Waterfall Hldgs PLC - Offer by Allied
Leisure Plc
RNS Number:0035K
Waterfall Holdings PLC
4 May 2000
Not for release, publication or distribution in or into
the United States, Canada, Australia or Japan.
Allied Leisure PLC
Recommended Cash Offer for Waterfall Holdings PLC
* The boards of Allied and Waterfall announce the terms
of a recommended cash offer for Waterfall to be made
by Close Brothers on behalf of Allied to acquire the
whole of the issued share capital of Waterfall not
already owned by Allied.
* The Offer of 55 pence in cash for each Waterfall Share
values the entire issued share capital of Waterfall at
approximately £22.7 million. There will also be a Loan
Note Alternative.
* Allied already owns 23.8 per cent. of Waterfall and
has received irrevocable undertakings to accept the
Offer from Waterfall's directors and others in respect
of a further 30.4 per cent. Allied therefore owns or
has received irrevocable undertakings to accept the
Offer in respect of a total of 54.2 per cent. of
Waterfall's existing share capital.
* The Offer represents a premium of 20.9 per cent. to
the closing price of 45.5 pence per Waterfall Share on
15 February 2000, being the last dealing day prior to
Waterfall's announcement that it was in talks which
might lead to an offer.
* Waterfall's cue sports division is an excellent fit
with Allied's Rileys American pool and snooker
business and the acquisition will further strengthen
Allied's position as the clear market leader in cue
sports in the UK, increasing the size of Allied's cue
sports estate by 55 per cent., from 100 to 155 clubs.
* Allied expects to derive significant benefits from the
development and marketing of a single cue sports brand
with a national presence.
* Allied expects to extract significant synergy benefits
from the acquisition, primarily through improved
purchasing and a reduction in central overheads.
* The Allied Directors believe that the growth potential
of the Rileys brand is significant and they intend to
continue the successful expansion of the format - 15
new Rileys have been opened in the current financial
year and a further 7 sites are under development.
* The Acquisition is expected to be earnings enhancing
in the first full financial year.
Commenting on the Offer, Neil Goulden, Chief Executive of
Allied, said:
"The offer for Waterfall is the third step in the
restructuring and repositioning of Allied which began
with the acquisition of European Leisure PLC in June
1999 and continued with the subsequent asset disposals
and the formation of the Megabowl ten-pin bowling
joint venture.
The acquisition of Waterfall will add significant
critical mass to our cue sports business in a single
step and will strengthen our position as the UK's
leading cue sports business. We believe that the
growth prospects for Rileys are excellent as we
establish a nationwide presence and identity for the
brand. The repositioning process has transformed
Allied and its prospects, creating market leading
positions in cue sports and ten-pin bowling and a
strong position in fast food with Burger King.
We continue to have a strong balance sheet backed by
an excellent underlying cash flow and our focus now
will be on consolidating and developing our current
brand portfolio - Rileys, Megabowl and Burger King
franchised restaurants."
Commenting on the Offer, John Garrett, Chairman of
Waterfall, said:
"Waterfall has previously emphasised the benefits of
merging the UK's two major cue sports businesses.
Allied and Waterfall have been able to agree a
transaction which is advantageous for both sets of
shareholders".
This summary should be read in conjunction with the
attached press announcement.
The Offer will not be made, directly or indirectly, in or
into, or by use of the mails, or by any means or
instrumentality (including, without limitation, facsimile
transmission, telex or telephone) of interstate or
foreign commerce, or of any facility of a national
securities exchange, or the United States, Canada,
Australia or Japan and the Offer cannot be accepted by
any such use, means, instrumentality or facility or from
within the United States, Canada, Australia or Japan.
Accordingly, copies of this announcement are not being,
and must not be, mailed or otherwise distributed or sent
in or into or from the United States, Canada, Australia
or Japan.
Enquiries
BACK
Allied
Neil Goulden 020 7601 1000 (today)
Chief Executive 01509 414 422
(thereafter)
Close Brothers Corporate Finance 020 7655 3100
(advisers to Allied)
John Llewellyn-Lloyd
Alka Bali
Square Mile (PR Advisers to 020 7601 1000
Allied)
Kevin Smith
Waterfall
Martin Callan 01252 331677
Chief Executive
Marshall Securities (advisers to 020 7490 3788
Waterfall)
John Webb
Robert Luetchford
Close Brothers, which is regulated by The Securities and
Futures Authority Limited, is acting exclusively for
Allied in connection with the Offer and is not acting for
any other person and will not be responsible to anyone
other than Allied for providing the protections afforded
to customers of Close Brothers or for giving advice in
relation to the Offer.
