Update Regarding BCM
LIT plc ("LIT") announces that on 29 October 2008 it received a letter from the directors of Babcock & Brown Capital Limited ("BCM") in reply to the non-binding indicative proposal that LIT made on 27 October 2008(which is subject to certain terms and conditions and may or may not lead to an offer) for the acquisition of BCM by LIT (the "Proposal"). According to the letter, the directors of BCM currently do not intend to provide due diligence access on the basis of the Proposal. LIT is now assessing its options in this regard and intends to seek an ongoing dialogue with BCM.
The market capitalisation of BCM was A$338 million as of 31 October 2008 and in the Proposal it was contemplated that LIT may consider making an offer (subject to certain terms and conditions and which may or may not lead to an offer) to acquire BCM for a combination of LIT shares and cash dividend, returning to BCM shareholders a substantial amount of the existing BCM parent company excess balance sheet cash which was AU$ 344 million as of 30 June 2008.
If a transaction was implemented successfully, LIT would add eircom and Golden Pages to its existing portfolio companies, TDG Ltd. and the Laxey Investment Trust.
Further information on BCM, sourced from the BCM 2008 annual report, is set out below.
BCM listed on the Australian Securities Exchange in February 2005 as an Australian-based investment company that would focus on a concentrated portfolio with a flexible investment horizon. At 30 June 2008, BCM had A$448 million invested in eircom Group plc ("eircom"), Ireland's incumbent telecommunications provider, A$107 million invested in Golden Pages, the leading Israeli directories business and approximately A$367 million in available cash resources.
BCM holds a 57.1% interest in eircom representing an investment of approximately A$448 million. Associates of Babcock & Brown hold an additional 7.9% and existing and former employees hold the remaining 35% through their share ownership trust, the ESOT. eircom owns Ireland's copper and fibre backbone telecommunications network. It is the largest provider of fixed line wholesale and retail telecommunication services in Ireland and has 69% of the fast growing retail DSL broadband market. eircom's mobile business has a growing 19% share of the mobile market.
BCM acquired 100% of Golden Pages in July 2007. Golden Pages is the leading Israeli directories business with a portfolio of complementary directory and internet search businesses operating across four distribution platforms. Golden Pages was acquired for an enterprise value of A$248 million, requiring an equity investment of A$150 million. Following a refinance in February 2008 the equity investment at 30 June 2008 was A$107 million.
As at 30 June 2008 BCM held A$367 million in available cash reserves. Since 30 June 2008, BCM remitted approximately A$38 million to Golden Pages that will be used to repay existing debt facilities.
BCM reported a consolidated profit (net profit after tax) of A$101.2 million at 30 June 2008. Consolidated EBITDA for the same period was A$1,281.7 million (pre goodwill impairment provision on Golden Pages of A$4.3 million).
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Alex Paiusco, Chief Executive
Mike Haxby, Chief Financial and Risk Officer
KBC Peel Hunt Ltd, Nominated Adviser and Broker
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Guy Wiehahn or Oliver Stratton