Statement on Royal London Interest in Pearl proposal for Resolution
Wednesday, 10 October 2007
Royal London notes the statement issued today by Pearl Assurance PLC ("Pearl") in relation to its communication to the Board of Resolution PLC ("Resolution") that it is considering a possible cash offer for Resolution.
Royal London confirms that, following discussions with Pearl about the possibility of Royal London acquiring certain Resolution assets should Pearl make a firm offer to acquire Resolution and Pearl's offer be successful, Royal London has entered into a binding agreement with Pearl. The agreement provides that conditional on successful completion of the offer, Royal London would have the right to acquire certain Resolution businesses and assets. The total consideration payable by Royal London for such assets would be approximately £1.25 billion (subject to certain post-closing adjustments). In addition, Royal London has agreed to provide £0.3 billion of the debt funding for any offer to be made by Pearl.
The assets to be acquired by Royal London are expected to include, amongst others:
- Scottish Provident, one of the leading providers of protection products in the UK life sector
- Scottish Provident International Life Assurance, an Isle of Man-based offshore protection provider
- The business and trading assets of the Resolution Management Services Company relating to Life Division North, an administration and service business company based in Glasgow
- Blocks of in-force policies and the related asset management of those policies
There can be no certainty that Royal London will acquire these assets in Resolution given that the transaction is conditional upon Pearl making a firm offer for Resolution and that offer being successful. A further announcement will be made when appropriate.
It is expected that any acquisition of certain Resolution assets by Royal London will not have a material impact on the rating of the Subordinated Guaranteed Notes issued by RL Finance Bonds plc, a subsidiary of Royal London.
for further information please contact:
Royal London
Alasdair Buchanan
Tel: +44 (0) 131 524 7133
Mob: +44 (0) 7919 170413
Financial Dynamics
Robert Bailhache
Tel: +44 (0)20 7831 3113
Ed Gascoigne-Pees
Andrew Waterworth
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code, if any person is, or becomes, "interested" (directly or indirectly) in one per cent. or more of any class of "relevant securities" of Resolution, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 p.m. (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Resolution, they will be deemed to be a single person for the purposes of Rule 8.3.
Under the provisions of Rule 8.1 of the Takeover Code, all "dealings" in "relevant securities" of Resolution by Pearl or Resolution, or by any of their respective "associates", must also be publicly disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Takeover Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.]
Notes to Editors:
Royal London Group, is a specialist financial service provider. Its businesses focus on those sectors of the market which value premium propositions, operating through a number of brands:
- Scottish Life – UK pensions market
- Bright Grey – UK protection market
- Scottish Life International – offshore investment markets
- RLAM – fund management
- RLAS – life and pensions administration
Royal London is one of the stronger life and pension companies in the UK, and has a strong track record for with-profits performance.
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £32.7 billion. Group businesses serve around three million customers and employ 2,570 people (figures quoted are as at 30 June 2007).
Subordinated Liabilities
Perpetual Cumulative Step-up Subordinated Guaranteed Notes
On 14 December 2005 RL Finance Bonds plc, a wholly owned subsidiary of The Royal London Mutual Insurance Society Limited (the "Parent company"), issued the Perpetual Cumulative Step-up Subordinated Guaranteed Notes. The issue price of the Notes was 99.676% of the principal amount of £400m. The Notes are guaranteed by the Parent company. The proceeds of the issue were loaned to the Parent company on the same interest, repayment and subordination terms as those applicable to the Notes. The Notes have no maturity date but the issuer has the option to redeem all of them at their principal amount on 15 December 2015 and at three monthly intervals thereafter. Interest is payable at a fixed rate of 6.125% per annum for the period to 15 December 2015, payable annually in arrears on 15 December each year.