BT 2016 Annual Report Download - page 253

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Overview The Strategic Report Governance Financial statements Additional information
Board meetings of BT are likely to consider or refer to any matter
in respect of which the Conflicted Matters Committee believes that
either:
(i) BT and the Deutsche Telekom Group are competitors; or
(ii) there is an actual or potential conflict of interest between BT
and the Deutsche Telekom Group (a “Conflicted Matter”).
The Conflicted Matters Committee shall comprise of at least
three members including at all times the Secretary to the Board,
the Head of Competition and Regulatory Law and the Director
of Governance. The Deutsche Telekom Representative Director
shall not be a member of the Conflicted Matters Committee. The
Deutsche Telekom Representative Director shall not attend any
Board meeting of BT unless a senior compliance officer of Deutsche
Telekom AG has received prior confirmation that the Conflicted
Matters Committee has considered whether such attendance
raises any concerns in relation to a Conflicted Matter. In the event
that the Conflicted Matters Committee has a serious or immediate
concern in relation to a Conflicted Matter, the Deutsche Telekom
Representative Director shall not attend any Board meetings
in relation to the Conflicted Matter and shall not receive any
information in relation to the Conflicted Matter.
Deutsche Telekom AG is also entitled to receive, subject to
compliance by BT with its legal and regulatory obligations, such
financial or other information in relation to the BT Group as is
necessary or reasonably required by Deutsche Telekom AG in order
to comply with its reporting requirements and legal, regulatory or
tax obligations.
Standstill and Lock-up Agreement with Orange SA
and Orange
1. Standstill and Lock-up Agreement
BT entered into a Standstill and Lock-up Agreement with Orange
SA and Orange on Completion, which regulates the ability of the
Orange Group to deal in shares and other securities of BT. The
Standstill and Lock-up Agreement terminates if (a) the Ordinary
Shares are no longer listed on the premium listing segment of
the Official List and admitted to trading on the London Stock
Exchange’s main market for listed securities or (b) the Orange Group
ceases to be interested in more than 3% of the issued ordinary
share capital of BT.
2. Standstill Provisions
The Standstill and Lock-up Agreement contains standstill provisions
pursuant to which Orange SA undertakes on behalf of itself and its
group for a period of three years from the date of the Standstill and
Lock-up Agreement, subject to certain exceptions, not to:
(i) acquire or offer to acquire any interest in any shares or other
securities of BT as a result of which the aggregate interest of
the Orange Group and its concert parties increases above 4%
of Ordinary Shares in issue at any time;
(ii) act in concert with any person in respect of the holding, voting
or disposition of any shares or other securities of BT;
(iii) solicit or participate in any solicitation of Shareholders to vote
in a particular manner at any meeting of the Shareholders; or
(iv) actively or publicly make any proposals for any merger,
consolidation or share exchange involving shares or other
securities of BT (for the purposes of this Part only, the
“Standstill Provisions”).
The exceptions to the Standstill Provisions include:
(i) where the Orange Group announces an offer under Rule
2.7 of the Code or takes any action requiring it to make an
offer under Rule 9 of the Code, in each case if such offer is
recommended by the Directors of BT;
(ii) where any third party makes or announces under Rule 2.7 of
the Code an offer to acquire the issued ordinary share capital
of BT, whether such offer is recommended by the Directors of
BT or not; and
(iii) where BT makes any offering or issue of shares or other
securities and the Orange Group takes up its rights to
subscribe for or acquire the shares or other securities offered
to it by BT.
After expiry of the standstill period, the Orange Group will
otherwise be free to increase its shareholding in BT.
3. Lock-up Provisions
The Standstill and Lock-up Agreement contains lock-up provisions
pursuant to which Orange SA and Orange undertake for a period
of 12 months from the date of the Standstill and Lock-up
Agreement, subject to certain exceptions, that neither they nor
any of their group members will, directly or indirectly, effect any
Disposal. The exceptions include:
(i) any Disposal to the Deutsche Telekom Group;
(ii) where Orange SA or Orange accepts any offer by a third party
for the whole of the ordinary share capital of BT, whether
by tender offer or scheme of arrangement, or provides an
irrevocable undertaking or letter of intent to accept or vote in
favour of any such offer;
(iii) any Disposal to any member of the Orange Group, provided
that the transferee agrees to be bound by the restrictions of
the Standstill and Lock-up Agreement;
(iv) any sale of shares via any single off-market trade to a Financial
Investor of up to all the shares of BT in which the Orange
Group has an interest, provided that the transferee enters
into a lock-up agreement on substantially similar terms to the
lock-up provisions of the Standstill and Lock-up Agreement;
and
(v) if the Orange Group owns 2% or less of the issued ordinary
share capital of the Company, any Disposal which is by way
of a swap or other agreement to transfer the economic
ownership of the shares.
4. Orange CP Contract
Prior to any Disposal by Orange SA, Orange or any of their group
members, in accordance with paragraph 3(iv) above, BT has a
right of first offer in relation to the relevant shares (subject to the
passing of the Buy-Back Resolution), and such right is set out in
the Orange CP Contract.
Pursuant to the Orange CP Contract, prior to an intended Disposal
to Financial Investors, the relevant selling entity is obliged to issue
a notice to BT specifying the number of Ordinary Shares proposed
to be sold or transferred. BT has nine Business Days within which
to make an offer for all of the shares detailed in the notice, or else
its right to make an offer will lapse. If the offer is not accepted, the
selling entity may make the sale or transfer within three months of
the delivery of the notice to BT at a price equal to or greater than
the price offered by BT. If BT does not make an offer within the
allotted time, the selling entity may sell the Ordinary Shares within
three months of the delivery of the notice to BT at any price. The
Orange CP Contract will terminate 12 months from Completion.
The notice from the selling entity may be issued to BT during a
close period or prohibited period (as such terms are defined in the
Model Code of Chapter 9 of the Listing Rules) of BT. If any such
period does not expire prior to the end of the nine Business Day
period within which BT may elect to make an offer to buy-back the
shares, BT will not be able to exercise its right of first offer.
When exercised in conjunction with BT’s right of first offer in
relation to Ordinary Shares held by Deutsche Telekom AG and
Deutsche Telekom, the maximum amount of Ordinary Shares BT