biedprijs per Obligatie voor elke Obligatie die op geldige wijze is aangemeld (of op ongeldige wijze, indien de Bieder de aanmelding daarvan desalniettemin heeft aanvaard) en geleverd, ten bedrage van EUR 132.273,61 in contanten per Obligatie, minus een bedrag van EUR 3.875 als enige rente is betaald of nog betaald moet worden aan een Obligatiehouder met betrekking tot de jaarlijkse renteperiode die eindigt op 28 oktober 2005, op voorwaarde dat de Biedingen gestand worden gedaan. De Biedprijs per Aandeel vertegenwoordigt een premie van: (i) 14 procent ten opzichte van de slotkoers van de Aandelen van EUR 1,93 op 15 juli 2005, de laatste Werkdag voor het gezamenlijk persbericht van Versatel en de Bieder werd uitgebracht waarin werd aangekondigd dat de verwachting gerechtvaardigd was dat overeenstemming kon worden bereikt met betrekking tot de Biedingen; (ii) 47 procent ten opzichte van de slotkoers van de Aandelen van EUR 1,50 op 28 april 2005, de dag voor de eerste berichten met betrekking tot de gesprekken met Belgacom N.V. en Talpa; en (iii) 29 procent ten opzichte van de gemiddelde slotkoers van de Aandelen van EUR 1,70 voor de twaalf maanden voorafgaand aan, en tot en met 28 april 2005, de dag voor de eerste berichten met betrekking tot de gesprekken met Belgacom N.V. en Talpa. De Biedprijs per Obligatie is gebaseerd op de waarde van de Aandelen en als volgt berekend: (a) een conversieprijs van EUR 1,667 per Aandeel, wat de conversieprijs is die van toepassing zou
zijn als er, in verband met een Change of Control zoals gedefinieerd in de Obligatie Voorwaarden, op of voor 28 oktober 2005 conversie zou plaatsvinden, hetgeen betekent dat iedere Obligatie kan worden geconverteerd in 59.988 Aandelen; vermenigvuldigd met;
I-.
p I
(b) de Biedprijs per Aandeel; plus
(c) een additionele aanmoedigingsvergoeding (incentive fee) van 0,30 procent over de hoofdsom van de Obligatie, zijnde een bedrag van EUR 300. Zie tevens Hoofdstuk 8.6 (Substantiation ofthe Ofer Pnce) en Hoofdstuk 13 (Shnre Pnces of Versatei). 17.3 Rationale van de Biedingen
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Onder de voorwaarde dat de Biedingen gestand worden gedaan, is het de bedoeling dat de Duitse Business verkocht en overgedragen zal worden aan Apax. De Bieder zal via Versatel de Benelux Business houden. Met betrekking tot de Benelux Business is de belangrijkste reden voor de transactie gelegen in het feit dat een sterker platform wordt gecreëerd om: (i) een kritieke massa in de Benelux te bereiken: de combinatie van Tele2’s bestaande activiteiten binnen het Benelux marktgebied tezamen met de Benelux Business zal leiden tot een pro forma omzet van ongeveer EUR 800 miljoen en een EBITDA van ongeveer EUR 112 miljoen (op basis van de financiële gegevens over 2004); (ii) de efficiëntie van de samengevoegde bedrijven te verbeteren door de Tele2 en Versatel activiteiten te integreren en door Tele2’s cliënten en verkeer naar het netwerk van Versatel te migreren, waardoor synergievoordelen behaald zullen worden; (iii) aanzienlijke middelen bij te dragen om de activiteiten in met name het strategische breedband segment aanmerkelijk verder te ontwikkelen; en
75
(iv) twee complementaire bedrijven te combineren om extra mogelijkheden te creëren om de winstgevendheid op de lange termijn te verbeteren door aan bestaande klanten reeds bestaande producten over en weer te verkopen en door het bedrijfs- en marktrisico te verkleinen. Apax zal de breedband business van de Duitse Business in de bestreken regio verder uitbreiden, waarbij de nadruk zal liggen op zowel de zakelijke als de particulieren klanten. Apax beoogt de Duitse Business als platform te gebruiken voor toekomstige acquisities in de Duitse markt. Het doel van Apax is om te blijven investeren in verdere groei en deel te nemen in de consolidatie van alternatieve carriers in Duitsland om zo een van de leidinggevende aanbieders in Duitsland te creëren. Het strategische doel is om de Duitse alternatieve carriers markt te consolideren en een sterke speler te creëren die nationaal zal concurreren met, onder meer, Deutsche Telekom AG. Ten slotte verschaft de Bieder de huidige Effectenhouders de mogelijkheid om hun belang in Versatel met een aantrekkelijke premie te verkopen, waardoor zij deze direct liquide kunnen maken. Zie tevens Hoofdstuk 8.6 (Substantiation of the Offer Price), Hoofdstuk 8.7 (Transaction Rationale) en Hoofdstuk 8.8.2 (Strategy). 17.4 Aanbeveling door de Raad van Commissarissen en het Bestuur De Raad van Commissarissen en het Bestuur en hebben zorgvuldig de strategische, financiële en sociale aspecten van de Biedingen overwogen en zijn tot de conclusie gekomen dat de Biedingen in het belang zijn van Versatel, de Aandeelhouders, Obligatiehouders en andere belanghebbenden bij Versatel. De Raad van Commissarissen en het Bestuur zijn van oordeel dat de Biedingen redelijk en evenwichtig zijn ten opzichte van de Aandeelhouders en de Obligatiehouders. In dat kader wordt venvezen naar de door Lazard afgegevenfaimess opinion met betrekking tot Bod I, zoals weergegeven in Hoofdstuk 11 (Faimess Opinion). Daarom steunen de Raad van Commissarissen en het Bestuur de Biedingen volledig en bevelen zij unaniem de Aandeelhouders en Obligatiehouders aan om de Biedingen te accepteren. Zie tevens Hoofdstuk 7 (Recommendation by the Supewisory Board and the Management Board). 17.5
Aandelenbelang van de Raad van Commissarissen en het Bestuur
Op de datum van dit Biedingsbericht worden 1.624.979 Aandelen en 3.940.000 Opties gehouden door de heer R.M. Raithata, enig lid van het Bestuur. Volgens de informatie uit de openbare registers van de AFM worden op de datum van dit Biedingsbericht geen Aandelen of Opties gehouden door de leden van de Raad van Commissarissen. 17.6 Onherroepelijke Toezegging
Talpa heeft, onder voldoening van een aantal gebruikelijke voorwaarden, onherroepelijk toegezegd om alle door haar gehouden Aandelen aan te bieden onder Bod I. Deze toezegging ziet op een totaal van 217.976.476 Aandelen met een totale nominale waarde van EUR 4.359.592,52, welk belang op de datum van dit Biedingsbericht ongeveer 41,65 procent van het totale uitgegeven en geplaatste aandelenkapitaal van Versatel vertegenwoordigt.
17.7 Voorwaarden, Aanmeldingstermijn, Gestanddoening, Verlenging en Levering 17.7.1 Voorwaarden
Niettegenstaande enig ander voorschrift van de Biedingen, geldt de verplichting van de Bieder om de Biedingen gestand te doen, indien op of voor de Sluitingsdatum aan de volgende Voorwaarden is voldaan: (a) een zodanig aantal Aandelen wordt ter aanvaarding onder Bod I aangemeld dat deze, tezamen met de Aandelen die door de Bieder alsdan direct of indirect worden gehouden, op de Sluitingsdatum tenminste 95 procent (vijfennegentig procent) van alle Aandelen vertegenwoordigt; (b) een zodanig aantal Obligaties wordt ter aanvaarding aangemeld onder Bod I1 dat deze, tezamen met de Obligaties die door de Bieder alsdan direct of indirect worden gehouden, op de Sluitingsdatum tenminste 85 procent (vijfentachtig procent) van alle Obligaties vertegenwoordigt; (c) geen Belangrijke Negatieve Verandering heeft zich voorgedaan of is ter kennis van de Bieder gekomen;
76
waarbij een Belangrijke Negatieve Verandering enige gebeurtenis of omstandigheid is die een belangrijk negatief effect tot gevolg heeft of redelijkerwijs kan hebben op Versatel en/of haar groepsmaatschappijen, zodanig dat van de Bieder redelijkerwijs niet kan worden verwacht de Biedingen te continueren of gestand te doen, mits deze gebeurtenis of omstandigheid niet voortvloeit uit: (i) een algemene economische teruggang in de telecommunicatie sector welke in het algemeen bedrijven in deze sector, zoals Versatel, Bieder en hun groepsmaatschappijen, treft; (ii) enige gebeurtenis of omstandigheid: (a) die reeds bekend was bij Bieder uit informatie welke gedeponeerd of openbaar is gemaakt door Versatel op grond van een algemene verplichting tot openbaarmaking of op grond van regelgeving van Euronext Amsterdam; of
(b) welke bekend is gemaakt in de schriftelijke informatie die door Versatel aan Bieder en baar adviseurs is verschaft gedurende bet due diligence onderzoek en in de vorm van enige mondelinge informatie die verschaft is tijdens de management presentaties die, voorafgaande aan de datum van ondertekening van de Fusieovereenkomst, in verband met de Biedingen ten behoeve van de Bieder gehouden zijn; (iii) de bekendmaking, het doen en de tenuitvoerlegging van de Biedingen (behalve voor zover de gebeurtenis of omstandigheid voortvloeit uit change of confrol bepalingen in overeenkomsten welke zijn aangegaan door Versatel of één van baar groepsmaatschappijen, voor zover deze niet bekend zijn gemaakt aan de Bieder of haar adviseurs voorafgaande aan de datum van ondertekening van de Fusieovereenkomst); (d) geen openbare aankondiging is uitgebracht waaruit voor het eerst blijkt dat een derde partij een openbaar bod aankondigt op alle of op een deel van de Aandelen, de Obligaties, de Warrants, de Opties, aandelen of effecten die geconverteerd kunnen worden in aandelen in het kapitaal van Versatel of een van haar dochtervennootschappen of enig materieel onderdeel van het bedrijf, onderneming of activa van Versatel, of dat een derde partij het recht heeft verkregen of is overeengekomen om enige van voornoemde effecten te verwerven; (e) noch de Stichting Continuïteit noch de Stichting Prioriteit heeft (geheel of gedeeltelijk) enige van haar Cal1 Opties uitgeoefend en beide stichtingen hebben onvoorwaardelijk en onherroepelijk al hun Cal1 Opties met ingang van de Gestanddoeningsdatum beëindigd;
(0
Versatel heeft de Fusieovereenkomst niet op zodanige wijze geschonden dat redelijkerwijs verwacht mag worden dat de schending een materieel negatief effect zal hebben op Versatel, de Bieder, Apax (doch uitsluitend in verband met de Transactie), Tele2 AB (doch uitsluitend in verband met de Transactie), de Biedingen of de Transactie, welke schending van zodanig ernstige aard is dat redelijkerwijs niet van de Bieder kan worden verlangd dat deze de Biedingen gestand zal doen;
(9) geen kennisgeving van de AFM is ontvangen dat Bod I en/of Bod I1 isizijn gedaan in strijd met een of meer bepalingen zoals uiteengezet in hoofdstuk IIA van de Wte 1995, in welk geval het effecteninstellingen op grond van artikel 32a van het Bte 1995, niet is toegestaan hun medewerking te verlenen aan de uitvoering en afwikkeling van de Biedingen; en
(b) geen bevel, schorsing, vonnis of besluit van toepassing is, of is gegeven of verstrekt door een rechter, arbitragecommissie, overheid, overheidsinstantie of andere toezichthoudende of administratieve instantie, noch is er enig(e) wet, regel, regeling, bevel of verbod van overheidswege voorgesteld, in de wet opgenomen, ten uitvoer gelegd of van toepassing verklaard op de Biedingen, welke op enigerlei wezenlijke wijze de Biedingen beperkt, verbiedt of vertraagt. De Voorwaarden in Hoofdstuk 17.7.l(a) tot en met Hoofdstuk 17.7.l(f) en Hoofdstuk 17.7(h) hierboven, zijn ten behoeve van de Bieder opgenomen, die daarvan op elke moment (geheel of gedeeltelijk) afstand kan doen door een schriftelijke kennisgeving aan Versatel. Van de Voorwaarde in Hoofdstuk 17.7.l(g) kan geen afstand worden gedaan.
