| Thu 14 Nov 2002, 16:41 | | Liberty International Plc - Statement Re Letter To |
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Liberty International Plc - Statement Re Letter To Shareholders
LIBERTY INTERNATIONAL PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: LBT
Issuer Code: LILI I
14 November 2002
Liberty International PLC
Letter to Shareholders
Liberty International is today posting a letter to all its shareholders
informing them of a number of significant and positive recent developments
concerning the Company.
The full text of the letter is attached.
Enquiries
Liberty International PLC +44 20 7960 1200
Donald Gordon, Chairman +44 20 7960 1201
David Fischel, Chief Executive +44 20 7960 1207
Public Relations (UK) - Hudson Sandler
Michael Sandler +44 20 7796 4133
Public Relations (South Africa) -
College Hill Associates
Matthew Gregorowski (London) +44 20 7457 2020
Nick Williams (South Africa) +27 (0) 83 607 0761
If you have sold or otherwise transferred all your ordinary shares please
forward this document as soon as possible to the purchaser or transferee, or to
the bank, stockbroker, or other agent through whom or to whom the sale or
transfer was effected, for delivery to the purchaser or transferee.
From Donald Gordon, Chairman, Liberty International
14 November 2002
Dear Shareholder
I am writing to inform you of a number of significant and positive recent
developments which collectively represent a substantial advance in the affairs
of Liberty International.
Victoria Centre, Nottingham
Liberty International`s effective ownership level increased from 38 per cent to
100 per cent for a net outlay of GBP157 million
Liberty International has for some years had an effective interest in the
Victoria Centre, Nottingham, of around 38 per cent, of which 20 per cent was
held directly and the balance was held through a 23.2 per cent interest in a
partnership called the UK Prime Property Partnership owning 80 per cent of the
Victoria Centre.
On 4 November 2002, Liberty International`s interest in the Victoria Centre
effectively increased to 100 per cent for a net outlay of GBP157 million as part
of the realignment of the ownership structure of the Victoria Centre involving
the retirement of the General Partner, Baffin (U.K.) Limited, and the assumption
of this role by a subsidiary of Liberty International.
The Victoria Centre was opened in 1972 as one of the first of the new generation
of shopping centres to be built in the UK and now comprises 956,000 sq.ft. of
modern retail space, anchored by John Lewis and House of Fraser, the latter
opened in 1996 as part of a major extension of the Northern end of the scheme.
The Centre provided a net annual rental income of around GBP16 million for the
year ended 31 December 2001. The Victoria Centre has 117 separate retail
units, including a wide variety of multiple retailers, and has the benefit of
approximately 2700 car spaces and excellent public transport links. Nottingham
as a city is ranked 5th nationally by size of shopping population with some 3.8
million people in the catchment area. The Centre ranks within the top 10 UK
shopping centres by size.
We are delighted to be continuing and increasing our Group`s involvement with
the Victoria Centre which goes back to its original construction and opening in
1972. The Centre has a proven highly successful track record, attracting some
23 million customer visits per annum. The arrangements are consistent with our
strategy of focussing primarily on dominant regional shopping centre locations
in the United Kingdom.
Placing of 28.4 million new ordinary shares, representing 9.9 per cent of
Liberty International`s then existing issued share capital, at 560p per share
raising GBP159 million.
On 6 November 2002, Liberty International successfully placed, through Morgan
Stanley Securities Limited ("Morgan Stanley"), 28.4 million new ordinary shares
at 560p per share raising GBP159 million before expenses. The shares were
placed with a range of UK and international institutional investors.
The net proceeds of the Placing will be applied to the payment associated with
the increased ownership level of the Victoria Centre referred to above and to
the Group`s overall capital expenditure programme.
Purpose of Placing
The Directors had concluded that additional equity finance, particularly in the
light of the above arrangements concerning the Victoria Centre, Nottingham, was
an important element in the Group`s overall financing plans in order to maintain
the debt to assets and interest cover ratios of Liberty International at
appropriate levels, where the cost of capital is optimised and the Group`s
strong financial position can be maintained.
