Untitled - David Kronemyer

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Share Premium Account where a company issues shafes ar a value which represents a pfemium over theif nominal value, the premium musi generally, under the Compani€s Act, be transferred to a share premium account. Under the tompanies Act,ihe uses to which the share pr€mium account can be put are very restricted and the account cannot be used for writing off Soodwill. If an acquisition is mad€ v/holly or partly for shares and certain specific conditions are met, the Companies Act proyides relief from the need to create a share premium account (known as 'merger relief). Under these provisions the premium may be tak€n to a merger reserve against which any goodwill arising may be written off. Merger relief was available in connection with the acquisition of Rent-A-Center and the premium was taken to a merger res€rve against which the goodwill has been applied. In cefiain circumstances, an acquisition may qualify to be accounted for as a merger under the provjsions of Statem€nt of Standard Accounring Practice No. 23 and were advantage to be taken of those Provjsions no goodwill would arise. However, it is not always possible to structure acquisitions so as to take advantage of either mer{aer relief or merg€t accounting. By way of example, 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. The Proposal Under the Companies Act, a company may reduce or cancel its share premium account provided that it obtains rhe approval of the shareholders in general meeting, separate approval of any class of shares whose special rights are affected and the confirmation ofrhe 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 over a number of years, the share premium account of the Company as at 31 March 1987 had risen to 5282,240 ,492. lt is now proposed that the Company's share premium account should be reduced byS282 million, with the result that such sum would be credited to a new reserye in the books ofthe Company ("the New Reserve"). In respect of each of the years ended 31 March 1986 and 31 March 1987 the goodwill which arose on consolidation as a result of acquisirions made during rhose years was written off against the profit and loss account reserve. The aggregate amount of goodwill written off in respect of those two years wa5 approximately.L29,000,000. Ir is now proposed rhat 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 Reserve of approximately 52 53 million, it is proposed that this should be available for use in writing off goodwill which is likely to arise in the future. To put this ligure in pefspective, the goodwill which arose on the acquisition of Rent-A-Center alone amount€d to approximatelyS3OO million. Your Directors consider that a reserve of this amount is necessary to assist the Company in rhe pursuit of its acquisition policy because withour it the need to write offgoodwill in relation to acquisitions where neither merger accounting nor merger relief is available could inhibit the Company in relation to the size, structur€ and timing of acquisitions. As mention€d above, 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 undertaking to the High Court restricting the availability of the New Reserve to any use (apaft from writing off goodwill) to which the share premium account could be applied. It should be noted rhat the reduction of the share premium account will not result in any diminurion in the 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 of a prohibition against reduction of the share premium account contained in the Company's Articles ofAssociation as part of the rights attaching to the Convertible Preference Shares, for the holders of the Convertible Preferenc€ Shares to pass an Extraordinary Resolution at a separate Class 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 middle ofJuly 19a8, will not affect the interests of creditors and it will not alter rhe authorised or issued share capital of rh€ Company or the propoftionate voting rights of shareholders.
M€€tings You will find attached to this letter:- (a) a notice convening a separate Class Meeting of the holders of the Convertible Preference Shares on 11 May 1988; and (b) a notice convening an Extraordinary General Me€ting of the Company on 18 May 1988 to consider Extraordinary and Special Resolutions for the implementation of th€ proposal. To be effectiv€ rhe resolutions must b€ approved by three-quarters of the votes cast. Action Enclosed with this letter are form(s) of proxy for use at the Me€tings. Please complete, sign and retum the appropriate form(s) of proxy as soon as possible in accordance with the instructions printed thereon, whether or not you intend to be present at the relevant Meeting(s). The appropriate forms of proxy are as follows:- GREEN for use by holders of Conveftible Preferenc€ Shares at the sepa{ate Meeting of such holders YELLOV for use by holders of Ordinary Shares and Conveftible Preference Shares at the Extraordinary General Meeting of th€ Company. Shareholders are strongly urged to complete th€ appropdate form of proxy and return lt to the Company's Reglstrar, Natlonal westmlnster Bank PLC, Reglstrar's l)epartment, Caxton House, Redcllffe way, Brtstol Bs99 7NH so as to afflYe not later than 48 hours before the tlme fixed for th€ rel€Yant Meeting. The return of the appropriate form of prorT will not prevent a shareholder from attending the meeting and voting in person if he is entitled to do so and so wishes- Copies of the following documents will be available for inspection at the offices of Rowe & Mav/, 20 Black Friars I-ane, London EC4v 6HD at any rime during usual business hours on any weekday (Saturda's and public hotidays excepted) up to and including the day of the Meeting:- (a) the M€morandum and A.rticles of Association of th€ Company; (b) the audit€d accounts of the Company and its subsidiaries for the two years ended 31 March 1987 and the interim report for the six months ended 30 September 1987; (c) the Circular comprising listing pafticulars of the Rent-A-Center acquisition. Recommendatlon Your Directors b€lleye that the proposal described in thls document is ln the best iflterests of the Company and lts shareholders. Accordingly, they unanlmously recommend you to Yote ln favour of the Resolutlons to be proposed at the Meetlngs as they intend to do in respect of thelr own shareholdlngs- Yours faithfully, U\"llr-B sir Graham wilkins Chairman
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Tirrnover lrom continuing operation
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THORN EMI is a rad :ally duutgerl b
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single purchasers of consumer elect
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e seen, all key measures of perform
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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
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THoRN EMI ELECTRONICS, With divisio
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Before the year-end, THORN EMI Elec
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Before the year-end, THORN EMI Elec
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to seclrily syslems and spe. a sed
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increase of I per cent. THORN EMI G
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ARTISTS, STUDIOS. RECORD MANUFACTUR
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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 92 and 93: In certain circumstances, where an
Page 94 and 95: Efl NAORDINARY RESOLUTION THAT this
Page 97: THIS DocuMEN'I Is IMPORTANT AND Rxe
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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