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17.7.2 Aanmeldingstermijn
De Aanmeldingstermijn vangt aan op 14 september 2005 en eindigt op 7 oktober 2005 om 15:OO uur, Amsterdamse tijd, tenzij de termijn wordt verlengd met inachtneming van artikel 90 lid 5 Bte 1995, in welk geval de Aanmeldingstermijn eindigt op die latere datum. Indien uiterlijk op de Sluitingsdatum aan één of meer van de Voorwaarden niet is voldaan, mag de Bieder van tijd tot tijd de Aanmeldingstermijn verlengen totdat aan alle Voorwaarden is voldaan of daarvan afstand is gedaan. Zie tevens Hoofdstuk 6A.7 (Extension) en Hoofdstuk 6B.11 (Extension) en Hoofdstuk 17.7.4 (Verlenging). Op of voor de Sluitingsdatum aangemelde Effecten mogen niet worden ingetrokken, behoudens het recht om een aanmelding in te trekken tijdens een eventuele verlenging van de Aanmeldingstermijn met inachtneming van het bepaalde van artikel 90 lid 5 van het Bte 1995. Indien aan alle Voorwaarden is voldaan, of, indien en voor zover van toepassing, daarvan afstand is gedaan, zal de Bieder alle Effecten aanvaarden die op geldige wijze zijn aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding daarvan desalniettemin aanvaardt) en niet eerder zijn ingetrokken, in overeenstemming met, met betrekking tot de Aandelen, de procedures zoals uiteengezet in Hoofdstuk 6A.2 (Acceptance of Offer I) en Hoofdstuk 17.7.5.1 (Aanvaarding door Aandeelhouders) en met betrekking tot de Obligaties, de procedures zoals uiteengezet in Hoofdstuk 6B.2 (Acceptance of Offer Ir) en Hoofdstuk 11.1.5.2 (Aanvaarding door Obligatiehouders). 17.7.3 Gestanddoening De Biedingen worden gedaan onder het voorbehoud van vervuiling van de Voorwaarden, inclusief maar niet beperkt tot de Voorwaarde dat ten minste Y5 procent van alle Aandelen en ten minste 85 procent van alle Obligaties is aangemeld op de Sluitingsdatum, onder de voorwaarden van de Biedingen, zoals uiteengezet in Hoofdstuk 17.7.l(a) en 17.7.l(b) (de “Minimum Acceptatie Voorwaarde”). De Bieder behoudt zich het recht voor afstand te doen van Voorwaarden. Zie Hoofdstuk 8.2 (Offer Conditions) en Hoofdstuk 17.7.1 (Voorwaarden)hiervoor. De Bieder zal niet later dan om 15:OO uur, Amsterdamse tijd o p de vijfde Werkdag volgend op de Sluitingsdatum, zijnde de Gestanddoeningsdatum, vaststellen of aan de Voorwaarden is voldaan of dat hiervan afstand wordt gedaan en aankondigen (i) of de Biedingen gestand worden gedaan, (ii) of er nog steeds onzekerheid is over de voldoening van enige Voorwaarde(n), of (iii) dat de Biedingen worden beëindigd omdat er niet is voldaan aan de Voorwaarden edof daarvan geen afstand is gedaan door de Bieder, alles met inachtneming van artikel 9t lid 4 Bte 1995. Een (eventuele) aankondiging door de Bieder dat er nog onzekerheid bestaat met betrekking tot voldoening van enige van de Voorwaarden, betekent niet dat enige Effectenhouder het recht zal hebben om enige aanmelding van Effecten in te trekken of dat enige aanmelding van Effecten of met betrekking tot de Obligaties, corresponderende Elektronische Aanmeldingsformulieren geacht zullen worden automatisch ingetrokken te zijn. 17.7.4 Vérhnging De Bieder kan de Biedingen, althans de Aanmeldingstermijn, verlengen tot na de Sluitingsdatum, in welk geval alle verwijzingen, tenzij de context anders bepaalt, in dit Biedingsbericht naar “15:OO uur, Amsterdamse tijd, 7 oktober 2005” worden verschoven naar de uiterste datum en het uiterste tijdstip tot waartoe de Biedingen verlengd zijn. Indien de Biedingen, althans de Aanmeldingstermijn, wordt(en) verlengd met als gevolg dat de verplichting onder artikel 9t Bte 1995 om aan te kondigen of de Biedingen al dan niet gestand worden gedaan, wordt uitgesteld, zal dit uiterlijk op de derde Werkdag na de Sluitingsdatum om 15:OO uur, Amsterdamse tijd, publiekelijk worden aangekondigd, met inachtneming van het bepaalde in artikel 90 lid 5 Bte 1995. Gedurende een dergelijke verlenging van de Aanmeldingstermijn blijven de Biedingen gelden voor alle eerder aangemelde en niet ingetrokken Effecten. I?. 7.5 Aanvaarding door Eflectenhouders
17.7.5.1 Aanvaarding door Aandeelhouders
Aandeelhouders die hun Aandelen via een Aangesloten Instelling houden, worden verzocht hun aanvaarding kenbaar te maken via hun bank of commissionair niet later dan op 7 oktober 2005 om 15:OO
78
uur, Amsterdamse tijd, tenzij de Aanmeldingstermijn is verlengd met inachtneming van Hoofdstuk 6A.7 (Exlension) en Hoofdstuk 17.7.4 (Verenging). De Aangesloten Instellingen mogen Aandelen uitsluitend schriftelijk voor aanvaarding aanmelden bij de Settlement Agent in Breda (t.a.v. Agency Services-Exchange Agency MF2020, Kemelstede 2, 4817 ST Breda, Nederlandfa +31 (O) 76 5799620). Bij het indienen van de aanmeldingen dienen de Aangesloten Instellingen te verklaren dat (i) zij de door hen aangemelde Aandelen in hun administratie hebben, (ii) elke Aandeelhouder die Bod I aanvaardt onherroepelijk er voor instaat en garandeert dat de Aandelen die door hem worden aangeboden, aangeboden worden in overeenstemming met de restricties als uiteengezet in Hoofdstuk 1 (Restrictions and Important Information), en dat (iii) zij zich verbinden deze Aandelen te zullen leveren aan de Bieder op de Dag van Betaling, mits de Biedingen gestand zijn gedaan. Behoudens het bepaalde in artikel 90 lid 5 Bte 1995, vormt het aanmelden van Aandelen onder Bod I een onherroepelijke opdracht tot het blokkeren van enigerlei poging de aangemelde Aandelen over te dragen, zodat op of voorafgaand aan de Dag van Betaling niet tot levering van zulke Aandelen kan worden overgegaan (anders dan aan de Settlement Agent op of voor de Dag van Betaling mits de Biedingen gestand zijn gedaan en de Aandelen voor koop geaccepteerd zijn) en om de effectenrekening waar zulke Aandelen op gehouden worden te debiteren op de Dag van Betaling ten aanzien van alle Aandelen die worden aangemeld tegen betaling door de Settlement Agent van de Biedprijs per Aandeel. Houders van Aandelen op naam die Bod I willen aanvaarden terzake van zulke Aandelen, dienen een ingevuld en ondertekend aanmeldingsformulier in te leveren bij de Settlement Agent (t.a.v. Agency Services-Exchange Agency MF2020, Kemelstede 2, 481 7 ST Breda, Nederland, fax +31 (0)76 5799620). Overeenkomstig de voorschriften en voorwaarden van Bod I moeten de aanmeldingsformulieren zijn ontvangen door de Settlement Agent in Breda, niet later dan 15:OO uur, Amsterdamse tijd op de Sluitingsdatum. De aanmeldingsformulieren zijn tevens op verzoek bij Versatel (t.a.v. Investor Relations Department) en bij de Settlement Agent te verkrijgen. Het aanmeldingsformulier zal tevens fungeren als akte van levering met betrekking tot de daarin genoemde Aandelen. Door zijnhaar Aandelen aan te melden onder Bod I, anders dan via een Aangesloten Instelling, verklaart, garandeert en verplicht elke Aandeelhouder die zijnhaar Aandelen aanmeldt, zich jegens de Bieder op de dag dat die Aandelen worden aangemeld tot en met de Dag van Betaling, behoudens correcte terugtrekking van een aanmelding gedurende enige verlenging van de Aanmeldingstermijn, in overeenstemming met artikel 90 lid 5 Bte 1995, dat:
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(a) de aanmelding van Aandelen door de Aandeelhouder een aanvaarding inhoudt van Bod I onder de voorwaarden van Bod I; (b) de betrokken Aandeelhouder volledig gerechtigd en bevoegd is de Aandelen aan te melden, te verkopen en te leveren, en geen andere overeenkomst is aangegaan tot aanmelding, verkoop of levering van de volgens opgave aangemelde Aandelen met derden anders dan de Bieder (zulks tezamen met alle bijbehorende rechten) en dat, wanneer deze Aandelen door de Bieder tegen contanten worden verworven, de Bieder die Aandelen in volledige en onbezwaarde eigendom verwerft, vrij van rechten van derden en beperkingen van welke aard dan ook; en
(c) bij de aanmelding van dergelijke Aandelen, Hoofdstuk 1 (Restrictions and ímpodant Information) en de effectenwetgeving en overige toepasselijke wet- en regelgeving van de jurisdictie waarin de betrokken Aandeelhouder zich bevindt of waarvan hijbij ingezetene is, is nageleefd en geen registratie, goedkeuring of indiening bij enige toezichthoudende instantie van die jurisdictie vereist is in verband met de aanmelding van die Aandelen.
I
1
17.7.5.2 Aanvaarding door Obligatiehouders Een Obligatiehouder die Obligatie(s) onder Bod I1 wenst aan te melden moet op of voor 15:OO uur, Amsterdamse tijd, op de Sluitingsdatum en voor de uiterste datum die door ieder Clearing Systeem wordt vastgesteld, een correct en volledig ingevuld Elektronisch Aanmeldingsformulier indienen, of bewerkstelligen dat deze namens hemhaar wordt ingediend, bij het desbetreffende Clearing Systeem op de wijze zoals hierna omschreven. De aanmelding van Obligaties door een Obligatiehouder zal geacht worden plaats te hebben gevonden op het moment van ontvangst door het relevante Clearing Systeem van een geldig Elektronisch Aanmeldingsformulier in overeenstemming met de vereisten van het desbetreffende Clearing Systeem. De ontvangst van een dergelijk Elektronisch Aanmeldingsformulier door het desbetreffende Clearing Systeem
19
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zal worden bevestigd in overeenstemming met de gebruikelijke procedures van dat Clearing Systeem en zal tot gevolg hebben dat de Obligaties in het desbetreffende Clearing Systeem geblokkeerd worden, zodat met betrekking tot die Obligaties geen overdrachten tot stand kunnen worden gebracht. Een Obligatiehouder moet, door middel van het relevante Clearing Systeem, de juiste stappen nemen zodat geen overdrachten tot stand kunnen worden gebracht met betrekking tot voornoemde geblokkeerde Obligaties op enig moment na de blokkering daarvan, zulks in overeenstemming met de vereisten van het Clearing Systeem en de uiterste datum die door bet desbetreffende Clearing Systeem worden voorgeschreven. Door dergelijke Obligaties in het desbetreffende Clearing Systeem te blokkeren, wordt iedere Obligatiehouder geacht in te stemmen met verstrekking door het desbetreffende Clearing Systeem van informatie omtrent de identiteit van die Obligatiehouder aan de Tender Agent. Slechts Directe Participanten mogen Elektronische Aanmeldingsformulieren indienen. Indien een Obligatiehouder geen Directe Participant is, moet hijizij bewerkstelligen dat de Directe Participant via wie hijizij de Obligaties houdt, namens hemniaar tot indiening van een Elektronisch Aanmeldingsformulier overgaat hij het relevante Clearing Systeem vóór het verstrijken van de uiterste datum zoals die door het desbetreffende Clearing Systeem is vastgesteld. Uitsluitend Obligatiehouders en Directe Participanten zijn verantwoordelijk voor de inachtneming van, en het in overeenstemming handelen met, de procedures en de uiterste data die van toepassing zijn o p de aanmelding van de Obligaties. Een Obligatiehouder die Obligaties houdt in naam van een bemiddelaar (broker), handelaar, bank, beheerder of andere gevolmachtigde of bewaarder dient, tijdig vóór de Sluitingsdatum, contact op te nemen met deze persoon of entiteit indien hijhij Bod I1 wenst te aanvaarden en dient ervoor zorg te dragen dat de Obligaties worden geblokkeerd in overeenstemming met de gebruikelijke procedures van het relevante Clearing Systeem, alsmede in Overeenstemming met de uiterste data die door het desbetreffende Clearing Systeem zijn vastgesteld.
Door in overeenstemming met de gebruikelijke procedures van het relevante Clearing Systeem een geldig Elektronisch Aanmeldingsformulier in te dienen bij dat Clearing Systeem, wordt een Obligatiehouder en de desbetreffendenamens hemihaar optredende Directe Participant jegens de Bieder, de Dealer Manager en de Tender Agent geacht bet volgende te erkennen, te verklaren, te garanderen en op zich te nemen, van de dag waarop het Elektronisch Aanmeldingsformulier is ingediend bij het relevante Clearing Systeem tot en met de Dag van Betaling (indien de desbetreffende Obligatiehouder en de desbetreffende namens hem/haar optredende Directe Participant niet in staat is om deze verklaringen, garanties en verplichtingen af te gevedop zich te nemen, dient deze Obligatiehouder of de namens hem/ haar optredende Directe Participant terstond contact op te nemen met de Dealer Manager):
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(a) De betrokken Obligatiehouder heeft de voorwaarden van het Biedingsbericht ontvangen, bestudeerd en aanvaard. (b) Door de Obligaties in het desbetreffende Clearing Systeem te blokkeren, wordt de betrokken Obligatiehouder geacht in te stemmen met verstrekking door het desbetreffende Clearing Systeem van informatie omtrent zijnihaar identiteit aan de Tender Agent. (c) In overeenstemming met de voorschriften en voorwaarden van Bod 11, aanvaardt de betrokken Obligatiehouder hierbij Bod 11 ten aanzien van de hoofdsom van de Obligaties die in zijnihaar rekening geblokkeerd zijn in het desbetreffende Clearing Systeem. Onder voorwaarde en met ingang van levering aan de Bieder van de Obligaties die geblokkeerd zijn in het desbetreffende Clearing Systeem, doet de Obligatiehouder hierbij afstand van al zijnhaar rechten, bevoegdheden tot en aanspraken op - en ten opzichte van - alle desbetreffende Obligaties en doet hijhij afstand van en geeft hijhij alle rechten of vorderingen op die hijizij ten aanzien van de Bieder of Versatel mocht hebben met betrekking tot enige van de desbetreffende Obligaties. (d) iedere bevoegdheid die, al dan niet krachtens overeenkomst, is toegekend als gevolg van verklaringen, garanties en verplichtingen van de betrokken Obligatiehouder, en al zijnihaar verplichtingen, zullen bindend zijn voor zijnihaar rechtsopvolgers, rechtsverkrijgers, erfgenamen, executeurs, curatoren en wettelijke vertegenwoordigers en zullen niet worden aangetast, noch ophouden te bestaan, door zijnihaar overlijden of onbekwaamheid. (e) Door de Bieder is, anders dan uiteengezet in dit Biedingsbericht, aan de betrokken Obligatiehouders geen informatie verstrekt over de fiscale consequenties voor hemhaar als gevolg van de verkoop van de Obligaties, en de desbetreffende Obligatiehouder erkent dat bijhij
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uitsluitend aansprakelijk is voor enige belastingen en gelijksoortige of verwante betalingen die hemhaar worden opgelegd onder de wetten van enige toepasselijke jurisdictie ten gevolge van zijnihaar aanvaarding van Bod I1 en hijhij stemt toe dat hijhij geen regresrecht heeft of zal hebben (al dan niet bij wege van terugbetaling, vrijwaring of anderszins) op de Bieder, de Dealer Manager, Versatel en de Tender Agent of enige andere persoon met betrekking tot voornoemde belastingen en betalingen. (í) De betreffende obligatiehouder is geen persoon jegens wie het doen van Bod I1 in strijd is met toepasselijke effectenwetgeving.
(9) De betrokken Obligatiehouder is volledig gerechtigd en bevoegd de Obligaties die hierbij worden aangemeld aan te melden en te leveren en die Obligaties zullen aan de Bieder worden geleverd in volle en onbezwaarde eigendom met alle rechten die daaraan verbonden zijn en vrij van bezwarende rechten van derden en beperkingen van welke aard dan ook. De betreffende Obligatiehouder zal, indien daartoe verzocht, alle additionele documenten ondertekenen en leveren en/of zulke andere dingen doen die door de Bieder geacht worden nodig of wenselijk te zijn oni de overdracht van de relevante Obligaties te voltooien of zulk recht en bevoegdheid aan te tonen. (h) De betreffende Obligatiehouder houdt en zal, tot het moment van betaling op de Dag van Betaling, de Obligaties geblokkeerd aanhouden in het desbetreffende Clearing Systeem. In overeenstemming met de vereisten van het betrokken Clearing Systeem en op de uiterste datum die door het betrokken Clearing Systeem is vastgesteld, heeft de betreffende Obligatiehouder een Elektronisch Aanmeldingsformulier ingediend (of bewerkstelligd dat deze voor hemhaar is ingediend) bij het betrokken Clearing Systeem, al naar gelang van toepassing, om het blokkeren van de aangemelde Obligaties, effectief op en met ingang van die datum, goed te keuren zodat o p ieder moment voor de overdracht van de desbetreffende Obligaties op de relevante Dag van Betaling aan de Bieder of namens de betreffende Obligatiehouder, geen overdrachten van die Obligaties tot stand kunnen worden gebracht. (i) Alle informatie die door of namens de Obligatiehouder aan de Bieder wordt verstrekt in de vorm van het Elektronisch Aanmeldingsformulier of anderszins is, in elk materieel opzicht, juist en correct. Obligatiehouders die hun Obligatie(s) niet middels de Clearing Systemen aanhouden dienen contact
op te nemen met de Tender Agent, teneinde te vernemen hoe zij hun Obligatie(s) dienen aan te melden voor aanvaarding onder Bod 11.
17.7.6 Betaling Indien de Bieder aankondigt dat de Biedingen gestand worden gedaan, zullen de Aandeelhouders, die hun Aandelen hebben aangemeld en de Obligatiehouders, die hun Obligaties hebben aangemeld, binnen vijf Werkdagen volgend op de Gestanddoeningsdatum (de “Dag van Betaling”) de Biedprijs per Aandeel en/of de Biedprijs per Obligatie ontvangen, met betrekking tot ieder Aandeel en/of Obligatie davdie op geldige wijze is aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding daarvan desalniettemin heeft aanvaard) en geleverd in overeenstemming met de voorschriften en voorwaarden van de Biedingen. 17.8 De Bieder
De Bieder, een besloten vennootschap met beperkte aansprakelijkheid, statutair gevestigd te Amsterdam, Nederland, werd op 9 september 2005 opgericht naar Nederlands recht. De Bieder is (indirect) een volle dochtermaatschappij van Tele2 AB, een Zweedse naamloze vennootschap, statutair gevestigd te Stockholm, Zweden. De Bieder is geregistreerd bij het Handelsregister van de Kamer van Koophandel in Amsterdam onder nummer 34232877. Zie tevens Hoofdstuk 10 (Infomafion on fhe Offeror and Apax). De Bieder zal de Biedingen financieren door middel van een combinatie van financiering welke verschaft wordt op grond van bankfaciliteiten, financiering door eigen vermogen en een toegezegde kredietfaciliteit van de zijde van Ganymed onder de Back to Back Overeenkomst. Zie Hoofdstuk 8.8.4 (Divesfifure of fhe German Business) en Hoofdstuk 8.10 (Financing of fhe Offers). Tele2 AB heeft zich verplicht dergelijke financiering te verstrekken (anders dan de financiering die door Ganymed verstrekt dient te worden, zoals verder beschreven in Hoofdstuk 17.9.1 (Afstoting van Duitse Business)).
