| To : Business Editor | For immediate release |
HONGKONG LAND ACCEPTS RECOMMENDED OFFERS BY KVAERNER FOR TRAFALGAR HOUSE
4th March 1996 -- Hongkong Land Holdings Limited ("Hongkong Land") said today that the Board of its associated company, Trafalgar House, has recommended the acceptance of cash offers to be made by Kvaerner a.s. for the whole of the issued ordinary and convertible preference share capital of Trafalgar House. Hongkong Land has given an irrevocable undertaking to accept the offers in respect of its shareholding in Trafalgar House.
The offers will be 50 pence in cash for every Trafalgar House ordinary share and 80 pence in cash for every Trafalgar House convertible preference share, representing premia of 28.2% and 29.0% respectively over the share prices of 39 pence and 62 pence respectively at the close of business on 26th February 1996, the day before the offer period commenced, and of 55.0% and 30.1% respectively over the share prices of 32?pence and 61?pence respectively at the close of business on 5th February 1996, approximately one month prior to the date of the announcement. The offers value the whole of Trafalgar House's ordinary and convertible preference share capital at ?79 million which, together with other outstanding classes of share capital, gives a total value of ?04 million.
Hongkong Land owns 25.8% of Trafalgar House's ordinary share capital and 25.1% of its convertible preference share capital. If the offers become unconditional, Hongkong Land will receive ?24 million (US$343 million) in cash for its shares, which will be used for general corporate purposes. The overall net deficit against the original investment cost will be some US$156 million. The offers compare with an expected carrying value in the Hongkong Land Group's consolidated balance sheet at 31st December 1995 of US$125 million, after previous write downs. The disposal will, therefore, generate an exceptional profit in the Group's 1996 accounts of US$218 million over that book value, which will be subject to adjustment for Hongkong Land's share of Trafalgar House's trading results up to the point of completion. In the year ended 30th September 1995, Trafalgar House reported a pre-tax loss of ?20.8 million, after exceptional items of ?04.2 million.
Kvaerner is a leading international technology group with regional and local operations in Europe, North and South America, Australia and Asia. With a stock market capitalisation of approximately NOK9 billion (?.9 billion), Kvaerner is one of Norway's largest companies and is engaged in shipbuilding, oil and gas, mechanical engineering and pulping.
Mr. Percy Weatherall, Chief Executive of Hongkong Land, said, "Hongkong Land acquired its interests in Trafalgar House as a long-term strategic holding and as part of the Group's strategy of broadening its infrastructure-related activities. The restructuring costs required in Trafalgar House, however, together with contract losses and asset write downs, were far greater than it had been possible to determine from the information publicly available at the time the investment was first made."
"Considerable management time has been spent in restructuring Trafalgar House. These efforts are beginning to bear fruit and the relationship with Hongkong Land has greatly assisted Trafalgar House in the development of its business in the Asia-Pacific Region. Nonetheless, Trafalgar House has stated that recovery will take two or three more years. Trafalgar House has now received an unsolicited approach which the Board of Trafalgar House believes, in the circumstances, offers good value for shareholders. The decision to accept the offers is therefore, we believe, in the best interests of Hongkong Land Shareholders."
For further information please contact:
| Hongkong Land Limited Percy Weatherall, Managing Director Ian Durant, Finance Director |
(852) 2842 8400 (852) 2842 8300 |
| Robert Fleming & Co. Limited Nick Dillon |
(44) 171 638 5858 |
| Ludgate Asia Limited Martin Spurrier |
(852) 2543 5413 |
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