Marshall, which is regulated by The Securities and
Futures Authority Limited, is acting exclusively for
Waterfall in connection with the Offer and is not acting
for any other person and will not be responsible to
anyone other than Waterfall for providing the protections
afforded to customers of Marshall or for providing advice
in relation to the Offer.
The Allied Directors accept responsibility for the
information contained in this announcement. To the best
of the knowledge and belief of the Allied Directors (who
have taken all reasonable care to ensure that such is the
case), the information contained in this announcement is
in accordance with the facts and does not omit anything
likely to affect the import of such information.
Not for release, publication or distribution in or into
the United States, Canada, Australia or Japan.
Introduction
The boards of Allied and Waterfall announce that they
have reached agreement on the terms of a recommended cash
offer, to be made by Close Brothers on behalf of Allied,
to acquire the whole of the issued and to be issued share
capital of Waterfall not already owned by members of the
Allied Group.
The Offer values the entire existing issued share capital
of Waterfall at approximately £22.7 million.
Recommendation
The Waterfall Board, which has been so advised by
Marshall, considers the terms of the Offer to be fair and
reasonable. In providing advice to the Waterfall Board,
Marshall has taken account of the commercial assessments
of the Waterfall Directors.
The Waterfall Board unanimously recommends Waterfall
Shareholders to accept the Offer, as the Waterfall
Directors, their connected persons and members of their
families have irrevocably undertaken to do in respect of
their own beneficial holdings, amounting in aggregate to
8,640,717 Waterfall Shares representing 20.9 per cent. of
Waterfall's existing issued share capital.
Current holding in Waterfall and irrevocable undertakings
Members of the Allied Group currently own 9,843,720
Waterfall Shares in aggregate representing approximately
23.8 per cent. of Waterfall's existing issued share
capital.
Allied has received irrevocable undertakings to accept
the Offer from the Waterfall Directors, their connected
persons and members of their families in respect of
8,640,717 Waterfall Shares in aggregate representing
approximately 20.9 per cent. of Waterfall's existing
issued share capital. All of these undertakings to accept
the Offer are binding, even if a competing offer is
announced by a third party.
In addition, Allied has received irrevocable undertakings
to accept the Offer from four other Waterfall
Shareholders in respect of an aggregate of 3,901,674
Waterfall Shares, representing approximately 9.4 per
cent. of Waterfall's existing issued share capital. One
of these undertakings (which relates to 1,209,285
Waterfall Shares) will cease to be binding if a competing
offer is announced by a third party at a price of not
less than 57.75 pence per Waterfall Share. Two
undertakings (which relate to a total of 2,641,837
Waterfall Shares) will cease to be binding if a competing
offer is announced at a price of not less than 60 pence
per Waterfall Share. The other undertaking (which
relates to 50,552 Waterfall Shares) is binding even if a
competing offer is announced by a third party.
In aggregate, therefore, the Allied Group owns or has
received irrevocable undertakings to accept the Offer in
respect of 54.2 per cent. of Waterfall's existing issued
share capital.
The Offer
The Offer will be made on the following basis:
For each Waterfall Share 55 pence in cash
The Offer values the entire existing issued share capital
of Waterfall at approximately £22.7 million. The Offer
represents a premium of 20.9 per cent. over the closing
middle market price of 45.5 pence for a Waterfall Share
on 15 February 2000, the last dealing day prior to
Waterfall's announcement that it was in talks which might
lead to an offer.
The Waterfall Shares will be acquired by Allied under the
Offer free from all liens, equities, charges,
encumbrances and other interests and together with all
rights now or hereafter attaching thereto, including the
right to receive and retain all dividends and other
distributions declared, made or paid hereafter.
The conditions to which the Offer will be subject are set
out in Appendix I.
