Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Ordinary Shares and
American Depositary Shares
of
Indigo Aviation AB
at
$13.00 Net per Share
by
AerFi Sverige AB,
an indirect, wholly-owned subsidiary of
AerFi Group plc
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY DECEMBER 15, 1999, UNLESS EXTENDED.
INDIGO'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE COMBINATION
AGREEMENT AND DETERMINED THAT THE COMBINATION AGREEMENT AND THE OFFER ARE FAIR
TO YOU AND IN YOUR BEST INTEREST. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU
ACCEPT THE OFFER AND TENDER YOUR SHARES UNDER THE OFFER.
Bear Xxxxxxx & Co. Inc. has delivered to Indigo's board of directors its
written opinion that, as of the date of the opinion and based on and subject to
the assumptions and qualifications stated in the opinion, the consideration to
be paid in the offer is fair, from a financial point of view, to the holders of
Indigo shares, other than Indigo's controlling shareholders.
IMPORTANT
You may tender all or any portion of your Indigo shares by:
o completing and signing the letter of transmittal that accompanies this
document according to the instructions in the letter of transmittal,
having your signature guaranteed if required by Instruction 1 to the
letter of transmittal, and mailing or delivering the letter of
transmittal together with the Indigo share certificates and any other
required documents to the depositary at the address set forth on the
back cover;
o tendering your Indigo shares according to the procedure for book-entry
transfer described in "The Tender Offer" Procedures for Accepting the
Offer and Tendering Shares"; or
o asking your broker, dealer, commercial bank, trust company or other
nominee to tender your shares for you.
If your Indigo shares are registered in the name of a broker, dealer, bank,
trust company or other nominee you must contact that broker, dealer, bank, trust
company or other nominee if you desire to tender your Indigo shares.
If you desire to tender your Indigo shares and your Indigo share
certificates are not immediately available, or you cannot comply with the
procedure for book-entry transfer on a timely basis, or you cannot deliver all
required documents to the depositary before the expiration of the offer, you may
tender your Indigo shares by following the procedures for guaranteed delivery
described under the caption "The Tender Offer" Procedures for Accepting the
Offer and Tendering Shares".
You should direct questions or requests for assistance to the information
agent or the dealer manager at their addresses and telephone numbers listed on
the back cover of this document. You may obtain additional copies of this
document, the letter of transmittal, the notice of guaranteed delivery and other
related materials from the information agent or the dealer manager.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
---------------
The dealer manager for the offer is:
XXXXXXXXX & CO., LLC
November 17, 1999
TABLE OF CONTENTS
Page
----
INTRODUCTION......................... 1
SPECIAL FACTORS...................... 3
Background of the Offer............ 3
Recommendation of Indigo's Board of
Directors; Fairness of the
Offer........................... 6
Opinion of Financial Advisor to
Indigo's Board of Directors..... 7
Position of AerFi and AerFi Sverige
Regarding Fairness of the Offer. 12
Purpose and Structure of the Offer;
Reasons of AerFi for the Offer.. 12
Plans for Indigo after the Offer... 13
Rights of Shareholders in the
Offer........................... 13
The Combination Agreement.......... 14
The Share Exchange Agreement....... 20
The Share Purchase Agreement....... 23
The Option Agreement............... 23
The Registration Rights Agreement.. 23
The Tag-Along Rights Agreement..... 24
Letter Regarding Intention to
Tender.......................... 24
Interests of Certain Persons in the
Offer........................... 24
THE TENDER OFFER..................... 28
Terms of the Offer................. 28
Acceptance for Payment and Payment
for Shares...................... 29
Procedures for Accepting the Offer
and Tendering Shares............ 30
Withdrawal Rights.................. 32
United States Federal Income Tax
Consequences.................... 33
Price Range of Shares; Dividends... 34
Certain Information Concerning
Indigo.......................... 35
Certain Information Concerning AerFi
and AerFi Sverige............... 38
Financing of the Offer............. 41
Dividends and Distributions........ 42
Certain Effects of the Offer....... 42
Certain Conditions of the Offer.... 43
Certain Legal Matters; Regulatory
Approvals....................... 45
Fees and Expenses.................. 47
Miscellaneous...................... 48
SCHEDULES
SCHEDULE I - Directors and Executive
Officers of Indigo................. I-1
SCHEDULE II - Directors and
Executive Officers of AerFi and
AerFi Sverige...................... II-1
ANNEX A - Opinion of Bear Xxxxxxx.... A-1
To the Holders of Indigo Shares:
INTRODUCTION
AerFi Sverige AB or AerFi Sverige, a Swedish corporation, offers to purchase
any and all issued and outstanding ordinary shares nominal value SEK 3.14 per
share and, without duplication, the American depositary shares each representing
one ordinary share, of Indigo Aviation AB or Indigo, a Swedish limited liability
company, at a price of $13.00 per Indigo share, net to the seller in cash. AerFi
Sverige is an indirect, wholly-owned subsidiary of AerFi Group plc or AerFi, an
Irish limited liability company. Certain shareholders of Indigo, the controlling
shareholders, who own approximately 72.7% of Indigo's issued and outstanding
shares, have agreed to exchange and/or sell those shares to AerFi and AerFi
Sverige in separate transactions under a share exchange agreement and/or a share
purchase agreement. This offer is made subject to the terms and conditions
listed in this document and in the letter of transmittal. This document refers
(1) to the shares and the American depositary shares described above
collectively as the Indigo shares, (2) to the offer described in this document,
together with any amendments and supplements (including the letter of
transmittal), as the offer, (3) to AerFi Group plc as AerFi, we or us and (4) to
the time when the offer is declared unconditional as the unconditional time.
You will not be obligated to pay brokerage fees or commissions (except for fees
which may be payable in respect of custodial or other beneficiary accounts) or,
except as otherwise provided in Instruction 6 of the letter of transmittal,
stock transfer taxes on our purchase of Indigo shares under the offer. We will
pay all charges and expenses incurred in connection with the offer of Xxxxxxxxx
& Co., LLC, the dealer manager for the offer, Bankers Trust Company, the
depositary with respect to the Indigo shares and the offer, and Corporate
Investor Communications, Inc., the information agent for the offer. See "The
Tender Offer -- Fees and Expenses".
INDIGO'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE COMBINATION
AGREEMENT AND DETERMINED THAT THE COMBINATION AGREEMENT AND THE OFFER ARE FAIR
TO YOU AND IN YOUR BEST INTERESTS. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU
ACCEPT THE OFFER AND TENDER YOUR SHARES UNDER THE OFFER.
Indigo has filed with the Securities and Exchange Commission a
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to you with this document.
Bear Xxxxxxx & Co. Inc., has delivered to Indigo's board of directors its
written opinion that, as of the date of the opinion and based on and subject to
the matters stated in the opinion, the consideration to be paid in the offer is
fair, from a financial point of view, to the holders of Indigo shares other than
Indigo's controlling shareholders. See "Special Factors -- Opinion of Financial
Advisor to Indigo's Board of Directors" for further information concerning Bear
Xxxxxxx' opinion.
The controlling shareholders of Indigo have agreed not to tender their shares in
the offer and, in a separate transaction, those shareholders have entered into a
share exchange agreement and/or a share purchase agreement with us and AerFi
Sverige. These shareholders own 8,197,568, or approximately 72.7%, of Indigo's
issued and outstanding shares. Under the share exchange and share purchase
agreements, 5,891,670 of these shares will be exchanged for 21,799,179 new
ordinary shares of AerFi , reflecting an exchange ratio of 3.7 AerFi ordinary
shares for each Indigo share, and the remaining 2,305,898 Indigo shares will be
sold to AerFi Sverige for $13.00 per share in cash. No valuation of AerFi=s
ordinary shares was prepared in connection with the offer, the share exchange
agreement and the share purchase agreement transactions. AerFi=s ordinary shares
are not listed on any recognized securities exchange or quotation system or
traded on any recognized public trading market and are traded, on a very
infrequent basis, only in private transactions. According to AerFi=s articles of
association, each transfer of AerFi=s ordinary shares must be reported to AerFi,
including the number of shares transferred and the price per share paid. In the
three-month period from August 16, 1999, to November 16, 1999, the weighted
average price of AerFi=s ordinary shares transferred was $2.121 per share. Given
the limited and illiquid nature of the trading market for AerFi=s ordinary
shares, this price may not reflect an accurate valuation of AerFi=s ordinary
shares.The consummation of the offer is not conditional upon consummation of the
share exchange and share purchase agreements. The consummation of the share
exchange agreement and share purchase agreement transactions are not contingent
upon consummation of the offer. The controlling shareholders of Indigo will be
granted options to purchase up to 1,000,000 new ordinary shares of AerFi at
$3.17 per share pursuant to an option agreement. See "Special Factors -- The
Share Exchange Agreement", "Special Factors -- The Share Purchase Agreement" and
"Special Factors -- The Option Agreement".
The offer is being made under a combination agreement dated November 11,
1999 among Indigo, AerFi and AerFi Sverige. The offer is not conditioned on
obtaining financing. The combination agreement provides, among other things,
that following the unconditional time if AerFi Sverige owns more than 90% of the
voting rights and more than 90% of the outstanding Indigo shares at that time,
AerFi Sverige intends to take all action required to commence a compulsory
acquisition under the Swedish Companies Act. The price to be paid to holders of
Indigo shares in the compulsory acquisition will be determined under the Swedish
Companies Act and may be higher, lower or equal to the offer price.
Under the Swedish Companies Act, dissenters' rights are not available to you
in connection with the offer. You should refer to "Special Factors -- Rights of
Shareholders in the Offer" for a discussion of your rights under the Swedish
Companies Act.
Upon the closing of the share exchange agreement and share purchase
agreement transactions, we have agreed to take all action that is necessary to
appoint Xx. Xxxx-Xxxx Xxxxxxxx and Mr. Xxxx Xxxxx to AerFi's board of directors.
Furthermore, we shall take all action necessary to appoint Mr. Xxxx Xxxxx
President and Chief Executive Officer of ErgoFi Inc., a subsidiary of AerFi.
Finally, Indigo's existing employee stock option plans will be cancelled and
replaced with, at the employee's choice, cash compensation in respect of the
cancelled Indigo stock options or replacement options in AerFi's employee share
option scheme, as set out in the combination agreement.
As of November 11, 1999, there were 11,276,288 outstanding Indigo ordinary
shares and options to purchase an aggregate of 295,920 Indigo ordinary shares at
an average exercise price of $11.01 per Indigo share. Based upon the foregoing,
there were approximately 11,572,208 Indigo shares outstanding on a fully diluted
basis. Upon the terms and subject to the conditions of the offer (including, if
the offer is extended or amended, the terms and conditions of that extension or
amendment), AerFi Sverige will accept and pay for all Indigo shares validly
tendered and not withdrawn before the expiration date. AerFi Sverige reserves
the right, subject to the terms and conditions of the combination agreement, to
extend the period during which the offer is open by giving oral or written
notice of the extension to the depositary. During any extension, all Indigo
shares previously tendered and not withdrawn will remain subject to the offer,
subject to your rights to your Indigo shares as described under "The Tender
Offer -- Withdrawal Rights".
Indigo's board of directors has not declared any dividends which have not
been paid. If we acquire control of Indigo, we currently intend that, before the
acquisition of the entire equity interest in Indigo, no further dividends will
be declared on the Indigo shares.
On April 7, 1998, Indigo filed a registration statement on Form F-1 under
the Securities Act of 1933 for an offering of American Depositary Shares
representing 3,300,000 ordinary shares. The offering price for the issue was
$13.00 and the aggregate proceeds received by Indigo were $35,061,000. On March
18, 1998, Indigo filed a registration statement on Form F-6 to register the
American depositary shares that were issuable upon registration and deposit of
the ordinary shares.
This document and the letter of transmittal contain important information
which you should read carefully before making any decision about the offer.
SPECIAL FACTORS
Background of the Offer
Recent Contacts, Negotiations and Transactions Between AerFi and Indigo
On December 18, 1998, Xx. Xxxxxxx Xxxxxx, the Chief Executive of AerFi,
wrote to Xx. Xxxx-Xxxx Xxxxxxxx, the Chairman of Indigo, to inform him of the
recent completion of XxxXx's restructuring and suggested a meeting to consider
whether an opportunity may exist for both organizations to work together to
their mutual benefit. Xx. Xxxxxxxx responded on December 21, 1998 by noting that
Indigo was agreeable to a meeting to explore what opportunities might exist
which could benefit Indigo and AerFi.
On January 13, 1999, Xx. Xxxxxx and Xx. Xxxxxx Xxxxxx, AerFi's Chief
Financial Officer, met with Xx. Xxxxxxxx at AerFi's offices in Shannon, Co.
Xxxxx, Ireland. Both parties discussed their respective businesses and their
respective strategies for future growth. In particular, Xx. Xxxxxx discussed
AerCo Limited, a bankruptcy-remote special purpose company that owns and leases
33 commercial jet aircraft and in which AerFi holds certain subordinated debt
securities and all of the residual economic interest. Xx. Xxxxxx discussed how
AerCo Limited could purchase additional aircraft, and if Indigo was interested,
a proposal to securitize some or all of Indigo's existing fleet in AerCo Limited
could be submitted to AerCo Limited's board of directors.
On January 14, 1999, Xx. Xxxxxxx Xxxxxxxx, Executive Vice President and
Chief Financial Officer of Indigo Airlease Corporation, a wholly owned U.S.
subsidiary of Indigo, wrote to Xx. Xxxxxx offering a Boeing 737-200 aircraft for
sale. Xx. Xxxxxx replied to Xx. Xxxxxxxx on January 14, 1999 to the effect that
the proposed sale fell outside AerFi's acquisition criteria and therefore was
not of interest to AerFi.
On February 4, 1999, Xx. Xxxxxx made a presentation on securitization
opportunities for Indigo to the Indigo board of directors. Xx. Xxxxxx outlined
AerFi's experience with aircraft securitization, including the structure and
economic aspects of AerCo Limited. In addition, Xx. Xxxxxx gave his views on
each of the funding options available to Indigo including bank debt, public
debt, aircraft sales and securitizations. Xx. Xxxxxx also provided a comparison
of the possible financial terms of an aircraft securitization by AerCo Limited
compared with other aircraft securitization vehicles. On March 19, 1999, Xx.
Xxxxxx spoke with Xx. Xxxxxxxx during which conversation Xx. Xxxxxx stated that
he would write to Xx. Xxxxxxxx in this regard.
On March 30, 1999, Xx. Xxxxxx wrote to Xx. Xxxxxxxx concerning the
consolidation trend in the aircraft leasing industry. Xx. Xxxxxx stated that it
was his view that Indigo and XxxXx must identify either a chosen niche in the
industry or seek amalgamation opportunities in order to compete effectively with
industry leaders. Xx. Xxxxxx noted that AerFi and Indigo had businesses and
management teams which were complementary with little overlap. In addition,
Indigo had achieved good market recognition and had developed a significant
track record in the aircraft leasing industry in a short space of time.
Meanwhile, AerFi had become a strong, cash rich company which had successfully
launched the AerCo Limited securitization vehicle. In his letter, Xx. Xxxxxx
proposed that XxxXx and Indigo merge their businesses as this would combine
complementary skills and achieve xxxxxxxx xxxx in terms of portfolio and
financing capability. Xx. Xxxxxx stated that he believed the following issues
would have to be addressed to achieve such a combination:
o the relative valuation of both entities;
o the amount of liquidity or cash provided to those shareholders who
wished to exit; and
o the balance of continuing shareholders and allocation of control.
During the first week of April 1999, Xx. Xxxxxxxx advised Xx. Xxxxxx that
Xxxxxx was already in discussions with other parties who were interested in
possible investment in, or combination with, Indigo. However, Xx. Xxxxxxxx
indicated that Indigo's Board of directors would be prepared to consider any
offer AerFi was prepared to make. Xx. Xxxxxxxx emphasized that Indigo did not
feel it was obliged to find a combination opportunity at that time and
consequently, in any proposals to be made by XxxXx, the valuation attributed to
Indigo and the liquidity offered to Indigo's shareholders would be very
important.
On April 16, 1999, XxxXx and Indigo entered into a confidentiality agreement
following which AerFi provided Indigo with certain confidential information
relating to AerFi.
On April 26, 1999, Xx. Xxxxxx and representatives of Xxxxxxxxx & Co.,
financial adviser to AerFi, met with Xx. Xxxxxxxx Xxxxxx, a non-executive
director of Indigo, appointed by Indigo's Board to represent the interests of
Indigo's public shareholders. The parties discussed which Indigo shareholders
wanted liquidity and the possible advantages to Indigo of proceeding with a
combination with AerFi.
On May 4, 1999, Xx. Xxxxxx wrote to Xx. Xxxxxxxx proposing that, subject to
Board approval and customary due diligence, AerFi would make a cash tender offer
for some of Indigo's shares, with certain Indigo shareholders agreeing to
exchange their Indigo shares for AerFi's ordinary shares at an agreed exchange
ratio. Xx. Xxxxxx attached an analysis from Xxxxxxxxx & Co. that assumed a
$13.00 per share offer price in the cash tender offer. In addition, Xx. Xxxxxx
also proposed that Mr. Xxxx Xxxxx, Chief Executive Officer of Indigo Airlease
Corporation, a U.S. wholly owned subsidiary of Indigo, would be offered a senior
management position in the combined entity.
On May 10, 1999, Xx. Xxxxxxxx spoke with Xx. Xxxxxx and Xx. Xxxxxx and
indicated that XxxXx's proposal was not acceptable to Indigo for a number of
reasons, including the total amount of cash available for the cash tender offer.
Xx. Xxxxxxxx also indicated that Indigo wished to receive $15 per share.
Subsequently, AerFi indicated to Indigo that it was not willing to improve its
offer.
On June 9, 1999, Xx. Xxxxxx met Xx. Xxxxx in London where they discussed
whether it was possible to re-commence discussions on a merger. On June 16,
1999, Xx. Xxxxxx met with certain senior Indigo employees at the Paris Air Show
during which the Indigo employees outlined their experience and achievements to
date.
On June 14, 1999, Indigo's board of directors held a special telephonic
meeting to discuss the possibility of a transaction with XxxXx. Xx. Xxxxxxxx and
Xx. Xxxxx reported on the status of the discussions with XxxXx and another
potential acquiror that had expressed an interest in a combination with Indigo.
Indigo's board agreed to engage an investment bank to act as financial advisor
in evaluating a possible transaction and appointed a sub-committee, consisting
of Xx. Xxxxxxxx, Xx. Xxxxx, Xx. Xxxxxx, Mr. Xxxxx Xxxxxxxx and Xx. Xxxx
Xxxxxxxxxx as members, Xx. Xxxxxxx Xxxxxxxx as secretary and Mr. Xxx-Xxxx
Xxxxxxxxx as deputy, to select the investment bank and to handle contacts with
the investment bank relating to a possible transaction.
On June 15, 1999, the sub-committee of Indigo's board of directors met and
selected Xxxx Xxxxxxx & Co., Inc. to act as its financial advisor.
On June 18, 1999, Indigo and XxxXx entered into a further confidentiality
agreement following which both parties exchanged information relating to each
other's business, including financial projections relating to Indigo's business.
See "The Tender Offer -- Certain Information Concerning Indigo".
On June 23, 1999, Xx. Xxxxxx, certain AerFi employees and representatives of
Xxxxxxxxx & Co. met with Xx. Xxxxx, Xx. Xxxxxxxx and representatives of Bear
Xxxxxxx in New York, and Xx. Xxxxx and Xx. Xxxxxxxx made a presentation about
Indigo's business and financial situation.
On July 16, 1999, Xx. Xxxxxx wrote to Xx. Xxxxxxxx to outline AerFi's
proposed terms for a potential acquisition of Indigo by AerFi. The proposal was
subject to AerFi's board of directors' approval, all necessary regulatory
approvals and to due diligence. It included a cash offer of $11.00 per Indigo
share for 6.706 million Indigo shares and a share exchange in respect of
Indigo's remaining shares at an exchange ratio of one Indigo share for 3.593
AerFi ordinary shares. The proposal also offered two AerFi board seats to
representatives of Indigo following the combination.
On July 21, 1999, Xx. Xxxxxx spoke with Xxxxxxxxx & Co. during which he
emphasized that the cash purchase price would have to be over $13.00 per share.
Following further discussions between the parties, on July 26, 1999, Xx. Xxxxxx
called Xxxxxxxxx & Co. to confirm that a cash tender offer of $13.00 per Indigo
share up to a maximum of $70 million, with the remaining shares exchanging at a
ratio of one Indigo share for 3.875 AerFi ordinary shares, would be acceptable
to Indigo subject to satisfaction of significant remaining outstanding issues.
On July 30, 1999, Xx. Xxxxxx wrote to Xx. Xxxxxxxx to outline AerFi's
proposed terms for a potential acquisition of Indigo, subject to AerFi's board
of directors' approval, regulatory approval and due diligence. Xx. Xxxxxx
indicated that XxxXx would be prepared to pay $13.00 per share for 5.385 million
Indigo shares with the remaining Indigo shares exchanging for AerFi shares at a
ratio of one Indigo share for 3.875 AerFi ordinary shares.
On August 5, 1999, Indigo's board of directors held a special meeting to
consider the proposed transaction with XxxXx. Indigo's board reviewed the status
of discussions with XxxXx and received an oral report from Bear Xxxxxxx.
Indigo's board of directors resolved to enter into an exclusivity agreement with
XxxXx and to dissolve the sub-committee that had been formed at the June 14,
1999 meeting. Xx. Xxxxxxxx and Xx. Xxxxx were designated the contact persons for
further discussions with XxxXx.
On August 6, 1999, Indigo granted AerFi an exclusivity period for the
negotiation of terms on a combination of both entities. Subsequently this was
extended to November 10, 1999.
During August and September 1999, the parties undertook extensive due
diligence on each other's businesses. Following the completion of the due
diligence reviews in mid September, both parties held discussions to consider
issues raised by the due diligence process.
Following their discussion, on September 24, 1999, Xx. Xxxxxx wrote to Xx.
Xxxxxxxx to propose a combination on the following terms:
(i) a cash tender offer of $13.00 per Indigo share,
(ii) a total cash tender offer of $70 million,
(iii) an exchange ratio of 3.7 AerFi ordinary shares per Indigo share not
tendered in the offer,
(iv) new options over 4 million AerFi ordinary shares at an exercise price
of $3.00 per share for Indigo employees,
(v) a loyalty bonus of $0.75 per new AerFi share option granted to Indigo
employees,
(vi) AerFi board seats for Xx. Xxxxxxxx and Xx. Xxxxx,
(vii) Xx. Xxxxx to become Chief Executive Officer of AerFi's newly formed
U.S. subsidiary.