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17.9 Consequenties van de Biedingen 17.9.1 Afstoting van Duitse Business
Onder de voorwaarde van gestanddoening van de Biedingen, is het de bedoeling dat Versatel de Duitse Business zal afstoten. De Duitse Business zal aan Ganymed worden verkocht en overgedragen tegen betaling van een bedrag van ongeveer EUR 539 miljoen (welke prijs is gebaseerd op een enteiprise value van EUR 565 miljoen). De verwachte prijs van ongeveer EUR 539 miljoen zal worden aangepast naar aanleiding van, onder andere, veranderingen in het saldo van intra-groep leningen en uitkeringen door de Duitse Business aan Versatel, in alle gevallen met betrekking tot de periode na 31 maart 2005. De Bieder zal, middels Versatel, de Benelux Business en de dochtermaatschappijen van Versatel die geen onderdeel uitmaken van de Duitse Business of Benelux Business, behouden. Apax overweegt vervolgens een deel van haar eigen vermogen in de Duitse Business te syndiceren. De afstoting van de Duitse Business zal tot stand worden gebracht door middel van verkoop en levering van alle aandelen in het kapitaal van Versatel Deutschland Holding GmbH (de holdingvennootschap van de Duitse Business) tezamen met intra-groep leningen welke door Versatel of haar dochtervennootschappen aan de Duitse Business zijn verstrekt. De verkoop en levering zal tegelijk met, of meteen na, de afhandeling van de Biedingen plaatsvinden. In afwachting van deze verkoop en levering zal Ganymed een lening aan de Bieder verstrekken ten bedrage van ongeveer EUR 539 miljoen, uit te keren op de Dag van Betaling, welke door de Bieder aangewend zal worden om, tezamen met andere middelen die haar ter beschikking staan, op de Dag van Betaling de benodigde betalingen aan de houders van Effecten te kunnen doen. De koopprijs voor de Duitse Business zal worden betaald in overeenstemming met een leningsdocument (lom note), uit te geven door Ganymed aan Versatel (het “Leningsdocument’’). Onder voorwaarde van goedkeuring door de Buitengewone Vergadering van Aandeelhouders (zie Hoofdstuk 14A, ktraordinary General Meeting of Shareholders), zal Versatel aan de Bieder en aan de Aandeelhouders die hun Aandelen niet onder Bod I hebben aangeboden (de “Minderheid”) een bedrag per Aandeel uitkeren welke het equivalent is van (i) het hoofdhedrag van, plus enige rente over het Leningsdocument gedeeld door (ii) het aantal Aandelen dat door de Bieder wordt gehouden op het moment dat de uitkering wordt vastgesteld (de uitkeringen aan de Bieder en de Minderheid worden hierna aangeduid als de “Completion Uitkering”). De Bieder en Versatel zijn overeengekomen dat het gedeelte van de Completion Uitkering dat aan de Bieder uitgekeerd dient te worden, zal worden voldaan door middel van een cessie van het Leningsdocument aan de Bieder. De Bieder en Ganymed beogen dat, na een dergelijke cessie, de vordering op Ganymed onder het Leningsdocument zal worden verrekend met de vordering van Ganymed op de Bieder onder de lening welke verschaft zal worden door Ganymed aan de Bieder in verband met de financiering van de Biedingen. Over de uitkering van het relevante gedeelte van de Completion Uitkering aan de Minderheid zou dividendbelasting kunnen worden geheven. Of en wanneer een dergelijke belasting terug te vorderen is, zal afhangen van het belastingprofiel van iedere Aandeelhouder die zijnihaar Aandelen niet onder Bod I heeft aangeboden. Zie Hoofdstuk 15 ( T a Aspects of the Offers). De Aandeelhouders zullen (op de Buitengewone Vergadering van Aandeelhouders), onder andere, verzocht worden om (i) het Bestuur te machtigen om de Duitse Transactie aan te gaan en (ii) de Completion Uitkering goed te keuren, zowel (i) als (ii) onder de opschortende voorwaarde dat de Biedingen gestand zijn gedaan. Zie tevens Hoofdstuk 14A (Ertraordinary Generol Meeting of Shareholders of Versatel). 17.9.2 Strategie van Versatel Benelux en de Benelux Business en Duitse Business
Zowel de Bieder als Apax onderschrijven de kernelementen van Versatel’s strategie in hun respectievelijke markten. A l s zodanig zal de strategie van Versatel in de Benelux en Duitsland grotendeels ongewijzigd blijven en de uitgangspunten daarvan blijven om: (a) zoveel mogelijk klanten aan te blijven sluiten op haar netwerk. Versatel is voornemens om door te gaan om te trachten om zo veel mogelijk klanten direct aan te sluiten op haar netwerk, daarbij gebruikmakend van haar eigen glasvezel, DSL technologie, draadloze technologie, gehuurde lijnen en andere technologieën voor zover zulke technologieën kostenefficiënt en beschikbaar worden. Versatel is van mening dat direct aangesloten klanten een aanwinst o p de lange termijn vertegenwoordigen. Voorts is Versatel van mening dat zij beter in staat is om de kwaliteit en
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winstgevendheid te controleren van haar diensten en de hoeveelheid en soorten diensten die aan direct aangesloten klanten worden aangeboden; gebundelde diensten te leveren. Versatel is voornemens om door te gaan met het leveren van gebundelde diensten (bijvoorbeeld spraak, data, internet en video) via één enkele aansluiting. Versatel is van mening dat het aan een klant aanbieden van meerdere diensten via één enkele aansluiting een voordeel oplevert ten opzichte van haar concurrenten in haar doelmarkten en Versatel de gelegenheid geeft om additionele of uitgebreidere diensten te leveren tegen beperkte periodieke uitgaven, hetgeen de winstgevendheid en de waarde voor de klanten verbetert; de nadruk te bluven leggen op de doelgroep van het klantensegment. In ieder van haar kernmarkten heeft Versatel als doelstelling om een f i n service provider te zijn voor zakelijke, particuliere en carrier klanten. Voordat haar infrastructuur aangelegd werd, richtte Versatel zich op het leveren van indirecte toegangsdiensten aan het midden- en kleinbedrijf. Echter, sinds 1999 is Versatel tevens in staat geweest om diensten te leveren aan grote bedrijven, welke verder ontwikkelde diensten vereisten. Versatel is van mening dat zij, als gevolg van haar vermogen om diensten te leveren en de kostenvoordelen welke geassocieerd worden met haar wijdvertakte lokale netwerk, goed gepositioneerd is om succesvol mee te dingen in de biedingsprocessen welke over het algemeen voor deze grotere klanten gehouden worden. Voorts is Versatel van plan zich te blijven begeven op de markt voor het midden- en kleinbedrijf met een aanbod van gebundelde diensten. Om aantrekkelijk te zijn voor de massale consumentenmarkt en om een groter verkoopvolume ie genereren, heeft Versatel zich gericht op het leveren van breedbanddiensten via DSL technologie. Versatel is ook voornemens om haar netwerk te blijven gebruiken om diensten aan andere kredietwaardige carriers te leveren; haar bestaande netwerk goed te blijven benutten. In aanvulling op het inzetten van een sterke “buckbone” en lokale toegangsinfrastructuur in Nederland, Duitsland en België, heeft Versatel tevens aanzienlijke investeringen in wijkcentrales gedaan voor de inzet van DSL infrastructuur. Per 30 juni 2005 had Versatel ongeveer 310 wijkcentrales operationeel in Nederland, welke ongeveer 65 procent van de Nederlandse markt dekten. Per 30 juni 2005 exploiteert Versatel 588 wijkcentrales met ISDN e d o f DSL infrastructuur in Duitsland. In België heeft Versatel 57 operationele wijkcentrales. A l s gevolg daarvan is Versatel van mening dat zij goed gepositioneerd is om op kostenefficiënte wijze lokale toegangsdiensten te leveren aan een groot deel van de zakelijke en particuliere markt in Nederland, Duitsland en België; en t-
zich te richten op superieure klantenservice. Versatel streeft ernaar een concurrentievoordeel te behouden door superieure klantenservice te leveren op het gebied van bereidwillige beantwoording van vragen, nauwkeurigheid en kwaliteit. Versatel is van mening dat het leveren van klantenservice op hoog niveau een essentieel element is om klanten aan te trekken en te behouden. Daarom blijft Versatel investeren in haar klantenservice en operationele ondersteuningssystemen om haar concurrentievoordeel te behouden. Met betrekking tot de Benelux Business, zal de Bieder er naar streven om de bestaande Tele2 activiteiten te integreren in de activiteiten van Versatel. De combinatie van de Benelux Business en Tele2 zal een leidende alternatieve telecommunicatie-exploitant in Nederland en België doen ontstaan. Voor de klanten van Versatel-in alle segmenten-zal deze combinatie bijdragen tot schaalvoordelen, welke op hun beurt zullen leiden tot een optimale combinatie van hoge kwaliteit en innovatieve dienstverlening, een sterke klantenbasis en scherpe prijzen. De Bieder is voornemens om Versatel’s triple-pluy strutegv in Nederland voort te zetten. Met betrekking tot de Duitse Business beoogt Apax momenteel dat de Duitse Business het platform zal vormen voor verdere acquisities in die markt. Het strategische doel van Apax is om de Duitse alternatieve carriers markt te consolideren, om zodoende een sterke speler te creëren die o p nationaal niveau kan concurreren met, onder meer, Deutsche Telekom AG. 17.9.3 Liquiditeit en beëindiging van beursnotering
Door de aankoop van Effecten door de Bieder onder de Biedingen zal, onder andere, het aantal Effectenhouders verminderen, evenals het aantal Effecten dat openbaar wordt verhandeld. Dit zal derhalve een negatieve invloed hebben op de liquiditeit en marktwaarde van de Effecten die niet onder de Biedingen zijn aangemeld.
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Onder voorwaarde van gestanddoening van de Biedingen is de Bieder voorts voornemens om zo spoedig mogelijk, in overleg met Euronext Amsterdam, de notering van de Effecten op Euronext Amsterdam te beëindigen. Dit zou evenzeer een verdere negatieve invloed hebben op de liquiditeit en marktwaarde van de Effecten die niet onder de Biedingen zijn aangemeld. Na de afwikkeling van de Biedingen en met inachtneming van de bepalingen van Hoofdstuk 8.8.4 (Legal Structure of Erstatel following the Offers) en Hoofdstuk 17.9.4 (Juridische Structuur van Versatel na de Biedingen) is de Bieder voornemens om Versatel in een besloten vennootschap met beperkte aansprakelijkheid om te zetten. Na een dergelijke omzetting zullen de Aandelen niet langer vrij overdraagbaar zijn en zullen de Obligaties uitsluitend kunnen worden geconverteerd in aandelen met een dergelijke beperkte overdraagbaarheid. 17.9.4 Juridische Structuur van Kmatel na de Biedingen
Juridische Structuur ais mei betrekking tot de Aandelen aan de Minimum Aceepiatie Voorwaarde wordt vokn Indien op de Dag van Betaling met betrekking tot de Aandelen aan de Minimum Acceptatie Voorwaarde is voldaan en de Bieder 95 procent (of meer) van de Aandelen heeft verworven (exclusief de Aandelen die door Versatel edof haar dochtermaatschappijen worden gehouden), is de Bieder momenteel voornemens de resterende Aandelen, die niet zijn aangemeld (noch door Versatel of haar dochtermaatschappijen worden gehouden), te verkrijgen door middel van de wettelijke uitkoopprocedure overeenkomstig artikel 2:92a of 2201a van het Burgerlijk Wetboek. De Bieder verwacht dat, in het geval van een wettelijke uitkoopprocedure, het bedrag per Aandeel hetwelk betaald zal worden aan de Minderheid gelijk zal zijn aan de Biedprijs per Aandeel minus het bedrag van de Completion Uitkering. Zie Hoofdstuk 8.8.1 (Divestifure of fhe German Business) en Hoofdstuk 17.9.1 (Afstoting van de Duitse Business). Ook indien de Minimum Acceptatie Voorwaarde met betrekking tot de Aandelen is vervuld, kan de Bieder (in plaats van het initiëren van de wettelijke uitkoopprocedure) met gewone meerderheid van stemmen in de algemene vergadering van aandeelhouders van Versatel besluiten dat een juridische fusie tussen de Bieder en Versatel tot stand zal worden gebracht in overeenstemming met de artikelen 2:309 en 2:334 van het Burgerlijk Wetboek of dat enige van de andere stappen worden ondernomewdie zijn uiteengezet onder “Additionele Manieren om de Aandelen van de Minderheid te verkrijgen” in dit Hoofdstuk 17.9.4. De juridische consequenties van een juridische fusie, inclusief de mogelijkheid om daarna een wettelijke uitkoopprocedure te starten, zijn dezelfde als hieronder uiteengezet onder ‘‘Juridische Structuur als van de Minimum Acceptatie Voorwaarde afstand wordt gedaan” in dit Hoofdstuk 17.9.4. Juridische Structuur ais met betrekking tot de Aandelen van de Minimum Acceptatie Voorwaarde afitand wordt gedaan In het geval dat de Bieder afstand heeft gedaan van de Minimum Acceptatie Voorwaarde met betrekking tot de Aandelen en de Biedingen gestand heeft gedaan, en na de Dag van Betaling niet 95 procent of meer van de Aandelen verkregen wordt (exclusief Aandelen gehouden door Versatel of haar dochtermaatschappijen), is de Bieder voornemens, met gewone meerderheid van stemmen in de algemene vergadering van aandeelhouders van Versatel, een juridische fusie tot stand te brengen tussen de Bieder en Versatel, in overeenstemming met de artikelen 2309 en 2:334 van het Burgerlijk Wetboek (welke artikelen refereren aan een zogenaamde “driehoeksfusie”, als gevolg waarvan de aandeelhouders van de verdwijnende vennootschap aandeelhouders worden van een groepsmaatschappij van de overblijvende vennootschap).
A l s gevolg van een dergelijke juridische fusie, zal de Bieder voortduren te bestaan en zal Versatel ophouden te bestaan. De Minderheid zal dan, van rechtswege, aandeelhouder worden in Tele2 Netherlands Holdings B.V. (de “Uitgevende Entiteit”), de enige aandeelhouder van zowel de Bieder als Tele2. De aandelen die door de Uitgevende Entiteit, ten gevolge van de juridische fusie, aan de Minderheid worden toegekend zullen, niettegenstaande enige verwatering ten aanzien van het aantal totale stemrechten die door de Minderheid kunnen worden uitgeoefend, een waarde hebben die gelijk is aan de waarde van de Aandelen die door de Minderheid gehouden worden, onmiddellijk na voltooiing van de Duitse Transactie en uitbetaling van de Completion Uitkering. De samenstelling van het aandelenkapitaal van de Uitgevende Entiteit wordt hieronder beschreven.
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Het maatschappelijke kapitaal van de Uitgevende Entiteit bestaat uit twee afzonderlijke klassen van zogenaamde tracking aandelen, zijnde gewone aandelen A en gewone aandelen B.
Alle uitgegeven gewone aandelen A worden gehouden door Tele2 Europe S.A. en geven alleen recht
op de waarde en winsten van Tele2 en ïhngo S.A., dochtervennootschappen van de Uitgevende Entiteit. De totale waarde van Tele2 en Tango S.A. is ongeveer EUR 303 miljoen. De gewone aandelen A geven geen recht op de waarde en winsten van Versatel en het vreemd vermogen dat is gebruikt om Versatel te kopen. De gewone aandelen B geven alleen recht op de waarde en winsten van het met vreemd vermogen gefinancierd belang van de Uitgevende Entiteit (via de Bieder) in Versatel. De gewone aandelen B geven geen recht op de waarde en winsten van Tele2 en Tango S.A. Na een juridische fusie zal het percentage gewone aandelen B dat aan de Minderheid wordt uitgekeerd gelijk zijn aan het percentage Aandelen dat, onmiddellijk voorafgaand aan een juridische fusie, wordt gehouden door de Minderheid. De venvachting is dat de Bieder of de Uitgevende Entiteit gedeeltelijk bankfinanciering zal aanwenden om aan haar verplichtingen onder de Biedingen te kunnen voldoen. A l s gevolg daarvan kan de Minderheid, na bovenbedoelde juridische fusie, gewone aandelen B verkrijgen van een andere (suh)klasse, welke preferente rechten omvat. Zulke preferente rechten geven de Minderheid recht op een zodanig rendement als nodig is om een eventueel tekort tussen de waarde van hun Aandelen voorafgaand aan de juridische fusie en de waarde van hun aandelen in de Uitgevende Entiteit op te heffen. Vanwege de bestaande belangen van de Uitgevende Entiteit in Tele2 en Tango S.A. en het gebruik door de Bieder van bankfinanciering om aan haar verplichtingen onder de Biedingen te kunnen voldoen, zal het percentage van de Minderheid van de totale nominale waarde van alle aandelen in de Uitgevende Entiteit (de geplaatste gewone aandelen A en gewone aandelen B) als gevolg van de juridische fusie kleiner worden dan het aandeel van de totale nominale waarde van de Aandelen welke door de Minderheid, voorafgaand aan de juridische fusie, gehouden werd. Een voorbeeld ter illustratie: indien de Minderheid voorafgaand aan de juridische fusie 15 procent van de Aandelen zou houden, voorziet de Bieder dat de Minderheid na de juridische fusie minder dan 5 procent van de totale nominale waarde van de aandelen in de Uitgevende Entiteit zal houden. Dienovereenkomstig zullen de stemrechten welke door de Minderheid kunnen worden uitgeoefend ook minder dan 5 procent bedragen. Verder wordt venvacht dat enige bankfinanciering die aan de Uitgevende Entiteit ter beschikking wordt gesteld, op een gegeven moment-tegen een redelijke en evenwichtige prijs-zal worden omgezet in nieuw uit te geven gewone aandelen in de Uitgevende Entiteit, van dezelfde klasse als die van aandelen die door de Minderheid gehouden worden. Als gevolg van een dergelijke omzetting zal het belang van de Minderheid in de Uitgevende Entiteit venvateren.
