Proposal to Convertible Bondholders
Sequence No: 10/2020
ISIN:PUBLISHED ON MARCH 23, 2020 BY DP WORLD PLC
Date: 23 March 2020
To: Bondholder
DP World PLC
USD 1,000,000,000 1.75 per cent. Convertible Bonds due 2024 (the "Bonds")
1. Background
On 17 February 2020, the Issuer and its majority Shareholder, Port & Free Zone World FZE ("PFZW"), announced that agreement has been reached on the terms of a recommended cash offer (the "Offer") for the entire issued and to be issued share capital of the Issuer, other than the shares in the Issuer already owned by or on behalf of PFZW. The Offer is being implemented by way of a scheme of arrangement under Part 9 of the DIFC Companies Law No. 5 of 2018, which will be overseen and sanctioned by the Special Tribunal Related to Dubai World. PFZW has reserved the right to implement the Offer by way of a takeover offer.
1.2 Capitalised terms used in this communication and not otherwise defined in this communication have the meanings set forth in the terms and conditions of the Bonds dated 12 June 2014.
2. Information for Bondholders
2.1 Enclosed is a separate communication from the Issuer to Bondholders containing further details of the Offer and information about how to exercise your pre-existing contractual rights and the put options under the terms of the Bonds (the "Bondholder Communication"). The Bondholder Communication was prepared by the Issuer in consultation with, and is sent to you with the agreement of, PFZW.
2.2 PFZW has arranged for up to US$300m to be available for the Issuer once it accedes to a facilities agreement to, amongst other purposes, fund potential redemption of the Bonds, as further described in the Scheme Circular (as defined in the Bondholder Communication).
2.3 The information contained in the Bondholder Communication is important and requires your immediate attention. If you are in any doubt as to the contents of the Bondholder Communication or what action you should take, you are recommended to seek your own personal financial advice immediately.
PORT & FREE ZONE WORLD FZE
Date: 23 March 2020
To: Bondholders
DP World PLC
USD 1,000,000,000 1.75 per cent. Convertible Bonds due 2024 (the Bonds)
3. Background
3.1 This communication is issued to you in your capacity as a person with an interest in the Bonds (Bondholder or you). As indicated in the notice circulated to you on 17 February 2020, the Issuer and its majority Shareholder, Port & Free Zone World FZE (PFZW), announced on 17 February 2020 that agreement has been reached on the terms of a recommended cash offer (the Offer) for the entire issued and to be issued share capital of the Issuer, other than the shares in the Issuer already owned by or on behalf of PFZW (the Scheme Shares). The Offer is being implemented by way of a scheme of arrangement under Part 9 of the DIFC Companies Law (the Scheme), which will be overseen and sanctioned by the Special Tribunal Related to Dubai World (the Tribunal). PFZW has reserved the right to implement the Offer by way of a takeover offer. The Issuer published the Scheme Circular on or around the date of this communication (the Scheme Publication Date).
3.2 Capitalised terms used in this communication and not otherwise defined in this communication have the meanings set forth in the terms and conditions of the Bonds dated 12 June 2014 (the Conditions). This communication should not be relied upon in substitution for reading the Conditions in full and the Issuer disclaims any and all liability arising from such reliance. Bondholders should, to the extent required, obtain their own advice in relation to matters set out in this communication.
4. The Terms of the Offer
Offer terms and conditions
4.1 Under the terms of the Offer as announced on 17 February 2020 (the Rule 2.4 Announcement), the consideration for each Scheme Share was US$16.75 in cash (the Initial Offer Price). The Initial Offer Price under the terms of the Offer valued the entire issued ordinary share capital of the Issuer at approximately US$13.9 billion.
4.2 As set out in the Rule 2.4 Announcement, PFZW reserved the right to reduce the original cash consideration of US$16.75 per Scheme Share by an amount up to the amount of any dividend and/or other distribution and/or return of capital by the Issuer between the date of the Rule 2.4 Announcement and the date on which the Scheme becomes effective pursuant to its terms (the Effective Date).