Xx. Xxxxxx also wrote to Xx. Xxxxx on September 24, 1999, to outline in more
detail the benefits of the proposed merger for Indigo's employees, including
proposed terms for exchanging existing Indigo employee options for AerFi
options. Following further discussions between Xx. Xxxxxx, Xx. Xxxxxxxx and Xx.
Xxxxx, it was agreed that those shareholders in Indigo participating in the
share exchange would receive options to purchase in aggregate 1 million AerFi
ordinary shares at $3.17 per share exercisable within three years of the closing
of any combination transaction.
On October 19 and 20, 1999 the management of both entities met in Ireland to
discuss each other's businesses further.
During the remainder of October and November 1999, AerFi, Indigo, the
controlling shareholders and their respective counsel negotiated the structure
of the combination and the agreements to implement it, including the combination
agreement, the share exchange agreement, the share purchase agreement and the
option agreement.
On November 7, 1999, XxxXx's directors held a conference call with XxxXx's
management and AerFi's legal and financial advisors to review the status of the
proposed transaction with Indigo.
On November 9, 1999, Indigo's board of directors held a special telephonic
meeting to review, with the advice and assistance of Indigo's financial and
legal advisors, the final proposed terms and conditions of the combination
agreement, the tender offer and related transactions. Indigo's Swedish and U.S.
counsel reviewed the terms and conditions of the combination agreement as well
as the agreements that were to be entered into by the controlling shareholders,
including the share exchange agreement, the share purchase agreement and the
option agreement. Representatives of Bear Xxxxxxx summarized and reviewed their
financial analysis of the proposed transaction and delivered Bear Xxxxxxx'
opinion that, as of November 9, 1999, the $13.00 per share in cash to be
received by the holders of Indigo shares in the offer was fair, from a financial
point of view, to such holders, other than Indigo's controlling shareholders.
Indigo's board of directors then discussed the merits of the proposed
combination agreement and offer. At the conclusion of this discussion, Xx. Xxxxx
informed the board that there were outstanding issues relating to the terms of
employment that were being offered by XxxXx to Indigo's key management employees
and requested that the board allow him an additional day to continue to
negotiate such terms prior to making a final decision on the proposal. The
members of the board agreed to allow Xx. Xxxxx an additional day to negotiate
such terms and accordingly the board meeting was adjourned until November 10,
1999.
On November 10, 1999, Indigo's board of directors reconvened its special
telephonic meeting. Xx. Xxxxx informed the board that Indigo's key management
employees were satisfied with the terms of their proposed employment
arrangements. Following a brief discussion on the terms of the combination
agreement and the offer, Indigo's board of directors unanimously approved that
Indigo enter into the combination agreement, determined that the combination
agreement and the offer are fair to and in the best interests of the holders of
Indigo shares and recommended that the shareholders of Indigo, other than the
controlling shareholders, accept the offer and tender their Indigo shares
pursuant to the offer.
On November 10, 1999, XxxXx's board of directors met and reviewed the terms
and conditions of the combination agreement, the offer, the share exchange
agreement, the share purchase agreement and all related agreements. Following
such review AerFi's board of directors unanimously approved the offer and
AerFi's entry into the combination agreement, the share exchange agreement, the
share purchase agreement and all related agreements.
The combination agreement, the share exchange agreement, the share purchase
agreement and the other related agreements were signed on November 11, 1999.
Recommendation of Indigo's Board of Directors; Fairness of the Offer
(a) Recommendation of Indigo's Board of Directors.
AT A MEETING ON NOVEMBER 10, 1999, INDIGO'S BOARD OF DIRECTORS, A MAJORITY
OF WHICH IS COMPOSED OF DIRECTORS WHO ARE NOT EMPLOYEES OF THE COMPANY,
UNANIMOUSLY APPROVED THE COMBINATION AGREEMENT AND THE OFFER AND DETERMINED THAT
THE COMBINATION AGREEMENT AND THE OFFER ARE FAIR TO YOU AND IN YOUR BEST
INTEREST. THE BOARD RECOMMENDS THAT YOU ACCEPT THE OFFER AND TENDER YOUR SHARES
UNDER THE OFFER.
(b) Reasons for the Recommendation of the Board of Directors.
In making its recommendation to Indigo's shareholders, Indigo's board of
directors considered a number of factors, including, but not limited to, the
following:
(i) the terms and provisions of the combination agreement and the offer;
(ii) discussions with management of Indigo (at board meetings on June 14,
1999, August 5, 1999, November 9, 1999 and November 10, 1999 and at
previous board meetings) relating to Indigo's financial position,
results of operations, business and prospects, including Indigo's
prospects if it were to remain independent;
(iii) the unfavorable treatment in the capital markets for small-cap
commercial finance companies, such as Indigo, which made it difficult
for Indigo to remain independent and obtain on attractive terms the
additional capital necessary to grow its business;
(iv) the results of previous discussions with third parties regarding
potential merger or other business combination transactions with
Indigo;
(v) the trading price of Indigo's shares since its initial public
offering in April 1998, and in particular the fact that over the past
12 months the shares had traded on the Nasdaq National Market
primarily in a range between $6.00 and $9.00 and the fact that the
$13.00 cash tender offer price represents a premium of approximately
27% over the last sale price of $10.25 for the Indigo shares on the
Nasdaq National Market on November 9, 1999, the day prior to the
meeting of the board to approve the combination agreement;
(vi) the presentation by Xxxx Xxxxxxx at the November 9, 1999 board
meeting and the oral opinion of Bear Xxxxxxx to the effect that, as
of such date, and based on the assumptions made, matters considered
and limits of review as set forth in the opinion, the $13.00 per
Indigo share in cash to be received by the holders of Indigo shares
in the offer was fair, from a financial point of view to such
holders, other than the controlling shareholders. A copy of the
written opinion of Xxxx Xxxxxxx, dated November 11, 1999, which sets
forth the assumptions made, matters considered and certain
limitations on the scope of review undertaken by Xxxx Xxxxxxx, is
attached as Annex A hereto. Shareholders are urged to read the
opinion of Bear Xxxxxxx carefully in its entirety;
entirety. In entirety.connection with its determination, Indigo's
board of directors expressly adoptedconsidered (i) the conclusion of
Bear Xxxxxxx that the $13.00 per share cash tender offer price was
fair, from a financial point of view, to the holders of Indigo
shares, other than the controlling shareholders and (ii) the analyses
by Bear Xxxxxxx upon which such conclusion was based and expressly
adopted such conclusion and based.analyses. In its review of the
analyses performed by Xxxx Xxxxxxx, Indigo's board of directors did
not place greater weight on any one of the separate analyses prepared
by Bear Xxxxxxx, but rather relied upon the summary and conclusions
of Bear Xxxxxxx that the analyses, taken as a whole, supported the
conclusion that the cash tender offer was fair, from a financial
point of view, to the holders of Indigo shares. Xxxxxxx. Based on
Bear Xxxxxxx= nationally recognized expertise in the commercial
finance industry, its expertise and experience in the evaluation of
businesses in connection with transactions similar to the one
contemplated by the combination agreement, its and the board of
directors= familiarity with Indigos business, financial condition,
results of operations and prospects and itsBear Xxxxxxx= analyses and
presentations related to the fairness opinion, Indigo's board of
directors believes that Bear Xxxxxxx= opinion as to the fairness of
the cash tender offer to the holders of Indigo shares was well
supported and sound. Indigo's board of directors believes that the
Bear Xxxxxxx oral presentations and its oral and written opinion
supported the board of director=s fairness determination;
(vii) the fact that holders of approximately 72.7% of the Indigo shares
were prepared to enter into the related share exchange and share
purchase agreements;
(viii) the fact that the offer is not conditioned on the availability of
financing; and
(ix) the fact that the combination agreement permits Indigo's board of
directors, in the exercise of its fiduciary duties, to terminate the
combination agreement in favor of a superior alternative acquisition
proposal although such termination would trigger the payment of a fee
to AerFi by Indigo of $5 million and the reimbursement of expenses
incurred by AerFi up to a maximum of $2 million.
Indigo's board of directors recognized that the consummation of the offer
and the combination will deprive Indigo's current public shareholders of the
opportunity to participate in Indigo's future growth prospects and, therefore,
in reaching its conclusion, the board determined that the historical results of
operations and the future prospects of Indigo were adequately reflected in the
$13.00 cash tender offer price per Indigo share. Indigo's board of directors
also considered that although Indigo had in the past held discussions with third
parties regarding possible merger or business combination transactions, no buyer
other than AerFi had indicated an intention to make a proposal as favorable to
Indigo and its shareholders as that in the offer and related transactions.
In view of the variety of factors considered in connection with its
evaluation of the transaction, Indigo's board did not assign relative weights to
the specific factors considered in reaching its decision.
In connection with its evaluation of the fairness of the offer,
Indigo's board of directors did not consider valuations of Indigo based on any
valuation methodologies other than those undertaken by Bear Xxxxxxx, because
Indigo's board of directors, after discussion with Bear Xxxxxxx, determined such
methodologies to be the most relevant to the values that would be realistically
available to Indigo's shareholders. assessment of the offer. In addition,
Indigo's board of directors did not consider the prices at which certain
directors or their affiliates had purchased shares subsequent to Indigo's
initial public offering (all of which were lower than the tender offer price) to
be material in determining whether the cash tender offer was fair to Indigo's
shareholders.
The non-executive directors of Indigo have not retained an unaffiliated
representative to act solely on behalf of the public shareholders for the
purposes of negotiating the terms of the combination and tender offer or prepare
a report concerning the fairness thereof. The combination and the tender offer
are not subject to the approval by a majority of the public shareholders. If,
after the expiration of the tender offer, AerFi Sverige owns more than 90% of
the voting rights and more than 90% of the outstanding shares, AerFi Sverige
intends to acquire the remaining shares under the compulsory acquisition. The
price for the shares acquired under the compulsory acquisition must either be
approved by (i) all the remaining minority shareholders or (ii) and arbitration
tribunal. See also "Special Factors B Rights of Shareholders in the Offer."
Indigo's board of directors expresslyconsidered and adopted the
conclusion of Bear Xxxxxxx in connection with its determination that the $13.00
per share cash tender offer price was fair, from a financial point of view, to
the holders of Indigo shares, other than the controlling shareholders.
Considering the above factors, Indigo's board of directors determined that
acceptance of the offer and the tender of Indigo shares pursuant to the offer
would be in the best interest of Indigo's shareholders.
Opinion of Financial Advisor to Indigo's Board of Directors
Indigo engaged Bear Xxxxxxx as its financial advisor based on Bear Xxxxxxx'
experience and expertise. Bear Xxxxxxx is an internationally recognized
investment banking firm that has substantial experience in merger and
acquisition transactions. Bear Xxxxxxx, as part of its investment banking
business, is continuously engaged in the valuation of businesses and securities
in connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. Indigo selected Bear Xxxxxxx
because it is a nationally known investment banking firm with expertise in the
commercial finance industry, because it has experience in transactions similar
to the one contemplated by the combination agreement and because it is familiar
with Indigo and its business.
At the November 9, 1999, meeting of Indigo's board of directors, Bear
Xxxxxxx orally delivered its opinion to the effect that, as of the date thereof,
and subject to the assumptions, qualifications and limitations set forth therein
and to delivery of definitive agreements which Bear Xxxxxxx received on November
11, 1999 from Indigo, the cash tender offer was fair, from a financial point of
view, to the holders of Indigo shares, other than Indigo's controlling
shareholders.
On November 11, 1999, Bear Xxxxxxx delivered its written opinion. We have
attached as Annex A to this document the full text of Bear Xxxxxxx' written
opinion and we urge you to read the opinion in its entirety. This opinion sets
forth the assumptions made, matters considered and qualifications and
limitations on the review undertaken by Xxxx Xxxxxxx and is incorporated herein
by reference. THE SUMMARY OF THE BEAR XXXXXXX OPINION SET FORTH BELOW IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION WHICH IS
ATTACHED AS ANNEX A TO THIS DOCUMENT.
The amount of consideration to be paid to the holders of Indigo shares in
the tender offer was determined by arm=s length negotiations between Indigo and
AerFi and were not based on any recommendation by Bear Xxxxxxx. Xxxx Xxxxxxx was
not requested by Indigo's board of directors to make, nor did Xxxx Xxxxxxx make,
any recommendation as to the amount of the consideration to be received by the
holders of Indigo shares. No limitations were imposed by Indigo on Bear Xxxxxxx
with respect to the investigations made or the procedures followed by Bear
Xxxxxxx in rendering the its opinion.
In reading the discussion of the fairness opinion set forth below, Indigo
shareholders should be aware that Bear Xxxxxxx' opinion:
o was provided to the Indigo board of directors for its use and benefit;
o did not address Indigo's underlying business decision to enter into the
combination agreement;
o did not constitute a recommendation to the Indigo board of directors in
connection with the combination agreement or the offer;
o did not address the consideration to be received by Indigo's controlling
shareholders; and
o does not constitute a recommendation to any Indigo shareholder as to
whether to accept the offer and tender shares.
Certain shareholders of Indigo have entered into agreements simultaneously
with the execution of the combination agreement pursuant to which, among other
things, such shareholders have agreed to sell a portion of their shares for the
same per share consideration as the offer and will exchange their remaining
Indigo shares for AerFi ordinary shares. Although Bear Xxxxxxx evaluated the
fairness, from a financial point of view, of the cash tender offer to the public
shareholders of Indigo, the terms and conditions of the offer itself were
determined by AerFi and Indigo through arm's-length negotiations. Bear Xxxxxxx
provided advice to Indigo during the course of such negotiations. Indigo did not
provide specific instructions to, or place any limitations on, Bear Xxxxxxx with
respect to the procedures to be followed or factors to be considered by it in
performing its analyses or providing its opinion.
In the course of performing its review and analyses for rendering this
opinion, Bear Xxxxxxx has:
(i) reviewed the combination agreement, the share exchange agreement,
the share purchase agreement and the option agreement;
(ii) reviewed Indigo's Annual Report on Form 20-F for the year ended
December 31, 1998 and its Quarterly Reports on Form 6-K for the periods
ended March 31, 1999, June 30, 1999 and September 30, 1999;
(iii) reviewed Indigo's Registration Statement on Form F-1 filed April
7, 1998;
(iv) reviewed certain operating and financial information, including
budgets and estimates, provided to Bear Xxxxxxx by Indigo's management
relating to Indigo's businesses and prospects;
(v) met with certain members of Indigo's senior management to discuss
Indigo's business, operations, historical and projected financial results
and future prospects;
(vi) reviewed the historical prices, valuation parameters and trading
volumes of the common shares of Indigo;
(vii) reviewed certain publicly available financial data, stock market
performance data and valuation parameters of companies which Bear Xxxxxxx
deemed generally comparable to Indigo;
(viii) reviewed the terms of recent acquisitions of companies which Bear
Xxxxxxx deemed generally comparable to Indigo and the combination; and
(ix) conducted such other studies, analyses, inquiries and
investigations as Bear Xxxxxxx deemed appropriate.
Bear Xxxxxxx has relied upon and assumed, without independent verification,
the accuracy and completeness of the financial and other information, including
without limitation, the budgets and estimates provided to Bear Xxxxxxx by
Indigo. Bear Xxxxxxx has assumed, without independent verification, that the
budgets and estimates have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the senior management of Indigo
as to their expected future performance. Bear Xxxxxxx has also relied upon the
current and future estimates of aircraft values as published in the AVITAS
BlueBook of Jet Aircraft Values and adjusted, as appropriate, by Indigo
management. Bear Xxxxxxx has not assumed any responsibility for the independent
verification of any such information or of the budgets and estimates provided to
it, and has further relied upon the assurances of the senior management of
Indigo that they are unaware of any facts that would make the information and
budgets and estimates provided to Bear Xxxxxxx incomplete or misleading.
In arriving at its opinion, Bear Xxxxxxx relied on the information set forth
above and did not perform or obtain any independent appraisal of the assets or
liabilities of Indigo and AerFi, nor was Bear Xxxxxxx furnished with any such
appraisals. Bear Xxxxxxx assumed with Indigo's consent that the offer will be
conducted in accordance with the terms described in the combination agreement,
without the waiver of any material condition and with all the necessary material
consents and approvals having been obtained without any limitations,
restrictions, conditions, amendments or modifications that collectively would be
material to Bear Xxxxxxx' analysis. Bear Xxxxxxx' opinion is necessarily based
on economic, market and other conditions, and the information made available to
Bear Xxxxxxx, as they exist and can be evaluated, as of the date of the opinion.
The following is a brief summary of the material valuation and financial and
comparative analyses considered by Bear Xxxxxxx in connection with the rendering
of the Bear Xxxxxxx opinion. This summary does not purport to be a complete
description of the analyses underlying the Bear Xxxxxxx opinion and is qualified
in its entirety by reference to the full text of Bear Xxxxxxx' opinion.
In performing its analysis, Xxxx Xxxxxxx made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Bear Xxxxxxx, AerFi and Indigo. Any estimates contained in the analysis
performed by Bear Xxxxxxx are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by this analysis. Additionally, estimates of the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
such businesses or securities may actually be sold. Accordingly, these analyses
and estimates are inherently subject to substantial uncertainty. In addition, as
described above, Xxxx Xxxxxxx' opinion was among several factors taken into
consideration by Indigo's board of directors in making its determination to
approve the offer and the combination agreement.
Bear Xxxxxxx' conclusion that the consideration to be received by the public
shareholders is fair from a financial point of view was based on the following
analyses:
1) Comparable Companies Analysis. The company that Bear Xxxxxxx believed to
be most comparable to Indigo is International Aircraft Investors or IAIS, a
similarwhich, to Bear Xxxxxxx= knowledge, is the only other publicly traded
small-capitalization commercial finance company engaged primarily in leasing
aircraft. Based on closing prices as of November 4, 1999, IAIS was trading at a
multiple of tangible book of 0.8x, a multiple of most recent quarter's
annualized earnings before remarketing income of 7.3x, a multiple of estimated
1999 earnings of 7.9x and multiple of estimated 2000 earnings of 6.8x. The
$13.00 cash tender offer price for the Indigo shares implies transaction
multiples of 1.4x Indigo's book value, 18.2x Indigo's most recent quarter's
earnings annualized before remarketing income, 10.2x Indigo's estimated 1999
earnings and 9.5x Indigo's estimated 2000 earnings.
IAAB
IAIS (Offer price)
---- -------------
Price/Tangible Book.......... 0.8x 1.4x
Price/MRQA before
Remarketing.................. 7.3x 18.2x
Price/1999E EPS.............. 7.9x 10.2x
Price/2000E EPS.............. 6.8x 9.5x
Bear Xxxxxxx also reviewed the trading multiples of a group of other
transportation related commercial finance companies (comprised of Xxxxxx Lease
Finance Corp., XTRA Corp., Xxxxxxx Truck Leasing Corp., and Interpool Inc.):
IAAB
Min Max Median (Offer price)
--- --- ------ -------------
Price/Tangible Book 0.8x 1.9x 1.2x 1.4x
Price/1999E EPS... 7.3x 10.3x 10.0x 10.2x
Price/2000E EPS... 4.6x 9.0x 6.7x 9.5x
Bear Xxxxxxx also reviewed the trading multiples of a group of other
non-investment grade commercial finance companies (comprised of LINC Capital,
DVI, and Microfinancial):
IAAB
Min Max Median (Offer price)
--- --- ------ -------------
Price/Tangible Book 0.8x 2.2x 1.2x 1.4x
Price/1999E EPS... 7.8x 9.8x 8.8x 10.2x
Price/2000E EPS... 5.9x 8.3x 6.4x 9.5x
2) Discounted Cash Flow Analysis. Bear Xxxxxxx performed two discounted cash
flow analyses on Indigo: (i) a portfolio run-off scenario and (ii) a going
concern scenario. The multiples used in the going concern scenario were based on
the current and historical multiples of Indigo and the companies described under
AComparable Companies Analysis@ above.
o Portfolio Run-Off Scenario. The portfolio run-off scenario assumes that
Indigo liquidates its existing portfolio of aircraft by selling each
airplane as it comes off lease and does not originate any new leases
other than existing commitments. Free cash would be distributed to
Indigo's shareholders based on leverage assumptions. For residual values
of the aircraft, Bear Xxxxxxx used values published in the AVITAS
BlueBook of Jet Aircraft Values which were provided to it by Indigo
management. Bear Xxxxxxx used discount rates of 14.7%-18.7% and looked
at residual values between 95% and 105% of the AVITAS base values. This
provided a range of $8.04 to $11.66 and a midpoint of $9.75 (based on a
16.7% discount rate).
o Going Concern Scenario - Base Case. The base case going concern scenario
assumes that Indigo re-leases each aircraft as it comes off lease and
utilizes free cash to purchase new aircraft. Using a range of discount
rates of 14.7%-18.7%, Bear Xxxxxxx calculated a terminal value for
Indigo based on multiples of book value (0.85x-1.45x) and earnings
(7.0x-10.0x) and discounted these values back to December 31, 1999.
Using terminal value based on a multiple to book value, this resulted in
values ranging from $6.98-$12.75 and a midpoint of $8.65 (assuming a
terminal book value multiple of 1.00x and a discount rate of 16.7%).
Using a terminal value based on a multiple of earnings, this resulted in
a range of values from $7.42-$11.75 and a midpoint of $8.92 (assuming a
terminal earnings multiple of 8.0x and a discount rate of 16.7%).
o Going Concern Scenario - Releverage Case. The releverage case going
concern scenario assumes that Indigo would be able to access the capital
markets and releverage its balance sheet. The proceeds would be invested
in new aircraft. Bear Xxxxxxx believed that case was aggressive because
the ability of small-cap finance companies to access the financial
markets has been and continues to be limited. Using a range of discount
rates of 14.7%-18.7%, Bear Xxxxxxx calculated a terminal value for
Indigo based on multiples of book value (0.85x-1.45x) and earnings
(7.0x-10.0x) and discounted these values back to December 31, 1999.
Using a terminal value based on a multiple of book value, this resulted
in values ranging from $7.13-$13.48 and a midpoint of $8.83 (assuming a
terminal book value multiple of 1.00x and a discount rate of 16.7%).
Using a terminal value based on a multiple of earnings, this resulted in
a range of values from $8.34-$13.20 and a midpoint of $10.03 (assuming a
terminal earnings multiple of 8.0x and a discount rate of 16.7%).