The Loan Note Alternative
Waterfall Shareholders who validly accept the Offer
(other than certain overseas shareholders) may elect to
receive Loan Notes instead of all or part of the cash
consideration to which they would otherwise be entitled,
on the following basis:
For every £1 of cash £1 nominal of Loan Notes
The Loan Notes will be issued, credited as fully paid, in
amounts and integral multiples of £1 nominal and any
fractional entitlements will be disregarded. The Loan
Notes will be unsecured and will bear interest, payable
in arrears up to but excluding the date of payment (less
any applicable tax), in half-yearly instalments, at a
rate of 1 per cent. per annum below six-month LIBOR. No
application will be made for the Loan Notes to be listed
on any stock exchange.
The holders of the Loan Notes will have the option to
redeem all (whatever the amount) or any part (being
£1,000 in nominal value or any integral multiple thereof)
of their Loan Notes at half-yearly intervals, commencing
on 31 December 2000 (or 30 June 2001, if 31 December 2000
is less than six months from the date of issue of the
Loan Notes). On 30 June 2005 all outstanding Loan Notes
will be redeemed.
Information on Waterfall
Waterfall's core business is the operation of 55 American
pool and snooker clubs. Waterfall's cue sports clubs
trade under several brand names including Colours, Suzy
Q, Breaks and The Pool Shack. Like Allied's cue sports
business Rileys, the majority of Waterfall's cue sports
clubs are licensed private members clubs providing
American pool tables, a bar and food operation, suitable
theming and high profile music and video, as well as a
quiet snooker area.
Waterfall also has an entertainments division comprising
7 nightclubs and venue bars and a ten-pin bowling
division with 6 centres.
In the group financial statements for the period ended 2
October 1999, Waterfall reported turnover of £23.2
million (1998: £19.0 million), profit before tax and
exceptional items of £2.2 million (1998: £2.6 million)
and basic earnings per share before exceptional items of
3.8 pence (1998: 5.3 pence). As at 2 October 1999,
Waterfall had net assets of £11.8 million.
Information on Allied
Allied's business comprises three main components: Rileys
American pool and snooker clubs, the Megabowl ten-pin
bowling based family entertainment centre joint venture
and Burger King franchised restaurants.
Rileys is the UK's market leading cue sports operator
with 100 sites. Rileys is a cue sports concept offering
American pool in a lively bar atmosphere combined with
snooker in a quiet area.
Megabowl is the UK's market leading brand of ten-pin
bowling based family entertainment centres, with 58
sites. The business was formed in December 1999 as a
50/50 joint venture with Duke Street Capital by merging
the family entertainment centres formerly owned by First
Leisure Corporation Plc with Allied's own Megabowl
bowling business. Megabowl's family entertainment centres
are focused on ten-pin bowling but are supported by a
range of other leisure offerings including amusement
machines, virtual reality rides, fast food outlets and
licensed bars.
Allied owns 35 Burger King franchised restaurants making
it one of the largest Burger King corporate franchisees
in the UK. Tight cost controls linked to local marketing
initiatives are driving like for like profits ahead of
last year in this division.
Members of the Allied Group own 9,483,720 Waterfall
Shares in aggregate representing approximately 23.8 per
cent. of the current issued share capital of Waterfall.
These shares were acquired with European in June 1999.
In the group financial statements for the year ended 30
June 1999, Allied reported turnover of
£61.2 million (1998: £48.9 million), profit before tax
and exceptional items of £4.1 million (1998:
£4.3 million) and earnings per share before exceptional
items of 3.2 pence (1998: 3.5 pence).
In its interim results to 31 December 1999, Allied
reported turnover of £59.5 million (1998:
£28.6 million), profits before tax and exceptional items
of £3.8 million (1998: £1.6 million) and earnings per
share before exceptional items of 1.3 pence (1998: 1.3
pence).
No adjustments have been made to the above earnings per
share figures to reflect Allied's 1 for 5 share
consolidation which took effect on 10 April 2000.
Background to and reasons for the Offer
The merger of European with Allied in June 1999 resulted
in Allied acquiring the Rileys cue sports business, as
well as the 23.8 per cent. stake held by European in
Waterfall. Following the merger Allied has pursued an
aggressive expansion strategy for Rileys and has
successfully opened 15 new units, confirming Rileys'
position as the market leading cue sports brand in the
UK. The acquisition of Waterfall will result in a
substantial increase in Allied's cue sports business and
is consistent with Allied's strategy of expansion.
The Allied Board is pleased that, following due diligence
on Waterfall, it has been able to agree with the
Waterfall Board the terms of the recommended cash Offer.