4.3 In the Issuer’s 2019 results announcement on 11 March 2020, the Issuer’s board recommended a final dividend of US$0.40 per Ordinary Share for the 2019 financial year (the Final Dividend), subject to approval at the Issuer’s annual general meeting scheduled to take place on 23 April 2020 (the 2020 AGM). PFZW has informed the Issuer’s board that it will vote in favour of the resolution to approve the Final Dividend at the 2020 AGM and is exercising its right to reduce the cash consideration payable under the terms of the Offer for each Scheme Share by the full amount of the Final Dividend. Accordingly, under the terms of the Offer, Scheme Shareholders at the Scheme Record Time will receive US$16.35 in cash for each Scheme Share (the Offer Price). The Offer Price and the Final Dividend together values the entire issued ordinary share capital of the Issuer at approximately US$13.9 billion.
4.4 If, at any time after the Scheme Publication Date and before the Effective Date, any further dividend, other distribution or return of capital (other than the Final Dividend) is declared, made or paid or becomes payable in respect of the Scheme Shares, PFZW has reserved the right to further reduce the Offer Price payable under the terms of the Offer by an amount up to the amount of such dividend and/or other distribution and/or return of capital.
4.5 If the Scheme becomes effective, PFZW will become the holder of the entire issued ordinary share capital of the Issuer. This is to be achieved by transferring the Scheme Shares to PFZW, in consideration for which PFZW will pay cash to each holder of Scheme Shares.
4.7 The Scheme is subject to the following conditions:
(a) (i) its approval by a majority in number of the Scheme Shareholders who are present and voting, whether in person or by proxy, at the Tribunal Meeting and at any separate class meeting which may be required (or any adjournment thereof) and who represent 75 per cent. or more of the Scheme Shares voted by those Scheme Shareholders; and (ii) such Tribunal Meeting being held on or before the 22nd day after the expected date of the Tribunal Meeting set out in the Scheme Circular (or such later date as may be agreed between PFZW and the Issuer (and that the Tribunal may allow));
(b) (i) the resolutions required to implement the Scheme being duly passed at the General Meeting (or any adjournment thereof); and (ii) such General Meeting being held on or before the 22nd day after the expected date of the General Meeting to be set out in the Scheme Circular (or such later date as may be agreed between PFZW and the Issuer (and that the Tribunal may allow)); and
(c) (i) the sanction of the Scheme by the Tribunal (with or without modification (but subject to such modification being acceptable to PFZW and the Issuer)) and the delivery of a duly certified copy of the order of the Tribunal sanctioning the Scheme under Part 9 of the DIFC Companies Law to the DIFC Companies Law Registrar in accordance with the DIFC Companies Law; and (ii) the Sanction Hearing being held on or before the 22nd day after the expected date of the Sanction Hearing set out in the Scheme Circular (or such later date as may be agreed between PFZW and the Issuer (and that the Tribunal may allow)).
4.8 The Offer is also conditional upon the following antitrust and regulatory conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless the following conditions (as amended if appropriate) have been satisfied or, where capable of waiver, waived:
4.9 This communication constitutes the giving of notice to Bondholders for the purpose of Condition 11(g), which requires the Issuer to give notice to Bondholders if an offer is made to all Shareholders (other than the offeror and/or any associates of the offeror) to acquire all or any part of the issued Ordinary Shares. Details concerning this Offer may be obtained from the specified office of the Paying, Transfer and Conversion Agent, being at One Canada Square, London E14 5AL, United Kingdom or at www.dpworld.com.
4.10 Further details of the Offer and a copy of the Scheme Circular can be found at www.dpworld.com.
Effect of the Scheme
4.11 The implementation of the Scheme will result in the cancellation of the listing of the Ordinary Shares on the Official List of Securities.
As the Scheme will extend to any Ordinary Shares which are unconditionally allotted, issued or transferred out of treasury before the Scheme Record Time, the Scheme will not extend to any Ordinary Shares issued after the Scheme Record Time pursuant to the exercise of Conversion Rights. If a Bondholder is issued Ordinary Shares following the Scheme Record Time, such Ordinary Shares will be automatically transferred to PFZW in accordance with the procedures described in paragraph 3.25 below.
4.13 It is intended that the Issuer be re-registered as a private company as soon as practicable following the Effective Date or any other de-listing that the Issuer elects to undertake.