3) Net Asset Value. Bear Xxxxxxx computed an adjusted book value per Indigo
share of $8.73 using 2000 AVITAS BlueBook values and $11.66 using 1999 AVITAS
BlueBook values, as directed by Indigo management, as estimates of current fair
market value for Indigo's aircraft. Due to the leveraged nature of Indigo's
balance sheet, a small change in the fair market value of the aircraft can have
a significant impact on adjusted book value. For example, an assumed value equal
to 95% of AVITAS BlueBook base values implies an adjusted book value per Indigo
share of $6.46 based on year 2000 values and $9.24 based on year 1999 values,
while an assumed value equal to 105% of AVITAS BlueBook base values implies an
adjusted book value per Indigo share of $11.01 based on year 2000 values and
$14.08 based on year 1999 values. Because of the nature of Indigo's business,
Bear Xxxxxxx did not consider pure liquidation value to be a relevant indicator
of the value of the Indigo shares.
4) Other Issues. In addition to the quantitative analysis above, Bear
Xxxxxxx considered the following issues that Indigo would face as a going
concern.
o Access to capital. In order to grow its balance sheet and earnings,
Indigo will be required to secure additional sources of funds. This has
become increasingly difficult for small capitalization non-investment
grade finance companies.
o Credit risks. The airline industry tends to be cyclical and Indigo, as a
monoline commercial finance lender, would be impacted if the credit
quality of its lessees deteriorates.
o Residual risk. A significant portion of Indigo's value is derived from
the value of the aircraft in its portfolio. Any decrease in the demand
for narrowbody airplanes could reduce Indigo's true book value by tens
of millions of dollars.
o Limited float. Indigo's public float is approximately 3.0 million shares
or approximately $27 million.
The preparation of a fairness opinion is a complex process and involves
various judgments and determinations as to the most appropriate and relevant
assumptions and financial analyses and the application of these methods to the
particular circumstances involved. The opinions are therefore not readily
susceptible to partial analysis or summary description, and taking portions of
the analyses set out above, without considering the analysis as a whole, would,
in the view of Bear Xxxxxxx, create an incomplete and misleading picture of the
processes underlying the analyses considered in rendering its opinion. Bear
Xxxxxxx did not form an opinion as to whether any individual analysis or factor
(positive or negative), considered in isolation, supported or failed to support
its opinion. In arriving at its opinion, Bear Xxxxxxx considered the results of
its separate analyses and did not attribute particular weight to any one
analysis or factor. The analyses performed by Bear Xxxxxxx, particularly those
based on estimates and budgets, are not necessarily indicative of actual values
or actual future results, which may be significantly more or less favorable than
suggested by these analyses. These analyses were prepared solely as part of the
Bear Xxxxxxx analysis of the fairness, from a financial point of view, of the
exchange ratio to the shareholders of Indigo, other than Indigo's controlling
shareholders.
The engagement letter dated June 25, 1999 between Indigo and Bear Xxxxxxx
provides for an initial cash fee of $100,000. If the offer is not consummated by
January 15, 2000, Bear Xxxxxxx will receive a cash fee of $100,000 upon
termination. Upon consummation of the offer, Indigo will pay Bear Xxxxxxx a cash
fee of $700,000, against which any fairness opinion fees shall be credited.
Indigo agreed to pay Bear Xxxxxxx a cash fee of $400,000 at the time the
fairness opinion was rendered. In addition, Indigo has agreed to reimburse Bear
Xxxxxxx for all reasonable out-of-pocket expenses.
Bear Xxxxxxx has not previously been engaged by Indigo to provide investment
banking or financial advisory services. In the ordinary course of business, Bear
Xxxxxxx may actively trade the equity securities of Indigo for its own account
and for the account of its customers and, accordingly, may at any time hold a
long or short position in these securities.
Position of AerFi and AerFi Sverige Regarding Fairness of the Offer
We believe that the consideration to be received by Indigo's shareholders
under the offer is fair to those shareholders, other than Indigo's controlling
shareholders. We base our belief on the following facts:
o that Indigo's board of directors concluded that the combination
agreement and the offer are fair to you and in your best interests;
o notwithstanding the fact that Xxxx Xxxxxxx' opinion was addressed to
Indigo's board of directors and that we are not entitled to rely on the
opinion, the fact that Indigo's board of directors received an opinion
from Bear Xxxxxxx that, as of the date of the opinion and based on and
subject to the assumptions and qualifications stated in the opinion, the
consideration to be paid in the offer is fair, from a financial point of
view, to the holders of Indigo shares other than Indigo's controlling
shareholders;
o that the offer, at a price of $13.00 per share constitutes a 14.9%
premium over the closing market price of the Indigo shares on November
10, 1999, the business day immediately before the date on which the
offer was announced and a 53.4% premium over the average closing market
price of the Indigo shares in the three months preceding that date; and
o there has been little liquidity for the Indigo shares in recent months
and, given the relatively small capitalization of Indigo, there may be
limited liquidity for the Indigo shares in the future. An investment in
the Indigo shares remains subject to significant risks.
We did not find it practicable to assign, nor did we assign, relative
weights to the individual factors considered in reaching our conclusion as to
fairness. Because of the nature of Indigo's business, we did not consider net
book value or liquidation value to be relevant indicators of the value of the
Indigo shares.
Purpose and Structure of the Offer; Reasons of AerFi for the Offer
The purpose of the offer, being made under a combination agreement dated
November 11, 1999 among Indigo, AerFi and AerFi Sverige, is for AerFi Sverige to
acquire all of the outstanding shares in Indigo. The acquisition will occur as a
result of the following:
o the share exchange agreement! the share exchange agreement with certain
controlling shareholders of Indigo under which they have agreed to
exchange 5,891,670, or 52.2%, of the issued and outstanding Indigo
shares for 21,799,179 of AerFi's ordinary shares,shares (at an exchange
ratio of 3.7 AerFi ordinary shares for each Indigo share). The number of
Indigo shares that each exchanging shareholder is exchanging with AerFi
under the share exchange agreement is set out under AInterests of
Certain persons in the Offer-Beneficial Ownership of the Indigo Shares@,
irrespective of the result of the offer;
o the share purchase agreement with certain controlling shareholders of
Indigo under which they have agreed to sell to AerFi Sverige 2,305,898,
or 20.5%, of the issued and outstanding Indigo shares, for $13.00 per
share in cash, irrespective of the result of the offer;
o the offer; and
o a compulsory acquisition under the Swedish Companies Act if AerFi
Sverige owns more than 90% of the voting rights and more than 90% of the
outstanding Indigo shares following the unconditional time.
Upon consummation of the offer and, if necessary, the compulsory
acquisition, Indigo will become a wholly-owned subsidiary of AerFi Sverige,
which in turn is an indirect wholly-owned subsidiary of AerFi. The offer for the
Indigo shares has been structured as a cash tender offer to (i) effect a prompt
and orderly transfer from Indigo's public shareholders to AerFi Sverige of the
Indigo shares that will not be acquired directly from the controlling
shareholders of Indigo in separate share exchange and share purchase agreements
and (ii) provide you with cash for all of your Indigo shares.
Under the Swedish Companies Act, Indigo's board of directors must approve
Indigo's entry into the combination agreement. Indigo's board of directors has
approved Indigo's entry into the combination agreement.
We have decided to acquire Indigo at this time to implement AerFi's business
strategy of growth through acquisition of used new technology aircraft without
significant new aircraft order commitments.
Indigo's management strengths are complementary to ours: Indigo has strong
airline marketing and technical skills, while AerFi has strong financial and
capital market skills.
The combination enables AerFi to become a "full service" aircraft leasing
organization with the financial ability and management resources to buy and sell
aircraft and manage and service any future aircraft it acquires, in addition to
the existing Indigo aircraft and, upon termination in October 2001 of third
party servicing arrangements, AerFi's existing aircraft.
Both companies will benefit from the increased scale of the combined
businesses.
The combination provides opportunities for cost savings through reduced
funding costs by providing access to securitization financing for the existing
Indigo aircraft, realizing certain tax synergies through the management of the
combined aircraft fleets and the potential replacement of existing third party
aircraft servicers.
Plans for Indigo after the Offer
Upon completion of the offer, if necessary, we intend to effect a compulsory
acquisition under the Swedish Companies Act. See "Special Factors -- The
Combination Agreement".
As promptly as practicable following the unconditional time, Indigo and its
directors will use their best efforts to appoint XxxXx's designees to Indigo's
board of directors and obtain the resignation of those incumbent directors not
designated by XxxXx.
Following completion of the offer, and subject to any restrictions contained
within applicable financing arrangements, we may seek to sell or transfer a
material amount of Indigo's aircraft assets to AerCo Limited, a bankruptcy-
remote, special purpose company in which we hold certain subordinated debt
securities and all of the residual economic interest, or to other securitization
vehicles. We do not hold the share capital of AerCo Limited and AerCo Limited is
governed by a board of directors comprised largely of persons independent from
us.
Except as otherwise described in this document and except for the
transactions contemplated by the combination agreement, we have no current plans
or proposals which relate to or would result in:
o an extraordinary corporate transaction, such as a merger, reorganization
or liquidation involving Indigo;
o any change in Indigo's present management or any change in any material
term of the employment contract of any executive officer;
o any material change in Indigo's present dividend rate or policy or
indebtedness or capitalization; or
o any other material change in Indigo's corporate structure or business.
Nevertheless, we may initiate a review of Indigo and its assets, corporate
structure, capitalization, operations, properties, policies, management and
personnel to determine what changes, if any, would be desirable, following the
combination, to best organize and coordinate our activities with Indigo's
activities.
Rights of Shareholders in the Offer
You will not have dissenter's rights as a result of the offer. If you do not
tender your Indigo shares under the offer, and assuming AerFi Sverige owns more
than 90% of the voting rights and more than 90% of the outstanding Indigo shares
following the unconditional time, we intend to acquire your Indigo shares under
the compulsory acquisition as described below provided we acquire more than 90%
of the voting rights and more than 90% of the outstanding Indigo shares.
Under the Swedish Companies Act of 1975, minority shareholders have certain
rights to protect them from detrimental acts of the majority. A shareholder or a
group of shareholders holding one-tenth of all shares or one third of the shares
represented at the general meeting may request the appointment of an additional
auditor by the county administrative board (Sw. Iansstyrelsen).
Further, a shareholder or a group of shareholders holding at least 10% of
the shares of a company have the right to request that an extraordinary general
meeting be convened. In addition, each individual shareholder may request an
item to be placed on the agenda for a general meeting.
As a rule, the board of directors or other representatives of a Swedish
limited liability company or a voting majority at a shareholders meeting may not
enter into transactions or take other actions which are likely to give an undue
advantage to a shareholder or a third party to the detriment of the company or
other shareholders, unless expressly provided in the Swedish Companies Act.
If AerFi Sverige owns more than 90% of the voting rights and more than 90%
of the outstanding Indigo shares after the unconditional time, AerFi Sverige
intends to commence a compulsory acquisition of the remaining Indigo shares
under the Swedish Companies Act. In such circumstances, the Swedish Companies
Act also allows a holder of Indigo shares who has not accepted the offer to
demand the compulsory acquisition of his Indigo shares by AerFi Sverige. The
price to be paid in the compulsory acquisition will be determined under the
Swedish Companies Act and, although it is usually equal to the offer price, it
may be higher or lower than the offer price.
If the process of compulsory acquisition is initiated and if AerFi Sverige
and the remaining minority shareholders in Indigo cannot agree on the price to
be paid, an arbitration tribunal will be determined to establish the price.
After the arbitration tribunal has been constituted and either the right of
compulsory acquisition is undisputed or a decision on the right of compulsory
acquisition has become final, AerFi Sverige may secure title to the remaining
Indigo shares by providing security for its obligation to pay the compulsory
acquisition price and interest when determined by the arbitration tribunal and
by filing a request with the arbitrators to approve the security offered by
AerFi Sverige for payment by it of the compulsory acquisition price. Once the
arbitrators approve the security offered, the ownership of Indigo shares will
transfer immediately to AerFi Sverige. The compulsory acquisition price,
including interest payable from the date that compulsory acquisition proceedings
are initiated, will then be determined by the arbitrators. The parties may
appeal against the arbitrators' award to the district court in Malmo, Sweden.
The process of determining the compulsory acquisition price and interest may
involve legal submissions from the various parties and may take considerable
time to complete.
This summary of your rights is not a complete statement of the procedures
that you should follow to exercise your rights under the Swedish Companies Act.
The applicable provisions of the Swedish Companies Act appears as Exhibit (e)(1)
to the Schedule 13E-3.
The Combination Agreement
The following is a summary of the material provisions of the combination
agreement, a copy of which is filed as Exhibit (c)(1) to the Schedule 14D-1. The
summary is qualified in its entirety by reference to the combination agreement,
which is incorporated herein by reference. You are urged to read the combination
agreement in its entirety.
The Offer
AerFi Sverige agreed to commence the offer no later than five business days
after the combination agreement is announced. AerFi Sverige only has to accept
for payment and pay for Indigo shares tendered under the offer if certain
conditions that are described in "The Tender Offer -- Certain Conditions of the
Offer" are satisfied or waived.
AerFi Sverige expressly reserves the right to waive the conditions to the
offer and to make any change in the terms or conditions of the offer. However,
AerFi Sverige may not without the consent of Indigo:
o change the form of consideration to be paid;
o decrease the price per Indigo share or the number of Indigo shares
sought in the offer;
o add conditions to the offer in addition to those listed in "The Tender
Offer -- Certain Conditions of the Offer";
o establish a minimum number of Indigo shares that must be tendered in the
offer;
o otherwise amend the terms or conditions of the offer in a manner that,
in Indigo's reasonable judgment, is adverse to Indigo or holders of
Indigo shares.
However, AerFi Sverige may, without the consent of Indigo, extend the offer:
o if any condition to the offer shall not have been satisfied or waived
when the offer expires, until those conditions are satisfied or waived;
or
o for any period required by any rule, regulation or interpretation of the
Securities and Exchange Commission or by applicable law; or
o on one or more occasions for an aggregate period of not more than 20
business days if, when the offer expires the number of Indigo shares
validly tendered and not withdrawn do not, together with the Indigo
shares exchanged/sold to us and AerFi Sverige by controlling
shareholders of Indigo pursuant to the share exchange and share purchase
agreements, represent more than 90% of the voting rights and more than
90% of the Indigo shares outstanding.
As soon as practicable after the conditions described under "The Tender
Offer -- Conditions to the Offer" are satisfied or waived and in compliance with
its obligations under the Securities Exchange Act, AerFi Sverige shall accept
all validly tendered Indigo shares for payment that have not been withdrawn. If
any of the conditions listed in paragraph (1), subclauses (1), (2), (3) and (4)
of paragraph (2)(a) and paragraph 2(b) (without the reference to subclause (5)
of paragraph 2(a)) under "The Tender Offer -- Certain Conditions of the Offer"
shall not have been satisfied when the offer expires, and AerFi Sverige and
Indigo reasonably believe that that condition can be satisfied, AerFi Sverige
shall extend the offer from time to time. AerFi Sverige shall not, however, be
required to extend the offer beyond March 31, 2000.
The Compulsory Acquisition
If AerFi Sverige owns more than 90% of the voting rights and more than 90%
of the outstanding Indigo shares after the unconditional time, AerFi Sverige
intends to commence a compulsory acquisition of the remaining Indigo shares
under the Swedish Companies Act.
Stock Options
Each option or warrant to purchase Indigo shares from Indigo that is
outstanding under any of Indigo's employee stock option or compensation plans or
arrangements will be canceled. Holders of options or warrants will, at the
election of the holder, either receive cash or options to purchase AerFi's
ordinary shares.
Representations and Warranties
We, AerFi Sverige and Indigo have given various customary representations
and warranties, including the following:
o Indigo, AerFi Sverige and we have represented as to our and their
corporate status, the authorization and the enforceability of the
combination agreement against each of us and them, the information to be
provided by each of us and them for inclusion in the U.S. Securities and
Exchange Commission filings related to the offer and the combination,
finders' fees and noncontravention,
o We have represented as to the sources of financing for the combination
and the offer; and
o Indigo has represented as to its capitalization, its subsidiaries and
equity investments, certain information about its aircraft and leases,
third party contracts, indebtedness, the accuracy of its financial
statements and filings with the U.S. Securities and Exchange Commission,
compliance with laws, the absence of undisclosed material liabilities,
the absence of certain changes or events concerning its business from
December 31, 1998 to the date of the combination agreement, the absence
of material litigation, certain tax matters, certain employee benefit
and pension plan matters, certain environmental matters, assets, certain
labor matters, insurance, the inapplicability of any anti-takeover
statutes, year 2000 compliance and the identification of and absence of
material adverse changes.
The representations and warranties contained in the combination agreement
will only be in effect until the unconditional time.
Covenants
We, AerFi Sverige and Indigo have given various customary covenants. Below
is a description of certain of these covenants:
Conduct of Business. Indigo agreed that, from November 11, 1999 until the
unconditional time, it will conduct its businesses as in the ordinary course
consistent with past practice and will preserve its business organizations and
relationships with third parties intact and keep available the services of its
present officers and employees.
Specifically, Indigo will not, except as otherwise permitted by the
combination agreement or if we consent in writing:
o adopt or propose any change in its organizational documents;
o merge or consolidate with any other person or acquire a material amount
of stock or assets of any other person;
o acquire any aircraft other than under contracts or commitments in effect
as of November 11, 1999;
o sell or otherwise dispose of any aircraft or any material subsidiary or
material amount of assets, securities or property, except under existing
contracts or commitments and in the ordinary course consistent with past
practice;
o take any action that would make any of its representations and
warranties under the combination agreement inaccurate at or as of any
time before the unconditional time; or
o omit to take any action necessary to prevent any of its representations
or warranties from being inaccurate at any time.
However, nothing described in the preceding paragraph shall prevent Indigo
from leasing, financing or refinancing its aircraft or any interest in its
aircraft in the ordinary course of business consistent with past practice.
Access to Information. From November 11, 1999 until the unconditional time
and subject to applicable law Indigo agreed to:
o give us full access to Indigo's offices, properties, books and records;
o furnish us all financial and operating data and other information that
they may reasonably request; and
o instruct its employees, counsel, financial advisors, auditors and other
authorized representatives to cooperate with us in our investigation of
Indigo.
No Solicitation; Other Offers. Indigo agreed that it will:
o not solicit or encourage the submission of an acquisition proposal;
o not engage in discussions or negotiations with, or disclose any
nonpublic information about Indigo or give access to its properties,
books or records to any person who makes, may be considering making, or
has made, an acquisition proposal;
o not grant any waiver or release under any standstill or similar
agreement relating to any class of its equity securities; or
o notify us promptly after receipt of any acquisition proposal (or
indication thereof) or any information request related to an acquisition
proposal.
However, this covenant does not prohibit Indigo from engaging in substantive
discussions with, or furnishing nonpublic information to, any person who
delivers an acquisition proposal for at least a majority of the Indigo shares
which Indigo's board of directors determines in good faith by a majority vote to
be superior to our proposal pursuant to the combination agreement, if:
o Indigo has complied with the covenant above;
o Indigo's board of directors determines in good faith by a majority vote,
after consultation with Indigo's outside legal counsel, that it should,
in its reasonable judgment, engage in discussions or furnish nonpublic
information in order to comply with its fiduciary duties to Indigo under
applicable law;
o the person who delivers the superior acquisition proposal executes a
confidentiality agreement with terms at least as favorable to Indigo as
those contained in the confidentiality agreement with us which was
superseded by the combination agreement; and
o Indigo notifies us about its intentions to engage in discussions or
furnish nonpublic information.
Indigo further agreed to terminate all activities, discussions and
negotiations with any persons conducted before November 11, 1999, relating to
any acquisition proposal. However nothing prevents Indigo's board of directors
from complying with Rule 14e-2 under the Exchange Act or the Swedish Companies
Act regarding any acquisition proposal.
Indigo's board of directors may withdraw, or modify in a manner adverse to
us, its recommendation to holders of Indigo shares if:
o Indigo has complied with its obligations to us described above;
o a superior acquisition proposal is pending at the time the board of
directors determines to take that action;
o the board of directors determines in good faith by a majority vote,
after consultation with Indigo's outside legal counsel, that it should,
in its reasonable judgment, take that action to comply with its
fiduciary duties to Indigo under applicable law; and
o Indigo notifies us that it intends to take that action and identifies
the person making, and the material terms and conditions of, that
superior acquisition proposal.
Indemnification and Insurance of Indigo's Directors and Officers. We agreed
to indemnify Indigo's directors, officers or employees against specific claims
asserted or made within a period of five years after the unconditional time. We
have also agreed to pay all reasonable expenses incurred by or on behalf of any
indemnified party in defending against any claim promptly after statements for
those reasonable expenses are received, so long as:
o payment is permitted under applicable law; and
o the relevant indemnified party agrees to reimburse us for the payment of
any expenses if it is ultimately determined that that person is not
entitled to indemnification.
For a period of five years after the unconditional time, we shall cause
Indigo to maintain the officers' and directors' liability insurance covering
persons who are presently covered by Indigo's officers' and directors' liability
insurance policies, for acts or omissions occurring at or before the
unconditional time on terms at least as favorable as those in effect on the date
of the combination agreement or at the unconditional time. However, AerFi will
not be required to expend in any one year an amount in excess of 150% of the
annual premiums currently paid by Indigo for that insurance.
Conditions of the Offer
See "The Tender Offer -- Certain Conditions of the Offer".