The Allied Board believes that the benefits of the
Acquisition will be that:
* the number of cue sports clubs owned by Allied will
increase from 100 to 155, which will further
strengthen Allied's market leading position in cue
sports. The geographic fit of Rileys with Waterfall's
cue sports clubs is good;
* the roll-out of the Rileys brand across a number of
Waterfall's cue sports clubs is expected to enhance
the performance of these clubs;
* the enlarged cue sports division will have greater
purchasing power on items such as pool and snooker
equipment, food, alcoholic and non-alcoholic beverages
and gaming machines;
* with a significantly greater number of cue sports
clubs and members, Allied's marketing efforts and
expenditure will become more powerful in boosting
revenue growth; and
* head office, administrative and regional management
infrastructures will be rationalised to produce a
lower and more efficient combined cost base.
Despite the addition of Waterfall's 55 cue sports clubs
to the Rileys division, the Allied Directors intend that
the roll-out of new clubs will continue unabated. Rileys
remains a very attractive investment proposition and
Allied remains committed to its growth.
Allied intends to dispose of the majority of Waterfall's
non-core businesses, including its entertainments
division and its ten-pin bowling division, as soon as
possible after the Acquisition. In accordance with the
terms of Allied's Megabowl ten-pin bowling joint venture
with Duke Street Capital, Waterfall's ten-pin bowling
units will be offered to the joint venture on a right of
first refusal basis.
Financing arrangements
The cash consideration payable under the Offer will be
financed by Allied from new committed bank facilities,
underwritten by National Westminster Bank Plc. The
Waterfall Group's existing debt will be re-financed
within these new facilities.
Current trading and prospects
Allied issued its interim results for the six months to
31 December 1999 on 3 March 2000. Since that date
trading has been satisfactory.
Waterfall has been trading satisfactorily since 2 October
1999, the end of its most recent financial period for
which audited accounts have been published.
With a clear strategy for focusing on the market leading
branded activities within the leisure industry and
through the integration of Waterfall into the Allied
Group, the Allied Board believes that the prospects for
the Enlarged Group are good.
Waterfall Directors and employees
Allied has given assurances to the Waterfall Directors
that the existing employment rights, including pension
rights, of the employees of the Waterfall Group will be
fully safeguarded.
Upon the Offer becoming unconditional in all respects,
all of the Waterfall Directors will resign as directors
of Waterfall and receive compensation packages in
accordance with their contractual entitlements.
Waterfall Share Option Schemes
Allied will make appropriate proposals to holders of
options under the Waterfall Share Option Schemes in due
course, if the Offer becomes or is declared wholly
unconditional. The Offer extends to any Waterfall Shares
which are unconditionally allotted or issued prior to the
date on which the Offer closes (or such earlier date as
Allied may, subject to the City Code, decide) pursuant to
the exercise of options granted under the Waterfall Share
Option Schemes.
General
This announcement does not constitute an offer or
invitation to purchase any securities.
Save for the Waterfall Shares currently owned by members
of the Allied Group and save for the undertakings to
accept the Offer referred to above, neither Allied nor
any director of Allied nor, so far as Allied is aware,
any person acting in concert with Allied, owns or
controls any Waterfall Shares or has any option to
acquire any Waterfall Shares, nor has Allied received any
other irrevocable undertaking to accept the Offer.
Save as provided for in the irrevocable undertakings,
neither Allied nor any person acting in concert with
Allied for the purposes of the Offer has any arrangement
in relation to Waterfall Shares or any securities
convertible or exchangeable into or options (including
traded options) in respect of or derivatives referenced
to any such shares. For these purposes, "arrangement"
includes any indemnity or option arrangement, and any
agreement or understanding, formal or informal, of
whatever nature, relating to Waterfall Shares which may
be an inducement to deal or refrain from dealing in such
shares.
The availability of the Offer to persons not resident in
the UK may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the UK or
who are subject to the laws of any jurisdiction other
than the UK should inform themselves about and observe
any applicable requirements.
The Offer will not be made, directly or indirectly, in or
into, or by use of the mails, or by any means or
instrumentality (including, without limitation, facsimile
transmission, telex or telephone) of interstate or
foreign commerce, or of any facility of a national
securities exchange, of the United States, Canada,
Australia or Japan and the Offer cannot be accepted by
any such use, means, instrumentality or facility or from
within the United States, Canada, Australia or Japan.