4.14 Even if the Scheme lapses, the Issuer may in any event take alternative steps to de-list.
5. Bondholder Rights
Conversion Rights
3.20.
5.2 The Conditions contain the right for a Bondholder to convert its Bonds at the Conversion Price.
5.3 Subject to the Conditions, a Bondholder may exercise Conversion Rights at any time from 30 July 2014 to the close of business (at the place where the Certificate in respect of such Bond is delivered for conversion) on the date falling 10 days prior to the Final Maturity Date (as the Final Maturity Date is 19 June 2024, Conversion Rights are exercisable until close of business on 9 June 2024).
5.4 A Bondholder that elects to convert its Bonds and be issued with Ordinary Shares (which, subject to paragraph 2.12, are subject to the Scheme) must deliver a duly completed Conversion Notice (in the form obtainable from any Paying, Transfer and Conversion Agent) to the specified office of any Paying, Transfer and Conversion Agent, during its usual business hours. If such delivery is made after the end of normal business hours or on a day which is not a business day in the place of the specified office of the relevant Paying, Transfer and Conversion Agent, such delivery shall be deemed for all purposes of the Conditions to have been made on the next business day.
5.5 The number of Ordinary Shares to be issued or transferred and delivered on exercise of a Conversion Right shall be determined by the Calculation Agent by dividing the principal amount of the relevant Bonds to be converted by the Conversion Price in effect on the relevant Conversion Date. In accordance with Condition 6(l), upon exercise of Conversion Rights by a Bondholder, the Issuer may elect to give a Cash Alternative Election Notice to the relevant Bondholder and satisfy the exercise of the Conversion Right in respect of all or some of the Bonds by paying the Cash Alternative Amount to the Bondholder in lieu of issuing Ordinary Shares. The Cash Alternative Amount shall be calculated in accordance with the Conditions.
For instructions on how to obtain a NIN, please see https://www.nasdaqdubai.com/trading/how-to-trade.
5.7 In accordance with Condition 6(g), upon receipt of a Conversion Notice from a Bondholder and unless the Issuer gives a Cash Alternative Election Notice, the Issuer must take all necessary steps to procure that Ordinary Shares are issued or transferred and delivered to or as directed by the converting Bondholder on or before the seventh Trading Day after the relevant Conversion Date.
If you would like to vote at the Tribunal Meeting or General Meeting, you must be issued with Ordinary Shares prior to the CSD Voting Record Time. If you exercise your Conversion Rights and are issued Ordinary Shares, it is very important that you provide voting instructions by completing and returning the voting instruction forms within the timeframe described in the Offer. For further details, see the Scheme Circular.
5.9 If you would like to convert your Bonds and be issued with Ordinary Shares which are subject to the Offer, you must be issued with Ordinary Shares prior to the Scheme Record Time. The Issuer will make an announcement of the Scheme Record Time on Nasdaq Dubai once the date of the Sanction Hearing and the Scheme Record Time have been determined (currently expected to be in the third quarter of 2020). Provided that you issue a valid Conversion Notice by no later than the Conversion Notice Deadline and the Issuer has not given a Cash Alternative Election Notice, the Issuer will issue the Ordinary Shares resulting from the conversion by the Scheme Record Time.
issued to you (subject to any further reduction by PFZW in the circumstances explained in paragraph 2.4).
5.11 Prior to any de-listing of the Issuer, Ordinary Shares to be delivered on conversion of the Bonds will be delivered through the Central Securities Depository of Nasdaq Dubai (CSD). Following a conversion, the Ordinary Shares will be registered in the name of Nasdaq Dubai Guardian Limited who will be the legal owner of Ordinary Shares and act as nominee for the holder who was named on the relevant Conversion Notice. The name of the holder specified in the relevant Conversion Notice will be entered on the register of the CSD maintained by Nasdaq Dubai and such beneficial holder will become entitled to participate in (including being able to direct Nasdaq Dubai Guardian Limited to appoint the beneficial holder as its proxy to vote on) the Scheme in accordance with its terms. Following any de-listing of the Issuer, Ordinary Shares to be delivered on conversion of the Bonds will be entered onto the legal register and the Bondholder that has exercised its Conversion Rights will become a shareholder on the legal register.