Termination
The combination agreement may be terminated before the unconditional time of
the offer as follows:
(1) by mutual written consent of Indigo, AerFi Sverige and us;
(2) by either Indigo or us if:
(a) the offer is not consummated by March 31, 2000. (This right is not
available to any party whose breach of any provision of the combination
agreement has been the cause of, or resulted in, the failure of the offer to
be consummated by that time.); or
(b) the acceptance and payment for the Indigo shares under the offer is
prohibited or AerFi Sverige is enjoined from accepting and paying for the
Indigo shares;
(3) by us and AerFi Sverige, if, before acceptance for payment of the
Indigo shares under the offer:
(a) any person or group (other than AerFi Sverige, any of its affiliates
or any institutional investor) acquires or proposes to acquire, after
November 11, 1999 beneficial ownership of more than 10% of the Indigo shares
or more than 10% of the assets of Indigo, or is granted any option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of those
Indigo shares or assets (this termination right shall not be implicated
solely by virtue of the Indigo shares beneficially owned by any Indigo
shareholder who, on November 11, 1999, already beneficially owned more than
10% of the outstanding Indigo shares.);
(b) any person or group (other than AerFi Sverige or any of its
affiliates) makes or publicly announces an intention to make, a tender or
exchange offer for at least 10% of the outstanding Indigo shares or publicly
proposes to enter into a definitive agreement or an agreement in principle
with Indigo regarding an acquisition proposal;
(c) (1) Indigo's board of directors withdraws or modifies in a manner
adverse to AerFi Sverige, its approval or recommendation of the combination
agreement, the offer or the combination, or recommends or enters into, or
publicly announces its intention to enter into, an agreement or an agreement
in principle for an acquisition proposal (or shall have resolved to do any
of the foregoing); (2) there is a material breach of the provisions
described in "-- Covenants -- No Solicitation; Other Offers"; or (3) Indigo
enters into a definitive agreement or an agreement in principle with a third
party regarding an acquisition proposal;
(d) (1) any of Indigo's representations or warranties in the combination
agreement that is (A) qualified by materiality or material adverse effect or
any similar standard or qualification, was not true and correct when made or
at any time before the acceptance for purchase of the Indigo shares or (B)
not so qualified, was true and correct in all material respects when made or
at any time before the acceptance for purchase of the Indigo shares; or (2)
Indigo breaches or fails to perform any of its obligations under the
combination agreement, and in the case of either clause (1) or (2), we
reasonably determine, after five Swedish business days' notice by us to
Indigo, that the inaccuracy, breach or failure is incapable of being cured
by March 31, 2000; or
(e) AerFi Sverige terminates the offer because of any of the events
described in "The Tender Offer -- Conditions to the Offer"; or
(4) by Indigo if:
(a) AerFi Sverige terminates the offer or allows the offer to expire
without either the purchase of any Indigo shares, or an extension of, the
offer, other than because of any of the events described in "The Tender
Offer -- Conditions to the Offer";
(b) before the purchase of Indigo shares under the offer, a person or
group makes a superior proposal and Indigo's board of directors terminates
the combination agreement and enters into a binding agreement concerning
that acquisition proposal; provided that Indigo may not exercise this right
to terminate, and may not enter into a binding written agreement regarding
that acquisition proposal, unless:
(1) Indigo notifies us at least five business days in advance that
Indigo's board of directors has authorized and intends to terminate the
combination agreement, specifying the material terms and conditions of the
acquisition proposal,
(2) We do not make, within five business days of receiving that notice,
an offer such that a majority of Indigo's board of directors determines that
(A) the foregoing acquisition proposal no longer is superior to our proposal
or (B) its fiduciary duties to Indigo no longer dictate that it should, in
its reasonable judgment, terminate the combination agreement, and
(3) on or before that termination, Indigo pays us a $5 million
termination fee.
In connection with the foregoing, Indigo agreed that it will (1) not
enter into a binding agreement with respect to any acquisition proposal
until at least the sixth business day after it notifies us, (2) negotiate in
good faith with us, and consider in good faith any offer made by us, during
that period and (3) notify us promptly if it changes its intention to enter
into such binding agreement; or
(c) (1) any of our representations or warranties made in the combination
agreement that is (A) qualified by materiality or material adverse effect or
any similar standard or qualification, was not true and correct when made or
at any time before the acceptance for purchase of the Indigo shares or (B)
not so qualified, was not true and correct in all material respects when
made or at any time before the acceptance for purchase of the Indigo shares,
or
(2) AerFi breaches or fails to perform any of its obligations under the
combination agreement, and in the case of either clause (1) or (2), Indigo
reasonably determines, after five Swedish business days' notice by Indigo to
AerFi, that that inaccuracy, breach or failure is incapable of being cured
by March 31, 2000.
Certain Fees and Expenses
Indigo has agreed to pay us a termination fee of $5 million if:
o we terminate the combination agreement under clause (c) of paragraph (3)
under "-- Termination" above; or
o Indigo terminates the combination agreement under clause (b) of
paragraph (4) under "-- Termination" above.
Indigo has agreed to pay us a termination fee of $5 million plus our
documented out-of-pocket costs and expenses (not to exceed $2 million) in
connection with the negotiation, execution, delivery and performance of the
combination agreement and any consideration, investigation, negotiation and
structuring of the transactions contemplated by the combination agreement if:
o we terminate the combination agreement under clause (a) or (b) of
paragraph (3) under "-- Termination" above; and
o before that termination any of the events described in clause (a) or (b)
of paragraph (3) under "-- Termination" above shall have occurred and
concurrently with or within 12 months after that termination, a third
party acquisition event occurs with the party or any of its affiliates
that made the acquisition, offer or public proposal described in such
clauses.
A "third party acquisition event" means (1) the consummation of an
acquisition proposal or series of acquisition proposals that results in (a)
holders of Indigo shares before that transaction, by virtue of their ownership
of those Indigo shares, in the aggregate owning less than 50% of the voting
securities of the entity surviving or resulting from that transaction (or, if
that entity is not its own ultimate parent, then its ultimate parent), (b) the
sale, lease, exchange, transfer or other disposition of at least 50% of the
assets of Indigo and its subsidiaries, taken as a whole or (c) the acquisition,
directly or indirectly, by any person or group (other than the current Indigo
shareholders, but only with respect to the Indigo shares beneficially owned by
them as of the date of the combination agreement) of beneficial ownership of 50%
or more of the Indigo shares (whether by merger, consolidation, share exchange,
business combination, tender or exchange offer or otherwise) or (2) the entering
into by Indigo, certain Indigo shareholders or any of their respective
affiliates of a definitive agreement with respect to any such transaction.
Indigo has agreed to pay our documented out-of-pocket costs and expenses
(not to exceed $2 million) in connection with the negotiation, execution,
delivery and performance of the combination agreement and any consideration,
investigation, negotiation and structuring of the transactions contemplated by
the combination agreement if:
o if the combination agreement is terminated under clause (c) or (d) of
paragraph (3) or Clause (b) of paragraph (4) under "-- Termination"
above, and
o at the time of that termination AerFi was in compliance with its
obligations under the combination agreement.
We have agreed to pay Indigo a termination fee of $5 million if Indigo
terminates the combination agreement under clause (a) of paragraph (4) under "--
Termination" above.
We have agreed to pay Indigo its documented out-of-pocket costs and expenses
(not to exceed $2 million) in connection with the negotiation, execution,
delivery and performance of the combination agreement and any consideration,
investigation, negotiation and structuring of the transactions contemplated by
the combination agreement if:
o Indigo terminates the combination agreement under (a) or (c) of
paragraph (4) under "-- Termination" above, and
o at the time of the termination Indigo was in compliance with its
obligations under the combination agreement.
If we or Indigo fail(s) to promptly pay any amount due as described above,
we or Indigo shall also pay any costs and expenses incurred by the other in
connection with a legal action to enforce the combination agreement that results
in a judgment against us or Indigo.
Except as discussed above, all costs and expenses incurred in connection
with the combination agreement will be paid by the party incurring that cost or
expense.
Amendments and Waivers
The combination agreement may be amended or waived before the unconditional
time if that amendment or waiver is in writing and signed, in the case of an
amendment, by Indigo, AerFi Sverige and us or in the case of a waiver, by the
party against whom the waiver is to be effective.
The Share Exchange Agreement
On November 11, 1999, we entered into a share exchange agreement with
certain of Indigo's shareholders. See also "Interests of Certain Persons in the
Offer -- Beneficial Ownership of the Indigo Shares." This document refers to
these individuals and entities as the exchanging shareholders. Each exchanging
shareholderThe exchanging shareholders agreed to:
o transfer and deliver a portion of its5,891,670 Indigo shares to AerFi in
exchange for 3.721,799,179 of AerFi's ordinaryshares; shares; shares (at
an exchange ratio of 3.7 AerFi ordinary shares for each Indigo share).
The number of Indigo shares that each exchanging shareholder is
exchanging with AerFi under the share exchange agreement is set out
under "Interests of Certain persons in the Offer-Beneficial Ownership of
the Indigo Shares";
o grant all of the consents of that exchanging shareholder that may be
required under the terms and conditions of Indigo's stock option or
compensation plans or arrangements to effect the exchange of the options
and warrants that is contemplated by the combination agreement.
No valuation of AerFi=s ordinary shares was prepared in connection with the
offer, the share exchange agreement and the share purchase agreement
transactions. AerFi=s ordinary shares are not listed on any recognized
securities exchange or quotation system or traded on any recognized public
trading market and are traded, on a very infrequent basis, only in private
transactions. According to AerFi=s articles of association, each transfer of
AerFi=s ordinary shares must be reported to AerFi, including the number of
shares transferred and the price per share paid. In the three-month period from
August 16, 1999, to November 16, 1999, the weighted average price of AerFi=s
ordinary shares transferred was $2.121 per share. Given the limited and illiquid
nature of the trading market for AerFi=s ordinary shares, this price may not
reflect an accurate valuation of AerFi=s ordinary shares.
Each exchanging shareholder also agreed not to:
o grant any proxy or enter into any voting arrangement regarding its
Indigo shares;
o place any encumbrance on or dispose of its Indigo shares or its employee
options except to its affiliates;
o solicit or initiate the acquisition of any interest in the business,
assets or capital stock of Indigo;
o transfer or grant any option to transfer any rights in its AerFi shares
during the six month period following the transfer of the Indigo shares
to AerFi except to certain permitted transferees;
o exercise any registration rights regarding its Indigo shares; and
o disclose any confidential documents and information concerning AerFi or
any of its subsidiaries furnished to that exchanging shareholder in
connection with the share exchange agreement.
Board of Directors and Management
We have agreed that when the share exchange has been consummated, we will:
o appoint Xx. Xxxx-Xxxx Xxxxxxxx and Mr. Xxxx Xxxxx to our board of
directors. These appointments will only be in effect until November 1,
2000. We have no obligation after such time to cause any of these
appointments to our board of directors. During the time that Xx.
Xxxxxxxx serves as a member of our board of directors, he will have the
right to appoint an observer, subject to certain restrictions and
limitations, to attend meetings of XxxXx's board of directors on his
behalf. Xx. Xxxxxxxx has informed us that he intends to appoint Xx. Xxxx
Xxxxxxxxxx, managing director of Xxxxxxxx Xxxxx and Aviation Know How
A/S and of Braganza A/S as his observer.
o appoint Mr. Xxxx Xxxxx President and Chief Executive Officer of ErgoFi
Inc., our wholly-owned subsidiary.
Representations and Warranties
The share exchange agreement contains various customary representations and
warranties, including the following:
o by us as to our corporate status, the authorization and enforceability
of the share exchange agreement against us, capitalization, the accuracy
of our financial statements, the absence of occurrence of certain events
that would reasonably be expected to have a material adverse effect on
our ability to perform our obligations under the share exchange
agreement, our aircraft fleet and related leases, as to certain tax
matters, and our year 2000 compliant status.
o by each exchanging shareholder as to its valid title to its Indigo
shares, the authorization and enforceability of the share exchange
agreement against it, the number of Indigo shares owned by it, its
understanding that the AerFi shares to be issued to it will not be
registered under the Securities Act of 1933 and finders' fees.
Certain Conditions to the Share Exchange Agreement
The sale and exchange of Indigo shares will not take place unless the
following conditions are met:
o the expiration or termination of any applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Act (the U.S. antitrust legislation);
o compliance with the Irish mergers and takeovers legislation;
o the sale and exchange of shares is not illegal; and
o all necessary filings in relation to the sale and the exchange have been
made.
Our obligation to exchange the Indigo shares for our shares is also subject
to the following conditions:
o all shareholders have performed their obligations under the share
exchange agreement in all material respects;
o the accuracy of Indigo's representations and warranties in the
combination agreement;
o the accuracy of the shareholders' representations and warranties in the
share exchange agreement;
o there is no law or proceeding which interferes, or could interfere, with
our ownership of Indigo or the Indigo shares or otherwise could have a
material adverse effect on Indigo or us;
o there is no change in Indigo's business, assets, financial condition or
otherwise that could be expected to have a materially adverse effect on
Indigo.
The exchanging shareholders' obligation to exchange their shares is also
subject to the following conditions:
o we have performed our obligations under the share exchange agreement in
all material respects;
o the accuracy of our representations and warranties in the share exchange
agreement;
o there is no change in our business, assets, financial condition or
otherwise that could be expected to have a materially adverse effect on
us; and
o our legal counsel shall have delivered certain opinions to Indigo.
Termination
The share exchange agreement may be terminated before the sale and exchange
of Indigo shares:
o by mutual written agreement of us and exchanging shareholders holding
more than 50% of the Indigo shares to be exchanged under the share
exchange agreement;
o by us or exchanging shareholders holding more than 50% of the Indigo
shares to be exchanged under the share exchange agreement, if the
exchange has not occurred on or before March 31, 2000;
o by us or exchanging shareholders holding more than 50% of the Indigo
shares to be exchanged under the share exchange agreement, if the
consummation of the offer and the combination is prohibited or there is
any judgment, injunction, order or decree enjoining the parties from
consummating the offer and the combination;
o by exchanging shareholders holding more than 50% of the Indigo shares to
be exchanged under the share exchange agreement if any representation or
warranty made by AerFi in the share exchange agreement that is
inaccurate when made or at any time before the exchange of shares or we
have breached or failed to perform in any material respect any of our
obligations under the share exchange agreement, and in either case, such
exchanging shareholder reasonably determines, after 30 calendar days'
notice by such exchanging shareholder to us, that inaccuracy, breach or
failure is incapable of being cured by March 31, 2000; or
o by us if any representation or warranty by Indigo in the combination
agreement or any representation or warranty by any of the exchanging
shareholders in the share exchange agreement is inaccurate when made or
at any time before the exchange of shares or any of the exchanging
shareholders shall have breached or failed to perform in any material
respect any of their respective obligations under the share exchange
agreement, and in either case, we reasonably determine, after 30
calendar days' notice by us to the exchanging shareholders, that that
inaccuracy, breach or failure is incapable of being cured by March 31,
2000.
A copy of the share exchange agreement is filed as Exhibit (c)(2) to the
Schedule 14D-1 and incorporated herein by reference, and the foregoing summary
of the share exchange agreement is qualified in its entirety by reference
thereto.
The Share Purchase Agreement
On November 11, 1999, AerFi Sverige entered into a share purchase agreement
with certain of Indigo's shareholders. See also "Interests of Certain Persons in
the Offer -- Beneficial Ownership of the Indigo Shares." Each of these
shareholders agreed to sell to AerFi Sverige the Indigo shares that are owned by
it on the date of the share purchase agreement, except for Indigo shares to be
exchanged by some of those shareholders for AerFi shares under the share
exchange agreement, at the same price per Indigo share ($13) received by holders
of Indigo shares under the offer.
The sale and purchase under the share purchase agreement is subject to the
same conditions as the share exchange under the share exchange agreement.
A copy of the share purchase agreement is filed as Exhibit (c)(3) to the
Schedule 14D-1 and incorporated herein by reference, and the foregoing summary
of the share purchase agreement is qualified in its entirety by reference
thereto.
The Option Agreement
On November 11, 1999, we entered into an option agreement with the
exchanging shareholders. Pursuant to this agreement, we will grant to the
exchanging shareholders options to purchase an aggregate of 1,000,000 AerFi
ordinary shares, exercisable at any time from the date of receipt to the third
anniversary of that date at the price of $3.17 per AerFi ordinary share in cash.
The grant of options is subject to the same conditions as the share exchange
under the share exchange agreement.
A copy of the option agreement is filed as Exhibit (c)(4) to the Schedule
14D-1 and incorporated herein by reference, and the foregoing summary of the
option agreement is qualified in its entirety by reference thereto.
The Registration Rights Agreement
On November 11, 1999, we entered into a registration rights agreement with
the exchanging shareholders. We agreed that if we propose to sell ordinary
shares in an underwritten public equity offering in any jurisdiction under an
effective registration statement, other than a registration statement relating
solely to employee benefit plans, under the Securities Act or under a comparable
law of any other jurisdiction, we will give at least 30 days' written notice to
the exchanging shareholders before filing the registration statement. The notice
shall offer to the exchanging shareholders the opportunity to include in the
offering the number of ordinary shares as each exchanging shareholder may
request. Within 20 days after receipt of that notice, the exchanging
shareholders shall, subject to the conditions described in the registration
rights agreement, have the right by notifying us in writing to require us to
include in the registration statement relating to that offering the number of
ordinary shares as that exchanging stockholder may request subject to the rights
of holders of already outstanding registration rights.
A copy of the registration rights agreement is filed as Exhibit (c)(5) to
the Schedule 14D-1 and incorporated herein by reference, and the foregoing
summary of the registration rights agreement is qualified in its entirety by
reference thereto.
The Tag-Along Rights Agreement
On November 11, 1999, one of our major shareholders, Texas Pacific Group or
TPG, agreed to extend to the exchanging shareholders of Indigo certain rights
currently enjoyed by the officers and directors of AerFi to include
("tag-along") their AerFi ordinary shares (or a portion thereof) in sales by TPG
of its AerFi ordinary shares (or a portion thereof).
A copy of the tag-along rights agreement is filed as Exhibit (c)(6) to the
Schedule 14D-1 and incorporated herein by reference, and the foregoing summary
of the tag-along rights agreement is qualified in its entirety by reference
thereto.
Letter Regarding Intention to Tender
One of the shareholders of Indigo, Industrifinans SMB III ASA, has informed
Xxxx-Xxxx Xxxxxxxx (one of the exchanging shareholders) that it intends to
tender all its Indigo shares. As of September 30, 1999 Industrifinans SMB III
ASA owned 219,920 Indigo shares. The letter from Industrifinans SMB III ASA is
filed as Exhibit (c)(7) to the Schedule 14D-1 and incorporated herein by
reference.
Interests of Certain Persons in the Offer
In considering the recommendation of the Indigo board of directors to
approve the combination, Indigo shareholders should consider that some of
Indigo's directors and officers have interests in the combination that differ
from, or are in addition to, their interests as Indigo shareholders. Indigo's
directors and officers may receive benefits from the combination not available
to Indigo shareholders generally. The Indigo board of directors was aware of
these interests and considered them, among other matters, in approving the
combination agreement and the transactions contemplated by the combination
agreement.
U.S. Employment Agreements
ErgoFi Inc., a wholly-owned subsidiary of AerFi, has entered into employment
agreements with the following officers of Indigo Airlease Corporation, a U.S.
wholly owned subsidiary of Indigo: Xxxx Xxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx
and Xxxxxx XxXxxxxxx. The agreements will become effective upon the completion
of the combination. The employment agreements for Xxxx Xxxxx and Xxxxxx Xxxxxxxx
will replace their current employment agreements with Indigo Airlease
Corporation, a wholly-owned U.S. subsidiary of Indigo. The term of the
agreements is for three years commencing on the closing date of the combination
and ending on the third anniversary thereof, unless renewed by mutual written
agreement. Among other things, the agreements provide for each employee to
receive:
o base salary;
o a performance-related bonus, at the absolute discretion of the ErgoFi
Inc. board;
o such other benefits and perquisites as are generally provided by ErgoFi
Inc. to its senior management employees in the United States; and
o a car.
In addition to the benefits listed above, Xxxxxx Xxxxxxxx is also entitled
to, until April 2, 2001, the airfare for up to two round-trips per year for the
executive's spouse between Florida and California.
The agreements also provide that, if an executive (x) is terminated by
ErgoFi Inc. without "cause", as defined in the agreements, or (y) terminates his
employment for "good reason", as defined in the agreements, as a severance
benefit, ErgoFi Inc. will continue to pay the executive for a period of (a)
eighteen months following the date of termination if the date of termination is
within twelve months of the closing date of the combination, an amount equal to
the installments of his base salary (at the rate in effect at the date of
termination) that would have been paid to him had his agreement and his
employment with ErgoFi Inc. not been terminated or (b) six months following the
date of termination if the date of termination is not within twelve months of
the closing date of the combination, an amount equal to the installments of his
base salary (at the rate in effect at the date of termination) that would have
been paid to him had his agreement and employment with ErgoFi Inc. not been
terminated.
The agreements further provide for restrictions relating to confidentiality
and, for a two-year period after the executive's termination, restrictions
relating to nonsolicitation of employees of ErgoFi Inc. and its affiliates. They
also provide that, unless otherwise waived by ErgoFi Inc., the executive is not
to compete with ErgoFi Inc. and its affiliates for a period of two years after
the executive's termination. During the two-year noncompete period, in
consideration for the executive's covenant not to compete, ErgoFi Inc. will pay
the executive:
o executive's base salary applicable at the time of termination;
o a bonus equal to the average of the aggregate amounts paid to the
executive as bonus in the two preceding years; and
o a sum equal to the aggregate amount that ErgoFi Inc. would have paid
during each year of the noncompete period for benefits for the executive
had the executive remained employed by ErgoFi Inc.
Swedish Employment Agreement
Indigo has entered into an employment agreement with Xxxxx Xxxxxxx, managing
director of Indigo, which will become effective upon completion of the
combination. The employment agreement will replace the current employment
agreement between Xx. Xxxxxxx and Indigo. The term of the agreement is for three
years commencing on the closing date of the combination and ending on the third
anniversary thereof, unless renewed by mutual written agreement.
Among other things, the agreement provides for:
o base salary;
o a performance-related bonus, at the absolute discretion of the board;
o a house, including electricity, water, heating and fees for a security
alarm system at no cost to the executive;
o the free use of a car; and
o such other benefits and perquisites as are generally provided by Indigo
to its other senior management employees in Sweden.
The agreement also provides that, if the executive (x) is terminated by
Indigo without "cause", as defined in the agreement, or (y) terminates his
employment for "good reason", as defined in the agreement, as a severance
benefit, Indigo will continue to pay the executive for a period of (a) eighteen
months following the date of termination if the date of termination is within
twelve months of the closing date of the combination, an amount equal to the
installments of his base salary (at the rate in effect at the date of
termination) that would have been paid to him had his agreement and his
employment with Indigo not been terminated or (b) six months following the date
of termination if the date of termination is not within twelve months of the
closing date of the combination, an amount equal to the installments of his base
salary (at the rate in effect at the date of termination) that would have been
paid to him had his agreement and employment with Indigo not been terminated.
The agreement further provides for restrictions relating to confidentiality
and, for a two-year period after executive's termination, restrictions relating
to nonsolicitation of employees of Indigo and its affiliates. It also provides
that, unless otherwise waived by Indigo, the executive is not to compete with
Indigo and its affiliates for a period of two years after the executive's
termination. During the two-year noncompete period, in consideration for the
executive's covenant not to compete, Indigo will pay the executive:
o executive's base salary applicable at the time of termination;
o a bonus equal to the average of the aggregate amounts paid to the
executive as bonus in the two preceding years; and
o a sum equal to the aggregate amount that Indigo would have paid during
each year of the noncompete period for benefits for the executive had
the executive remained employed by Indigo.
Consulting Agreements; Director Payments
ErgoFi Inc. has entered into a consulting agreement with Xxxxxxx Xxxxxxxx
which will become effective upon the completion of the combination. The
consulting agreement will replace the current employment agreement between Xx.
Xxxxxxxx and Indigo Airlease Corporation. The term of the consulting agreement
is for six months commencing on the closing date of the combination. If the
parties mutually agree in writing, the term may be extended for additional
six-month periods.