Accordingly, copies of this announcement are not being,
and must not be, mailed or otherwise distributed or sent
in or into or from the United States, Canada, Australia
or Japan.
The Offer Document is expected to be posted to Waterfall
Shareholders tomorrow.
A circular to Allied Shareholders convening an
Extraordinary General Meeting to approve the Acquisition
is expected to be posted to Allied Shareholders tomorrow.
Certain terms used in this announcement are defined in
Appendix II.
Enquiries
Allied
Neil Goulden 020 7601 1000 (today)
Chief Executive 01509 414 422
(thereafter)
Close Brothers Corporate Finance 020 7655 3100
(advisers to Allied)
John Llewellyn-Lloyd
Alka Bali
Square Mile (PR Advisers to 020 7601 1000
Allied)
Kevin Smith
Waterfall
Martin Callan 01252 331677
Chief Executive
Marshall Securities (advisers to 020 7490 3788
Waterfall)
John Webb
Robert Luetchford
Close Brothers, which is regulated by The Securities and
Futures Authority Limited, is acting exclusively for
Allied in connection with the Offer and is not acting for
any other person and will not be responsible to anyone
other than Allied for providing the protections afforded
to customers of Close Brothers or for providing advice in
relation to the Offer.
Marshall, which is regulated by The Securities and
Futures Authority Limited, is acting exclusively for
Waterfall in connection with the Offer and is not acting
for any other person and will not be responsible to
anyone other than Waterfall for providing the protections
afforded to customers of Marshall or for providing advice
in relation to the Offer.
The Allied Directors accept responsibility for the
information contained in this announcement. To the best
of the knowledge and belief of the Allied Directors (who
have taken all reasonable care to ensure that such is the
case), the information contained in this announcement is
in accordance with the facts and does not omit anything
likely to affect the import of such information.
APPENDIX I
1. Conditions of the Offer
The Offer is subject to the following conditions:
(a) valid acceptances being received (and not, where
permitted, withdrawn) by not later than 3.00p.m. on
the first closing date of the Offer (or such later
time(s) and/or date(s) as Allied may, subject to the
rules of the City Code, decide) in respect of not
less than 90 per cent. (or such lower percentage as
Allied may decide) in nominal value of the Waterfall
Shares to which the Offer relates, provided that this
condition will not be satisfied unless Allied and/or
its associates shall have acquired or agreed to
acquire (whether pursuant to the Offer, or otherwise)
directly or indirectly Waterfall Shares carrying in
aggregate more than 50 per cent. of the voting rights
then normally exercisable at a general meeting of
Waterfall attributable to the Waterfall share capital
including, for this purpose (to the extent, if any,
required by the Panel), any such voting rights
attaching to any Waterfall Shares that are
unconditionally allotted or issued before the Offer
becomes or is declared unconditional as to
acceptances, whether pursuant to the exercise of any
outstanding subscription or conversion rights or
otherwise and, for this purpose: (i) the expressions
"Waterfall Shares to which the Offer relates" and
"associates" shall be construed in accordance with
sections 428 to 430F of the Companies Act 1985, and
(ii) shares which have been unconditionally allotted
shall be deemed to carry the voting rights which they
will carry upon issue;
(b) the passing at an Extraordinary General Meeting (or
at any adjournment thereof) of Allied of such
resolution or resolutions as are necessary to
approve, fund, implement and effect the Offer and the
acquisition of any Waterfall Shares;
(c) Allied not having discovered or otherwise becoming
aware prior to the date when the Offer would
otherwise have become unconditional in all respects
that the Secretary of State for Trade and Industry
has referred or intends to refer the proposed
acquisition of Waterfall by Allied or any matters
arising therefrom to the Competition Commission;
(d) no government or governmental, quasi-governmental,
supranational, statutory, regulatory or investigative
body, court, trade agency, association, institution
or professional or environmental body or any other
person or body whatsoever in any jurisdiction (each a
"Third Party") having decided to take, institute,
implement or threaten any action, proceeding, suit,
investigation, enquiry or reference or made, proposed
or enacted any statute, regulation or order or
required any action to be taken which would or might:
(i) make the Offer or implementation of the Offer,
or the acquisition or the proposed acquisition
by Allied or any member of the Allied Group of
any shares or other securities in, or control
of Waterfall or any member of the Waterfall
Group, void, illegal or unenforceable, or
otherwise directly or indirectly restrain,
prohibit, restrict or delay the same or impose
additional conditions or obligations with
respect thereto, or otherwise challenge or
interfere therewith;
