Directors' Report: Governance - British American Tobacco

www.bat.com/annualreport2009
From the close of business on 5 March 2010 until the close of business
on 12 March 2010, no transfers between the UK main register and
the South African branch register are permitted and no shares may be
dematerialised or rematerialised between 8 March 2010 and 12 March
2010, both days inclusive.
Further details of the total amounts of dividends paid in 2009 (with
2008 comparatives) are given in note 8 on the accounts.
Share capital
As at 31 December 2009, the Company had an allotted and fully
paid share capital of 2,025,364,622 ordinary shares of 25p each with
an aggregate nominal value of £506 million (including treasury shares
and shares owned by the employee share trusts).
Purchase of own shares
During the year ended 31 December 2009, the Company made
no purchases of its own shares. In February 2009, the Directors
discontinued the share buy-back programme until further notice.
The Directors sought fresh authority for the Company to purchase its
ordinary shares in order that the appropriate mechanisms would be
in place to enable the share buy-back programme to be reinstated
at any time when, in the opinion of the Directors, the exercise of the
authority would result in an increase in the Company’s earnings per
share and would be in the interests of its shareholders generally. At
the 2009 Annual General Meeting, the Company was given authority
to purchase up to 199,600,000 of its ordinary shares. The minimum
price that may be paid for such shares is 25p and the maximum price
is an amount equal to 105 per cent of the average of the middle market
prices shown in the quotation for an ordinary share as derived from
the London Stock Exchange Daily Official List for the five business days
immediately preceding the day on which the ordinary share is contracted
to be purchased. This present authority for the Company to purchase
its own shares will expire at the 2010 Annual General Meeting.
In accordance with the Company’s policy, any repurchased shares
are held as treasury shares and as at 31 December 2009 the number
of treasury shares was 28,960,054. While treasury shares are held no
dividends are paid on them and they have no voting rights. Treasury
shares may be resold at a later date.
In order that the Directors may reinstate the share buy-back programme
when appropriate, it is proposed that the authority for the Company to
purchase its own shares is renewed with the applicable resolution to be
put to shareholders at the 2010 Annual General Meeting. Details of the
resolution and explanatory notes are contained in the Notice of Annual
General Meeting which is sent to all shareholders and is also published
on www.bat.com.
Significant agreements – change of control
The following significant agreements contain certain termination
and other rights for our counterparties upon a change of control
of the Company.
Directors’ report: Governance
British American Tobacco Annual Report 2009
On 8 March 2005, the Company, B.A.T. International Finance p.l.c.,
B.A.T Capital Corporation and British American Tobacco Holdings
(The Netherlands) B.V. (as borrowers and, in the case of the Company,
as a borrower and guarantor) entered into a revolving credit facility
agreement with HSBC Bank plc (as agent) and certain financial institutions
(as lenders) pursuant to which the lenders agreed to make available to
the borrowers £1.75 billion for general corporate purposes (the Facility).
Pursuant to the Facility, should a borrower (other than the Company)
cease to be a direct or indirect subsidiary of the Company, such borrower
shall immediately repay any outstanding advances made to it. Where
there is a change of control in respect of the Company, the lenders can
require all amounts outstanding under the Facility to be repaid.
On 7 August 2007, British American Tobacco Mexico, S.A. de C.V.
(as borrower) and the Company, B.A.T. International Finance p.l.c.
and B.A.T Capital Corporation (as guarantors) entered into a term
credit facility arrangement with Barclays Capital (as mandated lead
arranger), HSBC Bank plc (as agent) and certain financial institutions
(as lenders) pursuant to which the lenders agreed to make available to
the borrower US$690 million to refinance existing facilities and for general
corporate purposes (the Facility). Pursuant to the Facility, should the
borrower cease to be a direct or indirect subsidiary of the Company,
the borrower shall immediately repay any outstanding amounts. Where
there is a change of control in respect of the Company, the lenders can
require all amounts outstanding under the Facility to be repaid.
On 10 July 2009, British American Tobacco Tütün Mamulleri Sanayi
ve Ticaret Anonim Sirketi (as borrower), the Company and B.A.T.
International Finance p.l.c. (as guarantors) entered into a term credit
facility agreement with Barclays Bank PLC (as agent) and certain
financial institutions (as lenders) pursuant to which the lenders agreed
to make available to the borrower €700 million to refinance existing
facilities and for general corporate purposes (the Facility). Pursuant
to the Facility, should the borrower cease to be a direct or indirect
subsidiary of the Company, the borrower shall immediately repay any
outstanding advances. Where there is a change of control in respect
of the Company, the lenders can require all amounts outstanding
under the Facility to be repaid.
Details of the change of control provisions contained in the Company’s
Long-Term Incentive Plans are given in the Remuneration report.
Contractual arrangements
Individual operating companies in the Group have contractual and
other arrangements with many third parties in support of the Group’s
business activities covering input materials (filter tow, tobacco leaf
and wrapping materials), logistics and distribution. Such contracts
and arrangements may be deemed to be essential to one or more
operating companies but there are no contracts or arrangements
considered to be essential to the operation and understanding of
the business or the Group as a whole.
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From the Chairman
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