The agreement provides that, in consideration of Xx. Xxxxxxxx'x agreement to
provide consulting services to ErgoFi Inc. in relation to all financial matters
in respect of Indigo and its subsidiaries, including in relation to the
integration of the AerFi and Indigo businesses, ErgoFi Inc. will pay Xx.
Xxxxxxxx a consulting fee at the rate of $242,500 per year pro-rated on a
monthly basis and will provide Xx. Xxxxxxxx with such benefits as are generally
provided to employees of ErgoFi Inc.
The agreement also provides that if Xx. Xxxxxxxx is terminated without cause
prior to the termination of the original six month term, Xx. Xxxxxxxx will be
entitled to receive the fees and benefits he would have received during that six
month term had his agreement and consultancy with ErgoFi Inc. not been
terminated.
The agreement further provides that Xx. Xxxxxxxx is entitled to a car and,
at ErgoFi Inc.'s absolute discretion, a performance-related bonus at the end of
the term.
It is expected that Xx. Xxxx-Xxxx Xxxxxxxx will also enter into a consulting
agreement with Indigo in connection with his services as a director of AerFi.
The terms of this consulting agreement are currently being negotiated.
The Indigo board of directors approved the payment to Xxxxxxxx Xxxxxx, a
director of Indigo, of an aggregate of $140,000 for his services in advising the
board on the terms and conditions of the combination agreement and the offer and
negotiating and facilitating the transaction with AerFi.
Beneficial Ownership of the Indigo shares
Schedule I to this document lists information concerning beneficial
ownership of the Indigo shares as of November 17, 1999 by each of the directors
and executive officers of Indigo.
The table below sets forth the directors and executive officers of Indigo
who will exchange and/or sell their Indigo shares to us and to AerFi Sverige
pursuant to the share exchange and share purchase agreement transactions, and
the number of Indigo shares that each of these directors and executive officers
will exchange and/or sell pursuant to the share exchange and share purchase
agreements.
Number of Indigo Shares Number of Indigo Shares
to be Exchanged under the to be Sold under the
Name Share Exchange Agreement Share Purchase Agreement
----------------------- ------------------------- ------------------------
Xxxx-Xxxx Xxxxxxxx(1).. 2,599,858 764,285
Xxxx Xxxxxxxxxx(2)..... 1,303,789 456,785
Xxx-Xxxx Xxxxxxxxx(3) 684,645 259,417
Xxxx Xxxxx............. 696,305 503,856
Xxx Xxxxx Xxxxxx(4).... 477,037 153,980
Xxxxxxx X. Xxxxxxxx.... 130,036 94,075
Xxxx Xxxxxxxx.......... 0 64,500
Xxxxx Xxxxxxxx......... 0 9,000
----------
(1) Includes, in the aggregate, (i) 2,500,000 shares owned by Volito AB, of
which Xx. Xxxxxxxx beneficially owns approximately 65.0% of the outstanding
capital stock, (ii) 864,043 shares owned by corporations that are wholly
owned by Xx. Xxxxxxxx and (iii) 100 shares owned by Xx. Xxxxxxxx directly.
(2) Includes, in the aggregate, (i) 1,440,074 shares owned by Braathen Lease and
Aviation Know How A/S and (ii) 320,500 shares owned by Braganza A/S. Mr.
Xxxxxxxxxx is the Managing Director of each of these entities but disclaims
the beneficial ownership of these shares.
(3) Includes, in the aggregate, 944,062 shares owned by QueQuoin Holding, Ltd.
of which Xx. Xxxxxxxxx is the chairman. Xx. Xxxxxxxxx disclaims the
beneficial ownership of these shares.
(4) Includes, in the aggregate, 631,017 shares owned by Industrifinans SMB II
ASA of which Xx. Xxxxxx is the Managing Director. Xx. Xxxxxx disclaims the
beneficial ownership of these shares.
Management of Indigo After the Combination
See "Special Factors -- Plans for Indigo after the Offer".
THE TENDER OFFER
Terms of the Offer
Upon the terms and subject to the conditions of the offer (including, if the
offer is extended or amended, the terms and conditions of that extension or
amendment), AerFi Sverige will accept and pay for all Indigo shares validly
tendered and not withdrawn before the expiration date. The expiration date will
be 12:00 midnight, New York City time, on Wednesday, December 15, 1999, or the
latest time and date that the offer, as extended by us, expires.
AerFi Sverige reserves the right, subject to the terms and conditions of the
combination agreement, to extend the period during which the offer is open by
giving oral or written notice of the extension to the depositary. During any
extension, all Indigo shares previously tendered and not withdrawn will remain
subject to the offer, subject to your rights to your Indigo shares as described
under "The Tender Offer -- Withdrawal Rights".
Subject to the applicable regulations of the Securities and Exchange
Commission and the terms and conditions of the combination agreement, AerFi
Sverige also expressly reserves the right, by giving oral or written notice to
the depositary and making a public announcement, to:
o delay acceptance for payment of or payment for any Indigo shares,
pending receipt of any regulatory approval specified in "The Tender
Offer -- Certain Legal Matters; Regulatory Approvals",
o terminate the offer and not accept for payment any Indigo shares if any
of the conditions specified in "The Tender Offer -- Certain Conditions
of the Offer" is unsatisfied, and
o waive any condition, or otherwise amend the offer.
AerFi Sverige acknowledges that Rule 14e-1(c) under the Exchange Act
requires AerFi Sverige to pay the consideration offered or return the Indigo
shares tendered promptly after the termination or withdrawal of the offer.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, that announcement in
the case of an extension to be made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled expiration date. Subject
to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act, which require that material changes be promptly disseminated to
shareholders in a manner reasonably designed to inform them of those changes)
and without limiting the manner in which AerFi Sverige may choose to make any
public announcement, AerFi Sverige shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Xxxxx News Service.
If AerFi Sverige makes a material change in the terms of the offer or the
information concerning the offer, or if it waives a material condition of the
offer, AerFi Sverige will extend the offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
Subject to the terms of the combination agreement, if, before the expiration
date, AerFi Sverige should decide to decrease the number of Indigo shares being
sought or to increase or decrease the consideration being offered in the offer,
that decrease in the number of Indigo shares being sought or that increase or
decrease in the consideration being offered will be applicable to all
shareholders whose Indigo shares are accepted for payment under the offer and,
if at the time notice of any such decrease in the number of Indigo shares being
sought or that increase or decrease in the consideration being offered is first
published, sent or given to holders of those Indigo shares, the offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that notice is first so published, sent
or given, the offer will be extended at least until the expiration of that ten
business day period. For purposes of the offer, a "business day" means any day
other than a Saturday, Sunday or United States federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, New York City time.
Consummation of the offer is conditioned upon satisfaction of the conditions
specified in "-- Certain Conditions of the Offer". AerFi Sverige may not accept
for payment or pay for any Indigo shares and may terminate the offer if all
conditions to the offer, except for applicable regulatory approvals described
under ACertain Legal Matters; Regulatory Approvals@, are not satisfied on or
before the expiration date of the offer.
Indigo provided AerFi Sverige with Indigo's stockholder list and security
position listings for the purpose of disseminating the offer to you. This
document and the letter of transmittal will be mailed to record holders of
Indigo shares whose names appear on Indigo's stockholder list. This document and
the letter of transmittal will also be furnished, for subsequent transmittal to
beneficial owners of Indigo shares, to brokers, dealers, commercial banks, trust
companies, and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing.
Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the offer (including, if the
offer is extended or amended, the terms and conditions of any such extension or
amendment), AerFi Sverige will accept and pay for, all Indigo shares validly
tendered before the expiration date and not properly withdrawn, promptly after
the latest to occur of the expiration date and the satisfaction or waiver of the
conditions to the offer described in "The Tender Offer -- Certain Conditions of
the Offer".
In all cases, payment for Indigo shares tendered and accepted under the
offer will be made only after the depositary receives:
o the Indigo share certificates or timely confirmation of a book-entry
transfer of those Indigo shares into the depositary's account at The
Depository Trust Company under the procedures described in "The Tender
Offer -- Procedures for Accepting the Offer and Tendering Shares";
o the letter of transmittal properly completed and executed, with any
required signature guarantees or, in the case of a book-entry transfer,
an Agent's Message (as defined below) in lieu of the letter of
transmittal; and
o any other documents required under the letter of transmittal.
For purposes of the offer, AerFi Sverige will be deemed to have accepted for
payment (and thereby purchased) Indigo shares validly tendered and not properly
withdrawn as, if and when AerFi Sverige gives oral or written notice to the
depositary of AerFi Sverige's acceptance for payment of those Indigo shares
under the offer. Upon the terms and subject to the conditions of the offer,
payment for Indigo shares accepted for payment under the offer will be made by
deposit of the purchase price therefor with the depositary, which will act as
agent for tendering shareholders for the purpose of receiving payments from
AerFi Sverige and transmitting those payments to tendering shareholders whose
Indigo shares have been accepted for payment. BUYER WILL NOT PAY INTEREST ON THE
PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY DELAY IN MAKING THAT PAYMENT.
If any tendered Indigo shares are not accepted for payment for any reason
under the terms and conditions of the offer, or if Indigo share certificates are
submitted evidencing more Indigo shares than are tendered, Indigo share
certificates evidencing unpurchased Indigo shares will be returned, without
expense to the tendering stockholder (or, in the case of Indigo shares tendered
by book-entry transfer into the depositary's account at The Depository Trust
Company under the procedure described in "The Tender Offer -- Procedures for
Accepting the Offer and Tendering Shares", those Indigo shares will be credited
to an account maintained at The Depository Trust Company), as promptly as
practicable following the expiration or termination of the offer.
If, before the expiration date, AerFi Sverige increases the consideration
offered to any holders of Indigo shares under the offer, that increased
consideration will be paid to all holders of Indigo shares that are purchased
under the offer, whether or not those Indigo shares were tendered before that
increase in consideration.
AerFi Sverige reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the Indigo shares tendered under the offer, but any such
transaction or assignment will not relieve AerFi Sverige of its obligations
under the offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Indigo shares validly tendered and accepted
for payment under the offer.
Procedures for Accepting the Offer and Tendering Shares
In order for a holder of Indigo shares to validly tender Indigo shares under
the offer, the letter of transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message in lieu of the
letter of transmittal) and any other documents required by the letter of
transmittal, must be received by the depositary at one of its addresses listed
on the back cover of this document and either:
o the Indigo share certificates evidencing tendered Indigo shares must be
received by the depositary at that address or those Indigo shares must
be tendered under the procedure for book-entry transfer described below
and a book-entry confirmation must be received by the depositary
(including an Agent's Message if the tendering shareholder has not
delivered a letter of transmittal), in each case before the expiration
date, or
o the tendering shareholder must comply with the guaranteed delivery
procedures described below. The term "Agent's Message" means a message,
transmitted by The Depository Trust Company to, and received by, the
depositary and forming a part of a book-entry confirmation which states
that The Depository Trust Company has received an express acknowledgment
from the participant in The Depository Trust Company tendering the
Indigo shares which are the subject of that book-entry confirmation,
that that participant has received and agrees to be bound by the terms
of the letter of transmittal and that AerFi Sverige may enforce that
agreement against that participant.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer
The depositary will establish accounts for the Indigo shares at the
Depository Trust Company for purposes of the offer within two business days
after the date of this document. Any financial institution that is a participant
in the system of The Depository Trust Company may make a book-entry delivery of
Indigo shares by causing The Depository Trust Company to transfer those Indigo
shares into the depositary's account at The Depository Trust Company in
accordance with The Depository Trust Company's procedures for that transfer.
However, although delivery of Indigo shares may be effected through book-entry
transfer at The Depository Trust Company, either the letter of transmittal,
properly completed and executed, together with any required signature
guarantees, or an Agent's Message in lieu of the letter of transmittal, and any
other required documents, must, in any case, be received by the depositary at
one of its addresses listed on the back cover of this document before the
expiration date, or you must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees
Signatures on all letters of transmittal must be guaranteed by a firm which
is a member of the Medallion Signature Guarantee Program, or by any other
"eligible guarantor institution", as that term is defined in Rule 17Ad-15 under
the Exchange Act, except in cases where Indigo shares are tendered:
o by a registered holder of Indigo shares who has not completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the letter of transmittal, or
o for the account of an Eligible Institution.
If an Indigo share certificate is registered in the name of a person other
than the signer of the letter of transmittal, or if payment is to be made, or an
Indigo share certificate not accepted for payment or not tendered is to be
returned, to a person other than the registered holders, then the Indigo share
certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the names of the registered holders appear on the
Indigo share certificate, with the signatures on that Indigo share certificate
or stock powers guaranteed by an eligible institution. See Instructions 1 and 5
of the letter of transmittal.
Guaranteed Delivery
If you desire to tender Indigo shares under the offer and the Indigo share
certificates evidencing your Indigo shares are not immediately available or you
cannot deliver the Indigo share certificates and all other required documents to
the depositary before the expiration date, or you cannot complete the procedure
for delivery by book-entry transfer on a timely basis, you may tender your
Indigo shares, if:
o tender is made by or through an Eligible Institution;
o the depositary receives a properly completed and duly executed notice of
guaranteed delivery, substantially in the form made available by us,
before the expiration date; and
o the depositary receives the Indigo share certificates (or a book-entry
confirmation) evidencing all tendered Indigo shares, in proper form for
transfer, in each case together with the letter of transmittal, properly
completed and executed, with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message), and any other
documents required by the letter of transmittal within three trading
days after the date of execution of that notice of guaranteed delivery.
A trading day is any day on which the Nasdaq National Market operated by the
National Association of Securities Dealers, Inc. is open for business.
The notice of guaranteed delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the depositary and must
include a guarantee by an Eligible Institution in the form described in the form
of notice of guaranteed delivery made available by us.
In all cases, payment for Indigo shares tendered and accepted for payment
under the offer will be made only after timely receipt by the depositary of the
Indigo share certificates evidencing those Indigo shares, or a book-entry
confirmation of the delivery of those Indigo shares, and the letter of
transmittal (or a facsimile of that letter), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message), and any other documents required by
the letter of transmittal.
Determination of Validity
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Indigo shares will be
determined by us in our sole discretion, which determination will be final and
binding on all parties. We reserve the absolute right to reject any and all
tenders determined by us not to be in proper form or the acceptance for payment
of which may, in the opinion of our counsel, be unlawful. Subject to the terms
of the combination agreement, we also reserve the absolute right to waive any
condition of the offer or any defect or irregularity in the tender of any Indigo
shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of Indigo
shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of AerFi Sverige, the dealer
manager, the depositary, the information agent or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. Our
interpretation of the terms and conditions of the offer (including the letter of
transmittal and the instructions thereto) will be final and binding.
Other Requirements
By executing the letter of transmittal as described above, you irrevocably
appoint our designees as your proxies, each with full power of substitution, in
the manner described in the letter of transmittal, to the full extent of your
rights regarding the Indigo shares tendered by you and accepted for payment by
us (and with respect to any and all other Indigo shares or other securities
issued or issuable in respect of those Indigo shares on or after November 11,
1999). All those proxies shall be considered coupled with an interest in the
tendered Indigo shares. Such appointment will be effective when, and only to the
extent that, we accept the Indigo shares for payment. Upon the acceptance for
payment, all prior proxies given by you regarding Indigo shares (and those other
Indigo shares and securities) will be revoked without further action, and no
subsequent proxies may be given nor any subsequent written consent executed by
you (and, if given or executed, will not be deemed to be effective) with respect
thereto. Our designees will, with respect to the Indigo shares for which the
appointment is effective, be empowered to exercise all your voting and other
rights as they in their sole discretion may deem proper at any annual or special
meeting of Indigo's shareholders or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise. We reserve the right
to require that, in order for Indigo shares to be deemed validly tendered,
immediately upon our payment for those Indigo shares, we must be able to
exercise full voting rights with respect to those Indigo shares.
The tender of Indigo shares under any one of the procedures described above
will constitute your acceptance of the offer, as well as your representation and
warranty that:
o you own the Indigo shares being tendered within the meaning of Rule
14e-4 promulgated under the Exchange Act,
o the tender of your Indigo shares complies with Rule 14e-4, and
o you have the full power and authority to tender and assign the Indigo
shares tendered, as specified in the letter of transmittal.
Our acceptance for payment of Indigo shares tendered under the offer will
constitute a binding agreement between you and us upon the terms and subject to
the conditions of the offer.
In general, if you are a United States Holder (as described below under "The
Tender Offer -- United States Federal Income Tax Consequences") that
participates in the offer, you should complete the Substitute Form W-9 in the
letter of transmittal to provide the depositary with your correct taxpayer
identification number and certify that the number is correct or properly certify
that you are awaiting a taxpayer identification number, unless an exemption is
demonstrated to apply. Otherwise, backup United States federal income tax
withholding may apply and a payment to you may be withheld at a 31% rate.
In general, if you are not a United States Holder and you participate in the
offer, you should give the depositary a completed Form W-8BEN (Certificate of
Foreign Status) before receipt of payment to prevent backup United States
federal income tax withholding.
Withdrawal Rights
Tenders of the Indigo shares made under the offer are irrevocable except
that those Indigo shares may be withdrawn at any time before the expiration date
and, unless theretofore accepted for payment by AerFi Sverige under the offer,
may also be withdrawn at any time after January 15, 2000. If AerFi Sverige
extends the offer, is delayed in its acceptance for payment of Indigo shares or
is unable to accept Indigo shares for payment under the offer for any reason,
then, without prejudice to AerFi Sverige's rights under the offer, the
depositary may, nevertheless, on behalf of AerFi Sverige, retain tendered Indigo
shares, and those Indigo shares may not be withdrawn except to the extent that
tendering shareholders are entitled to withdrawal rights as described herein.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the depositary at
one of its addresses listed on the back cover page of this document. Any such
notice of withdrawal must specify the name of the person who tendered the Indigo
shares to be withdrawn, the number of Indigo shares to be withdrawn and the name
of the registered holder of those Indigo shares, if different from that of the
person who tendered those Indigo shares. If Indigo share certificates evidencing
Indigo shares to be withdrawn have been delivered or otherwise identified to the
depositary, then, before the physical release of those Indigo share
certificates, the serial numbers shown on those Indigo share certificates must
be submitted to the depositary and the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless those Indigo shares have
been tendered for the account of an Eligible Institution. If Indigo shares have
been tendered under the procedure for book-entry transfer as described in "The
Tender Offer -- Procedures for Accepting the offer and Tendering Shares", any
notice of withdrawal must specify the name and number of the account at The
Depository Trust Company to be credited with the withdrawn Indigo shares.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by AerFi Sverige, in its sole
discretion, whose determination will be final and binding. None of AerFi
Sverige, the dealer manager, the depositary, the information agent or any other
person will be under duty to give notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give any such
notification.
Any Indigo shares properly withdrawn will thereafter be deemed not to have
been validly tendered for purposes of the offer. However, withdrawn Indigo
shares may be re-tendered at any time before the expiration date by following
one of the procedures described in "The Tender Offer -- Procedures for Accepting
the offer and Tendering Shares".
United States Federal Income Tax Consequences
This summary of the material United States federal income tax consequences
of the offer is for general information only and is based on the law as
currently in effect. This summary does not discuss all of the tax consequences
that may be relevant to a holder of Indigo shares in light of its particular
circumstances or to holders subject to special rules, such as financial
institutions, broker-dealers, tax-exempt organizations, holders that hold their
shares as part of a straddle or a hedging or conversion transaction and holders
who acquired their Indigo shares through the exercise of an employee stock
option or otherwise as compensation.
Holders of Indigo shares are urged to consult their own tax advisors as to
the particular tax consequences to them of the offer or any compulsory
acquisition that may follow the offer, including the effect of United States
federal, state and local tax laws or Swedish, Irish or other non-United States
tax laws.
A United States Holder refers to (1) a citizen or resident of the United
States, (2) a corporation or other entity created or organized in the United
States or under the laws of the United States or of any political subdivision of
the United States, or (3) an estate or trust, the income of which is includible
in gross income for United States federal income tax purposes regardless of its
source.
A Non-United States Holder refers to a holder of Indigo shares that is not a
United States Holder.
United States Holders that Participate in the Offer
The receipt by a United States Holder of cash for Indigo shares pursuant to
the offer will be a taxable transaction under the United States Internal Revenue
Code of 1986, as amended. A tendering United States Holder will generally
recognize gain or loss in an amount equal to the difference between the cash
received by the United States Holder pursuant to the offer and that holder's
adjusted tax basis in the Indigo shares tendered pursuant to the offer. That
gain or loss will be a capital gain or loss if the Indigo shares are a capital
asset in the hands of the United States Holder. United States Holders are urged
to consult their own tax advisors as to the federal income tax treatment of a
capital gain or loss, including limitations on the deductibility of a capital
loss.
A United States Holder that tenders Indigo shares may be subject to backup
withholding at a rate of 31% unless it provides its taxpayer identification
number and certifies that the number is correct or properly certifies that it is
awaiting a taxpayer identification number, or unless an exemption is
demonstrated to apply. Backup withholding is not an additional tax. Amounts so
withheld can be refunded or credited against the United States federal income
tax liability of the United States Holder, provided appropriate information is
forwarded to the Internal Revenue Service. In general, to prevent backup
withholding, a tendering United States Holder should complete the Substitute
Form W-9 that is included in the letter of transmittal. See the discussion in
"The Tender Offer -- Procedures for Accepting the Offer and Tendering Shares --
Other Requirements".
Non-United States Holders that Participate in the Offer
A tendering Non-United States Holder will generally not be subject to United
States federal income tax on a gain realized on a disposition of Indigo shares
unless:
o the gain is effectively connected with a trade or business in the United
States of that Non-United States Holder;
o that Non-United States Xxxxxx is a non-resident alien individual who
holds Indigo shares as a capital asset and who is present in the United
States for 183 or more days in 1999; or
o that Non-United States Holder is subject to tax under the provisions of
the Internal Revenue Code of 1986, as amended, on the taxation of United
States expatriates.
Non-United States Holders are urged to consult their own tax advisors.
Information reporting and backup United States federal income tax
withholding imposed at a rate of 31% may apply to cash payments received by a
tendering Non-United States Holder pursuant to the offer if the disposition of
Indigo shares is effected by or through a United States office of a broker.
Backup withholding is not an additional tax. Amounts so withheld can be refunded
or credited against the United States federal income tax liability of the
Non-United States Holder, provided appropriate information is forwarded to the
Internal Revenue Service. In general, to prevent backup withholding, a tendering
Non-United States Holder should complete a Form W-8BEN.