(ii) result in a delay in the ability of Allied, or
render unable, to acquire some or all of the
Waterfall Shares or require, prevent or delay
the divestiture by any member of the Allied
Group of any shares or other securities in
Waterfall;
(iii) require, prevent or delay the divestiture or
alter the terms envisaged for any proposed
divestiture by any member of the Allied Group
or the Waterfall Group of all or any portion
of their respective businesses, assets or
property or impose any limitation on the
ability of any of them to conduct their
respective businesses (or any of them) or own
their respective assets or properties or any
part thereof;
(iv) impose any limitation on, or result in a delay
in the ability of any member of the Allied
Group or any member of the Waterfall Group to
acquire, or to hold or to exercise
effectively, directly or indirectly, all or
any rights of ownership of shares or other
securities (or the equivalent) in, or manage
or control, Waterfall or in any member of the
Waterfall Group or on the ability of Waterfall
or any other member of the Waterfall Group to
hold or to exercise effectively any rights of
ownership of shares or other securities in, or
manage or control, any member of the Waterfall
Group;
(v) require any member of the Allied Group or the
Waterfall Group to offer to acquire any shares
or other securities (or the equivalent) in any
member of the Waterfall Group owned by any
third party;
(vi) impose any limitation on the ability of any
member of the Allied Group or the Waterfall
Group to co-ordinate its business, or any part
of it, with the businesses of any other member
of the Allied Group or the Waterfall Group;
(vii) result in any member of the Waterfall Group or
the Allied Group ceasing to be able to carry
on business under any name under which it
presently does so where the consequences of
which would be material in the context of the
Waterfall Group or the Allied Group, as
appropriate, taken as a whole; or
(viii) otherwise materially adversely affect the
business or profits or prospects of the
Waterfall Group or the Allied Group, taken as
a whole;
and all applicable waiting and other time periods
during which any such Third Party could decide to
take, institute, implement or threaten any such
action, proceeding, suit, investigation or enquiry
having expired, lapsed or been terminated;
(e) all necessary filings having been made and all
applicable waiting and other time periods under any
applicable legislation and regulations in any
jurisdiction having expired, lapsed or been
terminated and all statutory or regulatory
obligations in any jurisdiction having been complied
with in connection with the Offer or the acquisition
by any member of the Allied Group of any shares or
other securities in, or control of, Waterfall or any
member of the Waterfall Group and all authorisations,
orders, recognitions, grants, determinations,
certificates, consents, clearances, confirmations,
licences, permissions and approvals necessary or
appropriate for or in respect of the Offer or the
proposed acquisition of any shares or other
securities in, or control of, Waterfall or any member
of the Waterfall Group by any member of the Allied
Group or the issuing or offering of any Loan Notes or
the carrying on by any member of the Waterfall Group
of its business having been obtained in terms and in
a form in Allied's opinion satisfactory to Allied
from all appropriate Third Parties or from any
persons or bodies with which any member of the
Waterfall Group has entered into contractual
arrangements and all such authorisations, orders,
recognitions, grants, determinations, certificates,
consents, clearances, confirmations, licences,
permissions and approvals remaining in full force and
effect and there being no intimation of an intention
to revoke, suspend, restrict, modify or not to renew
the same;
(f) save as specifically disclosed in writing by
Waterfall to Allied prior to 4 May 2000, there being
no provision of any arrangement, agreement, licence,
permit, franchise or any other instrument to which
any member of the Waterfall Group is a party to or by
or to which any such member or any of its respective
assets may be bound, entitled or subject and which,
in consequence of the Offer or because of a change in
the control or management of Waterfall or any member
of the Waterfall Group or otherwise, could or might
result in:
(i) any monies borrowed by or any other
indebtedness, actual or contingent, of any
member of the Waterfall Group being or
becoming capable or being declared repayable
immediately or prior to their or its stated
maturity or the ability of any such member to
borrow moneys or incur any indebtedness being
withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage,
charge or other security interest over the
whole or any significant part of the business,
property or assets of any member of the
Waterfall Group or any such mortgage, charge
or other security interest becoming
enforceable;
(iii) any such arrangement, agreement, licence,
permit, franchise or instrument or the rights,
liabilities, obligations or interests of any
