Rights Issue Prospectus THIS DOCUMENT IS IMPORTANT and REQUIRES YOUR IMMEDIATE ATTENTION
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Rights Issue Prospectus THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. When considering what action you should take, you should seek your own personal ¢nancial advice immediately from your stockbroker, bank, solicitor, accountant, fund manager or other appropriate ¢nancial adviser authorised under the Financial Services Act 1986. Cazenove and Merrill Lynch, each of which is regulated in the United Kingdom by the Securities and Futures Authority Limited, are acting exclusively for BT and for no-one else in connection with the Rights Issue and will not be responsible to anyone other than BT for providing the protections a¡orded to their customers or for providing advice in relation to the Rights Issue or the contents of this document. If you sell or have sold or otherwise transferred all of your existing BT Shares (other than ex-rights) in certi¢cated form before 21 May 2001 (the ‘‘ex-rights date’’), please send this document, together with any accompanying Provisional Allotment Letter, at once to the purchaser or transferee or to the bank, stockbroker or other agent through whom you sell or have sold or transferred your shares for delivery to the purchaser or transferee. If your transferred BT Shares were held in uncerti¢cated form, a claim transaction will automatically be generated by CRESTCo which, on settlement, will transfer the appropriate number of Nil Paid Rights to the purchaser or transferee. The distribution of this document and/or the accompanying documents, and/or the transfer of Nil Paid Rights or Fully Paid Rights through CREST in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any of those restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction. A copy of this document, which comprises a prospectus relating to BT prepared in accordance with the listing rules made under section 142 of the Financial Services Act 1986, has been delivered to the Registrar of Companies in England and Wales for registration as required by section 149 of that Act. A copy of this document, together with a copy of the consents referred to in paragraph 17 of Part 7 and the material contracts referred to in paragraph 15 of Part 7, has been delivered for registration to the Registrar of Companies in Ireland in compliance with section 47 of the Companies Act, 1963 of Ireland as required by the European Communities (Transferable Securities and Stock Exchange) Regulations, 1992. Copies of this document and the documents speci¢ed in paragraph 19(h) of Part 7 have been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong). The Registrar of Companies in Hong Kong and the Securities and Futures Commission of Hong Kong take no responsibility as to the contents of any of these documents. BT Shares are listed on the O⁄cial List and traded on the London Stock Exchange and the Tokyo Stock Exchange. BT ADSs are traded on the New York Stock Exchange and the London Stock Exchange. Application has been made to the UK Listing Authority and to the London Stock Exchange for the new BT Shares to be admitted to the O⁄cial List and to trading on the London Stock Exchange’s market for listed securities. It is expected that admission of the new BT Shares to the O⁄cial List and trading on the London Stock Exchange’s market for listed securities will become e¡ective on 20 May 2001 and that dealings will commence, nil paid, in the new BT Shares on 21 May 2001. Application has also been made for the new BT ADSs to be listed on the New York Stock Exchange. British Telecommunications public limited company 3 for 10 Rights Issue of up to 1,975,580,052 new BT Shares at 300 pence per share The latest time and date for acceptance of the Rights Issue is 9.30 a.m. on 15 June 2001. The procedures for acceptance and payment are set out in Part 3 of this document and, for Qualifying non-CREST Shareholders only, also in the Provisional Allotment Letter. Your attention is drawn to the letter of recommendation from the Chairman of BT which appears in Part 1 of this document. This prospectus is intended for use only in connection with o¡ers and sales of rights to the new BT Shares to persons outside the United States and is not to be sent or given to any person within the United States. The share rights o¡ered in this prospectus are not being registered under the US Securities Act of 1933 for the purpose of sales outside the United States. If you have received this document and are a holder of BT ADSs or a US Holder of BT Shares you should have been sent a copy of the US Prospectus. Qualifying non-CREST Shareholders other than those resident in Australia, Belgium, Canada, France, Japan or South Africa, will ¢nd enclosed with this document a Provisional Allotment Letter. Qualifying CREST Shareholders (none of whom will receive a Provisional Allotment Letter) other than those resident in Australia, Belgium, Canada, France, Japan or South Africa are expected to receive a credit to their appropriate stock accounts in CREST in respect of the Nil Paid Rights to which they are entitled on 14 May 2001. The Nil Paid Rights so credited are expected to be enabled for settlement by CRESTCo as soon as practicable after admission of the new BT Shares to the O⁄cial List. If the Nil Paid Rights are for any reason not enabled by 8.00 a.m. on 21 May 2001, a Provisional Allotment Letter will be sent to each Qualifying CREST Shareholder in substitution for the Nil Paid Rights credited to its stock account in CREST. Qualifying CREST Shareholders who are CREST personal members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Rights Issue. The attention of Overseas Shareholders is drawn to paragraph 7 of Part 3 of this document. Holdings of BT Shares in certi¢cated and uncerti¢cated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue. CONTENTS Page Expected Timetable of Principal Events 3 De¢nitions 4 Directors, Company Secretary and Advisers 8 PART 1 Letter from the Chairman of BT 9 PART 2 Some Questions and Answers on the Rights Issue 18 PART 3 Further Terms and Conditions of the Rights Issue 25 PART 4 Preliminary Results of BT for the year ended 31 March 2001 37 PART 5 Pro Forma Financial Information for the year ended 31 March 2001 69 PART 6 Investment Considerations 77 PART 7 Additional Information 83 Cautionary statement regarding forward-looking statements This document contains certain statements that are or may be forward-looking with respect to (i) the bene¢ts and advantages of the Group’s restructuring; (ii) the Group’s plans to demerge BT Wireless, the structure of the demerger and the composition of the demerged group; (iii) the Group’s plans for Yell, BT Ignite and Concert; (iv) the growth of, and opportunities available, in the communications industry and the Group’s positioning to take advantage of those opportunities; and (v) the Group’s debt reduction plans. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. There are a number of factors that could cause actual events and developments to di¡er materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, statements made in Part 6 of this document as well as: (i) the Group’s ability to realise the bene¢ts expected to be derived from the restructuring; (ii) the Group’s ability to complete plans to demerge BT Wireless and to achieve an appropriate structure for the demerged group; (iii) the Group’s ability to deliver its plans for Yell, BT Ignite and Concert; (iv) the Group’s ability to bene¢t from the growth of, and capitalise on opportunities available in, the communications industry; (v) the Group’s ability to reduce its debts; and (vi) material adverse changes in market conditions. SHAREHOLDER HELPLINE TELEPHONE NUMBER: Freefone 0808 100 4141 (+44 20 7864 9074 if you are calling from outside the UK) (Monday to Friday, 8.30 a.m. to 8.30 p.m.; Saturdays, Sundays and UK public holidays 10.00 a.m. to 4.30 p.m.) CREST SERVICE DESK TELEPHONE NUMBER : 0845 964 5648 (+44 20 7849 0199 if you are calling from the Republic of Ireland or +44 845 964 5648 if you are calling from any other place outside the UK) (Monday to Friday, 8.00 a.m. to 8.00 p.m.) Notes For legal reasons, the Shareholder Helpline and the CREST Service Deskwillonlybeabletoprovideinformation contained in this document (other than information relating to the Company’s register of members and CREST processes respectively) and will be unable to give advice on the merits of the Rights Issue or to provide ¢nancial advice. If you do not know whether you hold your BT Shares in certi¢cated form or in CREST you should contact the Shareholder Helpline. 2 EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2001 Record Date for the Rights Issue close of business on 9 May Nil Paid Rights and Fully Paid Rights enabled in CREST by 8.00 a.m.