Holders that Participate in a Compulsory Acquisition
The receipt by a United States Holder or Non-United States Holder of cash
pursuant to a compulsory acquisition under the Swedish Companies Act would
generally result in United States federal income tax consequences similar to
those described above in "-- United States Holders that Participate in the
Offer" or "-- Non-United States Holders that Participate in the Offer,"
respectively. Holders of Indigo shares that receive cash pursuant to a
compulsory acquisition are urged to consult their own tax advisors.
Price Range of Shares; Dividends
The Indigo shares have been traded in the over-the-counter market since
April 9, 1998, and are quoted on the Nasdaq National Market System under the
symbol IAAB.
The following table lists for the periods indicated the high and low closing
sale prices per Indigo share as reported on the Nasdaq National Market System.
Indigo has not paid any cash dividend in the periods indicated in the following
table. Bid prices represent quotations by dealers, do not reflect mark-ups,
xxxx-xxxxx or commissions and may not represent actual transactions.
Market Price
----------------
High Low
------ -----
1998
Second Quarter (from April 9, 1998).... $ 14.938 $ 9.750
Third Quarter.......................... 12.750 7.000
Fourth Quarter......................... 10.000 6.063
1999
First Quarter.......................... 8.250 6.500
Second Quarter......................... 8.875 6.000
Third Quarter.......................... 9.500 6.750
Fourth Quarter (through
November 15, 1999)................... 12.563 7.031
On November 11, 1999 there were 29 holders of record of Indigo shares and
11,276,288 outstanding Indigo shares.
On November 10, 1999, the last full day of trading before the public
announcement of the execution of the combination agreement, the closing price of
the Indigo shares on the Nasdaq National Market System was $11.313 per Indigo
share. On November 15, 1999, the closing price of the Indigo shares on the
Nasdaq National Market System was $12.562 per Indigo share.
You are urged to obtain a current market quotation for the Indigo shares.
Certain Information Concerning Indigo
Unless otherwise stated, the information concerning Indigo in this document
has been furnished by Indigo or has been taken from or based upon publicly
available documents and records on file with the Securities and Exchange
Commission and other public sources. Although AerFi Sverige and AerFi have no
knowledge that would indicate that any statement in this document that is based
upon those reports and documents are untrue, AerFi Sverige and AerFi do not take
any responsibility for the accuracy or completeness of the information contained
in those reports and other documents or for any failure by Indigo to disclose
events that may have occurred and may affect the significance or accuracy of any
such information but that are unknown to AerFi Sverige and AerFi.
General
Indigo is a Swedish limited liability company incorporated in 1988, with its
principal offices located at Xxxxx Xxxxxxxxxxxxx 0, X-000 00 Xxxxx, Xxxxxx.
Indigo is principally engaged in the acquisition and leasing of narrow body
commercial jet aircraft to airlines throughout the world. Indigo also sells
aircraft from its own portfolio and selectively engages in remarketing
activities for airlines, financial institutions and other leasing companies.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of Indigo's directors and executive
officers and certain other information are listed in Schedule I to this
document. Indigo is subject to the informational requirements of the Exchange
Act applicable to a foreign private issuer and files periodic reports and other
information with the Securities and Exchange Commission relating to its
business, financial condition and other matters. You may inspect those reports
and other information at the public reference facilities maintained by the
Securities and Exchange Commission at Judiciary Plaza, 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000 and should also be available for inspection and copying
at the regional offices of the Securities and Exchange Commission in New York
(Xxxxx X. Xxxxxx Federal Building, 00 Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000)
and Chicago (Xxxxxxx XxXxxxxx Xxxxxxx Building, 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000). Copies of that material can also be obtained from the
Public Reference Section of the Securities and Exchange Commission in
Washington, D.C. 20549, at prescribed rates.
Certain Financial Projections
In the course of the discussions between representatives of AerFi and Indigo
regarding the offer and the combination AerFi was provided with certain
projections of Indigo's future operations. The projections, and the assumptions
underlying such projections, were not prepared with a view to public disclosure
or compliance with published guidelines of the Securities and Exchange
Commission or the guidelines established by the American Institute of Certified
Public Accountants regarding projections, and are included in this offer to
purchase only because they were provided to AerFi. None of AerFi, AerFi Sverige,
Indigo, any of their financial advisors or the dealer manager assumes any
responsibility for the accuracy of these projections. These projections are
based upon a variety of assumptions relating to the business of Indigo which may
not be realized and are subject to significant uncertainties and contingencies
beyond the control of Indigo. There can be no assurance that the projections
will be realized, and actual results may vary materially from those shown. None
of Indigo, AerFi or AerFi Sverige intends to update, revise or correct such
projections if they become inaccurate (even in the short term). In particular,
these projections will be materially affected if a material amount of Indigo's
aircraft assets are transferred to AerCo Limited in a securitization
transaction.
Set forth below is a summary of the projections. These projections should be
read together with the financial statements of Indigo referred to herein.
Fiscal Year Ended December 31
------------------------------------------------------
1998(A) 1999 2000 2001 2002
--------- ------ ------ ------ ------
(In thousands)
Income Statement Data
Revenues (including interest
income)......................... $ 63,440 $ 104,122 $ 123,427 $127,721 $ 132,823
========= ========= ========= ======== =========
Income before Taxes and Minority
Interests..................... 15,547 20,089 21,898 24,352 27,424
========= ========== ========== ========= ==========
Net Income...................... 11,133 14,817 15,767 17,533 19,745
========= ========== ========== ========= ==========
Earnings Per Diluted Share...... 1.07 1.28 1.36 1.52 1.71
========= ========== ========== ========== ==========
Balance Sheet (at period end)
Cash............................ 16,482 9,644 615 0 0
Net Aircraft.................... 548,703 797,309 831,872 837,633 840,830
Other Assets.................... 20,876 31,641 36,631 41,486 46,617
--------- ---------- ---------- --------- ----------
Total Assets.................... 586,061 838,594 869,118 879,119 887,447
========= ========== ========== ========= ==========
Debt............................ 452,629 669,613 676,041 661,324 642,025
Equity.......................... 90,036 104,853 120,620 138,153 157,898
Other Liabilities............... 43,396 64,128 72,457 79,642 87,524
--------- ---------- ---------- --------- ----------
Total Liabilities............... 586,061 838,594 869,118 879,119 887,447
========= ========== ========== ========= ==========
----------
(A) Actual for the year ended December 31, 1998.
Selected Historical Financial Information
Set forth below is certain selected financial information relating to Indigo
which has been excerpted or derived from the audited financial statements
contained in Indigo's Annual Report on Form 20-F for the fiscal year ended
December 31, 1998 and the unaudited financial statements contained in Indigo's
quarterly reports on Form 6-K at September 30, 1998 and 1999. The financial
information that follows is qualified in its entirety by reference to the 20-F
and the 6-K and other documents filed by Indigo with the Securities and Exchange
Commission which contain comprehensive financial information. The 20-F and the
6-K and those other documents may be examined and copies may be obtained from
the offices of the Securities and Exchange Commission in the manner described
above under "-- General".
Fiscal Year Nine Months
Ended Ended
December 31 September 30
----------------- -----------------
1998 1997 1999 1998
------ ------ ------ ------
(unaudited)
(In thousands, except per share
amounts)
Income Statement Data:
Revenues:
Rental of flight equipment...... $ 49,918 $ 30,735 $ 68,836 $ 33,727
Flight equipment marketing...... 8,923 7,169 7,179 8,923
Interest and other.............. 4,599 2,700 2,300 3,426
-------- -------- -------- --------
63,440 40,604 78,315 46,076
Expenses:
Interest........................ 24,078 15,780 30,093 16,627
Depreciation.................... 18,159 11,542 24,825 12,170
Rental expense.................. 0 0 3,211 0
Selling, general and
administrative................ 5,647 3,035 5,343 4,200
Exchange (gain) loss............ 9 (337) (12) (1)
-------- -------- -------- --------
47,893 30,020 63,460 32,996
-------- -------- -------- --------
Income before income taxes........ 15,547 10,584 14,855 13,080
Provision for income taxes........ 4,414 2,943 3,808 3,675
-------- -------- -------- --------
Net income...................... $ 11,133 $ 7,641 $ 11,047 $ 9,405
======== ======== ======== ========
Per Share Amounts:
Net income per basic share(1)... $ 1.09 $ 1.26 $ 0.98 $ 0.95
Net income per diluted share(2). 1.07 1.23 0.96 0.93
Book value per basic share(1)... 8.79 6.34 8.96 8.89
Book value per diluted share(2). 8.63 6.16 8.77 8.73
----------
(1) Net income per basic share and book value per basic share are calculated
using the weighted average number of ordinary shares outstanding for each of
the periods presented (10,247,630 for 1998, 6,087,436 for 1997, 11,276,288
for the nine months ended September 30, 1999 and 9,911,520 for the nine
months ended September 30, 1998).
(2) Net income per diluted share and book value per diluted share are calculated
using the weighted average number of ordinary shares and ordinary share
equivalents outstanding for each of the periods presented (10,437,347 for
1998, 6,264,290 for 1997, 11,525,541 for the nine months ended September 30,
1999 and 10,091,259 for the nine months ended September 30, 1998). Ordinary
share equivalents represent the number of shares which would be issued
assuming the exercise of warrants and conversion of preferred shares.
December 31 September 30
------------------- ------------
1998 1997 1999
------ ------ ------------
(unaudited)
(In thousands)
Balance Sheet Data:
Assets:
Cash and cash equivalents....................... $ 16,482 $ 4,669 $ 18,670
Accounts receivable............................. 2,587 4,893 4,202
Cash, restricted................................ 6,610 6,427 16,529
Notes receivable................................ 3,181 4,300 0
Net investment in finance and sales-type leases. 16,392 21,722 7,115
Flight equipment under operating leases......... 567,679 281,681 770,411
Less accumulated depreciation................... 35,368 23,061 52,283
-------- -------- --------
532,311 258,620 718,128
Deposits on flight equipment purchases.......... 4,350 1,600 4,100
Other assets.................................... 835 726 3,138
Deferred debt issue costs-less accumulated
amortization of $1,983 (1999), $1,756 (1998)
and $1,222 (1997)............................. 3,313 2,385 4,151
-------- -------- --------
$586,061 $305,342 $776,033
======== ======== ========
Liabilities and Shareholders' Equity
Accrued interest and other payables............. 5,925 3,022 5,439
Debt financing.................................. 449,975 238,817 612,998
Debt financing from related parties............. 2,654 2,654 2,654
Security and other deposits on flight equipment 24,661 15,669 34,445
Prepaid rentals................................. 4,644 2,741 7,543
Deferred income taxes........................... 8,166 3,836 11,871
Shareholders' Equity
Ordinary shares-SEK 3.14 notional amount;
25,477,707 (1999 and 1998) and
7,850,000 (1997) authorized shares;
11,276,288 (1999 and 1998) and
7,850,000 (1997) shares issued and
outstanding.................................. 4,688 3,294 4,688
Paid-in capital................................. 58,036 19,130 58,036
Retained earnings............................... 27,312 16,179 38,359
-------- -------- --------
90,036 38,603 101,083
-------- -------- --------
$586,061 $305,342 $776,033
======== ======== ========
Certain Information Concerning AerFi and AerFi Sverige
General
AerFi is an Irish limited liability company with its principal offices
located at Aviation House, Shannon, Co. Xxxxx, Ireland. AerFi is a lessor of
modern commercial aircraft and is a significant participant in the global
aviation industry.
On November 20, 1998, Texas Pacific Group became AerFi's largest shareholder
through a cash tender offer for outstanding AerFi ordinary shares and a
subscription for new AerFi ordinary shares. As of November 11, 1999, Texas
Pacific Group owned 58.9% of AerFi's issued ordinary share capital and 42.6% of
AerFi's ordinary share capital on a fully diluted basis.
GE Capital Corporation has an option, exercisable on or before October 29,
2001, to acquire a passive interest of 21.4% in the diluted ordinary share
capital of AerFi at an option price of $0.60 per share, which will be adjusted
downwards to $0.01 as a result of the $0.60 per share proposed special interim
dividend that AerFi announced on November 11, 1999, unless GE Capital
Corporation exercises its option and receives the underlying shares before the
record date for such extraordinary dividend. In a letter dated November 11,
1999, GE Capital Corporation notified us pursuant to the relevant provision of
the option agreement between it and us that it is contemplating delivery of an
exercise notice.
AerFi Sverige is a newly established Swedish corporation. It has not carried
on any activities other than the execution of the combination agreement. Its
principal offices are located at c/o Advocatfirman Xxxxx KB, P.O. Box 1703,
S-111 87 Stockholm, Sweden. AerFi Sverige is an indirect, wholly-owned
subsidiary of AerFi.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of our directors and executive
officers and certain other information are listed in Schedule II to this
document.
Except as described in this document, neither we nor, to the best of our
knowledge, any of the persons listed in Schedule II to this document (or any
associate or majority-owned subsidiary of AerFi or any such listed persons)
beneficially owns or have any right to acquire, directly or indirectly, any
Indigo shares or have effected any transaction in the Indigo shares during the
past 60 days.
Except as provided in the combination agreement or as otherwise described in
this document, neither we nor, to the best of our knowledge, any of the persons
listed in Schedule II to this document, have any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of Indigo, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or voting of those
securities, finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss, guarantees of profits,
division of profits or loss or the giving or withholding of proxies.
Except as disclosed in this document, since January 1, 1997 neither we nor,
to the best of our knowledge, any of the persons listed on Schedule II to this
document, have had any business relationship or transaction with Indigo or any
of its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the Securities and Exchange
Commission applicable to the offer. Except as disclosed in this document, since
January 1, 1997, there have been no contacts, negotiations or transactions
between AerFi or any of its subsidiaries or, to the best knowledge of AerFi, any
of the persons listed in Schedule II to this document, on the one hand, and
Indigo or its affiliates, on the other hand, concerning a consolidation or
acquisition, tender offer or other acquisition of securities, or an election of
directors.
Selected Historical Financial Information
The following selected consolidated financial data relating to AerFi and its
subsidiaries has been taken or derived from the audited financial statements
contained in AerFi's annual report for the year ended March 31, 1999. These
financial statements are prepared in accordance with Irish GAAP which differ in
certain significant respects from US GAAP. An explanation of the significant
differences and a reconciliation from Irish GAAP to US GAAP of shareholders'
Equity and net income for the financial year is set forth in Note 30 to these
financial statements. More comprehensive financial information is included in
that annual report and the financial data listed below is qualified in its
entirety by reference to the annual report. Copies may be obtained by contacting
Xxxx Xxxxxxx, at AerFi's address listed under "-- General" above.
The financial information in relation to AerFi contained in this document
does not constitute full financial statements within the meaning of Section 19
of the Companies (Amendment) Act, 1986 of Ireland. Full financial statements of
AerFi have been prepared for each financial year to which the financial
information relates and the auditors have given unqualified reports on such
financial statements, which financial statements except for the financial
statements for the year ended March 31, 1999, have been annexed to the relevant
annual returns delivered to the Registrar of Companies in Ireland. The financial
statements for the year ended March 31, 1999, will be annexed to the annual
return to be delivered to the Registrar of Companies in Ireland.
Selected Financial Information -- Irish GAAP
Fiscal Year Six Months
ended ended
March 31 September 30
------------------ ------------
1999 1998 1999
------ ------ ------------
(In millions, Unaudited
except per share amounts)
Income Statement Data:
Turnover -- Continuing Operations.............. $ 453 $ 236 $ 96
====== ====== ======
Total Operating Income......................... 472 244 103
====== ====== ======
Profit on Ordinary Activities Before Taxation.. 48 65 32
====== ====== ======
Profit for the Financial Year/Period........... 47 64 32
Dividends on First Preference Shares - Paid.... (2) (3) (1)
------ ------ ------
Profit Attributable to Equity Shareholders..... 45 61 31
====== ====== ======
Profit and Loss Account at End of Year/Period.. $ 210 $ 182 $ 241
====== ====== ======
Balance Sheet Data:
Assets
Tangible Assets (aircraft interests in aircraft
and other tangibles)........................... 275 675 230
------ ------ ------
Free Cash Balances............................. 322 127 340
Restricted Cash Balances....................... 113 159 130
Other Assets................................... 175 251 170
Total Assets................................... $ 885 $1,212 $ 870
====== ====== ======
Liabilities
Capital and Reserves and Shareholders' Funds... 376 336 407
Provisions for Liabilities and Charges......... 36 -- 36
Creditors...................................... 473 876 427
------ ------ ------
Total Liabilities.............................. $ 885 $1,212 $ 870
====== ====== ======
Per Share Data:
Profit per ordinary share - Basic(1)........... $ 0.40 $ 0.57 $ 0.26
Profit per ordinary share - Fully Diluted(2)... $ 0.38 $ 0.57 $ 0.20
----------
(1) Profit per basic share is calculated using the weighted average number of
ordinary shares outstanding for each of the periods presented (106,523,999
for 1998, 111,125,334 for 1999 and 119,344,512 for the six months ended
September 30, 1999).
(2) Profit per diluted share is calculated using the weighted average number of
ordinary shares and ordinary share equivalents outstanding for each of the
periods presented (106,523,999 for 1998, 118,926,005 for 1999 and
157,270,055 for the six months ended September 30, 1999). Ordinary share
equivalents represent the number of shares which would be issued, assuming
the exercise of warrants and conversion of preferred shares.
Reconciliation of Irish GAAP net profit attributable to ordinary shareholders as
reported in the Consolidated Profit and Loss Account to U.S. GAAP.
Fiscal Year Six Months
ended ended
March 31 September 30
----------------- ------------
1999 1998 1999
---- ---- ------------
(In millions) Unaudited
Net profit attributable to ordinary shareholders as
reported in the consolidated profit and loss account
(Irish GAAP)....................................... $ 45 $ 61 $ 31
Adjustments
Arising on sale and leaseback transactions
- reversal of income deferred in prior years..... 28 14 3
Arising on Airplanes Group......................... 324 (31) --
Predelivery payment provision...................... 15 (15) --
Positive goodwill amortized........................ (10) (1) --
Negative goodwill amortized........................ 10 1 --
Onerous contract provision......................... 14 -- --
Aircraft maintenance............................... 16 (1) --
Impairment of fixed assets - engine valuation
provision........................................ (10) -- --
Reclassification of income/(expense) on
extinguishment of debt........................... (1) 1 --
------ ------ ------
Net income to accord with US GAAP before
extraordinary item................................. 431 29 34
Extraordinary item - income/(expense) on
extinguishment of debt........................... 1 (1) --
Dividend on ordinary shares........................ -- -- (17)
------ ------ ------
Net income to accord with US GAAP.................. $ 432 $ 28 $ 17
====== ====== ======
Consolidated Balance sheet of AerFi Group plc and
subsidiaries in accordance with US GAAP
Assets
Cash............................................... 323 127 340
Restricted cash.................................... 179 454 196
Accounts receivable................................ 97 115 93
Net investment in capital and sales type leases.... -- 101 --
Aircraft........................................... 1,011 4,689 929
Aircraft predelivery payment....................... -- 59 --
Investment in aircraft............................. 81 81 81
Investments........................................ -- 13 --
Other assets....................................... 12 25 11
------ ------ ------
$1,703 $5,664 $1,650
====== ====== ======
LiabilitiesShareholders' funds/(Deficit)........... 213 (239) 230
Accrued expenses and other liabilities............. 372 1,034 349
Minority interests................................. -- 6 --
Indebtedness....................................... 1,118 4,809 1,071
Deferred income taxes.............................. -- 54 --
------ ------ ------
$1,703 $5,664 $1,650
====== ====== ======
Financing of the Offer
The total amount of funds required to consummate the offer and the
combination and to pay related fees and expenses is estimated to be
approximately $77 million. The offer and the combination are not conditioned on
obtaining financing. We have or will have sufficient cash or other sources of
immediately available funds to provide to AerFi Sverige to enable it to purchase
all of the Indigo shares outstanding and to pay all related fees and expenses
under the offer.
Dividends and Distributions
If, after the date of the combination agreement but before the unconditional
time, Indigo changes the outstanding Indigo shares by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of Indigo shares, or stock dividend on the Indigo shares with a
record date during that period the cash payable under the offer and any other
amounts payable under the combination agreement shall be appropriately adjusted.
Certain Effects of the Offer
Market for the Indigo shares
The purchase of Indigo shares under the offer will reduce the number of
holders of Indigo shares and the number of Indigo shares that might otherwise
trade publicly and is likely to adversely affect the liquidity and market value
of the remaining Indigo shares held by the public.
Stock Quotation
Depending upon the number of Indigo shares purchased under the offer, the
Indigo shares may no longer meet the standards for continued inclusion in the
Nasdaq National Market System. If, as a result of the purchase of Indigo shares
under the offer, the Indigo shares no longer meet the criteria for continued
inclusion in the Nasdaq National Market System, the market for the Indigo shares
could be adversely affected. According to Nasdaq's published guidelines, the
Indigo shares would not meet the criteria for continued inclusion in the Nasdaq
National Market System if at least one of the following two standards are not
met:
o among other things, a minimum of 750,000 publicly held Indigo shares, an
aggregate market value of the publicly held Indigo shares of at least $5
million and a minimum of 400 shareholders of round lots; or
o among other things, a minimum of 1,100,000 publicly held shares, an
aggregate market value of the publicly held Indigo shares of at least
$15 million, at least four registered and active market makers and a
minimum of 400 shareholders of round lots.
If one of these two standards were not met, quotations might continue to be
published in the overthecounter "additional list" or one of the "local lists"
unless, as detailed in Nasdaq's published guidelines, the number of
publiclyheld Indigo shares (excluding Indigo shares held by officers, directors
and beneficial owners of more than 10% of the Indigo shares) is less than
100,000, there are fewer than 300 holders in total, or there is not at least one
market maker for the Indigo shares. If the Indigo shares are no longer eligible
for Nasdaq quotation, quotations might still be available from other sources.
Exchange Act Registration
The Indigo shares are currently registered under the Exchange Act. Indigo
may terminate registration of the Indigo shares under the Exchange Act upon
application to the Securities and Exchange Commission if the Indigo shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Indigo shares under the Exchange
Act would substantially reduce the information required to be furnished by
Indigo to its shareholders and to the Securities and Exchange Commission.
Termination of registration would make certain provisions of the Exchange Act no
longer applicable to Indigo, such as the requirement to file an annual report on
Form 20F with the Securities and Exchange Commission. Furthermore, the ability
of "affiliates" of Indigo and persons holding "restricted securities" of Indigo
to dispose of those securities under Rule 144 or 144A promulgated under the
Securities Act of 1933, may be impaired or eliminated. If registration of the
Indigo shares under the Exchange Act were terminated, the Indigo shares would no
longer be "margin securities" or be eligible for inclusion in the Nasdaq
National Market System. We currently intend to seek to cause Indigo to terminate
the registration of the Indigo shares under the Exchange Act as soon after
consummation of the offer as the requirements for termination of registration
are met.