In het geval dat de Minderheid op enig moment, zoals ten gevolge van een juridische fusie erdof een omzetting van bankfinanciering in aandelen zoals hierboven omschreven, minder dan 5 procent van ,de totale nominale waarde van de aandelen in de Uitgevende Entiteit (de geplaatste gewone aandelen A en gewone aandelen B) zou houden, dan zou het mogelijk zijn voor de andere aandeelhouders in de Uitgevende Instelling om een wettelijke uitkoopprocedure te starten in overeenstemming met artikel 2:201a van het Burgerlijk Wetboek, om zodoende de overgebleven aandelen in de Uitgevende Entiteit te verkrijgen. Aangezien de Uitgevende Entiteit een besloten vennootschap met beperkte aansprakelijkheid onder Nederlands recht is, zullen alle door de Uitgevende Entiteit aan de Minderheid uit te keren aandelen niet-genoteerde aandelen op naam zijn die niet vrij overdraagbaar zijn. Volgend op een juridische fusie waarin de Bieder de overblijvende entiteit is, zullen de overgebleven Obligatiehouders obligaties houden die kunnen worden omgezet in aandelen in het kapitaal van de Bieder die niet vrij overdraagbaar zijn, en voorts in overeenstemming met de Obligatie Voorwaarden. Zouden, zoals wordt venvacht, zulke aandelen minder dan 5 procent van de totale nominale waarde van de aandelen in de Bieder vertegenwoordigen, dan zou het voor de Uitgevende Entiteit mogelijk zijn om een wettelijke uitkoopprocedure te starten in overeenstemming met artikel 2201a van het Burgerlijk Wetboek. De statuten van de Uitgevende Entiteit zullen bepalen dat de algemene vergadering van aandeelhouders van de Uitgevende Entiteit, met toestemming van de houders van de desbetreffende klasse van aandelen, met meerderheid van stemmen (op voorstel van de directie van de Uitgevende Entiteit) gerechtigd is elke afzonderlijke klasse van aandelen in te trekken tegen (terug)betaling met inachtneming van de relevante bepalingen in de statuten van de Uitgevende Entiteit. In het geval dat de
85
klasse(n) van aandelen die door de Minderheid wordt(en) gehouden, word(t)(en) ingetrokken, zal de Minderheid ophouden aandeelhouder te zijn in de Uitgevende Entiteit. Voor een periode van zes maanden nadat de meergenoemde juridische fusie tot stand is gekomen, zal de Minderheid het recht hebben om hun gewone aandelen B in de Uitgevende Entiteit, te verkopen en te leveren, terwijl Tele2 Europe S.A. zich verbindt om, gedurende dezelfde zesmaands termijn, de aandelen in de Uitgevende Entiteit die door de Minderheid gehouden worden, te kopen, indien de Minderheid ervoor kiest om te verkopen. De koopprijs per aandeel voor dergelijke aandelen B zal, gedurende deze beperkte termijn, vastgesteld worden op de Biedprijs per Aandeel zoals aangepast ten behoeve van de Duitse Transactie, de uitkering van de Completion Uitkering en enige uitkeringen uit de vrije reserves van de Uitgevende Entiteit welke de preferente rechten die verbonden zijn aan de door de Minderheid gehouden gewone aandelen B doen afnemen. Enig lid van de Minderheid die een onafhankelijke waardering van zijn aandelen verzoekt gedurende deze zesmaands termijn, heeft het recht om zijn aandelen in de Uitgevende Entiteit aan te bieden in overeenstemming met de voorgestelde statuten van de Uitgevende Entiteit, maar zal zijn recht verliezen om van Tele2 Europe S.A. te kunnen verlangen dat deze zulke aandelen koopt. De statuten van de Uitgevende Entiteit, welke op verzoek opgevraagd kunnen worden bij Tele2 en the Settlement Agent, bevatten verdere details met betrekking tot de beperkingen ten aanzien van de aandelenoverdracht en ten aanzien van het verzoek om een onafhankelijke waardering. In het geval van een juridische fusie en enige daaropvolgende wettelijke uitkoopprocedure of intrekking van een klasse van aandelen, zal de economische waarde van de Aandelen of aandelen in de Uitgevende Entiteit welke door de Minderheid gehouden worden, vastgesteld moeten worden. De Bieder verwacht dat de redelijke waarde van zulke aandelen vastgesteld zal worden onder verwijzing naar de Biedprijs per Aandeel, zoals aangepast ten behoeve van de Duitse Transactie, uitkering van de Completion Uitkering (zie Hoofdstuk 8.8.1 (Divestiture ofthe G e m a n Business) en Hoofdstuk 17.9.1 (Afstoting vair de Duitse Business)) en enige uitkeringen uit de vrije reserves van de Uitgevende Entiteit welke de preferente rechten die verbonden zijn aan de door de Minderheid gehouden gewone aandelen B doen afnemen. Additionele manieren om de Aandelen van de Minderheid te verkrijgen De Bieder behoudt zich tevens het recht voor elk ander juridisch geoorloofd middel aan te wenden
om 100 procent van de Aandelen te verkrijgen of op andere wijze volledig eigendom van Versatel’s onderneming te verkrijgen, inclusief door middel van een liquidatie, splitsing als bedoeld in artikel 2:334a van het Burgerlijk Wetboek, verkoop van alle of nagenoeg alle activa van Versatel of door middel van een juridische fusie tussen Versatel en enig ander lid van Tele2 AB’s groep. Ten slotte behouden de Bieder en Versatel zich het recht voor om de Bieder activa in Versatel in te laten brengen tegen uitgifte van Aandelen in het kapitaal van Versatel, waarbij bet voorkeursrecht van andere Aandeelhouders wordt uitgesloten, alles in overeenstemming met de Nederlandse wet en de Versatel Statuten op dat moment.
l
Acties te ondernemen met betrekking tot de Obligaties In het geval dat de Biedingen gestand worden gedaan en er volgend op enige conversie, aflossing, inkoop of intrekking van alle Obligaties die door de Bieder gehouden worden, minder dan 15 procent van het totale aantal Obligaties die oorspronkelijk zijn geplaatst zouden overblijven, dan zou Versatel gerechtigd zijn om alle uitstaande Obligaties af te lossen in overeenstemming met de Obligatie Voorwaarden tegen 100 procent van de hoofdsom plus opgebouwde en verschuldigde rente tot aan, maar niet inclusief, de datum van aflossing. Het is ook mogelijk dat, in het geval dat de Biedingen gestand worden gedaan, een Vergadering van Obligatiehouders op verzoek van Versatel bijeen zal worden geroepen alwaar besloten zal worden over een wijziging van de verplichte datum van aflossing, zoals opgenomen in de Obligatie Voorwaarden. Zie Hoofdstuk 14B (Meeting of Bondholders). Om tot het voorstel zoals hierboven uiteengezet te kunnen komen zal, voor de Vergadering van Obligatiehouders, ten minste 66% procent van de totale hoofdsom van de o p dat moment uitstaande Obligaties vertegenwoordigd moeten zijn. Op de Vergadering van Obligatiehouders kan een besluit om de Obligatie Voorwaarden aan te passen goedgekeurd worden indien ten minste 66% procent van de op de vergadering geldig uitgebrachte stemmen, daarmee instemt. De Bieder is van plan om met betrekking tot alle stemmen die verbonden zijn aan de Obligaties die worden aangemeld onder Bod 11, ten gunste van zo’n wijziging te stemmen. Na een dergelijke wijziging van de Obligatie Voorwaarden, is Versatel verplicht om alle Obligaties die niet voorafgaand aan de gewijzigde verplichte aflossingsdatum zijn geconverteerd, afgelost, ingekocht of ingetrokken, af te lossen tegen
86
!
i
I
I
100 procent van de hoofdsom, plus opgebouwde en verschuldigde rente tot aan, maar niet inclusief, de datum van aflossing zoals uiteengezet in Hoofdstuk 14B (Meeting of Bondholden). De Bieder behoudt zich tevens het recht voor elk ander juridisch geoorloofd middel aan te wenden, of te doen aanwenden, om Obligaties te verkrijgen, te converteren, af te lossen, in te trekken of om anderszins het voorgaande te bewerkstelligen. Wijzigingen van de Versatel Staîuten en structuur De Bieder behoudt zich het recht voor om de Aandeelhouders voorstellen te doen met betrekking tot één ‘of meerdere wijzigingen van de Versatel Statuten en vennootschapsstructuur, teneinde de vennootschapsstructuur van Versatel in lijn te brengen met de nieuwe holding en financieringsstructuur, die zal bestaan indien en zodra de Biedingen gestand zijn gedaan. I 7.9.5 Dividendbeleid
Er is geen dividend vastgesteld met betrekking tot het Boekjaar 2004. Het is de bedoeling dat, na gestanddoening van de Biedingen en voltooiing van de afstoting van de Duitse Business, Versatel besluit een dividend aan de Aandeelhouders betaalbaar te stellen, zulks in verband met de Duitse Transactie. De Bieder is voorts voornemens om het dividendbeleid van Versatel voort te zetten en zal mogelijk in de toekomst geen dividend (in contanten) aan de Aandeelhouders uitkeren. 17.9.6 Sociale Consequenties De Bieder verwacht op korte termijn de activiteiten van de Benelux Business en Tele2 te integreren. Details van een dergelijke integratie zullen echter pas vastgesteld worden na de Datum van Betaling en nadat de Bieder in staat is geweest om de consequenties van een dergelijke integratie heter te kunnen overzien. Er is een positief advies verkregen van de ondernemingsraad van Versatel Nederland B.V., zulks in overeenstemming met de Wet op de ondernemingsraden. De Sociaal-Economische Raad is op de hoogte gesteld van de Biedingen in overeenstemming met het SER-besluit Fusiegedragsregels 2000. De groepsondernemingsraad (“Konzembetriebsrat”) van de Duitse Business van Versatel is op de hoogte gesteld van de Duitse Transactie. Bovendien heeft Versatel de ondernemingsraad van haar Belgische activiteiten met betrekking tot de Transactie op de hoogte gesteld. 17.9.7 Raad van Commissarissen en Hoofddirectie Vanaf de Dag van Betaling zal de Raad van Commissarissen bestaan uit vier leden, zijnde de heer J. Svedberg (Chief Operating Officer van Tele2 AB), de heer L:J. Jarnheimer (Chief Executive Officer van Tele2 AB), de heer H. Zadler (Chief Financial Officer van Tele2 AB) en de heer E Berglund (President van Tele2 Sverige AB). De huidige leden van de Raad van Commissarissen, de heer L.W.A.M. van Doorne, de heer H.H. Huber, de heer L.M.H.A. Hermans, de heer B.L.J.M. Beerkens en de heer J.G. Drechsel zijn voornemens af te treden, met ingang van de Dag van Betaling. Leden van de Raad van Commissarissen die aftreden ontvangen hun reguliere reeds vastgestelde compensatie voor het Boekjaar 2005. Geen andere compensatie, zoals bedoeld in artikel 9i sub p Bte 1995, zal aan aftredende leden van de Raad van Commissarissen worden betaald. Onder de voorwaarde van gestanddoening van de Biedingen zal de heer R.M. Raithatha, enig lid van het Bestuur, zijn functies in het Bestuur en de Uitvoerende Raad neerleggen, op of kort na de Dag van Betaling doch uiterljk op 31 december 2005. Onder dezelfde Voorwaarde zal de arbeidsovereenkomst van de heer R.M. Raithatha op 31 december 2005 eindigen, maar zal hij als consultant beschikbaar zijn voor Versatel en Tele2 tot 30 juni 2006. Onder dezelfde voorwaarde zal de vergoeding welke verschuldigd is aan de heer R.M. Raithatha met betrekking tot zijn consultancy diensten en de heeindiging van zijn dienstverband in totaal EUR 2.258.000 bedragen. De verwachting is dat de heer P.G. Borgklint, president en CE0 van Tele2, de heer Raithatha zal opvolgen als enig lid van het Bestuur. 17.10
Mededelingen
Aankondigingen welke in verband met de Biedingen moeten worden gedaan zullen via een persbericht worden uitgebracht en tevens worden gepubliceerd in tenminste Het Financieele Dagblad en,
87
P‘
.a
waar van toepassing, de Officiële Prijscourant van Euronext Amsterdam en zullen worden vrijgegeven aan de Dow Jones News Service. Onder voorwaarde van toepasselijke vereisten van de Nederlandse wet- en regelgeving met betrekking tot de openbare biedingen en zonder de wijze waarop de Bieder een publieke aankondiging kan doen te beperken, heeft de Bieder geen verplichting om enige openbare aankondiging anders dan hierboven beschreven, te communiceren. 17.11 Verkrijgbaarheid Informatie
Exemplaren van dit Biedingsbericht, de Versatel Statuten alsmede de Voorgestelde Versatel Statuten, welke documenten door middel van verwijzing (“incoporution by reference”) zijn opgenomen in, cn een onderdeel vormen van, dit Biedingsbericht, zijn kosteloos verkrijgbaar ten kantoren van Versatel en de Settlement Agent en kunnen worden verkregen door contact op te nemen met Versatel of de Settlement Agent op de adressen hieronder: Versatel Versatel Telecom International N.V. T.a.v. Investor Relations Department Hullenbergweg 101 1101 CL Amsterdam Nederland
The Settlement Agent ABN AMRO Bank N.V. T.a.v. Servicedesk MF 7020 Kemelstede 2 4817 ST Breda
Postbus 22697 1100 D D Amsterdam Z-O Neder I a nd Tel. +31 (0)20 750 2362 Fax 31 (0)20 750 1019 Email:
[email protected]
Postbus 3200 4800 D E Breda
+
Nederland Tel. f 3 1 (0)76 579 9455 Fax +31 (0)76 579 9643 Email:
[email protected]
88
17.12 Indicatief Tudschema Venvaehte Datum en Tud (alle tiden zijn in Amsterdamse tijd, New ïorkse lijd is zes uur eerder)
!
09:OO uur, 13 september 2005
..
Publicatie van de advertentie waarin de verkrijgbaarstelling van het Biedingsbericht, vanaf 14 september, en de Biedingen wordt aangekondigd, in overeenstemming met artikel 90 lid 2 Bte 1995
09:00 uur, 14 september 2005
. .
Aanvang van de Aanmeldingstermijn
1000 uur, 29 september 2005
1 I
Geheiirtenir
15:00 uur, 7 oktober 2005, behoudens verlenging . . . .
...
Buitengewone Vergadering van Aandeelhouders, waarvoor ook de Obligatiehouders zullen worden uitgenodigd, waarin onder andere (zie Hoofdstuk 14A) de Biedingen zullen worden besproken, overeenkomstig het bepaalde in artikel 9q Bte 1995 Sluitingsdatum Uiterste datum waarop Effectenhouders hun Effecten onder de Biedingen kunnen aanmelden
Uiterlijk om 15:00 uur binnen vijf Werkdagen na de Sluitingsdatum . . Gestanddoeningsdatum De datum waarop de Bieder aankondigt of de Biedingen gestand worden gedaan, overeenkomstig artikel 9t lid 4 Bte 1995
I
Uiterlijk vijf Werkdagen na de Gestanddoeningsdatum . . . . .
Na de Dag van Betaling (indien deze wordt gehouden). . . . . , .
Dag van Betaling De datum waarop de Bieder, in overeenstemming met de bepalingen van de Biedingen, zal betalen (i) de Biedprijs per Aandeel aan de Aandeelhouders die op geldige wijze hun Aandelen hebben aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding desalniettemin heeft aanvaard) en hebben geleverd onder Bod I; en (ii) de Biedprijs per Obligatie aan de Obligatiehouders die op geldige wijze hun Obligaties hebben aangemeld (of op ongeldige wijze, mits de Bieder de aanmelding desalniettemin heeft aanvaard) en hebben geleverd onder Bod I1 Vergadering van Obligatiehouders, tijdens welke vergadering over wijziging van de Obligatie Voorwaarden gesproken en beslist zal worden (zie Hoofdstuk 14B, Meeting of Bondholders of Versatel).
89
18. VERSATEL TELECOM INTERNATIONAL N.V.
INDEX TO CONSOLIDATED FINANCIAL INFORMATION Section 18 (Financial Information) of this Offer Memorandum contains, amongst others, information extracted from the annual reports (jaarrekeningen) of Versatel Telecom International N.V. for the Financial Year 2002, the Financial Year 2003 and the Financial Year 2004 and as wel1 as the Selected Notes of the 2004 annual report. Additionally, unaudited condensed consolidated financial information is provided for the six month period ended 30 June 2005. The following financial information is made available:
-
Unaudited Condensed Consolidated Financial Information for the sk month period ended 30 June 2005. Review Report relating to the Unaudited Condensed Consolidated Financial Information for the sk month period ended 30 June 2005.
* Consolidated Financial Information for the years 2004, 2003 and 2002.
Auditors’ Report relating to the Consolidated Financial Information for the years 2004, 2003 and 2002.
