Untitled - David Kronemyer

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In certain circumstances, where an acquisition qualifies for full merger accounting, no goodwill would arise. However, it is not always possible to structure acquisitions so as to take advantage of either merger relief or merger accoundng. By way of exarnple, this would be the case following a successful share for share offer, where a company acquires control of less than 90 per cent. of the target company. Furthermore, merger relief would not be available where an acquisition is funded out of a company's cash resources. Ihe Propoml Under the Companies Act, a company may reduce or cancel its shafe premium account provided that it obtains the approval of the shareholders in general meeting, separate approval of any class of shares whose special rights are affected and the confrmation of the High Court. The amount by which the share premium account is reduced then becomes a new and separate reserve against which goodwill can be written off. As a result of issues of shares at a premium oyer a number of years, the share premium account of the company as at 31 March 1987 had fjsen to t282,24O,492. lt is now proposed that the company's share premium account should be reduced by 9282 million, with the result that such sum would be credited to a new reserve in the books of the Company ("the New Reserve"). In respect of each of the years ended 31 March 1986 and 31 March l9a7 the goodwill which arose on consolidation as a result of acquisitions made during those years was written off against the profit and loss account reserve. The aggregate amount of goodwill written off in respect of those two years was approximately &29,OOO,OOO. It is now proposed that such goodwill be re-instated and written off against part of the New Reserve, with the result that the profit and loss account reserve will be increased by the amount which was formerly applied in writing off goodwill. As to the balance of the New Reserye of approximately 5253 miltion, it is proposed that this should be available for use in writing off goodwill which is likely to adse in the future. To put this figure in perspective, the goodwill which arose on the acquisition of Rent-A'Center alone amounted to approximately S3OO million. Your Diectors consider that a reserve of this arnount is necessary to assist the Company in the pursuit of its acquisition policy because without it the need to write off goodwill in relation to acquisitions where neither merger accounting nor merger relief is available could inhibit the Company in relation to the size, structure and timing of acquisitions. As mentioned abol/e, the reduction, to be effective, requires the sanction of the High Court. Having regard to the rights attached to both classes of preference shares and the interests of creditors, the Company will give an undeftaking to the High Court restricting the availability of the New Reserve to any use (apart from writing off goodwill) to which share premium account could be applied. It should be noted that the reduction of the share premium account will not result in any diminution in tfie net assets of the Company, nor affect the ability of the Company to pay dividends. To implement the proposal it is necessary for shareholders to pass a Special Resolution in General Meeting and, in view ofa prohibition against reduction ofthe share premium account contained in the Company's A-rticles of Association as part of the rights attaching to the Convertible Preference Shares, for the holders of the Convertible Preference Shares to pass an Extraordinary Resolution at a separate CL$s Meeting. Your Directors will then apply to the High Court for an Order confirming the reduction. The proposal, which is expected to become effective towards the end of May 1988, will not a.ffect the interests of creditors and it will not alter the authorised or issued share capital of the Company or the proportionate voting rights of shareholders.