Margin Regulations
The Indigo shares are currently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System, which has the effect,
among other things, of allowing brokers to extend credit on the collateral of
the Indigo shares. Depending upon factors similar to those described above
regarding listing and market quotations, it is likely that, following the offer,
the Indigo shares would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers.
Certain Conditions of the Offer
Notwithstanding any other provision of the offer, AerFi Sverige may not
accept for payment or pay for any Indigo shares and may terminate the offer if
all conditions to the offer, except for applicable regulatory approvals (see
ACertain Legal Matters; Regulatory Approvals@), are not satisfied on or before
the expiration date of the offer. In particular, AerFi Sverige may not accept
for payment or pay for any Indigo shares and may terminate the offer if:
(1) before the expiration date of the offer:
(a) AerFi Sverige, AerFi, Indigo or their representative have not received
an unconditional written statement from the Minister for Enterprise,
Trade and Employment of Ireland that she or he has decided not to make
an order under Section 9 of the Irish Mergers Act in relation to the
offer or any related transactions or the applicable statutory period for
the making of such an order has not expired, or
(b) the waiting period under the HartScottRodino Act (the U.S. antitrust
legislation) that is applicable to the offer and the related
transactions has not expired or been terminated, or
(2) at any time on or after November 11, 1999 and before the expiration date
of the offer, any of the following conditions exist:
(a) there is any law, or there shall be threatened, instituted or pending
any action or proceeding, or any investigation or other inquiry that in
AerFi Sverige's judgment might result in that action or proceeding, by
any government or governmental authority or agency, or by any other
person, before any court or governmental authority or agency:
(1) challenging or seeking to make illegal, to delay materially or otherwise
directly or indirectly to restrain or prohibit the making or conduct of
the offer and/or any related transactions or the acceptance for payment
of or payment for some of or all the Indigo shares by AerFi Sverige or
the completion of any related transactions, seeking to obtain damages or
otherwise directly or indirectly relating to the transactions
contemplated by or related to the offer or the combination
(2) seeking to restrain or prohibit AerFi Sverige's ownership or operation
(or that of its respective subsidiaries or affiliates) of all or any
material portion of any of the Indigo shares or the business or assets
of Indigo and its subsidiaries, taken as a whole, or of AerFi Sverige
and its subsidiaries, taken as a whole, or to compel AerFi Sverige or
any of its subsidiaries or affiliates to dispose of or hold separate all
or any material portion of the business or assets of Indigo and its
subsidiaries, taken as a whole, or of AerFi Sverige and its
subsidiaries, taken as a whole,
(3) seeking to impose or confirm material limitations on the ability of
AerFi Sverige or any of AerFi Sverige's subsidiaries or affiliates
effectively to exercise full rights of ownership of the Indigo shares,
including, without limitation, the right to vote any Indigo shares
acquired or owned by AerFi Sverige or any of AerFi Sverige's
subsidiaries or affiliates on all matters properly presented to Indigo's
shareholders,
(4) seeking to require divestiture by AerFi Sverige or any of AerFi
Sverige's subsidiaries or affiliates of any Indigo shares or
(5) that otherwise, in the judgment of AerFi Sverige, is likely to have a
material adverse effect on Indigo or AerFi, or
(b) there is any action taken, or any law proposed or enacted or deemed
applicable to the offer or the combination, by any court, government or
governmental authority or agency other than the application of the
waiting period provisions of the Irish Mergers Act or the HartScott
Xxxxxx Act to the offer or the combination, that, in the judgment of
AerFi Sverige, is likely to result in any of the consequences referred
to in clauses (1) through (5) of paragraph (a) above; or
(c) any change occurs or is threatened (or any development occurs or is
threatened involving a prospective change) in the business, assets,
liabilities, financial condition, capitalization, operations, results of
operations or prospects of Indigo or any of its subsidiaries that, in
the reasonable judgment of AerFi Sverige, is or is likely to have a
materially adverse effect on Indigo, or AerFi Sverige becomes aware of
any facts that, in the reasonable judgment of AerFi Sverige, have or are
likely to have material adverse significance with respect to either the
value of Indigo and its subsidiaries, taken as a whole, or the value of
the Indigo shares to us; or
(d) it is publicly disclosed or AerFi Sverige otherwise learns that:
(1) any person or "group", other than any shareholder who is a party to the
share exchange agreement and/or share purchase agreement, has acquired
or proposes to acquire beneficial ownership of more than 10% of any
class or series of capital stock of Indigo, through the acquisition of
stock, the formation of a group or otherwise, or is granted any option,
right or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 10% of any class or series of capital stock of
Indigo other than acquisitions for bona fide arbitrage purposes only and
other than as disclosed in a Schedule 13D or 13G on file with the
Securities and Exchange Commission on November 11, 1999, or
(2) any such person or group that, before November 11, 1999, had filed a
Schedule 13D or 13G with the Securities and Exchange Commission, other
than any shareholder who is a party to the share exchange agreement
and/or share purchase agreement, has acquired or proposes to acquire
beneficial ownership of additional shares of any class or series of
capital stock of Indigo, through the acquisition of stock, the formation
of a group or otherwise, constituting 10% or more of any such class or
series, or is granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of additional shares of any
class or series of capital stock of Indigo constituting 10% or more of
any such class or series; or
(e) any person makes, or publicly announces an intention to make, a tender
or exchange offer for at least 10% of the outstanding Indigo shares; or
(f) any person files a Notification and Report Form under the HartScott
Xxxxxx Act or makes a similar filing under any other antitrust law or
makes a public announcement reflecting an intent to acquire Indigo or
10% or more of the assets or securities of Indigo; or
(g) any person makes a proposal or other communication to Indigo or enters
into a definitive agreement or an agreement in principle with Indigo,
regarding an acquisition proposal;
(h) the Indigo board of directors withdraws or modifies in a manner adverse
to AerFi Sverige, its approval or recommendation of the offer or
recommends, enters into, or publicly announces its intention to enter
into, a definitive agreement or an agreement in principle with respect
to an acquisition proposal (or resolves to do any of the foregoing); or
(i) any of Indigo's representations and warranties contained in the
combination agreement, that is (1) qualified by materiality or material
adverse effect or any similar standard or qualification, was not true
and correct when made or at any time before the acceptance for purchase
of the Indigo shares or (2) not so qualified, was not true and correct
in all material respects when made or at any time before the acceptance
for purchase of the Indigo shares; or
(j) Indigo breaches or fails to perform in any material respect any of its
obligations under the combination agreement; or
(k) the combination agreement is terminated in accordance with its terms; or
(l) there is any general suspension of trading in, or limitation on prices
for, securities on the New York Stock Exchange, Nasdaq or in the
overthecounter market; or
(m) there is any declaration of a banking moratorium by Swedish, Irish, U.S.
Federal or New York State authorities or a general suspension of
payments in respect of lenders that regularly participate in the U.S. or
international markets in loans to large corporations; or
(n) there is any material limitation by any Swedish, Irish, U.S. Federal,
state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency in
Sweden, Ireland or the United States that materially affects the
extension of credit generally by lenders that regularly participate in
the U.S. or international markets in loans to large corporations; or
(o) there is any commencement of a war involving Sweden, Ireland or the
United States or any commencement of armed hostilities or other national
or international calamity involving Sweden, Ireland or the United States
that has a material effect on bank syndication or financial markets in
the United States or internationally; or
(p) in the case any of the events in paragraphs (l) through (o) above,
existed on or at the time of the commencement of this offer, there is a
material acceleration or worsening of those events which, in the sole
judgment of AerFi Sverige and regardless of the circumstances (including
any action or omission by us or AerFi Sverige) giving rise to any such
condition, makes it inadvisable to proceed with that acceptance for
payment or payment.
(3) we have not received, dated as of the unconditional time, (a) certain
legal opinions, (b) a certificate of the chief executive officer of
Indigo regarding the accuracy of its representations and warranties and
the performance of its obligations under the combination agreement and
(c) certain other documents that we may reasonably request relating to
the existence and authority of Indigo and its subsidiaries.
Certain Legal Matters; Regulatory Approvals
General
Except as described in this section, based on our review of publicly
available filings of Indigo with the Securities and Exchange Commission and
other publicly available information regarding Indigo, we are not aware of any
license or regulatory permit that appears to be material to the business of
Indigo and its subsidiaries, taken as a whole, that might be adversely affected
by our acquisitions of Indigo shares (and/or the indirect acquisition of the
stock of Indigo's subsidiaries) as contemplated herein or of any approval or
other action by or with any domestic, foreign, or international government
authority or administrative or regulatory agency that would be required for the
acquisition of ownership of the Indigo shares (and/or the indirect acquisition
of the stock of Indigo's subsidiaries) by us. Should any such approval or other
action be required, we currently contemplate that that approval or other action
will be sought. While, except as otherwise expressly described in this section,
we do not presently intend to delay the acceptance for payment of or payment for
Indigo shares tendered under the offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained without substantial conditions or that failure to obtain any
such approval or other action might not result in consequences adverse to
Indigo's business or that certain parts of Indigo's business might not have to
be divested if those approvals were not obtained or those other actions were not
taken, any of which could cause AerFi Sverige to decline to accept for payment
or pay for any Indigo shares tendered. AerFi Sverige's obligations to accept for
payment or pay for the Indigo shares tendered under the offer is subject to the
conditions described in this document, including the conditions referred to
above in this paragraph and certain conditions with respect to litigation and
governmental action. See "The Tender Offer -- Certain Conditions of the Offer".
Antitrust Compliance
Indigo shares will not be accepted for payment or paid for under the offer
until the expiration or earlier termination of the applicable waiting period
under the HartScottRodino Act. See "-- Certain Conditions of the Offer". Under
the HartScottRodino Act, certain transactions (including certain transactions
involving the proposed acquisition of in excess of 15%, 25% and 50% of the
equity interest of a target corporation) may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice and the Federal Trade Commission and certain waiting period requirements
have been satisfied. Since consummation of the offer and the share exchange
agreement and share purchase agreement transactions would result in the
ownership by us and our subsidiaries of more than 50% of the equity of Indigo,
the acquisition of Indigo shares by us under the offer and the share exchange
and share purchase agreement transactions is subject to those requirements.
We filed the required Notification and Report Forms with respect to the
offer and the combination with the Antitrust Division and the Federal Trade
Commission on November 12, 1999. The statutory waiting period applicable to our
purchase of Indigo shares under the offer and the share exchange agreement and
share purchase agreement transactions will expire on December 12, 1999. However,
before that date, the Antitrust Division or the Federal Trade Commission may
extend the waiting period by requesting additional information or documentary
material relevant to the acquisition. If such a request is made, the waiting
period will be extended until 11:59 P.M., New York City time, on the tenth day
after we certify to the Antitrust Division or the Federal Trade Commission, as
the case may be, that we have substantially complied with that request.
Thereafter, the waiting period can be extended only by court order.
We have made a request for early termination of the waiting period
applicable to the offer. There can be no assurance, however, that the waiting
period under the HartScottRodino Act will be terminated early or will not be
extended. Subject to the provision described under "-- Withdrawal Rights", any
extension of the waiting period will not give rise to any withdrawal rights not
otherwise provided for by applicable law. If AerFi Sverige's acquisition of
Indigo shares is delayed under a request by the Antitrust Division or the
Federal Trade Commission for additional information or documentary material
under the HartScottRodino Act, the offer may, but need not, be extended.
The Federal Trade Commission and the Antitrust Division frequently
scrutinize the legality under the antitrust laws of transactions such as the
proposed acquisition of Indigo shares by us under the offer. At any time before
or after the purchase of Indigo shares under the offer by us, the Federal Trade
Commission or the Antitrust Division could take any action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the purchase of Indigo shares under the offer or seeking the
divestiture of Indigo shares purchased by us or the divestiture of substantial
assets of AerFi, Indigo or their respective subsidiaries. Private parties and
state attorneys general may also bring legal action under federal or state
antitrust laws under certain circumstances. Based upon an examination of
information available to AerFi relating to the businesses in which AerFi, Indigo
and their respective subsidiaries are engaged, we believe that neither the offer
nor the combination will violate the antitrust laws. Nevertheless, there can be
no assurance what the result will be if a challenge is made. See "The Tender
Offer -- Certain Conditions of the Offer".
Pursuant to the Irish Mergers Act, the necessary antitrust filings were made
in Ireland on November 12, 1999, and any delays in decisions by the appropriate
regulatory authorities in Ireland may affect when and whether the combination
will proceed.
Under the Irish Mergers Act, certain mergers and takeovers (including
certain transactions involving the proposed acquisition of 25% or more of the
equity interest of a target corporation) must, if certain financial thresholds
are exceeded, be notified to the Minster for Enterprise, Trade and Employment.
Where the Irish Mergers Act applies, notification must be made within one month
after an offer capable of acceptance is made, the effect of which would result
in the merger or takeover, and the transaction may not be consummated (the main
sanction imposed by the Act is that title to the shares or assets concerned will
not pass) unless the Minister has issued a clearance statement in respect of the
proposed merger or takeover, or it is implemented in accordance with the
conditions of a conditional clearance, or the Minister fails to take any action
within the relevant period prescribed by the Irish Mergers Act, which is 3
months from the later of the date of notification and, if the Minister requests
further information about the proposed transaction, the date of receipt of that
information.
Since the consummation of the combination agreement and the related
transactions, including the offer, would result in ownership by us and our
subsidiaries of more than 25% of the equity of Indigo, and as the financial
thresholds and the other requirements of the Irish Mergers Act are met, the
acquisition of Indigo shares by us and AerFi Sverige under the offer and the
share exchange agreement and share purchase agreement transactions is subject to
the provisions of the Irish Mergers Act and accordingly Indigo shares will not
be accepted for payment or paid for under the offer until either an
unconditional clearance from the Minister has been received or the relevant
period prescribed by the Irish Mergers Act has expired. See "-- Certain
Conditions of the Offer".
Pursuant to the Swedish Companies Act, no antitrust filings with the
appropriate regulatory authorities in Sweden were necessary in connection with
the offer and the combination.
State Takeover Statutes
A number of states have adopted laws which purport, to varying degrees, to
apply to attempts to acquire corporations that are incorporated in, or which
have substantial assets, shareholders, principal executive offices or principal
places of business or whose business operations otherwise have substantial
economic effects in, those states. Indigo, directly or through subsidiaries,
conducts business in a number of states throughout the United States, some of
which have enacted those laws. We do not believe that any of these laws will, by
their terms, apply to the offer, the compulsory acquisition or any other
business combination between us or any of our affiliates and Indigo and we have
not complied with any such laws. To the extent that certain provisions of these
laws purport to apply to the offer or any such merger or other business
combination, we believe that there are reasonable bases for contesting those
laws.
If any government official or third party should seek to apply any state
takeover law to the offer, the compulsory acquisition or any other business
combination between us or any of our affiliates and Indigo, we will take any
action as then appears desirable, which action may include challenging the
applicability or validity of that statute in appropriate court proceedings. In
the event it is asserted that one or more state takeover statutes is applicable
to the offer, the compulsory acquisition or any such other business combination
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the offer the compulsory acquisition or any such other business
combination, we might be required to file certain information with, or to
receive approvals from, the relevant state authorities or holders of Indigo
shares, and we might be unable to accept for payment or pay for Indigo shares
tendered under the offer, or be delayed in continuing or consummating the offer,
the compulsory acquisition or any such other business combination. In that case,
we may not be obligated to accept for payment or pay for any tendered Indigo
shares.
Fees and Expenses
Except as disclosed below, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Indigo shares under the
offer.
We have retained the services of Xxxxxxxxx & Co. LLC. to act as our
financial advisor and as dealer manager in connection with the offer and the
combination. Under the terms of an engagement letter, we agreed to pay Xxxxxxxxx
for its services as financial advisor and dealer manager an aggregate fee of up
to $2.5 million. We also agreed to reimburse Xxxxxxxxx for its reasonable travel
and other outofpocket expenses incurred in connection with its services,
including fees and expenses of its legal counsel. We further agreed to indemnify
Xxxxxxxxx and certain related parties against certain liabilities arising out of
Xxxxxxxxx'x engagement.
We have retained Corporate Investor Communications, Inc. to be the
information agent and Bankers Trust Company to be the depositary in connection
with the offer. The information agent may contact holders of Indigo shares by
mail, telephone, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominee shareholders to forward materials
relating to the offer to beneficial owners of Indigo shares.
As compensation for acting as information agent in connection with the
offer, Corporate Investor Communications, Inc. will be paid a fee of $12,000 and
will also be reimbursed for certain outofpocket expenses and may be
indemnified against certain liabilities and expenses in connection with the
offer, including certain liabilities under the federal securities laws. We will
pay the depositary reasonable and customary compensation for its services in
connection with the offer, plus reimbursement for outofpocket expenses, and
will indemnify the depositary against certain liabilities and expenses in
connection therewith, including certain liabilities under federal securities
laws. We will reimburse brokers, dealers, commercial banks and trust companies
for customary handling and mailing expenses incurred by them in forwarding
material to their customers.
The following is an estimate of fees and expenses to be incurred by us in
connection with the offer:
Financial advisor/dealer manager.. $2,600,000
Legal............................. 2,200,000
Accounting........................ 500,000
Taxation.......................... 425,000
Printing/filing................... 250,000
Advertising....................... 100,000
Depositary........................ 32,000
Information agent (including 39,000
mailing)........................
Miscellaneous..................... 500,000
----------
Total........................... $6,646,000
==========
Miscellaneous
The offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Indigo shares in any jurisdiction in which the making of
the offer or the acceptance thereof would not be in compliance with the laws of
that jurisdiction. However, we may take such action as we may deem necessary to
make the offer in any such jurisdiction and extend the offer to holders of
Indigo shares in that jurisdiction. In any jurisdiction the securities, blue sky
or other laws of which require the offer to be made by a licensed broker or
dealer, the offer is being made on our behalf by the dealer manager or one or
more registered brokers or dealers licensed under the laws of that jurisdiction.
YOU SHOULD RELY ONLY ON INFORMATION CONTAINED IN THE DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
We have filed with the Securities and Exchange Commission a Tender Offer
Statement on Schedule 14D1 under Rule 14d3 under the Exchange Act, together
with exhibits, furnishing certain additional information about the offer. AerFi,
AerFi Sverige and Indigo have jointly filed a Transaction Statement on Schedule
13E3, under Rule 13e3 under the Exchange Act, furnishing certain additional
information about the transactions. We may file amendments to those statements.
In addition, Indigo has filed with the Securities and Exchange Commission a
Schedule 14D9, together with exhibits, under Rule 14d9 under the Exchange Act,
setting forth the recommendations of Indigo's board of directors regarding the
offer and the reasons for those recommendations and furnishing certain
additional related information. You may examine and obtain copies of these
documents, and any amendments from the Securities and Exchange Commission (but
not the regional offices of the Securities and Exchange Commission) in the
manner described under "-- Certain Information Concerning AerFi and AerFi
Sverige" above.
AerFi Sverige
November 17, 1999
-----------
SCHEDULES
-----------
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
Indigo
The following table lists (1) the name, current business or residence
address and present principal occupation or employment, (2) material
occupations, positions, offices or employments and business addresses thereof
for the past five years and (3) information as to beneficial ownership of Indigo
shares of each director and executive officer of Indigo as of November 17, 1999.
Unless otherwise indicated, each of Indigo's directors and officers is a citizen
of the Kingdom of Sweden. Except as otherwise indicated, the business address of
each director and executive officer of Indigo is Sodra Xxxxxxxxxxxxx 0, X000 00
Xxxxx, Xxxxxx. Except as otherwise indicated, each occupation listed opposite a
person's name refers to employment with Indigo. Other than as indicated below,
no director or executive officer of Indigo beneficially owns more than 1% of the
outstanding Indigo shares. Directors of Indigo are indicated with an asterisk.
Present Principal Occupation or Employment; Beneficial
Name, Citizenship Material Positions Held During the Past Five Years Ownership of
and Current Business Address and Business Addresses Thereof Indigo shares
---------------------------- -------------------------------------------------- -------------
*Xxxx-Xxxx Xxxxxxxx.......... Xx. Xxxxxxxx has been Chairman of the board of 3,364,143
directors of Indigo since its inception and
was President of Indigo from its inception
until January 1995. Xx. Xxxxxxxx is also
currently the Chairman of the board of
directors of Volito AB, an investment company
with interests in aviation, trade, property
management and other activities, including a
significant ownership interest in Indigo.
From 1982 to 1991, Xx. Xxxxxxxx was employed
in various capacities by Xxxxxxx AB, a
publicly traded Swedish real estate finance
and property management company, including
Senior Vice President of Nyckeln from 1982 to
1985; Managing Director of Nyckeln's Aircraft
Leasing division from 1985 to 1991; and Chief
Executive Officer of Indigo Aviation AB. Xx.
Xxxxxxxx holds a Master of Science degree
from the University of Linkoping and is a
graduate of the Swedish Military Academy. He
also currently holds the rank of Captain in
the Swedish Army Reserve.
*Xxxx Xxxxx.................. Xx. Xxxxx has been President and Chief Executive 1,200,161
(United States of America) Officer of Indigo Airlease Corporation, a
wholly owned U.S. subsidiary of Indigo, since
May 1997. Xx. Xxxxx has been a director of
Indigo since 1995. From 1987 to 1995, Xx.
Xxxxx was employed by ILFC, an aircraft
leasing company, and was Vice President --
Marketing in charge of marketing for Europe,
the United States and the South Pacific from
1990 to 1995. Before joining ILFC, Xx. Xxxxx'
aviation experience included positions as
Manager of Technical Services for Aeronautics
Leasing, Inc. from 1986 to 1987; Manager in
charge of Maintenance Planning and
Reliability Engineering for Frontier
Horizon/Skybus Airlines from 1985 to 1986;
and Line Supervisor for Atlas Aircraft in
1985. Xx. Xxxxx served in the U.S. Army from
1979 to 1985 in 179th Aviation Company in
Fort Xxxxxx, Colorado with his last position
being Flight Engineering/ Technical
Inspector. Xx. Xxxxx attended the University
of Colorado studying Aviation/Aerospace
Engineering.
*Xx Xxxxxx................... Mr. Xxxxxx has been a director of Indigo since 0
1993. Mr. Xxxxxx is currently a private
investor and a director of Volito. From 1991
to 1997, Mr. Xxxxxx owned and managed ALT
Finance, a London, England based company,
which was a former finance subsidiary of a
Swedish bank, that was active in aircraft
finance. From 1987 to 1991, Mr. Xxxxxx was
General Manager of CL/PK Airfinance, an
aircraft financing joint venture between XX
Xxxxxx Stockholm and Credit Lyonnais, Paris.