ïkansition to IFRS The unaudited condensed consolidated financial information for the six month period ended 30 June 2005 hereinafter is prepared in accordance with International Financial Reporting Standards (IFRS). IFRS has been adopted by the Company with effect from 1 January 2005. The major changes arising between generally accepted accounting principles in the Netherlands (“Dutch GAAP”) and IFRS are set out in the notes to the unaudited condensed consolidated financial information hereinafter.
90
VERSATEL TELECOM INTERNATIONAL N.V. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2005
91
VERSATEL TELECOM INTERNATIONAL N.V. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION Consolidated balance sheet at 30 June 2005 and 31 December 2004 June 2005
(Currency-thousaods of euroì
December 2004
ASSETS Non-current assets Intangihle fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tangihle fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,355 721,224 1.443
26,507 667,171 1,621
749,022
695,299
243
133
77,482 35,068 28,166
69,618 42,878 22.232
140,716
134,728
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets. .....................
252.829
269.477
393,788
404,338
..............................................
1,142,810
1,099,637
572,475
572,507
572,475
572,507
........................................
114,340
115,735
Non-current liahilities Long-termdeht . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term lease ohligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,568 37,516 95,453
2,977 35,928 92,940
147,537
131,845
Current liabilities Short-term portion of long-term lease ohligations .................... Accountspayahle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued liahilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,482 107,138 121,178 73,660
5,842 103,280 100,012 70.416
Total short-term liahilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total group equity and liahilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
308,458 1,142,810
279,550 1,099,637
Total fixed assets Current assets Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivuble Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unhilled revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other receivahles and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . Total accounts receivahle
Total assets
GROUP EQUITï AND LIABILITIES Group equiîy Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total group equity
............................
Provisions Deferred income taxes
Total long-term liabilities
....................................
92
-
-
Consolidated statement of operations for the six months ended 30 June 2005 and.2004 June 2005 ~
(Currenq-ibouaands
Revenues
of eum)
.....................................................
Operating expenses Direct cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Social securities ................................................ Pensioncost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advertising and marketing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation of tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortisation of intangible f i e d assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
........................................
Total operating expenses
368,514
June 2004
279,519
162,871 131,398 47,410 40,482 6,144 5,820 2,624 2,590 15,013 6,976 76,711 65,061 152 19 12,889 9,663 43,108 29,985 366,922 291,994 ~
................................................
1,592
(12,475)
Financial income and expense Interest- and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Currency exchange gain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,392 (7,718) 1.634
Total financial income and expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss before income taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,317 (1,775) 537 79 (12,396)
.........................................
(130)
Operating result
Income tax credit/(charge)
......................... Minorityinterest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,526)
Loss before minority interest after income taxes Net loss after income taxes
........................................
1,336 __ (11,190) (705) ~
Net loss after income taxes per share (Basic and Diluted) Number of shares (basic).
............
..................
(0.00) ~ ~
518,672
93
(0.02)
=
464.689
Consolidated cash flow statement for the six months euded 30 June 2005 and 2004 June 200.5
(Cumncy-thousands of enm)
June2004
Cash flows from operating activities Net result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income tax movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-cash portion of interest-and other income . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stock option expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in other operating assets and liabilities Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accountspayable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unearnedrevenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flows from investing activities Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in investing activities
. ... . ... .... ... ............... ....
Cash flows from financing activities Payments under capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from/(redemption of) short-term loans . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from exercised options . . , . . . . . . . . . . . . . . , . . , . . . . . . . . . . , . . . . Proceeds from exercised warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by/(used in) financing activities . . . . . . . . . . . . . . . . . . . . . . .
(705)
(11,190)
76,863 (1,395) 2,513
65,080 130
72
-
(1,336) 78
(7,864) (4,632) 26 (110) 2,052 (18,553) 3,857 1,881 3,244 5,302 7,192 (1,479) 85,719
35,307
I I
I
i
l
(128,530) (49,713) (128,530)
(49,713)
(1,300) 15,270 11,592 490
(632) (217)
-
111
40 50
-
Net decrease in cash . . . . . . . . , . . . . . . . . . . . . . . . . . , . . . . . . . . . , , . . . , . . . Cash, beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,163 (759) (16,648) (15,165) 269,477 158,900
Cash, end of the period.
252,829
143,735
I I
,
li ,
l
i 94
Notes to the Unaudited Condensed Consolidated Financial Information for the six month period’ended 30 June 2005 Versatel Telecom International N.V. (the Company) incorporated in Amsterdam on 10 October 1995, provides international and national telecommunication services in The Netherlands, ‘Germany and Belgium. 1.
Statement of compliance
The condensed consolidated financial information has been prepared in accordance with IFRS. The 2004 financial information has been restated from Dutch GAAP to IFRS. This is the companies first condensed consolidated financial information for part of the period covered by the first IFRS annual financial statements and IFRS 1 “First-time Adoption of IFRS” has been applied. The condensed consolidated financial information does not include al1 of the information required when preparing financial statements. An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Company is provided below. This explanation includes reconciliations of equity and profit or loss for the comparative period previously reported under Dutch GAAP to those now reported under IFRS. 2.
Basis of preparation
The financial information is presented in euros and has been prepared under the historica1 cost convention except for the accounting for the convertible bond which is measured at fair value. The preparation of financial information requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The financial information has been prepared on the basis of IFRS for an EU company expected to be effective per 31 December 2005. Management has made assumptions about IFRS, which is set out below, that is expected to be applied when the first annual IFRS financial statements are prepared for the year ending 31 December 2005. However IFRS is subject to ongoing review and endorsement by the European Union or possible amendment by interpretive guidance from the International Accounting Standards Board and are therefore still subject to change. The Company’s first financial statements prepared under IFRS may, therefore, be prepared in accordance with different accounting poiicies to those used in the preparation of the financiai information in this document. As a consequence, these figures and the discussion in this paragraph should be treated with appropriate caution, as they might need to be revised in the light of such change. 3.
Significant accounting policies
The significant changes in the Company’s accounting policies arising from the adoption of IFRS are set out below. With the exception of these changes, the accounting policies applied under IFRS are consistent in al1 material respects with the accounting policies previously applied under Dutch GAAP as set out on pages 102 to 106 of this document. IFRS 1aliows companies to elect to use one or more exemptions from IFRS in transition. Versatel has elected to use the following exemptions: * Business Combinations: Versatel has not retrospectively applied IFRS 3 on business combinations prior
to 1 January 2004; Share-based payments: Versatel has elected not to apply IFRS 2 on share-based payments to equity instruments that were granted on or before 7 November 2002 The main impact of the adoption of IFRS is in the following areas, which are discussed in the following paragraphs and relates to Share-based payments and Business Combinations. IFRS 2 Share-Based Payments IFRS 2 requires that the compensation expense is calculated at fair value at the date of the grant and recognized as expense in the statement of operations over the vesting period. Under Dutch GAAP share based payments did not result in charges to the statement of operations. For equity settled share-based payment transactions, Versatel wil1 apply IFRS 2 to share options that were granted after 7 November 2002 and have not vested on 1 January 2005.
95
The fair value of the options granted in December 2002 and November 2003 has been calculated using the binominal options valuation model. The charge to the statement of operations over the relevant option vesting periods is adjusted to reflect actual levels of vesting. As a result, an expense of € 0.1 million wil1 be recognized in the statements of operations for 2004 for the year. For the six months ended 30 June 2004 the amount recognised as an expense is € 0.1 million. IFRS 3 Business Combinations IFRS 3 requires goodwill to he carried at cost with impairment reviews both annually and when there are indications that the carrying value may not be recoverable. Under Dutch GAAP, Versatel amortized goodwill based on the expected economical life, on a straight-he basis, over a period varying from 5 to 10 years. Versatel has elected to apply the transition arrangement under IFRS 1, which allows for the prospective application of IFRS 3 from 1January 2004 onward. The impact of IFRS 3 and the associated transitional arrangements is that al1 goodwill reported under Dutch GAAP is fixed as of 1 January 2004. Accordingly, the transition adjustments are to reverse the total goodwill amortization over 2004 of € 1.1 million and to correct the 2004 amortization charge, a reduction of € 1.1 million for the year. For the six months ended 30 June 2004 this amount was approximately € 0.3 million. Business combinations in 2004 relate to the acquisition of Iparix and BerliKomm. The BerliKomm acquisition did not result in goodwill. The acquisition of Iparix resulted in goodwill of €0.6 million. Furthermore the goodwill in the balance sheet is related to the buy-out of the minority interests of Free Label and Radio 538 in Zon Nederland in June 2003 and to the buy out of the minority interest of Telco’s Executive in Versatel Deutschland Holding in 2004. Per 31 December 2004 Versatel performed impairment tests of its goodwill. No impairment was recognized as a result of these tests. 4.
Dutch GAAP Reconciliation
Reconciliation of profit attnbutable to sharebolders for the six months ended 30 June 2004 30June 2004 Currenq-Thousands of Eums
(Loss)/profit attributable to shareholders-IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Write back of goodwill amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share-Based Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Loss)/profit attributable to shareholders as previously reported-Dutch
GAAP
........
(12,526) (280) 78 (12,728)
Reconciliation of shareholders’ equiîy 31 December 2004
Cumeoey-Thousaads of Euros
Shareholders’ equity 31 December 2004-IFRS ............................... Write back of goodwill amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders’ equity 31 December 2004 - Dutcb GAAF’ ........................
96
572,507 (1,140) 571,367
REVIEW REPORT RELATING TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2005 rnrroduction We have reviewed the condensed consolidated financial information of Versatel Telecom International N.V., Amsterdam for the six month period ended 30 June 2005 as included in this offer memorandum on pages 92 to 96. We have not reviewed the comparative condensed consolidated financial information. The condensed consolidated financial information is the responsibility of the Company’s management. Our responsibility is to issue a report on the condensed consolidated financial information for the six month period ended 30 June 2005 based on our review.
Scope We conducted our review in accordance with generally accepted standards for review engagements. These standards require that we plan and perform the review to ohtain moderate assurance as to whether the condensed consolidated financial information is free of material misstatement. A review is limited primarily to inquiries of company personnel and analytica1 procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we d o not express an audit opinion. Opinion Based on our review, nothing has come to our attention that causes US to helieve that the condensed consolidated financial information for the six month period ended 30 June 2005 do not comply with the basis as set out in the notes to the condensed consolidated financial information, which describes how International Financial Reporting Standards (IFRS) have been applied by management under IFRS 1, including assuniptions management has made about the standards and interpretations expected to he effective, and policies expected to he adopted, when management prepares its first complete set of IFRS financial statements as at 31 December 2005. Emphasis of mafter Without qualifying OUT opinion above, we draw attention to the fact that the notes to the condensed consolidated financial information explain why there is a possibility that the condensed consolidated financial information may require adjustment before constituting the final IFRS financial statements as at 31 December 2005. Moreover we draw attention to the fact that, under IFRS only a complete set of financial statements with comparative finiincial information and explanatory notes can provide a fair presentation of the Company’s financial position, results of operations and cash flows in accordance with IFRS. Amsterdam, 14 September 2005 Ernst & Young Accountants
91
Consolidated balance sheet at 31 December 2004, 2003 and 2002 2004
(Curmncy-thousands of euro)
_ 2003
2002 _
ASSETS
~~
I
Total accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134,728 269,477
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
404,338
85,739 158,900
75,090 191,031
245,138
266,594
~~
~~
Total assets
..........................................
1,098,497 ~867,835 868,083 ~~
GROUP EQUITY AND LIABILITIES Group equity
99
~
I
Consolidated statement of operations for the years ended 31 December 2004. 2003 and 2002 2004
2003
2002
600. 679
462. 139
294.400
214. 761 72. 268 9.936 3.302 5. 652 .(14. 930)
146.030 56.487 7.801 2.542
(Currency-thausands of euro)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses Direct cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pensioncost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Claim settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Idle building charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bond professional charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advertising and marketing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation of tangible fked assets . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of intangible fmed assets . . . . . . . . . . . . . . . . . . . . . . . . Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income and expense Result from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest- and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Currency exchange loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total financial income and expense
.........................
282.383 82. 705 12.120 5.055
. .
16.434 140.302 1.249 18.596 65.332 (23,497)
902. 888 (44.758) (608.488)
. . 446 5 ,638 17,627 3.986 (6. 137) (4.407) (146.507) (1.448) (1.307) 42.285
(3.599) .
I
.........
9.050 134.594 210 17.050 55.004
624. 176 506.897 -
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27.096) 822 Credit from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss before minority interest after income taxes . . . . . . . . . . . . . . . . . (26.274) . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.860 Net loss after income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24. 414) Net loss after income taxes per share (Basic and Diluted)")
-
-
(9. 664) 2. 688 5.803 8.353 395.980 231.303 16.334 39. 231
(0.05)
(76)
(86. 149)
(44. 834) (694.637) 10.249 .
(34.585) '(694. 637) 1.707 . (32.878) (694.637) (0.07)
(3.98)
(i) The calculation of earnings per share is based on thc net loss after incame taxes for the year and on 481. 483 thousand (2003 .460.705 thousand. 2002 .174.612 thousand) ordinaiy shares. bcing the weighted average number of ordinary shares outstanding . Due to thc net Ioss over 2002. 2003 and 2004. thc number of weighted average shares is identical for the basic and diluted earnings per share c a h l a t i o n as indusion of potential common shares would be anti.dilutive .
100
(Currency-thousands
!
of euro)
Cash flows from operating activities Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments fo reconcile net loss 10 net cash provided by operating activities Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income tax movement . . . . . . . . . . . . . . . . . . . . . . . . . . . Currency translation movement . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-cash portion of interest- and other income . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in other operating assets and liabilities Accounts receivahle, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(24,414)
(32,878) (694,637)
141,551 799 (822)
134,804
-
-
627,283 4,964
(10,249)
-
-
(56,552) (935)
(1,860)
(724) (1,707)
(10,444) 365 (31,010)
9,329 169 6,434
-
17,236 27,642 43,560
/__I
101
Notes to consolidated financial information a t 31 December 2004 (Currency-thousands
of euro)
1 General
Versatel Telecom International N.V. (“Versatel”, “Company” or “we”), incorporated in Amsterdam on 10 October 1995, provides international and national telecommunications services in The Netherlands, Germany and Belgium. 2 Accounting Principles a) General The financial information has been prepared under the historica1 cost convention and in conformity with the requirements of The Netherlands Civil Code and accounting principles generally accepted in The Netherlands (Dutch GAAP). The accounting principles have been applied consistently throughout the year and the preceding year except for the accounting of convertible senior notes as explained in note h).
b) Change in Accounting policy Effective 1 January 2004, Versatel changed its accounting policy for the accounting of convertible senior notes. This change was made in anticipation of the requirement for al1 listed companies within the European Union member states to report under International Financial Reporting Standards (IFRS) from 1 January 2005 onwards. The component of a financial instrument that creates a financial liability of the entity is separately recognized from the grant of an option to the holder of the instrument to convert it into an equity instrument. The fair value of the liability component of the convertible senior notes is determined using the company’s market interest rate for equivalent non-convertible senior notes. This amount is recorded as a liability on an amortized cost basis until extinguished on conversion or maturity of the senior notes. The remainder of the proceeds is allocated to the conversion option. This is recognized and included in the shareholders’ equity, net of income taw effects. This change in accounting policy does not have any impact on the prior period. The current year impact of the change in accounting policy on the financial information onsists of a € 19.9 million equity component, net of deferred taxes, reflected in the shareholders equity, a deferred tax
liability of f 9.0 million and f 0.7 million finance costs relating to the equity component. Under the former accounting policy the legal substance would prevail. c) Foreign Currency Transactions
The Company’s functional currency is the euro. Transactions involving other currencies are converted into euro using the exchange rates that are in effect at the time of the transactions. At the balance sheet date, monetaiy assets and liabilities, which are denominated in other currencies, are adjusted to reflect the current exchange rates. Gains or losses resulting from foreign currency re-measurements are reflected in the accompanying statement of operations. d ) Intangible Fked Assets Goodwill originating from the acquisition of investments represents the difference of the fair value of the net assets and the acquisition cost of the investments at the time of the acquisition. The goodwill is amortized based on the expected economical Me, on a straight-line basis, over a period varying from 5 to 10 years. Licenses are stated at the acquisition cost, less straight-line amortization. The amortization is calculated on the basis of acquisition cost and using the contractual terms. Amortization starts from the date that the services are actually offered under the license.