member of the Waterfall Group under any such
arrangement, agreement, licence, permit,
franchise or instrument being terminated or
adversely modified or affected or any action
being taken or any obligation of an adverse
nature or liability arising thereunder in a
manner which would be material;
(iv) any assets or interests of any member of the
Waterfall Group being liable to be disposed of
or charged or any right arising under which
any such asset or interest would be required
to be disposed of or charged;
(v) any member of the Waterfall Group ceasing to
be able to carry on business under any name
under which it presently does so in
circumstances which are material in the
context of the business of the Waterfall
Group, taken as a whole;
(vi) the rights, liabilities, obligations or
interest or business of any member of the
Waterfall Group in or with any other person,
firm or body (or any arrangement or
arrangements relating to any such interest or
business) being terminated, modified or
affected in a manner which would be material
in the context of the Waterfall Group, taken
as a whole; or
(vii) the financial or trading position or prospects
of any member of the Waterfall Group being
materially prejudiced or materially adversely
affected;
(g) since 2 October 1999 and except as disclosed in
Waterfall's annual report and accounts for the period
then ended, or save as specifically disclosed in
writing by Waterfall to Allied prior to 4 May 2000,
or as otherwise publicly announced by delivery of an
announcement to the Company Announcements Office of
the London Stock Exchange prior to 4 May 2000, no
member of the Waterfall Group having (save as between
Waterfall and wholly-owned subsidiaries of
Waterfall):
(i) issued or agreed to or authorised or proposed
the issue of additional shares of any class,
or securities convertible into, or rights,
warrants or options to subscribe for or
acquire, any such shares or convertible
securities;
(ii) recommended, declared, paid or made or
proposed to recommend any bonus, dividend or
other distribution;
(iii) made or authorised or proposed or announced
any change in its loan capital;
(iv) merged with or acquired any body corporate or
acquired or disposed of or transferred,
mortgaged or charged or created any security
interest over any assets or (save in the
ordinary course of business) any right, title
or interest in any assets (including shares
and trade investments) or authorised, proposed
or announced its intention to propose any
merger, demerger, acquisition, disposal,
mortgage, charge or security interest;
(v) issued, authorised or proposed the issue of
any debentures or, save in the ordinary course
of business, incurred any indebtedness or
contingent liability which is material in the
context of the Waterfall Group, taken as a
whole;
(vi) purchased, redeemed or repaid or announced any
proposal to purchase, redeem or repay any of
its own shares or other securities or reduced
or made any other change to any part of its
share capital;
(vii) entered into or varied, or authorised,
proposed or announced its intention to enter
into or vary, any contract, transaction or
commitment (whether in respect of capital
expenditure or otherwise) which is of a long
term, onerous or unusual nature or magnitude
or which would be restrictive on the business
of any member of the Waterfall Group or the
Allied Group, or which involves or could
involve an obligation of such a nature or
magnitude or which could be so restrictive or
which is other than in the ordinary course of
business, in each case which is material in
the context of the member of the Waterfall
Group or the member of the Allied Group, as
appropriate;
(viii) implemented or effected, or authorised,
proposed or announced its intention to
implement, effect, authorise or to propose,
any reconstruction, amalgamation, scheme,
commitment or other transaction or arrangement
otherwise than in the ordinary course of
business which is material in the context of
the Waterfall Group, taken as a whole;
(ix) entered into or changed the terms of any
contract with any of the directors of
Waterfall or senior executives of any member
of the Waterfall Group;
(x) taken any corporate action or had any legal
proceedings instituted or threatened against
it for its winding-up (voluntary or
otherwise), dissolution or reorganisation, or
for the appointment of a receiver,
administrator, administrative receiver,
trustee or similar officer of all or any of
its assets and revenues;
(xi) been unable or having admitted in writing that
it is unable to pay its debts or having
stopped or suspended (or threatened to stop or
suspend) payment of its debts generally or
ceased or threatened to cease carrying on all
or a substantial part of its business;
(xii) waived or compromised any claim which is
material (in the context of the Waterfall
Group, taken as a whole); or
(xiii) entered into any agreement, commitment or
arrangement or passed any resolution or made
any offer (which remains open for acceptance)
with respect to any of the transactions,
matters or events referred to in this
condition.