The Placing is expected to be beneficial to Shareholders as it will enable
Liberty International to:
continue the dynamic expansion and enhancement of its business.
consolidate and augment its premier nationwide franchise in the UK shopping
centre business.
undertake long-term infrastructure and regeneration projects, such as the highly
successful Braehead project, which require a significant backing of permanent
equity capital.
continue to pursue attractive opportunities within its high performing
commercial and retail property business conducted by Capital & Counties,
including the Group`s interests in the USA which are predominantly retail,
including shopping centres.
maintain its strong financial position. The Group has a highly defensive debt
structure in terms of its maturity, interest rate and risk profile with the
major proportion of the Group`s secured debt related to individual properties
and on a non-recourse basis to the Group.
be in a position to continue to deliver capital appreciation and superior
returns to Shareholders.
Other Details of the Placing
The Placing has increased the issued ordinary share capital of Liberty
International from 284.2 million to 312.6 million ordinary shares. The new
ordinary shares, which were allotted on 13 November 2002 and rank pari passu
with the existing ordinary shares, have been admitted to the Official List and
to listing on the London Stock Exchange`s market for listed securities. The
shares have also been listed on the JSE Securities Exchange South Africa.
In connection with the Placing, The Gordon Family Trust, a trust within the
Gordon family interests and therefore connected with the Chairman, Mr Donald
Gordon, and as such a related party for the purposes of the Listing Rules,
agreed to acquire 8 million of the shares placed. The Gordon family interests
after the Placing amount to approximately 62.7 million ordinary shares (20.0 per
cent of Liberty International`s issued ordinary share capital) at the close of
business on 13 November 2002.
Potential inclusion in FTSE-100 Index
Liberty International is listed on both the London Stock Exchange and since 1999
the JSE Securities Exchange South Africa. Liberty International now ranks as
the UK`s third largest listed property company by market capitalisation.
At the close of business on 13 November 2002, Liberty International`s FTSE
ranking on the London Stock Exchange was number 88 by market capitalisation,
based on the increased number of 312.6 million shares in issue. The Placing has
improved Liberty International`s ranking with a possible outcome of entry into
the FTSE-100 index at the next review date in December 2002. The company
considers FTSE-100 membership should have the desirable result of enhancing
Liberty International`s profile with the London and international investment
communities, and should increase the potential shareholder base and liquidity of
the company`s ordinary shares.
Information on Individual Projects
A substantial proportion of the Group`s overall investment and development
programme involves extensions to or increased interests in existing centres with
proven successful track records. The acquisition arrangements at Chapelfield
Norwich where Lend Lease Europe is the developer substantially insulate CSC from
construction and initial letting risk, in line with Liberty International`s low
risk expansion strategy at this time.
Excluding the Victoria Centre, Nottingham, the Group has a committed investment
and development programme of around GBP500 million, which is fully funded by
existing cash and committed facilities. In addition Liberty International is
actively engaged in potential development projects at both Cardiff and Oxford
and within the existing investment portfolio.
Committed Developments
MetroCentre, Gateshead (1.6 million sq.ft., 90 per cent owned)
Work has now started on the main contract for the GBP85 million redevelopment of
parts of MetroCentre. The New Red Mall scheme, replacing a redundant
supermarket, will provide 371,000 sq.ft. of prime retail space, including a new
Debenhams department store and 28 new shop units which will open for trade in
autumn 2004. A new 1,100 space covered car park will link directly to the
department store and into the new mall.
The New Public Transport Exchange, which replaces the existing bus station will
provide state-of-the-art facilities with internal, mall-quality waiting areas
for shoppers. It will also be a terminus for the dedicated Centrelink bus
service direct to central Gateshead. As part of this scheme, the railway
interchange will be upgraded and considerable infrastructure works will improve
the A1 junction and access roads around the centre.
Chapelfield, Norwich (510,000 sq.ft., expected to be 100 per cent owned)
CSC has entered into an agreement with Lend Lease Europe Limited to invest an
estimated GBP275 million (excluding residential costs) in the proposed
development of Chapelfield Shopping Centre, Norwich, which is targeted for
completion in autumn 2005. The consideration is dependent on the rents
achieved, currently estimated at GBP18 million per annum.
The 510,000 sq.ft. mixed-use scheme will include a 140,000 sq.ft. store for
House of Fraser, 10 large units and some 80 other shops, restaurants and cafes.