102
e) Tangible Fked Assets Tangible foted assets are stated at the acquisition cost, less straight-line depreciation. The depreciation is calculated on the basis of acquisition cost less residual value and the estimated useful life of the related asset. The estimated useful livec are: Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telecommunications equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other tangible fiued assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 years 2 - 20 years 3 - 5 years
Tangible foted assets operated by Versatel under a financial lease agreement are discounted at the Company’s refinancing rate and are c a p i t a l i d . The related debt is presented under long-term lease obligations. The short-term portion is presented under short-term portion of long-term lease obligations. Self-manufactured assets include al1 direct expenses incurred (e.g. work contracted out, direct labor, and material cost). Indirect expenses, which can be attributed to this activity, are also capitalized. Depreciation is calculated using the straight-line method over the estimated useful life, taking into account residual values.
fl
Financial Fked Assets Financial fixed assets are stated at the lower of cost or net realizable value
g) Impairment of Assets Versatel reviews its longlived assets and intangibles for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. This review consists of a comparison of the carrying value of the asset with the highest of the asset’s expected future discounted cash flow without interest costs and fair value (recoverable amount). If the recoverable amount exceeds the carrying value of the asset, no impairment is recognized. If the carrying value of the asset exceeds the recoverable amount, impairment exists and is measured by the excess of the carrying value over the recoverable amount. h) Inventoy Inventory is stated at the lower of cost or net realizable value with cost being determined on a first-in first-out basis. Versatel’s inventory primarily consists of routers and telecommunications equipment used to connect customers directly to our nehvork. i ) Accounts Receivable
Accounts receivable are stated at face value, Iess an allowance for possible uncollected accounts. j ) Income Tares and Deferred Income Tnr
The Company accounts for income taxes under the assets and liability method that requires recognition of deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in financial information or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and income tax bases of assets, liabilities and carry forwards using enacted tax rates in effect for the year in which differences are expected to reverse or the carry forwards are expected to be utilized. Deferred tax assets are recognized to the extent that it is probable that future taxable profit wil1 be available.
k) Other Assets and Liab Al1 other assets and liabilities are stated at the amounts at which they were acquired or incurred
1) Recognition of Operating Revenues
Operating revenues are stated net of discounts and value added taxes and are recognized when the service is rendered or wben assets are sold and collectability is probable. Invoices sent and cash received in advance of services rendered is recorded as unearned revenue. One-off connection fees and other initia1 fees, in general invoiced at the start of the contract, are deferred to unearned revenue and are recognized
103
over the estimated customer relationship period. Direct cost of revenues is recorded in the same period as the revenue is recorded. The direct cost relating to one-off connection fees and other initia1 fees are deferred to tangible fixed assets and depreciated over the estimated customer relationship period. Specifically, Versatel’s policies are as follows: Voice Revenues:
Operating revenues derived from providing various telecommunications services to customers include the following: Genera1 Voice services: Versatel primarily generates revenues from voice services through carrier select, dia1 around, least cost routing, ISDN and cal1 termination services. Revenues are measured in terms of subscription costs and traffic minutes processed and are recognized in the period in which the connection is provided. Toll-free (0800) and premium dial-in Services: Versatel offers Toll-free (0800) and premium dial-in services. For Toll-free services revenues are measured in t e r m of traffic minutes passed through to the customer and are recognized in the period in which these minutes are passed through. For premium dial-in services the Company collects per minute fees and passes a portion of these fees on to a local content provider. As a result of Versatel acting as an agent, Versatel reports these fees on a net basis, wherehy reported revenues only include that portion of the fees that are not passed on to a local content provider. These premium dial-in revenues are recognized in the period in which these minutes are passed through. Data Revenues: Operating revenues derived from providing various data services to customers include the following: Direct Access services: Versatel provides high bandwidth services to business and residential customers and other local telecom and Internet service providers that are directly connected to its network. Invoices sent and cash received prior to services being rendered is recorded as unearned revenue and recognized ratahly over the period of the specific arrangement; and Data Centers and Centrai Office Facilities services: Versatel provides co-location, telehousing and interconnect facilities services. Revenues related to these services are recognized ratably during the period in which these services are provided. Internet Revenues: Operating revenues derived from providing various Internet services to customers include revenues from Dedicated Internet Connectivity, IP-Based Electronic Transaction services, Web and ISP hosting services. Revenues from these services are recognized in the period in which these services are provided. For the IP-Based Electronic Transaction services, revenues are derived from commissions on e-commerce transactions from consumers utilizing Versatel’s network of websites. We recognize such revenues in the period that the user made the on-line purchase. Such revenues are recognized on a net basis, as Versatel does not act as a principal in the transaction. Other Carrier Services Revenues: Operating revenues derived from other Carrier Service Revenues relate to transactions where Versatel has sold infrastmcture to other carriers. m ) Pension Cost Pension cost relate to the cost of a defined contribution scheme. Contributions for pensions are directly charged to the income statement and are presented under pension cost.
n ) Stock-based Compensation The Company records stock-based compensation expense related to its stock option plans using the intrinsic method. This accounting method results in a compensation expense for the difference between the grant price and the fair market value in case the grant price is below the fair market value at the time of the grant. This compensation expense is recognized in the statement of operations at the date of the grant.
104
u) Saks, General and Administratiun Expense (“SG&A”) SG&A consists of wages and salaries, social securities, pension cost, advertising and marketing expenses, occupancy and other cost of revenues. 3
Principles of Cnnsolidation
The accompanying consolidated financial information include the operations of the following subsidiaries as of 31 December 2004: Legal Seat
Name -
Versatel Nederland B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . Versatel Finance B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zon Nederland N.V.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . XtraNed Nederland B.V. . . . . . . . . . . . . . . . . . . . . . . . . . Bizztel Telematica B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . Versatel Internet Group N.V. . . . . . . . . . . . . . . . . . . . . . . Versatel 3G N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Versatel Deutschland Holding GmbH . . . . . . . . . . . . . . . . Versatel Deutschland Verwaltungs GmbH . . . . . . . . . . . . . Versatel West-Deutschland GmbH & Co. KG . . . . . . . . . . Versatel Nord-Deutschland GmbH . . . . . . . . . . . . . . . . . . KomTel Telecommunications Services GmbH . . . . . . . . . . . Versatel SÜd-Deutschland GmbH . . . . . . . . . . . . . . . . . . . Versatel Germany GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . tesion Netzbetriebs- und Venvaltungs GmbH . . . . . . . . . . . Versatel Berlin GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . BerlinNet GmbH Telekommunikation und Neue Medien . . BerliKomm Asset Management Kft. . . . . . . . . . . . . . . . . . Versatel Belgium N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . Compath N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Burns & Perkins N.V.. . . . . . . . . . . . . . . . . . . . . . . . . . . . Versapoint N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Versapoint B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Versapoint GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Versapoint S.A.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amsterdam, The Netherlands Amsterdam, The Netherlands Amsterdam, The Netherlands Amsterdam, The Netherlands Leeuwarden, The Netherlands Amsterdam, The Netherlands Amsterdam, The Netherlands Berlin, Germany Dortmund, Germany Dortmund, Germany Flensburg, Germany Flensburg, Germany Stuttgart, Germany Munich, Germany Stuttgart, Germany Berlin, Germany Berlin, Germany Budapest, Hungary Wemmel, Belgium Wemmel, Belgium Gent, Belgium Amsterdam, The Netherlands Amsterdam, The Netherlands Dortmund, Germany Paris, France
Percentage Ownership
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 92.5% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
100% 100% 100%
100%
P,J:
,’
I
P2
On 31 March 2004 Telco Executive GmbH’s (formerly known as Arques) stake in Versatel
-3
Deutschland Holding GmbH diluted from 12.8% to 10.5% as a result of a capital cal1 by Versatel Deutschland Holding GmbH to its shareholders, at whicb Telco Executive GmbH did not participate.
I..)
On 29 July 2004 Versatel Deutschland Holding GmbH signed an agreement with Berlinwasser Holding Aktiengesellschaft (“BWH), a company jointly owned hy Land Berlin and RWE / Vivendi Berlinwasser Beteiligungs AG to purchase 100% of the outstanding share capital in BerliKomm Telekommunikationsgesellscbaft mbH (“BerliKomm”) and its wholly owned subsidiaries BerlinNet and BerliKomm Asset Management. BerliKomm was subsequently renamed Versatel Berlin GmbH. in order to fund the acquisition price of € 34.6 million, the Company issued approximately 24 million new ordinary shares at the closing of the acquisition on 1 September 2004.
On 16 August 2004, Versatel Telecom international N.V. purchased Telco Executive’s outstanding 10.5% minority interest in its German subsidiary, Versatel Deutschland Holding GmbH, by issuing 15 million ordinary shares at the day’s closing price of €1.36 per ordinary share. At the time, this represented a value of € 20 million, which was a discount of approximately 30% to the € 29 million that would be owed to Telco Executive under the putkall arrangements agreed to as part of the tesion and CompleTel Germany acquisition in 2ûO3. Telco Executive’s ordinary shares were locked up until 4 November 2004. On 19 November 2004, Versatel Nederland B.V. purchased 100% of the outstanding share capital in iparix Networks B.V. and relating assets from XB Networks International B.V. for a purchase price of approximately € 1.2 million. Iparix Networks B.V., a wireless nehvork operator, was subsequently renamed XtraNed Nederland B.V.
105
I
,.:>
,x)
’ rl
In December 2004, as part of a continued corporate clean up within the Versatel group, Versapoint N.V., Wemmel, Belgium, a 100% suhsidiary of Versapoint N.V., Amsterdam, The Netherlands and Versatel Internet Group Belgium N.V., Wemmel, Belgium, a 100% subsidiary of Versatel Internet Group N.V., Amsterdam, The Netherlands, were liquidated. The consolidated financial information include the accounts of Versatel and al1 entities in which Versatel has a controlling voting interest (“Suhsidiaries”). The results of these Subsidiaries are included from the respective dates of acquiring control hy Versatel during 2004. Al1 significant intercompany transactions have heen eliminated. Minority interest in the consolidated statement of operations represents the minority shareholders’ share of the income or loss of the consolidated Subsidiaries. The minority interest in the consolidated halance sheet reflects the original investment hy these minority shareholders in the consolidated Subsidiaries, adjusted for their proportional share of the income or loss of the Suhsidiary. When the minority interest amount in the consolidated halance sheet is fully offset hy losses of the Suhsidiary, Versatel recognizes the entire net loss of such Suhsidiary.
As of 31 December 2004, Versatel accounted for the following investments at the lower of cast a r net realizahle value: Percentage
-
Name
Legal Seat
Cedron Holding B.V. (formerly known as Consumerdesk Holding B.V.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BORnet GmhH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DOKOM Gesellschaft fur Telekommunikation mhH . . . . . . RuhrNET Gesellschaft für Telekommunikation mbH . . . . . . Mobile Communication and Service SH GmhH . . . . . . . . .
Amsterdam, The Netherlands Stadtlohn, Germany Dortmund, Germany Schwerte, Germany Flensburg, Germany
4
Ownership
1% 5% 10% 24% 10%
Intangible Fixed Assets The movement in intangihle fixed assets is as follows: Goodwill
Licenses
Total
4,000
800
4,800
21,816
-
-
21,816
(1,137) 24,679
(112) 688
(1,249) 25,367
26,026 (1,347)
800 (112)
26,826 (1,459)
24,619
688
25,367
(EUR million)
............................. Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Book value 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . Original cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Book value 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . Book value 1 January 2004
-
In the first quarter of 2004 an increase of € 2.1 million in goodwill was the result of additional funding that was provided to the German subsidiary Versatel Deutschland Holding GhmH and which was not matched on a pro rata basis by its minority shareholder Telco Executive. As a result of this transaction, Telco’s Executives’ interest in Versatel Deutschland Holding GbmH was diluted from 12.8% to 10.5%. In the third quarter Versatel purchased Telco Executives’ outstanding 10.5% minority interest in Versatel Deutschland Holding GhmH. The purchase of the outstanding minority share has heen recorded as € 19.1 million in goodwill. This goodwill is amortized over a 10-year period. The purchase of Iparix Networks B.V., a wireless local loop provider in The Netherlands, in November 2004 has resulted in a total amount of € 0.6 million in goodwill. This goodwill is amortized over a 10-year period.
106
I
I
I ,
1
5
Tangible Fixed Assets The movement in tangible fixed assets is as follows: Leasehold Teleeomrnuniealions Other tangible Irnprovements equipment fixed aasets
Construction in progress
lbld
36,965
615,847
(euro thousands)
Book value 1 January 2004
.....
5,074
558,133
15,675
-
-
-
-
100 (2,310)
54.476 112;335 (126,224)
683 15,876 (11,768)
1.019 71137
56.178 135I448 (140,302)
..
2,864
598,72O
20,466
45,121
667,171
i
Original Accumulated cost . . . . . Depreciation . . . . . . . . . . . . . . .
16,128 (13,264)
1,386,802 (788,082)
130,754 (110,288)
45,121
1,578,805 (911,634)
!
Book value 31 December 2004
..
2,864
598,720
20,466
45,121
I
, ~
I
!
Retirements . . . . . . . Acquisitions . . . . . . . Additionsmransfers . . . . . . . . . . . Depreciation . . . . . . . . . . . . . . . Book value 31 December 2004
6
-
-
-
667,171
Financial Fixed Assets The movement in financial fixed assets is as follows: Other Reeeivables
(euro thausanda)
Bookvalue lJanuary2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... Acqursitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer to other receivables and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Book value 31 December 2004
2,050 236 (665) 1,621
...........................................
The other receivables mainly relate to prepayments regarding operation and maintenance charges for acquired leased infrastructure.
7
Inventory The current value of the inventory does not significantly differ from its stated value.
8
Accounts Receivable Accounts receivable as presented under current assets mature within one year, 2004
ZO03
(euro thausands)
Gross Accounts Receivable on 31 December . . . . . . . . . . . . . . . . . . . . . . . . . Doubtful debt allowance at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Addition to allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 'Utilization of allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Doubtful debi allowance at 31 December. . . . . . . . . . . . . . . . . . Net Accounts Receivable on 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . <
<
.
107
87,431 18,726 1,738 2,325 (4,976) 17,813 69,618
73,525 12,526 5,696 2,901 (2,397) 18,726 54,799
9
Other Receivables and Prepaid Expenses Other receivahles and prepaid expenses include: 2004
2003
7,028 9.618 5,586
4,310 1,581
22,232
5,891
(euro thousands)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Value addedtaxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
......................................................
,
-
10 Cash
The cash halance is mainly denominated in Euro, although an amount equivalent to € 21.8 million is denominated in US dollars.
I
11 Shareholders’ Equiîy
The movement in consolidated shareholders’ equity is as follows: 2004
2003
Balancel January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
484,507
509,486
Buy out minority interest in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares issued for acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in corporate tax rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible senior notes’ equity component . . . . . . . . . . . . . . . . . . . . . . . . . . Warrants exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase minoritv interest Zon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . German liahility settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,065 34,405 16,047 19,929 20,695 133
-
(cum thousands)
Balance 31 December.
.
-
(24,414) 571,367
10 526 4,163 3,200 (32,878) 484,507
On 22 Octoher 2004 the company issued € 125 million of convertible senior notes. These convertible senior notes include an equity conversion component of € 19.9 million, net of deferred taxes, which is included in shareholders’ equity. The authorized capital of Versatel is € 36,400,000.02, consisting of 900 million ordinary shares of which 518,300,096 shares are issued and outstanding at 31 December 2004. The authorized capital further consists of 20 million preference-A shares, 900 million preference-B shares and one priority share. No such shares have yet been issued. Ai1 shares have a par value of € 0.02 each. In May and November 1998 Versatel issued in total 375.000 warrants in accordance with the first and second high yield offerings. Holders of these warrants have the right, for every warrant exercised, to purchase 13.334 fully paid and non-assessable shares of common stock of Versatel at a price of € 1.16 per share. During 2004 no warrants were exercised. As of 31 December 2004, 53,135 warrants are outstanding, giving rights to purchase 708,502 shares. These warrants wil1 expire in May 2008.
In Octoher 2002, Versatel issued 91,364,747 warrants as part of the debt-to-equity conversion. Holders of these warrants have the right, for every 4.8 warrants exercised, to purchase one fully paid and non-assessahle share of common stock of Versatel at a price of € 1.50 per share. During 2003 and 2004 a total of 66,622,601 warrants were exercised and as a result 13,879,689 shares were issued. The remainder of warrants not exercised did expire in Octoher 2004. On 16 August 2004, the company purchased Telco Executive’s.outstanding 10.5% minority interest in its German suhsidiary, Versatel Deutschland Holding GmbH, by issuing 15 million ordinary shares on the day’s closing price of € 1.36 per ordinary share. At the time, this represented a value of € 20 million. On 29 July 2004, Versatel Deutschland Holding GmhH signed an agreement with Berlinwasser Holding Aktiengesellschaft (“BWH’), a company jointly owned by Land Berlin and RWE / Vivendi
108
1
Berlinwasser Beteiligungs AG to purchase 100% of the outstanding share capital in BerliKomm Telekommunikationsgesellschaft mbH (i‘BerliKomm”) and its wholly owned subsidiaries BerlinNet and BerliKomm Asset Management. BerliKomm was subsequently renamed Versatel Berlin GmhH. In order to fund the acquisition price of € 34.6 million, the company issued approximately 24 million new ordinary shares at the closing of the acquisition on 1 September 2004. I
!