(h) since 2 October 1999 and except as disclosed in
Waterfall's annual report and accounts for the period
then ended, or as specifically disclosed in writing
by Waterfall to Allied prior to 4 May 2000, or as
otherwise publicly announced by delivery of an
announcement to the Company Announcements Office of
the London Stock Exchange prior to 4 May 2000:
(i) there having been no adverse change in the
business, assets, financial or trading
position or profits or assets or prospects of
Waterfall or any member of the Waterfall Group
which is material in the context of the
Waterfall Group, taken as a whole;
(ii) there having been no litigation, arbitration
proceedings, prosecution or other legal
proceedings to which any member of the
Waterfall Group is or may become a party
(whether as claimant or defendant or
otherwise) or investigation by any relevant
authority threatened, announced or instituted
or remaining outstanding, against or in
respect of any member of the Waterfall Group
which is material in the context of the
Waterfall Group, taken as a whole; and
(iii) no contingent or other liability having arisen
which would or could materially adversely
affect any member of the Waterfall Group in a
manner which is material in the context of the
Waterfall Group, taken as a whole;
(i) Allied not having discovered that:
(i) any financial or business or other information
disclosed at any time by or on behalf of any
member of the Waterfall Group, whether
publicly or not, to any member of the Allied
Group or otherwise, is misleading, contains a
misrepresentation of fact or omits to state a
fact necessary to make the information
contained therein not misleading in either
case which has not subsequently been corrected
by such disclosure and, in any event, which is
material in the context of the Offer; or
(ii) save as disclosed in writing by Waterfall to
Allied prior to 4 May 2000, any member of the
Waterfall Group is subject to any liability,
contingent or otherwise, which is not
disclosed in Waterfall's annual report and
accounts for the period ended 2 October 1999,
and which is or could be material in the
context of the business of the Waterfall
Group; and
(j) Allied not having discovered that, save as
specifically disclosed in writing by Waterfall to
Allied prior to 4 May 2000:
(i) any past or present member of the Waterfall
Group has not complied with all applicable
laws of any relevant jurisdiction in relation
to environmental matters, which non-compliance
would or could give rise to any liability
(whether actual or contingent) or cost on the
part of any member of the Waterfall Group
which would be material to the Waterfall
Group, taken as a whole;
(ii) there has been an emission, disposal,
discharge, deposit, spillage or leak of waste
or hazardous or harmful substances on or about
or from any property now or previously owned,
occupied or made use of by any past or present
member of the Waterfall Group which would or
could give rise to any liability (whether
actual or contingent) or cost on the part of
any member of the Waterfall Group which would
be material to the Waterfall Group, taken as a
whole;
(iii) there is, or is likely to be, any material
liability (in the context of the Waterfall
Group, taken as a whole), whether actual or
contingent, to make good, repair, reinstate or
clean up any property now or previously owned,
occupied or made use of by any past or present
member of the Waterfall Group or any
controlled waters under any environmental
legislation, regulation, notice, circular or
order of any relevant authority to Third Party
or otherwise; or
(iv) circumstances exist whereby a person or class
of persons would be likely to have any
material (in the context of the Waterfall
Group, taken as a whole) claim or claims in
respect of any service provided by, or any
product or process of manufacture or materials
used therein now or previously provided,
manufactured, sold or carried out by, any past
or present member of the Waterfall Group.
For the purposes of these conditions, "Waterfall
Group" means Waterfall and its subsidiary
undertakings and associated undertakings and any
other undertakings in which Waterfall and such
undertakings (aggregating their respective interests)
have a substantial interest, and "Allied Group" means
Allied and its subsidiary undertakings and associated
undertakings and any other undertakings in which
Allied and such undertakings (aggregating their
respective interests) have a substantial interest,
and for these purposes "subsidiary undertaking",
"associated undertaking" and "undertaking" have the
meanings given by the Companies Act 1985 (but for
this purpose ignoring paragraph 20(1)(b) of Schedule
4A to the Companies Act 1985) and "substantial
interest" means a direct or indirect interest in 20
per cent. or more of the equity capital of an
undertaking.
Allied reserves the right to waive all or any of the
above conditions, in whole or in part, except
conditions (a) and (b).
Condition (b) must be fulfilled and conditions (c) to
(j) (inclusive) must be fulfilled or waived or, where
appropriate, determined by Allied to have been or
remain satisfied by midnight on the 21st day after
the later of the first closing date of the Offer and
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