There will be a 1,000 space car park, 115 residential units and full integration
with local transport.
Braehead, Glasgow (1.06 million sq.ft., 100 per cent owned)
Renfrewshire Council has resolved to grant outline planning consent for the
development of a further 145 acres surrounding Braehead. The proposals include
420,000 sq.ft. of office space, some 900 residential units and a riverside park.
There will also be approximately 460,000 sq.ft. of planned leisure to be
operated by Xscape including an indoor real snowslope, a multiplex cinema,
family entertainment centre, a hotel, cafes and restaurants and some specialist
retailers.
Development Projects at the Planning Stage
Cardiff
CSC is working with Land Securities PLC, the UK`s largest listed property
company, under a proposed 50:50 joint venture to undertake a major city centre
regeneration scheme. The project will extend the existing St David`s Centre in
Cardiff owned by Land Securities PLC and incorporate the Hayes Centre which is
already owned by CSC, and will provide 750,000 sq.ft. of new retail space, with
leisure and residential elements. The Partnership is working closely with
Cardiff County Council on the proposals. The first stage of a major public
consultation exercise has now been completed and an outline planning application
was submitted at the end of October 2002.
Westgate, Oxford
This GBP220 million development proposal to extend and refurbish the Westgate
Centre in Oxford, where CSC already owns the Allders Department Store, will
respond to strong retailer demand for units in Oxford. The project is a 50:50
joint venture with LaSalle Investment Management. The scheme, which has been
carefully designed to blend with the historic streetscape of Oxford, includes a
remodelled entrance and elevations, new rooftop housing and provides a major new
public space at the heart of the centre. The overall centre on completion will
amount to 520,000 sq.ft.
Following a planning inquiry into the proposals in November 2001, the Planning
Inspector recommended that permission be granted for the scheme, save for a
small office element. However, the Secretary of State did not accept the
Planning Inspector`s recommendation and refused the application on 26 September
2002. CSC with its joint venture partner has decided to pursue a legal
challenge to the Secretary of State`s decision.
Existing Centres with Major Development and Investment Potential
Eldon Square, Newcastle upon Tyne (961,000 sq.ft., 30 per cent owned), opened in
1976, was one of the first examples of mixed use city centre regeneration. It
successfully incorporates modern shopping, offices, flats and a major leisure
centre. CSC continues to work to keep the centre up to date, providing the
larger units needed by today`s retailers. Discussions are taking place with
CSC`s partners which inter alia involve plans to develop the southern end of
Eldon Square to create a new department store and additional large retail units.
CSC continues to pursue development and expansion opportunities within the
remainder of its regional shopping centre portfolio.
Concluding Remarks
Despite the turbulent and volatile conditions currently prevailing in the
world`s financial and securities markets, our chosen sectors in the real estate
markets, notably our shopping centre and retail businesses, which comprise
around 90 per cent of the Group`s total assets, have continued to produce a very
sound and stable outcome, demonstrating the exceptional resilience of our prime
regional shopping centre assets.
Dilution of net asset value per share from the Placing will be minimal and will,
we believe, be more than compensated by the longer term benefits and improved
prospects for the Group from the promising projects on which we are now embarked
which should be positive for both growth and shareholder value.
The strengthening of the Group`s capital base as a result of the Placing will
facilitate the significant range of attractive investment and development
projects now open to us. Collectively, these transactions represent a major
extension and consolidation of our established and premier nationwide franchise
in the UK regional shopping centre industry.
Yours sincerely
Donald Gordon
Chairman
The company`s website www.liberty-international.co.uk contains information on
the Group and its activities, including the full text of recent announcements
about the above transactions
This announcement does not constitute an invitation to underwrite, subscribe for
or otherwise acquire or dispose of any shares in Liberty International. Past
performance is no guide to future performance and persons needing advice should
consult an independent financial adviser.
Morgan Stanley has given and not withdrawn its consent to the issue of this
document with the inclusion of the references to its name in the form and
context in which they appear.
Morgan Stanley acted for Liberty International in connection with the Placing
and no-one else and will not be responsible to anyone other than Liberty
International for providing the protections offered to clients of Morgan Stanley
nor for providing advice in relation to the Placing.
Date: 14/11/2002 04:33:19 PM Produced by the JSE SENS Department