Put Events
5.12 The Conditions contain the right for a Bondholder to require the Issuer to redeem its Bonds at their principal amount plus accrued interest:
(i) the Ordinary Shares at any time cease to be admitted to listing and trading on Nasdaq Dubai or Nasdaq Dubai announces that the Ordinary Shares will cease to be admitted to trading and listing on Nasdaq Dubai unless the Ordinary Shares are immediately admitted to trading and/or listing on another internationally recognised, regularly operating and regulated stock exchange; or
(ii) trading of the Ordinary Shares on Nasdaq Dubai (or, if the Ordinary Shares at any time cease to be admitted to listing and trading on Nasdaq Dubai and the Ordinary Shares at the relevant time are admitted to trading and/or listing on another internationally recognised, regularly operating and regulated stock exchange, trading of the Ordinary Shares on such exchange) is suspended for a period of five consecutive Trading Days or more,
a De-listing Put Event; or
(i) ceases to own, directly or indirectly, at least 50 per cent. of the issued share capital of the Issuer or otherwise ceases to control, either directly or indirectly, the Issuer; or
(ii) owns, directly or indirectly, more than 85 per cent. of the issued share capital of the Issuer,
an Ownership Put Event,
(each a Put Event).
5.13 Within four Business Days following the occurrence of a Put Event, the Issuer shall deliver a Put Event Notice to the Trustee and to the Bondholders, in accordance with Conditions 6(f) and 17. Such notice shall contain a statement informing Bondholders of their entitlement to exercise their Conversion Rights as provided in the Conditions and to require redemption of their Bonds pursuant to Condition 7(f).
A Put Event Exercise Notice, once delivered, shall be irrevocable.
5.16 The Issuer shall redeem all Bonds specified in a Put Event Exercise Notice on the Put Event Date.
Optional Put Dates
Exercise of Put Options
5.18 Each of the Ownership Put Option and the De-listing Put Option is exercisable in the period commencing on the occurrence of the applicable Put Event and ending 60 days following the occurrence of the applicable Put Event or, if later, 60 days following the date on which the Put Event Notice is given to Bondholders.
5.19 The 2021 Put Option is exercisable not earlier than 90 days nor less than 45 days prior to 19 June 2021.
(subject to any further reduction by PFZW in the circumstances explained in paragraph 2.4). You will realise significantly higher value by exercising your Put Option than by exercising your Conversion Rights. Exercising your Conversion Rights will therefore leave you “out of the money”.
Pre-existing rights and the Offer
5.22 In very limited circumstances (i.e. where PFZW switches to a takeover offer which then lapses or results in PFZW acquiring only a small number of the Issuer’s Ordinary Shares such that PFZW holds 85 per cent. of the share capital of the Issuer or less and the Issuer does not pursue a de-listing) neither the Ownership Put Option nor the De-listing Put Option will be available. If this occurs, the 2021 Put Option would remain exercisable by a Bondholder in accordance with the Conditions and the Issuer would remain listed, such that any Ordinary Shares issued to the relevant Bondholder(s) on the exercise of any Conversion Right would be listed, as would be the case today. A Conversion Notice, once delivered, is irrevocable.
5.23 If a Bondholder exercises its Conversion Right and PFZW subsequently switches to a takeover offer, the Ordinary Shares issued as a result of the conversion will be subject to the terms of the takeover offer. Pursuant to article 99(2) of the DIFC Companies Law, if the offeror under a takeover offer has, by virtue of acceptances of the offer, acquired or contracted to acquire 90 per cent. in value of the shares to which the offer relates, it may compulsorily acquire the remaining shares to which the offer relates on the terms of the offer, such compulsory acquisition being on the terms of the offer. Therefore: (i) if a Bondholder exercises its Conversion Rights; (ii) PFZW switches to a takeover offer for all Ordinary Shares in issue; and (iii) PFZW receives acceptances representing 90 per cent. in value of the Ordinary Shares to which the offer relates, PFZW would be entitled to compulsorily acquire all remaining Ordinary Shares (including those issued as result of a Bondholder exercising its Conversion Rights) on the price set out in the terms of the offer. Bondholders considering the options available to them with respect to their Bonds should be aware of this possibility.
