J.P. Morgan says it is not trying to lock out other bids and isn’t trying to charge punitive break up fees. The bank says it wishes to clarify two points referred to in the announcement of Technicolor dated June 11th, 2012 regarding the terms of its revised proposal.
The break-up fee of €3.4 million that J.P. Morgan proposed, representing 2 per cent of the maximum transaction value, would not be triggered by a successful completion of the transaction set out in the offer made by Vector Capital to Technicolor on May 25th. If the resolutions of Vector Capital in such offer are approved by the shareholders of Technicolor, no break-up fee would be payable.
The amended resolutions in J.P. Morgan’s revised proposal simply provide for the Vector resolutions and the J.P. Morgan resolutions to be mutually exclusive in all cases. This condition is in accordance with the original J.P. Morgan transaction, which provides that J.P. Morgan will become the reference shareholder of Technicolor with the support of the board of directors of Technicolor. There is therefore no difference in the certainty of the J.P. Morgan deal under the revised proposal. It does not prevent the shareholders of Technicolor from having the ability to consider all proposals submitted to them.
J.P. Morgan feels that its revised proposal represents a superior economic offer for Technicolor and its shareholders. The revised proposal raises the price per share in the capital increase reserved for J.P. Morgan by 19 per cent from €1.60 to €1.90. This results in additional proceeds of €22 million and an average price per share of between €1.81 and €1.83 (an increase of 13 per cent as against J.P. Morgan’s last proposal and a premium of 6 per cent over the Vector Capital proposal of between €1.71 and 1.73 per share). J.P. Morgan is therefore disappointed with the decision of the board of Technicolor, which means that the amended resolutions included in its proposal will not be submitted to the forthcoming General Shareholders’ Meeting. J.P. Morgan remains entirely prepared to make an investment in Technicolor on the basis of the superior financial terms in its revised proposal