Foster's Group Limited (Foster's) today announced an off-market Buy-Back tender ("the Buy-Back") of between $700 million and $900 million, approximately 6.5 per cent to 8.5 per cent of Foster's issued capital, subject to the Buy-Back Price.
This major capital management initiative follows the recent conversion of 89.3 per cent of the company's US$400 million convertible bond issue and the receipt of approximately $1.35 billion in net proceeds from the initial public offering ("IPO") of Australian Leisure and Hospitality ("ALH") and Australian Leisure and Entertainment Property Group ("ALE").
These two events, combined with the strong underlying cash generation of the group, have resulted in a level of capital that exceeds the group's current requirements.
The Board considers that a Buy-Back is a responsible and efficient way to return funds to shareholders and manage the company's capital structure while increasing earnings per share. The planned off-market Buy-Back, combined with the on-market buy-back announced on 1 October 2003, will enable the company to repurchase approximately 204.9 million shares, representing up to 10 per cent of the lowest number of shares on issue in the past 12 months.
The Buy-Back is open to all Foster's shareholders registered as at Monday, 17 November 2003 and participation is optional. Under the tender process, all shareholders eligible to participate in the Buy-Back will be able to tender all or some of their shares at specified prices in the range $4.00 to $4.90 or as a Final Price Tender, being the price within the range that is determined by the company as the Buy-Back Price.
The top of the range represents approximately a 7.2 per cent premium and the bottom of the range a 12.5 per cent discount to the closing price of Foster's shares on Wednesday, 5 November 2003. The Buy-Back Price will be the lowest price in the range that enables Foster's to repurchase the number of shares it determines to buy-back. Only shares tendered at or below the Buy-Back Price and Final Price Tenders will be bought back at the Buy-Back Price, subject to any required scaleback. All shareholders whose Tenders are successful will receive the same Buy-Back Price.
If the total number of Shares tendered at or below the Buy-Back Price (including under Final Price Tenders) is greater than the number of Shares which Foster's wants to buy back, Foster's will scale back Tenders.
The scale back mechanism will not apply to a Shareholder who tenders all of their Shares at or below the Buy-Back Price or as a Final Price Tender, and who has a Small Holding (500 or fewer Shares) as a result of the scale back.
No brokerage is payable by shareholders who choose to participate in the Buy-Back.
While Foster's intends to repurchase between $700 to $900 million worth of shares (approximately 6.5 per cent to 8.5 per cent of issued capital subject to the Buy-Back Price), it may choose to buy back a lower value of shares or no shares at all depending on the Tenders lodged by shareholders, prevailing market conditions and having regard to the interests of all shareholders, including those who choose not to participate in the Buy-Back.
Participation in the Buy-Back is optional and shareholders are advised to obtain their own financial, taxation and other professional advice on the implications of participating in the Buy-Back for their particular circumstances. For shareholders who successfully tender their shares, the Buy-Back Price will comprise a capital component of $1.81 per share with the balance being a fully franked dividend.
The on-market Buy-Back programme announced by the company on 1 October 2003 of up to 40 million shares has been suspended until after the completion of the off-market share Buy-Back. As at 5 November 2003, 14.7 million shares had been repurchased at an average price of $4.52 per share.
The timetable for the Buy-Back is outlined below. The full terms and conditions of the Buy-Back will be contained in a Buy-Back Tender booklet which will be posted along with a personalised tender form to all shareholders between 20-23 November 2003. A copy of the Buy-Back Booklet will be available on the Foster's website www.fostersgroup.com from about 20 November 2003.
Foster's President and CEO, Ted Kunkel said: "The Buy-Back reinforces the group's commitment to return excess funds to shareholders in the absence of a strategically aligned, value-accretive investment opportunity. On completion of the current Buy-Back activities, Foster's will remain conservatively geared at an estimated net debt to book equity level of 35 per cent. As such, Foster's will have the capacity to consider additional capital management activities in the absence of an appropriate investment opportunity, and dependent on market conditions."
| Event | Date | |
| Foster's shares quoted ex-entitlement to participate in the Buy-Back. Shares bought on or after this date will not receive an entitlement to participate in the Buy-Back |
Tues, 11 November 2003 | |
| Determination of Shareholders entitled to participate in the Buy-Back Buy-Back Record Date |
Mon, 17 November 2003 | |
| Tender period opens |
Tues, 25 November 2003 | |
| Tender period closes Tenders must be received by the Registry no later than 5pm AEDT |
Fri, 19 December 2003 | |
| Announcement of the Buy-Back price and the number of shares bought back |
No later than Tues, 23 December 2003 | |
| Dispatch of cheques and direct crediting of bank accounts for Buy-back proceeds to participating Shareholders | No later than Tuesday 6 January 2004 |
Foster's has appointed Goldman Sachs JB Were as financial adviser on the Buy-Back.
For further information on the Buy-Back, Shareholders can call the Foster's Buy-Back inquiry line on 1300 134 708 (within Australia) or +613 9649 5022 (outside Australia) or visit the Foster's website at www.fostersgroup.com
Media
Nicole Devlin
Tel: +613 9633 2261
Mob: 61 418 202 375
Investor Relations:
Robert Porter
Tel: +613 9633 2773
Mob: 0407 391 829
CFO Address to teleconference (PDF, 121 Kb)
CFO Presentation slides (PDF, 263 Kb)
Questions & Answers (PDF, 127 Kb)
Buy Back Tender Booklet (PDF, 366 Kb)