Meetings You will 6nd attached ro this letter:- (a) a notice convening a separate Class Meeting of the holders of the Convertible preference Shares on 23 March 1988; and (b) a notice convcning an Exraordinary General Meeting of the Company on 3O March lggg to consider Extraordinary and special Resolutions for the implementation of the proposal. To be efective the resolutions must be approved by three-quarters of the yotes qlst. Actlon Enclosed with this letter are form(s) ofprory for use at the Meetings. Please complete, sign and return the appropriate form(s) of Proxy ils soon as possible in accordance with the instructions printed thereon, whether or not you intend to be present at the rclevant Meeting(s). The appropriate forms of proxy are as follows:- BLUE for use by holders of convertible Preference shares at the separate Meeting of such holders VHITE for use by holders of Ordinary Shares and Convertible Preference Shares at the Exrraordinary General Meeting of the Company. shareholders are strongly urged to complete th€ appropriat€ form of prory and r€tum lt to th€ company's Registrar, National w€stmlnster Bank plc, R€gistrar's oepartrirent, caxton House, R€dcllffe Way, Bfistol BS99 7I\lU scl as to arriv€ not later than 48 hours before the time fixed for th€ rel€rrant Meeting. The retum of the appropriate form of proxy witl not prevent a shareholder from attending the meeting and voting in person if he is entitled to do so and so wishes. Copics ofthe following docum€nts will be available for inspection at the offrces of Rowe & Maw, 20 Black Friars r.ane, l,ondon Ec4v 6HD at any time during usual business hours on any weekday (saturdays and public holidays excepted) up to and including the day of the Meeting:- (a) the Memorandum and Articles of Association of the Company; (b) the audited accounts of the Company and its subsidiaries for the two years ended 3 r March 1987 and the interim report for the six months ended 30 September 1987; (c) the Circular comprising listing particulars of the Rent-A-Centef acquisition. Recornfirendation Your Dir€ctors belleve that the proposal described in this document is in the best interests of th€ Company arrd its shareholders. Accordingly, they unaninously recommend you to vote in frvour of the Resolutions to be proposed at the Me€tings as they intend to do in resp€ct of th€ir own shareholdings. Yours faithfully, Sir Graham Wilkins Chairrnan
Page 3 and 4:
Tirrnover lrom continuing operation
Page 7 and 8:
THORN EMI is a rad :ally duutgerl b
Page 9 and 10:
single purchasers of consumer elect
Page 12 and 13:
e seen, all key measures of perform
Page 14 and 15:
Fadio Benla s a.d the DER, MultiBro
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successfully in the Ottawa and Toro
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successfully in the Ottawa and Toro
Page 20 and 21:
THoRN EMI ELECTRONICS, With divisio
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Before the year-end, THORN EMI Elec
Page 24 and 25:
Before the year-end, THORN EMI Elec
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to seclrily syslems and spe. a sed
Page 28 and 29:
increase of I per cent. THORN EMI G
Page 31 and 32:
ARTISTS, STUDIOS. RECORD MANUFACTUR
Page 33 and 34:
INTERNATIoNAL, EMI Australia's subs
Page 37 and 38:
A MAJOR INTERNATIONAL FORCE PROVIDI
Page 39 and 40:
PRoDUCTS: A threefold increase in t
Page 43 and 44: The Directors submit their annual r
Page 45 and 46: FIXEI] ASSETS The Directors are of
Page 47 and 48: REPORT OF THE AUDTTORS TO THE MEMBE
Page 49 and 50: Tirrnover Coet of sales Gross proli
Page 51 and 52: Total frrnds from operatione
Page 53 and 54: Operating profit is stated after ch
Page 55 and 56: Employee costs, including Directors
Page 57 and 58: Investments comP 6e: Subsidiary com
Page 59 and 60: Tiade debtors: Due urithin one year
Page 61 and 62: Between one and two years Between t
Page 63 and 64: Authorised Ordinary Shares of 25p
Page 65 and 66: fuising on acquisition of Rent-A-Ce
Page 67 and 68: 24. PENSION ARNANGEMf,NTS A signifi
Page 69 and 70: Erecutive Committe€ uK Fentrr and
Page 71 and 72: Non'execllve D reclor s ncel984 whe
Page 75 and 76: THORN EMI plc Annual General Meetin
Page 77 and 78: 3. REDUCTION OF SHARE CAPITAL The 4
Page 79 and 80: The return of the appropriate Form
Page 81 and 82: Taxation Consequences (i) Sharehold
Page 83 and 84: (i) Overall Scheme Limits Ir is pro
Page 85 and 86: NOTICE OI' MEETINC OF THE HOLDERS O
Page 87 and 88: (ii) the allotment (otherwise than
Page 89: Clause 5(a) to be replaced by the f
Page 94 and 95: Efl NAORDINARY RESOLUTION THAT this
Page 97 and 98: THIS DocuMEN'I Is IMPORTANT AND Rxe
Page 99 and 100: M€€tings You will find attached
Page 101: THORN EMI plc NOTICE OF EXTRAORDINA
Page 104 and 105: . TERMS Ordinary Shareholders who w
Page 106: Il you do not specily in the Notice
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Untitled - David Kronemyer

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