From 1982 to 1987, Mr. Xxxxxx was the
Managing Director of PK Finance
International, which was responsible for the
international financing of aircraft for XX
Xxxxxx. From 1978 to 1982, Mr. Xxxxxx was an
Area Manager of Independent Leasing AB. Mr.
Xxxxxx is a graduate of Chalmers University
of Technology in Gothenburg, Sweden.
Xxxxxxx X. Xxxxxxxx.......... Xx. Xxxxxxxx is Executive Vice President Finance 224,111
(United States of America) and Chief Financial Officer of Indigo Airlease
Corporation, a whollyowned U.S. subsidiary of
Indigo, and has been with Indigo since March
1996. From 1992 to 1996, Xx. Xxxxxxxx was
employed by ILFC, and was Director of Finance
from 1993 to 1996. Before that time, Xx.
Xxxxxxxx was an auditor with Xxxxx and Xxxxx
from 1990 to 1992. Xx. Xxxxxxxx is a graduate
of the University of California, Berkeley
with a Bachelor of Science degree with honors
in Accounting and Finance and is a Certified
Public Accountant.
Xxxxx Xxxxxxx................ Xx. Xxxxxxx is Managing Director of Indigo and 10,000
(Federal Republic of Germany) has been with Indigo since September 1997. Before
joining Indigo, Xx. Xxxxxxx was Director of
Leasing Market Division for Airbus Industrie
from 1994 to 1997 and Director of Marketing
and Sales/Europe for Airbus Industrie from
1984 to 1993.
*Xxx-Xxxx Xxxxxxxxx.......... Xx. Xxxxxxxxx became a deputy director of 0
Indigo in 1996 and became a director in 1997.
Xx. Xxxxxxxxx is currently Chairman of
Quequoin Holdings, Ltd., an investment group
specializing primarily in medical venture
capital. Xx. Xxxxxxxxx is also the Chairman
of Phairson Medical Ltd., a biotechnology
Group; BM Research A/S, a drug delivery
systems company, and Epivac Ltd., a drug
delivery systems company. Xx. Xxxxxxxxx is
also a director of Ermitage International
Ltd., a money management company; Shilling
Banco Ltd., a UK commercial real estate
investment company; and Ostrumentia, a
Swedish commercial reals estate investment
company and is a Deputy Director of Volito
AB. Xx. Xxxxxxxxx was Chairman and a
substantial shareholder in HemoCue AB, a
Swedish pharmaceutical company, from 1989 to
1992 and a director until 1994. From 1983
until 1988, Xx. Xxxxxxxxx managed his own
investment and strategic consulting business
in London, England.
*Xxxx Xxxxxxxxxx............. Mr. Xxxxxxxxxx has been a director of Indigo 0
(Kingdom of Norway) since 1997. Mr. Xxxxxxxxxx is currently the
managing director of several companies owned
by the Braathen family in Norway, including
Braganza A/S and Braathen Lease and Aviation
Know How A/X. Xxxxxxxx A/S is a major
shareholder of Braathens SAFE, Norway's
leading domestic airline. Mr. Xxxxxxxxxx has
been a director of ResidenSea Ltd. (Bahamas)
since December 1996, Kristiansand Dyrepark
ASA (Norway) since May 1996 and
Industriginans SMB II ASA (Norway), in which
Braganza AS has an ownership interest, since
December 1996. Mr. Xxxxxxxxxx held various
position in Braathens SAFE between 1988 and
1995. Mr. Xxxxxxxxxx is a graduate of the
Norwegian School of Economics and Business
Administration.
Xxxxxx X. Xxxxxxxx........... Xx. Xxxxxxxx has been Senior Vice President 0
(United States of America) Marketing of Indigo Airlease Corporation, a
whollyowned U.S. subsidiary of Indigo, since
April 1998. Before joining Indigo, Xx.
Xxxxxxxx was Vice President, Sales and
Marketing for General Electric Capital
Aviation Services since 1994. From 1991 to
1993, Xx. Xxxxxxxx was Marketing Manager for
Polaris Aircraft Leasing Corporation. Before
that time, Xx. Xxxxxxxx held various
positions at XxXxxxxxx Xxxxxxx Corporation's
Xxxxxxx Aircraft division from 1983 to 1990.
Xx. Xxxxxxxx received his Bachelor of Science
in Mechanical Engineering and Technology from
the University of Dayton and his Master of
Business Administration from the University
of Southern California.
*Xxx Xxxxx Xxxxxx............ Xx. Xxxxxx has been a director of Indigo since 0
(Kingdom of Norway) 1997. Xx. Xxxxxx is currently a partner of
Industriginans Direkte Investeringer A/S in
Norway, and managing director of
Industrifinans SMB II ASA, a venture capital
and buyout company managed by Industrifinans
Direkte. Xx. Xxxxxx joined Industrifinans
Direkte in 1992 and is also a director of
several public and privately held companies.
Before 1992, Xx. Xxxxxx has held positions in
Norsk Hydro, Norway's largest industrial
group, and Touche Xxxx Management
Consultants. Xx. Xxxxxx is a graduate of the
Norwegian School of Economics and Business
Administration.
Xxxxxx Xxxxxx................ Xx. Xxxxxx has been Senior Vice President 1,500
(United States of America) Marketing for Indigo Airlease Corporation since
May 1999. Before joining Indigo, Xx. Xxxxxx
was Vice President -- New Business and
Remarketing for The CIT Group where he had
been employed since 1991. From 1989 to 1991,
Xx. Xxxxxx was Vice President Marketing at
Cauff, Xxxxxxx Aviation; from 1987 to 1989
Manager of Aircraft Programs for Ryder; from
1986 to 1987 an Appraiser at Avmark Services
and from 1980 to 1986 held various positions
at Air Florida. Xx. Xxxxxx attended Xxxxx
University.
*Xxxxx Xxxxxxxx.............. Xx. Xxxxxxxx has been a director of Indigo since 9,000
(United States of America) 1998. Xx. Xxxxxxxx is currently the Chief
Executive Officer of jetBlue Airways. Prior
to joining jetBlue Airways in 1999 Xx.
Xxxxxxxx was the Chief Executive Officer of
Open Skies, Inc., a corporation which
provides reservation services to airlines
throughout the world, from 1995 to 1999. Xx.
Xxxxxxxx served as president of Xxxxxx Air
from its inception in 1991 until its
acquisition by Southwest Airlines in 1993.
Following the acquisition of Xxxxxx Air, Xx.
Xxxxxxxx served on the executive planning
committee of Southwest Airlines during 1994.
Xx. Xxxxxxxx is currently a director of
WestJet Airlines Ltd., a Canadian lowcost
airline.
Xxxxx Xxx Xxxxx.............. Xx. Xxx Xxxxx has been Vice President and 4,000
(United States of America) Corporate Counsel of Indigo Airlease Corporation
since January 1998. Before joining Indigo,
Xx. Xxx Xxxxx was the Vice President and
Assistant General Counsel for The AGES Group,
ALP from early 1996 through 1997. Xx. Xxx
Xxxxx was in private law practice from 1994
through 1995. Xx. Xxx Xxxxx is a graduate of
Pace University School of Law where she
received her juris doctor degree. Previously,
Xx. Xxx Xxxxx held a variety of management
positions in the aviation industry, including
serving as a contracts consultant for
Greenwich Air Services from 1989 to 1990 and
working in a variety of positions for World
Airways from 1981 to 1986.
Xxxx Xxxxxxxx................ Xx. Xxxxxxxx has been Vice President and 0
Corporate Counsel since April 1998. Before
joining Indigo, Xx. Xxxxxxxx was an attorney
at Advokatfirman Xxxxxxx in Kristiandstad,
Stockholm and Malmo, Sweden since 1990. From
1987 to 1990, Xx. Xxxxxxxx was serving a
junior judgship at the district court of
Ystad, Sweden. Xx. Xxxxxxxx served as an
officer in the special forces of the Royal
Swedish Marines Combat Group from 1980 to
1982. Xx. Xxxxxxxx received his Master of Law
at the University of Xxxx, Sweden.
Xxxx Xxxxxxxxxx.............. Xx. Xxxxxxxxxx has been Vice President Technical 8,000
of Indigo since August 1994. Before joining
Indigo, Xx. Xxxxxxxxxx was the head of the
Engineering section at Malmo Aviation AB from
1988 to 1994. Before that time, Xx.
Xxxxxxxxxx was a mechanical Designer and
System Engineer at Swedair AB from 1981 to
1988 and Purchaser and Systems Engineer with
Transair Sweden AB from 1979 to 1980. >From
1976 to 1977, Xx. Xxxxxxxxxx served as an
aircraft mechanic/noncommissioned officer in
the Swedish Airforce. Xx. Xxxxxxxxxx is a
graduate of a Swedish fouryear
technicalmechanical engineering school and
has also earned a Business Diploma. Xx.
Xxxxxxxxxx is a certified Private Pilot and a
Gliding Instructor appointed by the Royal
Swedish Air Force.
Xxxxxx X. XxXxxxxxx.......... Xx. XxXxxxxxx is currently Senior Vice President 4,200
(United States of America) Technical of Indigo Airlease Corporation, a
whollyowned U.S. subsidiary of Indigo, and
has been with Indigo since March 1997. Before
joining Indigo, Xx. XxXxxxxxx was a Director
of Technical Services for ILFC from 1994 to
1997, a Flight Line Mechanic for Federal
Express Corporation from 1992 to 1994 and a
Project Manager for Xxxxxxx Aircraft Company
from 1987 to 1992. Xx. XxXxxxxxx has an
Associate of Science Degree in Aviation
Maintenance Technology from EmbryRiddle
Aeronautical University. Xx. XxXxxxxxx is an
FAA Certified Airframe and Powerplant
Mechanic and an FAA certified Private Pilot.
*Xxxxxxxx X. Xxxxxx.......... Xx. Xxxxxx has been director of Indigo since 0
(United States of America) 1998. Xx. Xxxxxx has been the President of Atlas
Capital Partners, a private equity investment
fund, since February 1998. Before joining
Atlas Capital Partners, he was a Managing
Director at Xxxxxxx Xxxxx Xxxxxx and cohead
of its Transportation Investment Banking
Group from July 1993 to January 1998. From
1988 to 1993, Xx. Xxxxxx was Senior Vice
President of Xxxxxx Xxxx Inc., in charge of
the Transportation and Automotive Investment
Banking groups. From 1985 to 1988 he was a
Vice President of Xxxxxxx & Company Inc. From
1981 to 1985, Xx. Xxxxxx held various
executive positions at American Broadcasting
Companies, Inc. Xx. Xxxxxx holds a Bachelor
of Science degree in Business Administration
from Washington University and a Masters of
Business Administration from Harvard Business
School.
Xxxx Xxxxxxxx................ Xx. Xxxxxxxxx became a director of Indigo in 64,500
1995 and became a deputy director in 1997.
Xx. Xxxxxxxxx is currently a private
investor. From 1985 to 1993, Xx. Xxxxxxxxx
was the President of HemoCue AB, a Swedish
pharmaceutical company. Before that time, Xx.
Xxxxxxxxx was the General Manager of MedScand
AB from 1983 to 1984 and the General Manager
and International Product Manager of
Molnlycke AB from 1972 to 1982. Xx. Xxxxxxxxx
is currently a director of Quequoin, BM
Research A/S and Volito AB.
------------
* Represents Directors of Indigo.
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF
XxxXx and AerFi Sverige
The following table lists (1) the name, current business or residence
address and present principal occupation or employment and (2) material
occupations, positions, offices or employments and business addresses for the
past five years, of each of our director and executive officer. Unless otherwise
stated, each of our, directors and officers, and each of the proposed directors
and officers of Indigo after consummation of the offer and the combination, is a
citizen of Ireland.
Except as otherwise indicated, the business address of each of our director
and executive officer is, AerFi Group plc, Aviation House, Shannon, Co. Xxxxx,
Ireland. Except as otherwise indicated, each occupation listed opposite a
person's name refers to employment with AerFi. None of our director or executive
officer beneficially owns any material amount of outstanding Indigo shares. Our
directors are indicated with an asterisk.
A. Directors and Executive Officers of AerFi.
Present Principal Occupation or Employment;
Name, Citizenship Material Positions Held During the Past Five Years
and Current Business Address and Business Addresses Thereof
-------------------------------- --------------------------------------------------
*Xxxx Xxxxxxxxx of Coddenham CBE Chairman Xxxx Xxxxxxxxx became Chairman of AerFi
(United Kingdom) on October 29, 1993 and is Chairman of the
Organization and Compensation Committee. He is
Chairman of Xxxxxxx plc and of Halifax plc and a
nonexecutive director of various companies,
including Manpower Inc (formerly Blue Arrow) and
St. Xxxxx' Place Capital plc. He is also a Bank of
England nominee on the Panel of Takeovers and
Mergers.
*Xxxxxxx Xxxxxx Chief Executive Xx. Xxxxxx is a Chartered
Accountant. He has been Chief Executive of AerFi
since October 29, 1993 and a Director since April
1993. He has held a number of senior management
positions since joining AerFi as a Vice President
in 1986 and has served as Deputy Chief Executive
of AerFi's Leasing and Capital divisions and from
April 1993 to October 1993 as AerFi's Chief
Operating Officer.
*Xxxxx Xxxxxxxxx Xx. Xxxxxxxxx has been managing Partner of TPG
(United States of America) since 1992. Prior to 1992, Xx. Xxxxxxxxx was Chief
000 Xxxx Xxxxxx, Xxxxx 0000, Operating Officer and Chief Investment Officer of
Fourth Worth, Keystone Inc.
Texas 76102, USA
*X. Xxxxxxx Xxxxxx Xx. Xxxxxx is a Chartered Accountant. He became a
(United Kingdom) Director/ Deputy Chairman of AerFi on October 29,
1993 and is a member of the Audit and the
Organization and Compensation Committees. Xx.
Xxxxxx is Chairman of various companies, including
the publicly quoted Simon Group plc., National
Express Group plc, Xxxxxxx Foods plc and Corporate
Services Group plc. He is also a nonexecutive
director of British Airways plc and of various
private companies.
*Xxxxxxx X. Xxxxx Xx. Xxxxx has been a Director of AerFi since 1976
and is Chairman of the Audit Committee and is a
member of the Organization and Compensation
Committee. Xx. Xxxxx is a former Deputy Chairman,
Group Chief Executive and President of the
Company. He is also a nonexecutive Director of
various private companies.
*Xxxxxxx. Xxxxxx Xx. Xxxxxx has been Chairman and Chief Executive of
(United States of America) America West Holdings Corporation since February 1997
American West Airlines Inc. and, since 1992, Chairman of the Board of its
000 X Xxx Xxxxxxx Xxxxxxxxx, xxxxxxxxx xxxxxxxxxx, Xxxxxxx West Airlines, Inc.
Phoenix, AZ 85034 USA Xx. Xxxxxx was Chairman of Airplanes Group from
1996 to 1998. Xx. Xxxxxx is owner and president of
Xxxxxx & Company, Inc., a financial advisory firm.
He is currently a director of Central Newspapers,
Inc., publisher of the Phoenix and Indianapolis
morning and evening newspapers, of Xxxxxx Dodge
Corporation, a major mining and manufacturing
company and Xxxxxxxx Wine Estates. He is also a
director of Air Transport Association (ATA).
*Xxxxxxx X. Xxxxx XXX Mr. Price has been Managing Partner of TPG since
(United States of America) 1992. Prior to 1992, Mr. Price was Vice President
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, of Strategic Planning and Business Development for
San Francisco, California 94104 GE Capital.
USA
*Xxxxxx X. Xxxxxxx Xx. Xxxxxxx became a Director of AerFi on July 26,
1994. Xx. Xxxxxxx is a nonexecutive director of
various public and private companies and he is
former Deputy Chairman and Group Chief Executive
of Allied Irish Banks plc.
Xxxxxx Xxxxxx Chief Financial Officer since May, 1997
(United Kingdom)
Xxxx Xxxxx General Counsel since May, 1997
Xxxx Xxxxxxx Group Treasurer since May, 1997
Xxx Xxxxxx Group Chief Accountant since May, 1997
Xxxxxxx Xxxxx General Counsel since May, 1997
Xxxx Xxxxxxx Company Secretary since September, 1997
------------
* Represents Directors of AerFi.
B. Directors and Executive Officers of AerFi Sverige.
Present Principal Occupation or Employment;
Name, Citizenship Material Positions Held During the Past Five Years
and Current Business Address and Business Addresses Thereof
-------------------------------- --------------------------------------------------
*Xxxx Xxxxxxx Director of AerFi Sverige since November 1999
Xxx Xxxxxx Deputy director of AerFi Sverige since
November 1999
------------
* Represents Directors of AerFi Sverige.
LOGO
November 11, 1999
Board of Directors
Indigo Aviation AB
Xxxxx Xxxxxxxxxxxxx 0
X000 00 Xxxxx, Xxxxxx
Ladies and Gentlemen:
We understand that Indigo Aviation AB. ("Indigo") and AerFi Group PLC
("AerFi") have entered into a Combination Agreement (the "Combination
Agreement") dated November 11, 1999, pursuant to which AerFi will offer to
acquire the approximately 3.0 million shares of Indigo currently held by public
shareholders for $13.00 per share in cash (the "Cash Purchase Price"). We also
understand that certain shareholders of Indigo (as set forth in the Share
Purchase Agreement, the "Inside Shareholders") and AerFi have entered into a
Share Purchase Agreement (the "Share Purchase Agreement") dated November 11,
1999, pursuant to which AerFi will acquire approximately 2.3 million shares held
by the Inside Shareholders for the Cash Purchase Price. Additionally, we
understand that certain Inside Shareholders and AerFi have entered into a Share
Exchange Agreement (the "Share Exchange Agreement") dated November 11, 1999,
pursuant to which approximately 5.9 million shares currently held by such Inside
Shareholders will be acquired in a stock for stock exchange whereby each such
Indigo share will be exchanged for 3.7 AerFi shares, and an Option Agreement
(the "Option Agreement") dated November 11, 1999 whereby such Inside
Shareholders will be granted options to purchase an aggregate of 1,000,000 AerFi
shares at a price of $3.17 per share. You have provided us with a copy of the
Combination Agreement, the Share Exchange Agreement, the Option Agreement and
the Share Purchase Agreement (together, these agreements constitute the
"Transaction").
You have asked us to render our opinion as to whether the Cash Purchase
Price is fair, from a financial point of view, to the shareholders of Indigo
(other than the Inside Shareholders).
In the course of performing our review and analyses for rendering this
opinion, we have:
o reviewed the Combination Agreement, the Share Exchange Agreement, the
Option Agreement and the Share Purchase Agreement;
o reviewed Indigo's Annual Reports to Shareholders and Annual Reports on
Form 20F for the fiscal years ended December 31, 1998 through 1999, and
its Quarterly Reports on Form 6K for the periods ended March 31, June
30, 1999 and September 30, 1999;
o reviewed certain operating and financial information, including
projections, provided to us by management relating to Indigo's business
and prospects;
o met with certain members of Indigo's senior management to discuss
Indigo's business, operations, historical and projected financial
statements and future prospects;
o reviewed the historical prices, valuation parameters and trading volume
of the common shares of Indigo;
o reviewed publicly available financial data, stock market performance
data and valuation parameters of companies which we deemed generally
comparable to Indigo;
o performed discounted cash flow analyses based on the projections for
Indigo furnished to us; and
o conducted such other studies, analyses, inquiries and investigations as
we deemed appropriate.
We have relied upon and assumed, without independent verification, the
accuracy and completeness of the financial and other information, including
without limitation the projections provided to us by Indigo and current and
future estimates of aircraft values as provided by Avitas and adjusted, as
appropriate, by management. With respect to Indigo's projected financial
results, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the senior
managements of Indigo as to the expected future performance of Indigo,
respectively. We have not assumed any responsibility for the independent
verification of any such information or of the projections provided to us, and
we have further relied upon the assurances of the senior managements of Indigo
that they are unaware of any facts that would make the information and
projections provided to us incomplete or misleading.
In arriving at our opinion, we have not performed or obtained any
independent appraisal of the assets or liabilities of Indigo, nor have we been
furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions, and the information made available to us,
as of the date hereof.
We have acted as a financial advisor to Indigo in connection with the
Transaction and will receive a fee for such services. In the ordinary course of
business, Bear Xxxxxxx may actively trade the equity and debt securities of
Indigo for our own account and for the account of our customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is intended for the benefit and use of the
Board of Directors of Indigo and does not constitute a recommendation to the
Board of Directors of Indigo or any holders of Indigo common stock as to how to
vote in connection with the Transaction. This opinion does not address Indigo's
underlying business decision to pursue the Transaction. This letter is not to be
used for any other purpose, or reproduced, disseminated, quoted to or referred
to at any time, in whole or in part, without our prior written consent;
provided, however, that this letter may be included in its entirety in any offer
to purchase to be distributed to the holders of Indigo common stock in
connection with the Transaction.
Based on and subject to the foregoing, it is our opinion that, as of the
date hereof, the Cash Purchase Price is fair, from a financial point of view, to
the shareholders of Indigo (other than the Inside Shareholders).
Very truly yours,
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxxx Xxxxxxxxx
Senior Managing Director
The depositary will accept manually signed facsimile copies of the letter
of transmittal. You or your broker, dealer, commercial bank, trust company or
other nominee should send or deliver the letter of transmittal, Indigo share
certificates and any other required documents to the depositary at the following
addresses:
The depositary for the offer is:
Bankers Trust Company
By Mail: By Facsimile Transmission By Hand or Overnight
(For Eligible Institutions Courier:
000 Xxxxxxxxxx Xxxxxx xxxx):
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxxxxxxx Xxxxxx
(212) 250-0000 Xxx Xxxx, Xxx Xxxx 00000
Att: Bond Transfer Unit/
ADR Tender Att: Bond Transfer Unit/
ADR Tender
Confirm by Telephone:
(000) 000-0000
You should address questions or requests for assistance or additional
copies of this document and the letter of transmittal to the information agent
or the dealer manager at their addresses and telephone numbers listed below. You
may also contact your broker, dealer, commercial bank or trust company for
assistance concerning the offer. You may obtain additional copies of this
document, the letter of transmittal and other related materials from the
information agent or the dealer manager. These documents will be furnished
promptly at our expense.
The information agent for the offer is:
Corporate Investor Communications, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxx
Xxx Xxxxxx 00000-2586
Toll Free (000) 000-0000
Banks and Brokers Please Call: (000) 000-0000
The dealer manager for the offer is:
XXXXXXXXX & CO., LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
(000) 000-0000 (Toll Free)
