PORTSMOUTH HARBOUR FERRY COMPANY IN FIH TAKEOVER BID
By J. Brock (FINN)
The Falkland Islands Holdings plc (FIH) board have announced that an offer will be made by Dawnay, Day Corporate Finance Limited on behalf of FIH for the whole of the issued share capital of the Portsmouth Harbour Ferry Company plc (PHFC) not already owned by FIH on 06 October 2004. Originally, the offer consideration comprised 7 new FIH shares for each PHFC share or a part Cash Alternative of £25.00 in cash and £8.50 in loan shares (i.e. £38.50) each PHFC Share. The loan notes would be redeemed in instalments over four years.
Since the Offer announcement, discussions have taken place between FIH and its advisors and Grant Thornton Corporate Finance, the independent financial advisor to the board of PHFC, which lead to FIH agreeing to improve the terms of the Part Cash Alternative. Also resulting from the discussions, Grant Thornton Corporate Finance agreed to advise the PHFC shareholders to accept the revised Part Cash Alternative. As announced by the FIH board, the consideration payable for each PHFC share under the Part Cash Alternative will be £25.00 in cash and £10.00 in loan notes. This is an increase of £1.50 in loan notes. These loan notes will be redeemed in instalments over the next three years. According to the announcement, the Share Offer is unchanged.
As a result, Grant Thornton Corporate Finance has advised the PHFC Board that it considers the terms of the Part Cash Alternative under the Offer to be reasonable so far as PHFC shareholders are concerned. Further advice is that the Board of PHFC recommend to PHFC shareholders to accept the Offer. Grant Thornton Corporate Finance understands that whilst the directors of PHFC have taken its advice into account, they are unable to recommend acceptance of the Offer because, amongst other things, they consider that it falls short of a price that fully reflects the future potential of the Company in the light of recent transactions in the domestic ferry sector.
Said David Hudd, Chairman of FIH, “The uncertainty inherent in any bid situation distracts management and staff from the operations of the business. I said in yesterday’s BBC South interview that there was some uncertainty as to the ownership of the ferry company and we were looking to resolve that uncertainty by making a bid for it. What I meant by this is that I believe that now that FIH has announced its formal Offer, this period of uncertainty as to the future ownership of the Portsmouth Harbour Ferry Company will soon be over. If the offer succeeds, the Company will become a subsidiary of FIH, and if it should fail, the Takeover Code will limit FIH’s ability to make another offer for 12 months.”
He went on to say, “I believe that the Offer is a generous one and am pleased that Grant Thornton Corporate Finance considers the £35.00 per share Part Cash Alternative to be reasonable and that it has advised the board of PHFC to accept it. The value of the share offer fluctuates with the FIH share price and today values each PHFC Share at over £40.00.”
