Infogrames Entertainment S.A.

Transcription

1 Infogrames Entertainment S.A. Report from the Board of Directors to the General Meeting of 2005 Océane Bondholders convened on first notice on December 13, Methods of voting and participation in the General Meeting - Text of draft resolutions presented by the Board of Directors - Statement of reasons for the draft resolutions that are being presented by the Board of Directors The following draft resolutions is for information purpose only and may be amended by the General Meeting of the bondholders 1

2 METHODS OF PARTICIPATION AND VOTING AT THE GENERAL MEETING Holders of 1.5% bonds convertible into and/or exchangeable for new or existing shares that were issued on May 30, 2000 with a par value of 39 euros ( Océane Bonds ) are called to a General Meeting, on first notice, on Monday, December 13, 2004 at 3:00 p.m. at: Palais des Congrès de Lyon, 50, quai Charles De Gaulle, Lyon To deliberate over the following agenda and draft resolutions. This general meeting is being called at the initiative of the Board of Directors. If this general meeting cannot be held validly on first notice, for lack of a quorum, the bondholders will be assembled on second notice, on December 20, 2004 at 3:00 p.m., with the same agenda, at the Palais des Congrès, 50, quai Charles de Gaulle, Lyon. All bondholders may take part or be represented at this general meeting or vote by proxy. Holders of registered bonds must have had their bonds entered in an account on the company s registers, kept by Euro Emetteurs Finances, 48 boulevard des Batignolles, Paris Cedex 17, at least five days before the date of the general meeting. They will be admitted into the general meeting simply by providing proof of their identity. Holders of bearer bonds, to prove their rights, must, within the statutory time limits, prove that the bearer bonds have been immobilized by a certificate, prepared by the accredited intermediary with whom their bonds are registered on account, which is to be deposited with Euro Emetteurs Finances, at the following address or by fax at Letters allowing attendance at the meeting or proxies for being represented will be issued by that intermediary to bondholders who so request. The text of the resolutions that are being proposed to the general meeting and the report from the board of directors are available to bondholders at the company s registered office. The Board of Directors * * * 2

3 The following draft resolutions is for information purpose only and may be amended by the General Meeting of the bondholders TEXT OF RESOLUTIONS PRESENTED BY THE BOARD OF DIRECTORS INFOGRAMES ENTERTAINMENT Société anonyme with capital of ,17 euros Registered office: 1 place Verrazzano Lyon Cedex Commercial Register of Lyon AGENDA Changes in the terms of the indenture of the Océane bonds that were issued on May 30, 2000 (approval from the Commission des opérations de bourse No dated May 18, 2000); Appointment of new main representatives of the body of Océane Bondholders; Powers for formalities. DRAFT TEXT OF RESOLUTIONS PROPOSED BY THE BOARD OF DIRECTORS First Resolution (Changes in the terms of the indenture of the Océane bonds that were issued on May 30, 2000) 1. The General Meeting of Océane Bondholders, ruling under the quorum and majority conditions stipulated in article L of the Commercial Code, - after having heard the reading of the report from the board of directors; - having taken cognizance of the draft note d opération concerning the free allotment of warrants; - having taken cognizance of the note d information concerning the purchase/exchange takeover bid targeting the Océane Bonds; approves the amendments to the indenture of the bonds with option of conversion into and/or exchange for new or existing shares that were issued on May 30, 2000, as follows: the term of the indenture, which is 5 years and 32 days and was initially to expire on July 1, 2005, is extended by 6 years, i.e. until July 1, 2011; the Océane Bonds, whose normal redemption price was initially set at euros (i.e. a premium of 7.11 euros), will be redeemed on July 1, 2011 at par, i.e. 39 euros per Océane Bond; and 1 The draft text of the first resolution has been changed from the version that was published in the Bulletin des annonces légales obligatoires on November 26, 2004 by resolution of the Board of Directors on November 23,

