VINCI - 2005 annual report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A. KEY EVENTS IN 2005
1. ASF (AUTOROUTES DU SUD DE LA FRANCE)
1.1 ACCOUNTING FOR THE HOLDING IN ASF USING THE EQUITY METHOD IN 2005
Following the appointment of a Director representing VINCI on the Board
of Directors of ASF, VINCI has used the equity method to account for its
22.99% shareholding in ASF since 15 December 2004.
The net effect of equity accounting for ASF on VINCI’s 2005 profit amounts
to €76.8 million. This is determined after taking account of an amortisation
charge of €24.9 million in respect of goodwill arising on first
consolidation, amortised on a straight-line basis over its remaining useful
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VINCI 2005 ANNUAL REPORT
period of 28 years from the date when the shareholding in ASF was first
accounted for using the equity method.
In total, the equity-accounted shares in ASF represent an asset of
€1,512 million in VINCI’s consolidated financial statements, to be
compared with a stock market value of €2,654.7 million at 31 December
2005.
1.2 DECISION BY THE FRENCH GOVERNMENT TO SELL ITS 50.4%
SHAREHOLDING IN ASF TO VINCI
On completion of the process it undertook for the sale of its shareholdings
in motorway companies, the French Government decided on 14 December
2005 to sell its 50.4% shareholding in ASF to VINCI. The transaction
will allow the emergence of a French world leader in the construction
and operation under concession of transport infrastructures, a rapidly
expanding market.
Price
The acquisition will be paid for in cash at a price of €50 per share, making
a total of €8.9 billion for the remaining 77% of ASF shares, given that
VINCI already owns 23%. This price will be increased to €51 per share if
the inclusion in the scope of the ASF concession of the Lyon Balbigny
section of the A89 motorway, which is in progress, is confirmed. The total
would then be €9.1 billion for the 77% of ASF shares remaining to be
acquired. On 23 February 2006, the National Assembly approved the law
validating the Lyon Balbigny inclusion.
Financing
The transaction will be financed as follows:
– €2.6 billion from existing resources (available cash and medium-term
credit lines);
2. OCEANE BONDS
2.1 EARLY REDEMPTION OF THE 2001-2007 OCEANE BONDS
Following the strong increase in its share price, VINCI has decided to
redeem early all the OCEANE bonds issued on 20 July 2001 maturing in
January 2007.
The early redemption was proposed on 22 August 2005 at €103.19 per
bond plus accrued interest since 1 January 2005 of €0.57, making a total
of €103.76 per bond.
– €4.2 billion from an acquisition loan for 7 years from 7 November
2005;
– €2.3 billion from a bridging loan for 20 months from 7 November
2005.
An issue of new shares for cash, to which VINCI shareholders will have a
preferential subscription right, will be made within a maximum of
18 months, depending on market conditions. This issue will not exceed
30% of the total amount of the transaction.
The sale by the French Government of its majority holding to VINCI is
subject to the authorisation of the monopoly regulatory authorities.
This will be followed by the launch by VINCI of a public offer for the
remaining 26.6% of ASF shares, in the form of a standing market offer.
Finalisation of this transaction is expected during the first half of 2006.
Conversion into shares was requested for almost all the bonds (99.72%),
leading to the issue of 11,468,262 shares resulting in an increase in the
consolidated equity of €586.5 million.