5.24 The Issuer has the option to redeem all (but not some only) of the Bonds at their principal amount together with all accrued interest if Conversion Rights are exercised and/or purchases (and corresponding cancellations) and/or redemptions effected in respect of 85 per cent. or more in aggregate of the principal amount of the Bonds originally issued (the Issuer Redemption Right). The Issuer Redemption Right is only exercisable once 85 per cent. of the Bonds initially issued to Bondholders have been converted, redeemed or purchased and cancelled. As at the date of this communication, , redeemed or purchased and cancelled. If some Bondholders elect to exercise their Conversion Rights or Put Options prior to the Final Maturity Date, it is conceivable that the applicable threshold of 85 per cent. of the Bonds would be reached, thus entitling the Issuer to exercise its Issuer Redemption Right. In these circumstances, your Bonds would be redeemed at the principal amount plus all accrued interest. Provided that the Issuer does not exercise the Issuer Redemption Right, your Conversion Rights will continue to subsist following completion of the Scheme, subject to the Conditions.
5.25 The Scheme will not extend to Ordinary Shares issued after the Scheme Record Time. However, if the Scheme becomes effective, any Ordinary Shares issued to any person other than PFZW or its group companies or nominees after the Scheme Record Time (including to Bondholders who exercise any Conversion Rights and are issued Ordinary Shares after the Scheme Record Time) will be automatically transferred to PFZW in consideration for the payment by PFZW to such persons of an amount equal to the Offer Price for each Ordinary Share so transferred.
6. Retaining your Bonds
6.1 If the Scheme is successful, all Bonds which are not redeemed, converted or purchased and cancelled will subsist following the Effective Date. You are therefore entitled to retain your Bonds, subject always to the Conditions (including the Issuer Redemption Right).
6.2 If:
(a) you do not exercise your Conversion Rights or any of the Put Options available to you;
(b) the Issuer does not exercise its Issuer Redemption Right; and
(c) your Bond/(s) are not otherwise purchased, cancelled, redeemed or converted in accordance with the Conditions,
your Bonds will be redeemed at their principal amount on the Final Maturity Date (19 June 2024).
7.1 In this communication, the following words and expressions shall have the following meanings:
has the meaning given in the Conditions (and, as at the date of this communication, is US$26.3643 per Ordinary Share);
CSD Voting Record Time has the meaning given in the Scheme Circular;
DIFC Companies Law means DIFC Law No. 5 of 2018;
DIFC Companies Law Registrar has the meaning given in Part 3 of Schedule 1 to the DIFC Companies Law;
DFSA means Dubai Financial Services Authority;
General Meeting means the general meeting of the Issuer (or any adjournment thereof) to be convened in connection with the Scheme, expected to be held as soon as the preceding Tribunal Meeting shall have been concluded or adjourned;
Nasdaq Dubai means Nasdaq Dubai Limited;
Official List of Securities means the Official List of Securities maintained by Nasdaq Dubai;
Sanction Hearing means the hearing by the Tribunal of the application to sanction the Scheme under Part 9 of the DIFC Companies Law;
Scheme Circular means circular issued by the Issuer to the Scheme Shareholders (and such other persons to whom the Tribunal or the DFSA requires the Scheme Circular to be posted, if any) in respect of the Scheme, a copy of which can be found at www.dpworld.com;
Scheme Record Time means 3:00p.m. (UAE time) on the date that is two Business Days after the Sanction Hearing or such other time as announced by the Issuer on Nasdaq Dubai;
Scheme Shareholder means a holder of Scheme Share(s);
Scheme Shares has the meaning given in the Scheme Circular;
Shareholder means a person whose name appears on the Issuer’s register of shareholders; and
Tribunal Meeting means the meeting of the Scheme Shareholders to be convened at the direction of the Tribunal pursuant to Part 9 of the DIFC Companies Law at which a resolution will be proposed to approve the Scheme, including any adjournment thereof.
DP WORLD PLC
Proposal to Convertible Bondholders.pdf
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