On 16 December 2004, the Dutch government decided to gradually reduce the corporate income tax rate from 34.5% in 2004 to 30% in 2007. This resulted in a reduction of € 16.0 million on a deferred tax liability originally formed via shareholders’ equity. Versatel has estahlished the following stock option plans: the 1999 Stock Option Plan (the “1999 Plan”), the 2000 Stock Option Plan (the “2000 Plan”), the 2001 Stock Option Plan (the “2001 Plan”) and the 2002/2003 Stock Option Plan (the “200212003” Plan”).
1999 Stock Option Plan I
I I
I
!
In January 1999, Versatel’s Board of Supervisory Directors approved the 1999 Stock Option Plan. The 1999 Plan allows Versatel to grant options to employees to purchase ordinary shares of Versatel. The option period wil1 commence at the date of the grant and wil1 last five years. The option exercise price is determined in the particular grant of the option. During 2004 the right to exercise options granted under the 1999 Stock Option Plan expired. In total 1,908,500 options to purchase 1,908,500 ordinary shares have been granted under the 1999 Plan. In total 410,493 options granted under the 1999 Plan have been exercised for a total of 410,493 shares. As per 31 December 2004 no options are outstanding under the 1999 Plan.
2000 Stock Option Plan ~
In December 1999, Versatel’s Board of Supervisory Directors approved the 2000 Stock Option Plan. The 2000 Plan allows Versatel to grant options to employees to purchase ordinary shares of Versatel. The option period wil1 commence hu0 years (except for an aggregate of 100,000 options which were immediately exercisable) after the date of the grant and wil1 last five years. The option exercise price is determined in the particular grant of the option.
i I
~
I
As of 31 December 2004, options to purchase 2,688,850 ordinary shares have heen granted under the 2000 Plan. As of 31 December 2004, 100,000 options granted under the 2000 Plan have heen exercised for a total of 100,000 shares. A further 516,600 options are still outstanding under the 2000 Plan. The remaining options that were previously granted under this stock option plan have subsequently heen cancelled, in most cases upon the request of the recipient of the options or the termination of the employment of the recipient of the options.
2001 Stock Option Plan
In May 2001, Versatel’s Board of Supervisory Directors approved the 2001 Stock Option Plan. The 2001 Plan allows Versatel to grant options to employees to purchase ordinary shares of Versatel. The option period wil1 commence hvo years after the date of the grant and wil1 last five years. The option exercise price is determined in the particular grant of the option. As of 31 December 2004, 1,055,900 options to purchase 1,055,900 ordinary shares have been granted under the 2001 Plan. As of 31 December 2004,517,700 options are still outstanding under the 2001 Plan. The remaining options that were previously granted under this stock option plan have subsequently been cancelled, in most cases upon the request of the recipient of the options or the termination of the employment of the recipient of the options.
2002/2003 Stock Option Plan
I
In November 2002, Versatel’s General Meeting of Shareholders approved the 2002/2003 Stock Option Plan. The 2002/2003 Plan allows Versatel to grant options to employees to purchase ordinary shares of Versatel. The option period wil1 commence at the date of the grant and wil1 last five years. These options were awarded in three Series during December 2002. The options under Series 1 have an exercise price of € 0.30. The options under Series 2 have an exercise price of € 0.50. The options under Series 3 have an exercise price of €0.75. These series can only be exercised if the market value of the Versatel stock is at least € 0.85 during a period of 50 days in a consecutive 60 days period with the option
109
period. As per 15 July 2003 this condition was complied with. In addition, during November 2003 options were issued to a newly recruited management team member. These options were awarded in three series of exercise prices of respectively € 1.98, f 2.28, and € 2.58.
As of 31 December 2004, 16,336,500 options to purchase 16,336,500 ordinary shares have been granted under the 2002/2003 Plan. As of 31 December 2004,757,250 options granted under the 2002/2003 Plan have been exercised fora total of 757,250 shares. As of 31 December 2004,15,064,850 options are still outstanding under the 200212003 Plan. The remaining options that were previously granted under this stock option plan have subsequently been cancelled, in most cases upon the termination of the employment of the recipient of the options. Al1 costs related to the above mentioned stock option plans are included in stock-based compensation. The shares issued as a result from stock option exercises are newly issued ordinaiy shares. The table below shows the details of the stock options outstanding as of 31 December 2004: Issued __
May-99 Jun-00. Jun-00. Jan-01. Jun-01. Dec-O2 Dec-O2 Dec-O2 Nov-03 Nov-03 Nov-O3
Expire
..... ... . . . . .. . . . . .
..... ..... .....
.<.
May-04 609,975 117,000 Jun-O7 370,000 Jun-O7 75,000 Jan-O8 561,300 Jun-O8 Dec-O7 6,623,900 Dec-O7 3,500,000 Dec-O7 4,700,000 375,000 Nov-O8 187,500 Nov-O8 187,500 Nov-O8
...
17,307,175
...
... ...
..... ... ..... . . .. . . ..... ..< ..... .....
.....
Total
Outstanding 1-Jan-04
... ...
Granted
Exercised
-
-
609,975 45,400
-
-
71,600 - 370,000 75,000 43,600 517,700 73,500 6,134,850 - 3,480,000 - 4,700,000 375,000 - 187,500 - 187,500
435,550
772,475 16,099,150
-
-
-
415,550 20,000
-
-
-
-
-
Cancelledl Outstanding Lapsed 31-Dec-04
Exercise Priee (€I
3.40 35.00 0.02 0.02 4.27 0.30 0.50 0.75 1.98 2.28 2.58
12 Taxes The Company and the subsidiaries Versatel Nederland B.V., Bizztel Telematica B.V., Versatel 3G N.V. Versatel Internet Group N.V. and Zon Nederland N.V. constitute a fiscal unity in The Netherlands.
I
Netherlands
In general, a Dutch holding company may benefit from tbe so-called “participation exemption”. The participation exemption is a facility in Dutch corporate tax laws which allows a Dutch company to exempt, from Dutch income tax, any dividend income and capital gains in relation to its participation in subsidiaries which are legal entities residing in The Netherlands or in a foreign country. Capital losses are also exempted, apart from the liquidation losses (under stringent conditions). As of 31 December 2002, Versatel Telecom International N.V and its Dutch subsidiaries included in the fiscal unity exhausted al1 its generated net operating loss (“NOL”) carry forwards for income tax purposes against the result from the financial restructuring. Versatel made an agreement with the Dutch tax authorities on the treatment of the financial restructuring. The Company has taken temporary fiscal impairments on its investments in foreign subsidiaries to shield the resulting restructuring gain. These fiscal impairments are, in principal, to be added back in five equal annual installments depending on the year of investment. A portion was added back starting from 2003. Due to the restructuring gain Versatel has taken a deferred tax liability of f 133.9 million for the fiscal year 2002. The gain can be sbielded against generated NOL‘S by the Dutch fiscal unity, whicb lowered the deferred tax liability for 2004. As a result the 2004 tax liability decreased by € 1.7 million. The Dutch government wil1 gradually reduce the corporate income tax rate from 34.5% in 2004 to 30% in 2007. This resulted in a deferred tax liability reduction of f 16.0 million decreasing shareholders’ equity. In October 2004 tbe company issued convertible senior notes leading to a deferred tax liability of € 9.0 million. This liability wil1 result in credits from income taxes over the life of these convertible senior notes. Credit from income taxes at 31 December 2004 includes an amount of € 0.2 million. Zon Nederland N.V used its remaining generated NOL cany forwards for income tax purposes and was included in the Dutch fiscal uni@ during 2004. The current statutoiy rate for The Netherlands is 34.5%.
110
I !
Germany
As of 31 December 2004, the German activities of Versatel had generated NOL carry forwards for income tax purposes totaling approximately € 297 million. For German income tax purposes, NOL carry forwards may generally be carried forward indefinitely. The current statutory rate for Germany is 39.4%. Belgium As of 31 December 2004, Versatel Belgium had generated NOL carry forwards for income tax purposes totaling approximately € 179 million. For Belgian income tax purposes NOL carry forwards may generally be carried forward indefinitely. The current statutory rate for Belgium is 34.0%. The Company has recorded a valuation allowance equal to the total net deferred tax assets as of 31 December 2004 and 2003, due to the uncertainty of realization through future operations. The valuation allowance wil1 be reduced at such time as management believes it is more likely than nat that the deferred tax assets wil1 he realized. 2004
2003
(euro thousands)
~
-
Deferred tax assets Operating loss carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
177,741 177,741 (177,741) ‘115,735’
1.075 92;474 93,549 (92.474) i24;726
........................................
115,735
123,651
Net deferred tax liability
The difference between the income tax expense provided in the consolidated financial information and the expected income tax benefit at statutory rates related to the Company’s corporate and foreign subsidiary operations for the years ended 31 December 2004 and 2003 is reconciled as follows: 2004
2003
(eum thousands)
Expected income tax benefit at the weighted average statutory rate of 39% (2003:38%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,722 (398) 4,623 (13,125) 822
13,845 (72) (406) (3,118) 10,249
13 Convertible Senior Notes
On 22 October 2004 Versatel issued 3.875% convertible senior notes for € 125 million due 2011. The convertible senior notes mature in seven years from the date of issue to the nomina1 value of € 125 million or can be converted into common shares of Versatel at a conversion price of € 2.033 at any time from and including 8 December 2004 to the earlier of 19 October 2011 and the fourteenth day prior to any date fixed for redemption by the company. The fair value of the liability component was determined at issuance of the convertible senior notes. The fair value of the liability component, included in the convertible senior notes, was calculated using the company’s market interest rate for equivalent non-convertible senior notes. The residual amount, representing the value of the equity conversion component, is included in shareholder’s equity, net of deferred income taxes.
111
t.‘ $i.
The movement in the convertible senior notes is as follows: 2004 (eum Ihausands)
Nomina1 value of the convertible senior notes issued on 22 October 2004 . . . . . . . . . . . . Equitycomponent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liability component at initia1 recognition on 22 October 2004 ..................... Accreted interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liability component at 31 December 2004
125,000 (19,929) (8,953) (3,951) 92,167 773 92,940
Interest expense on the convertible senior notes is calculated using the effective interest method by applying the effective interest rate of 4.7% to the liability component. The fair value of the liability component of the convertible senior notes at 31 December 2004, approximates tbe carrying amount.
I
I
14 Other Deht
Versatel Nord-Deutscbland (formerly known as Komtel) has loan facilities with the Flensburger Sparkasse, Germany, amounting to € 3.0, which is included in long-term debt at 31 December 2004. The loan facilities are secured by specifically identified fixed assets of Versatel Nord-Deutschland with a cost of €9.1 million and a net book value of €4.9 million and gross accounts receivable of €7.1 million at 31 December 2004. 15 Lease Obligations
Versatel entered into agreements for IRU's on fiber optic cable and network capacity. These IRU agreements are typically for a 15 to 20 year period and have no restrictions on use or no bargain purchase options at the end of the terms. A substantial portion of our IRU agreements have been pre-paid and therefore are not included as capital lease obligations. These IRU agreements are presented as telecommunications equipment. The amortization charge applicable to capital leases is included in depreciation of tangible fixed assets. The interest charge applicable to capital leases is included on the interest expense. Commitments for minimum rentals under non-cancelable capital leases per 31 December 2004 are as follows:
I
CommiIments
(euro thousands)
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009andfurtber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less amount representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,076 6,026 5,975 5,925 60,598 84,600 (42,830) 41,770
Telecommunications equipment includes .an amount of € 52.8 million for capitalized leases (2003 - € 70.2 million).
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16 Accrued Liabilities
Accrucd liabilities include: 2004
2003
171
163 1,153 2,900 219 14,175 14,136 22,228 42,637 97,671
(euro thousands)
Corporatc incomc tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valuc addedtax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payroll tax and social sccuritics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term portion of long-term liabilitics . . . . . . . . . . . . . . . . . . . . . . . . . Capital cxpcnditurc accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Network cost accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other accrucd liabilitics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued liabilities
...........................................
-
3,057 -
22,603 13,855 20,155 40,171 100.012
At 31 December 2004 value addcd taxcs was a receivablc of € 5.6 million and is classified as othcr rcccivables and prcpaid cxpcnscs. 17 Segment Information a)
Revenues
Generally, our services can bc characterized as voice, data and Internet services and in thc future media services. As such, wc dcrivc our revenucs from both minutes of communications traffic carricd by our nctwork, which are variable by customcr from pcriod to pcriod (generally voice), and fmed monthly fces for services provided to our customers (generally Internet and data). We allocatc our revenues to thc pcriod in which thc traffic was generatcd. The composition of our customcr base, service offcrings and gcographical focus bas continued to cvolve as a result of thc further dcvelopmcnt of our nctwork, acquisitions, including Svianed, Versatcl West-Deutschland (formerly known as VEW Tclnct) and Versatel Nord-Dcutschland (formerly known as Komtcl), Versatcl SÜd-Deutschland (formerly known as tcsion) and Versatcl Germany (formerly known as Complctcl) and most recently Versatel Bcrlin (formally known as BcrliKomm) and the expansion of our product offering. As a result of tbesc acquisitions, wc have significantly increascd thc portion of our revenues generatcd from fixed monthly fecs, expandcd our geographical focus in Germany and cxpanded our customcr base to includc larger customcrs. Historically, wc have priccd our variablc communications services (voicc) at a discóunt to thc local PïTs and cxpect to continue this pricing strategy as wc expand our opcrations. In gencral, prices for communications services have decrcased over thc last scveral ycars, both for voicc traffic as wcll as for data and Internet services. These price rcductions have an advcrse impact on margins. Our data and Internet services continue to be priced at compctitivc market lcvcls, but are less influenccd by the pricing power of the incumbcnt operators. A substantial portion of our rcvcnucs is attributablc to f i e d monthly fccs, primarily through thc provision of data and Internet services such as Internet conncctivity, local area nctwork to local area network (“LAN-to-LAN”) intcrconncct services and Internet web-hosting. For thc year cnded 31 December 2004, 47.3% of our rcvcnucs wcre generated from the provision of data and Internet services. Our variablc revenues are gcncrated by minutes of communications billcd for voice telephony services originatcd by our customers, tcrminating voice tclcphony traffic to customcrs dircctly connectcd with our nctwork and the termination of dial-up Internet traffic onto our nctwork for botb Zon, (per 2005 rcnamed Versatcl Consumer), and othcr Internet service providers. Our consumcr Internet division, prcviously named “Zon”, generates revenues from thc termination of minutes of traffic onto our nctwork as describcd above, sclling advertising on our portals and to a lesser cxtcnt recciving a percentage of some of tbe e-commerce rcvenuc generatcd by our subscribcrs. Additionally, Zon generates rcvcnucs by providing broadband Internet acccss and voice services over DSL technology for a fixcd monthly fee. As of August 2005, we. plan to generatc additional revenues by providing triple play services. Wc also makc a distinction bctwcen revenucs generatcd through customers that are directly conncctcd to our network (commonly refcrrcd to as “on-net” rcvcnucs), and revenues gencrated through customers that are not directly conncctcd to our network (commonly rcfcrred to “as off-net”-customcrs). On-net customcrs can bc connected to our wcbsite through our own fiber, DSL technology, other coppcr
113
access technologies, wireless technologies or leased lines. For the year ended 31 December 2004, € 446.4 million of our revenue was generated from on-net customers. Versatel’s revenues presented on a geographical basis is divided as follows: 2004
2003
266,928 273,740 60,011
225,449 189,633 47,057
600,679
462,139
(euro tbousands)
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
....................................................
Historically, we generated our revenues from small- and medium-sized business customers. Beginning in 1999, we started to generate revenues from larger customers. Currently we service large customers such as the UWV Group, ABN AMRO and the Dutch Ministry of Justice in The Netherlands and Landesbank Baden-Wtïrtemberg in Germany. We wil1 continue to participate in bidding processes for large customers and believe we are wel1 positioned to be awarded contracts as a result of our network and service offerings. We wil1 continue to focus on securing and provisioning customers that can be directly connected to our network utilizing our own fiber, DSL technology, other copper-based access technologies, wireless technology or leased lines. We believe these customers represent a long-term asset and provide the best economic return on our dense local access network. Also, with the introduction of ISDN voice and dedicated Internet services over DSL to the business community, as wel1 as the launch of a broadband Internet and voice product to the residential market in The Netherlands and Germany, we expect an increase in the number of customers we provision over DSL technology. Historically, in The Netherlands and Belgium, we have approached the residential voice market by providing carrier services such as carrier select hosting to resellers, who themselves target the residential voice market. Recently, we have limited the services we provide to other telecommunications service providers who solely focus on the voice resale market. This is as a result of financial difficulties experienced by certain of these service providers. Also, in The Netherlands, Versatel offers Internet services directly to the residential Internet market. In Germany, we believe market dynamics, including the high penetration of ISDN services, justify offering services directly to the residential market in selected situations. As a result, our German operations service residential customers, which has led to a substantial increase in our residential customer base. At the end of 2003, Versatel launched a nationwide ADSL product in Belgium over Bitstream access to the residential market. As our network has expanded, we have increased our ability to provide other carriers with telecommunications services, which wil1 maximize the use of our network. We actively monitor our credit exposure to other carriers and we have taken steps to reduce this risk in the past. We currently provide services such as leased lines, transmission, IP uplink, co-location services and voice origination to other service providers. Further, Versatel believes the revenue per service by customer type is an important indicator of the evolution of its broadband services product portfolio. Versatel’s revenues on a service by customer type is divided as follows: 2004
2003
170,330 105,153 54,856
144,879 82,959 57,090
66,783 79,219
41,994 53,494
78,642 44,624 1,072
62,133 18,990
600,679
462,139
(euro thousands)
Business customers Voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Residential customers Voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carrier services customers Voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
....................................................
114
-
b)
Direct cost of revenues
Our costs of revenues are comprised of fiwed network costs from third party suppliers and variable costs associated with the origination and termination of minutes of communications traffic and supply of broadband services. To date, our fmed network COSIShave primarily consisted of leased lines for sections of our backbone network, leased lines for directly connecting customers to our network, leased copper lines for DSL services, fees to other Internet service providers for the termination of Internet traffic, interconnection charges, subsidized customer equipment, value added services from suppliers and subscription charges. Origination and termination costs represent the cost of carrying minutes of communications traffic from our customers to our network and from our network to the final destination, respectively. We are experiencing a reduction in the costs as a percentage of the total associated with leased lines as we replace leased lines with our own local access and hackbone network. However, we wil1 continue to deploy leased lines to directly connect customers to our network in order either to accelerate such customer’s connection to our network, in which case we wil1 replace the leased line with our own fiber, or to connect a customer for which it is not economically viable for US to directly connect that customer to our own backbone. This can either be due to low transaction volumes or a too far distance from our network. As a percentage of revenue, we expect fmed network costs in the long run to decline due to the continuing build out of our local access network, technological improvements, realization of economies of scale, further liberalization of the European telecommunications market and increased availability of transmission capacity. However, price declines for our own services and the increase of our revenue from lower margin residential services, wil1 partly offset this decline. We have experienced a decline in the variable costs associated with minutes of communications traffic on a per minute basis for several factors, inchding: (a) the incremental build out of our network, which increases the number of points we interconnect with the PTïs and the number of carriers with which we interconnect, (b) the increase of minutes we originate and terminate, which leads to higher volume discounts available to US, (c) more rigorous implementation of the European Community directives requiring cost-based termination rates and leased line rates and (d) the emergence of new telecommunications service providers and the construction of new transmission facilities, which results in increased competition. However, there can be no assurance that the trend of decreasing variable costs wil1 continue. If rediictions in variable costs do not in fact outpace reductions in variable revenues, we may experience a substantial reduction in our margins on minutes of communications traffic which, absent a significant increase in hillable minutes of traffic carried, increased charges for other services, or a shift in the mix of subscription and variable revenues to more subscription revenues, would have a material adverse effect on our business and financial results.
c)
Selling, Genera1 and Administrative Expenses
SG&A expenses are comprised primarily of wages and salaries, social securities expense, pension cost, advertising and marketing expenses, occupancy and other costs of revenues. d ) EBITDA Versatel’s EBITDA consists of earnings (10%) income taxes, depreciation and amortization.
before interest expense, interest- and other income,
The Company’s EBITDA presented on a geographical hasis is divided as follows: 2004
2003
(euro thausands)
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total consolidated EBITDA
e)
...................................
72,503 43,525 2,025 118,053
58,288 31,931 (173) 90,046
Tangible FUed assets
Due to the integrated nature of our activities a meaningful breakdown of the tangihle fured assets between services per customer type is not presented here.
115
Versatel's tangible fixed assets presented on a geographical basis is divided as follows: 2004
2003
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
265,059 288,247 68,744
268,031 236,667 74,184
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Construction in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
622,050 45,121 667,171
578,882 36,965 615,847
(eum thousands)
We capitalize and depreciate our fixed assets, including switching and transmission equipment, routers, fiber'optic cable and rights of use, over periods ranging from 3 to 20 years taking residual values into account. The development of our network, including construction, indefeasible rights of use, and equipment, wil1 require capital expenditures resulting in larger depreciation charges in the future. Self-manufactured assets include al1 direct expenses incurred (e.g., work contracted out, direct labor and material cost). Indirect expenses that can be attributed to this activity are also capitalized. 18 Financial Instruments u)
Credit R i s k
The Company has no significant credit risks, other than those, which have already been allowed for, nor any receivables with a single customer or in an industry or geographical region that carries an unusually high credit risk.
b) Interest R i s k Versatel Nord-Deutschland has entered into a long-term loan facility totaling € 3.0 million, which is repayable in 2008 and bears 4.7% interest. Als0 see note 14.
On 22 October 2004 Versatel issued 3.875% convertible senior notes for € 125 million due 2011. Also see note 13. c)
Fair Vulues
In view of their short-term nature, the fair values of financial instruments included in receivables and current liabilities approximate their carrying amounts. The fair value of the liability portion of the convertible senior notes is calculated using the company's market interest rate for equivalent non-convertible senior notes. The fair value of the liability component of the convertible senior notes at 31 December 2004 approximates the carrying amount. The fair value of financial instruments included in other long-term liabilities at 31 December 2004 also approximates their carrying amounts. 19 Rent and Operating Lease Commitments Future minimum commitments in connection with rent and other operating lease agreements at 31 December 2004 are as follows: Rent & Operating Lease Commitmentr (euro thousands)
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 and further . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,621 21,374 20,912 16,875 35,898 i 16,680
Rent and operating lease expenses amounted to approximately € 18.6 million in 2004. The main part of future commitments relates to the renting of office space and points-of-presence for a 10 year period.
116
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20 Other Commitments
1 ~
~
I I
Commitments in connection with Versatel's capital expenditures relating to customer connections and network huild, not yet recorded on the balance sheet amount to approximately €22.8 million as of 31 December 2004. The Company and its subsidiaries provided, on behalf of third parties, bank guarantees amounting to approximately € 17.8 million. In November 2004, Versatel entered into a non-exclusive framework agreement with Samsung Electronics Co. Ltd., Korea, with the intend to procure certain equipment to facilitate Versatel's roll-out of its triple play service offering starting 2005. On 31 December 2004 Versatel has signed a long-term sponsor contract with the KNVB (Royal Dutch Football Association). Versatel wil1 become, amongst others, sponsor of the Dutch national football team and exclusive telecommunications partner of the KNVB and is subsidiaries. The financial commitment over a 3-year term of the contact is approximately f 3.2 million. In December 2004, Versatel announced that it won the bid for the live pay-TV rights of the Dutch Eredivisie football matches (including Ajax, Feyenoord, PSV and the 15 other teams of the Dutch premier football league). Starting with the new football season in August 2005, Versatel wil1 pay the Eredivisie CV € 30.5 million for these rights per season and wil1 do so for in total three seasons. On 22 December 2004, a letter of intend was signed. It is expected that the final contract negotiation wil1 he completed in 2005.
~
21 Board of Supervisory Directors and Board of Management a)
Compensation
The aggregate compensation for the Board of Supervisory Directors of the Company as a group in 2004 was f 249,422, compared to f 170,168 in 2003. ~
Tbe following table sets out certain information relating to the compensation received by the Board of Supervisory Directors for the years ended 31 December 2004 and 2003: 200.1
2003
Supervisory Directors Leo van Doorne (Chairman) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hans Huber (Vice-Chairman)(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Boudewijn Beerkens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Joop Drechsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loek Hermans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nathaniel Meyohas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,449 50,471 25,470 33,765 25,470 33,765
34,034
Resigned dwing 2004: Sandervan Brummelen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan van Duyn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ,. Frederic Gastaldo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jorg Mohaupt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,258 8,258 8,258 8,258 249,422
22,689 22,689 22,689 22,689 170,168
(amounts in eum)
,
I
i
I
! I I
(1)
22,689
-
22,689
Includes for the year 2004, f 75,000 for additional aclivities performcd on requcst of the Board af Supervisaty Dirccton andlar the Board of Management.
For 2004 the Board of Supervisory Directors approved that the Company's Managing Director base compensation was to he increased by 27.3%. This decision was based on a survey conducted on hehalf of the Board of Supervisory Directors of comparable CE0 compensation of a selected group of companies. The bonus component of the total compensation is based on targets achieved, compared to a set of specific measurahle targets agreed hetween the Managing Director and the Board of Supervisory Directors at the start of the year. These targets were hased on revenue growth, EBITDA and cash flow.
I
117
The total aggregate compensation of the Managing Director in 2004 was €874,140 compared to € 547,846 in 2003.
(amaunts in euro)
Raj Raithatha 2004 2003
Compensalian
Pension Premium
Bonus
Olher"'
Total
349,464 279,868
69,999 54,998
409,473 175,000
45,204 37,980
874,140 547,846
......... .........
( I ) Other includes for 2004, a gross payment of f 45,204 for pension counseling services paid by Versatel on behalf af Mr. Raithatha.
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b) Shareholdings The table helow shows the detail of the shareholdings by the Company's current Supewisory Directors and its Managing Director. In total, 2,850,900 shares are held by this group in aggregate at 31 December 2004 compared with 2,850,900 shares at 31 December 2003. 2004
Board of Supervisory Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leo van Doorne (Chairman) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hans Huber (Vice-Chairman) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BoudewijnBeerkens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Joop Drechsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LoekHermans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nathaniel Meyohas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-
-
-
Managing Director Rai Raithatha. . . . . . . . . . . . . . . . . .
c)
2,850,900 2,850,900
.................
Total shareholdings
2003
-
2,850,900 2,850,900
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Share Options No options have heen granted to any of our Supervisory Directors. During 2004 no options were granted to the Managing Director.
As per 31 December 2004 the Managing Director in aggregate holds 5,247,000 options to purchase 5,247,000 Ordinary Shares under the various plans. The tahle below sets out a breakdown of these options: Expire
Issued
Outstanding 1 Jan 2004
Granted
Exercised
-
-
Outstanding 31 Dec 2004
Exercise price
(0
~
Jun. 00.. . . . . . . . . . Jan. 0 1 . . . . . . . . . . . Dec. 02 . . . . . . . . . . Dec. 02 . . . . . . . . . . Dec. 02 . . . . . . . . . .
Jun. Jan. Dec. Dec. Dec.
07 08 07 07 07
2on,oon 47,000 1,600,000 1,000,000 2,400,000
-
-
5,247,000
-
200,ooo 47,000 i,6on,nno 1,000,000 2,4oo,ooo 5,247,000
0.02 0.02 0.30 0.50 0.75
22 Personnel The average number of personnel during the year was approximately 1,731 (2003 - 1,492) employed in the following geographical areas: Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total
..........................................................
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2004 2003 ~-
805 759 784 607 126 _ 142 _ 1,731 1,492
--
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23 Cash Flow Statement
The cash flow statement is derived from the statement of operations and other changes behveen the opening and closing balance sheets, eliminating the effect of currency translation differences and taking acquisitions into account. Movements in provisions for assets have been included under the item provided for. The cash balances of sold group companies are offset with the cash proceeds from sale of these subsidiaries. Variances as result of deconsolidation are excluded from the net cash from operating activities. Tbe cash balances of purchased group companies are offset with the cash used for acquisitions of these subsidiaries. 24 Related Parîies
The following table sets forth information regarding the beneficial ownership of the Ordinary Shares of the Company as at 31 December 2004, by each beneficial holder of 5% or more of the Ordinary Shares, as notified to the Company under the 1996 Act on the Disclosure of Holdings in Listed Companies (Wet Melding Zeggenschap in ter beurze genoteerde vennootschappen). % of shares
Name of beneficial hoider
outstanding
J.H.H. de Mol (Talpa Capital B.V.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Access Industries Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42.1%(’),(3) 6.7%(2),(3)
( i ) This approxirnate percentage is caiculated by the Company and based upon the notifications under the 1996 Act on the Disclosure of Holdings in Listed Companies and the i995 Act on the Supervision of the Secuities Trade and does not take into account any subsequent dilutian.
(2) ï ñ i s percentage is based upon Access Industries inc.’s notification af 3 January 2003 under the 1996 Act on the Disclosure of Holdings in Listed Companies and does nol take into account any subsequent dilution.
(3) This percentage is not on a fuliy diiuted basis
No transactions have occurred during 2004 with these related parties, 25
Legal Proceedings
In October 2000 the Company was informed by the public prosecutor in The Netherlands of potential civil and criminal tax liabilities relating to certain employee stock options granted prior to its initia1 public offering in July 1999. Altbough the Company had consulted with its Dutch tax advisors and the Dutch .mX Authorities prior to issuing these options and it believes the tax treatment of these options was correct, it has agreed with the public prosecutor to a payment of €3.0 million. This payment was made in tbe fourth quarter of 2001, whereby al1 criminal charges were dropped, without any admission of guilt by the Company. In June 2002, the Company received an additional assessment Wage Tax for an amount of € 14.6 million from the Dutch Tax Authorities regarding the valuation of the aforementioned employee
stock options. Tbe Company lodged an objection against the assessment and Dutch Tax Authorities took a negative decision on this objection in January 2003. The Company then lodged an appeal at the Amsterdam Court of Appeal. The Appeal Procedure is still pending. The Company bas not made any provision for the additional potential tax exposure. Should the Company he successful in its case with the Dutch Tax Authorities, it intends to attempt to reclaim al1 or part of the potential settlement that was reached with the public prosecutor. The Company has filed complaints in the past with the European Commission, with the Dutch Postal and Telecommunications Authority or Onafiankelijke Post en Telecommunicatie Autoriteit (the “OPTA”) and the Minister of Transport and Waterways in The Netherlands, with the Belgium Institute for Post and Telecommunications (“BIPT’) in Belgium, and with tbe Regulierungsbehörde fur Telekommunikation und Post (“RegTP”) in Germany as part of its regulatory strategy. The Company also makes routine filings with the regulatory agencies and governmental authorities in the countries in which it operates. The Compaiiy is from time to time involved in routine litigation in the ordinary course of business. It believes that no currently pending litigation to which it is a party wil1 have a material adverse effect on its financial position or results of operations.
119
AUDITORS’ REPORT RELATING TO THE CONSOLIDATED FINANCiAL INFORMATION FOR THE YEARS 2004,2003 AND 2002 In our opinion, the consolidated financial information of Versatel Telecom International N.V., Amsterdam for the years 2004,2003 and 2002, as included in this offer memorandum on pages 99 to 119 is consistent, in al1 rnaterial respects, with the financial statements for those years from which they have been derived. We issued unqualified auditors’ reports on these financial statements on 29 April 2005, on 21 April 2004 and on 30 May 2003, respectively.
For a hetter understanding of the Company’s financial position and results and of the scope of our audit, the aforementioned consolidated financial information should be read in conjunction with the financial statements from which it has been derived and our auditors’ reports thereon.
Amsterdam, 14 September 2005
Ernst & Young Accountants
120
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ADWSERS ADVISERS TO THE OFFEROR Financial Adviser
Legal Adviser
Morgan Stanley & Co. Limited 25 Cdbot Square Canary Wharf London El4 4QA United Kingdom
Allcn & Overy LLP Apollolaan 15 1077 AB Amsterdam The Netherlands
Dealer Manager Morgan Stanley & Co. International Limited 25 Cdhot Square Canary Wharf London E14 4QA United Kingdom ADWSERS TO VERSATEL Financial Adviser to the Company
Legal Adviser to the Company
Lazard B.V. Rembrandt Tower, 2XLhfloor Amstelplcin 1 1096 HA Amsterdam The Netherlands
Stihbe N.V. Strawinskylaan 2001 1070 AP Amsterdam The Netherlands
Accountant
Legal Adviser to the Supervisory Board
Ernst & Young Accountants Drentcstraat 20 1083 HK Amsterdam Thc Netherlands
Clifford Chance LLP Droogbdk 1A 1013 GE Amsterdam The Netherlands ADWSERS TO APAX
Financial Adviser
Legal Adviser
ABN AMRO Bank N.V. Gustav Mahlerlaan 10 1082 PP Amsterdam The Netherlands
Loyens & Loeff N.V. Fred. Roeskcstraat 100 1076 ED Amsterdam Thc Netherlands ADVISER TO THE
DEALER MANAGER Legal Adviser
Linklaters 3rd Floor Atrium Building Strawinskylaan 305 I 1077 ZX Amsterdam The Netherlands
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