4 the conversion and/or exchange parity, which was initially set at 1 share for each Océane Bond, and which is currently 1.05 shares for each Océane Bond after an adjustment made on January 16, 2002 resulting from the allotment of one free new share for twenty old shares decided by the board of directors on October 24, 2001, is increased to 10.5 shares for each Océane Bond. Resolves, as a result of these changes, to waive the benefit of the adjustment in the conversion ratio in the event of free allotment of warrants to shareholders that is stipulated in article of the note d opération that received approval No dated May 18, Resolves that these changes will be effective only if the following conditions precedent are met: acceptance of the change in the terms of the Océane Bonds, as stated above, by the special meeting of shareholders of the company called on first notice on December 21, 2004; the free allotment of warrants pursuant to the draft note d opération that has been made available to the Océane Bond holders; and the closing, on February 14, 2005 at 5 p.m. at the latest, of a purchase/exchange takeover bid targeting the Océane Bonds pursuant to the draft note d information that has been made available to the Océane Bond holders, each bond being compensated by: - one bond of the company with a par value of 14 euros; - a combination of cash and/or new shares of the company. The purchase/exchange takeover bid targeting the Océane Bonds will be submitted for approval to the Autorité des marchés financiers and the note d information stating the terms of the bid, a draft of which has been made available to the bondholders, will be subject to approval by that authority. Second Resolution (Appointment of new representatives of the body of Océane Bondholders). The General Meeting of Océane Bondholders takes note of the resignation of Ms. Estelle Picandet and Mr. Asgar Sondarjee from their positions as main representatives of the body of Océane Bondholders. The General Meeting of bondholders, ruling under the quorum and majority conditions stipulated in article L of the Commercial Code, approves the appointment of Ms. Edith Martinot, 4 avenue des Bois, Montigny-les-Cormeilles, and Mr. Philippe Sénèque, 38 rue de Laval, Saacy-sur-Marne, to the positions of main representatives of the body of Océane Bondholders and of Mr. Jean-Pierre Tichit, 11 rue de la Station, Deuil la Barre, and Ms. Corinne Bourdier, 101 avenue Emile Zola, Paris, to the positions of alternate representatives of the body of Océane Bondholders as of this meeting for the remaining term of the Océane Bonds. Third Resolution (Powers for formalities). The General Meeting of bondholders gives full powers to the bearer of an original, a copy or an extract of these minutes for purposes of accomplishing all legal formalities. 4

5 * * * DRAFT RESOLUTIONS PRESENTED BY THE BOARD OF DIRECTORS Resolution No. 1: Amendments to the conditions of the indenture of the Océane Bonds that were issued on May 30, 2000 (approval by the Commission des opérations de bourse No dated May 18, 2000) This draft resolution constitutes the first stage of a general settlement plan ( settlement plan ) that was announced on November 24, 2004 for the purpose of bringing the Company s projected cash into line and for the repayment of bank loans and redemption of bonds, and specifically the redemption of bonds with option for subscription and/or exchange for new or existing shares at maturity July 1, 2005 ( 2005 Océane Bonds ). The settlement plan, which consists of three stages indicated below, aims to bring together the interests of: - the Company by bringing the cash flow and the residual bond redemptions into line; - the bearers of 2005 Océane Bonds by increasing visibility for recovery of their investment; - the shareholders by keeping their maximum dilution between 0 (in the event all the Warrants are exercised) and 36.6% (if no Warrants are exercised). This settlement plan is centered around three stages: - the change in some terms of the 2005 Océane Bonds by the General Meeting of bondholders (stage No. 1); - the free allotment of the Warrants covered under this note d opération (stage No. 2); - a purchase/exchange takeover bid targeting the 2005 Océane Bonds redeemable for bonds and for cash and/or new shares (stage No. 3). Stage No. 1: the amendment of some terms of the 2005 Océane Bonds Amendments made to the indenture The 2005 Océane Bond indenture is to be amended as follows: the term of the indenture, which is 5 years and 32 days and was initially to expire on July 1, 2005, is extended by 6 years, i.e. until July 1, 2011; the 2005 Océane Bonds, whose normal redemption price was initially set at euros (i.e. a premium of 7.11 euros), will be redeemed on July 1, 2011 at par, i.e. 39 euros per 2005 Océane Bond; and the conversion and/or exchange parity, which was initially set at 1 share for each Océane Bond, and which is currently 1.05 shares for each 2005 Océane Bond after an adjustment made on January 16, 2002 resulting from the allotment of one free new share for twenty old shares decided by the board of directors on October 24, 2001, is increased to 10.5 shares for each 2005 Océane Bond. 5

6 Furthermore, as a result of these amendments, the holders of 2005 Océane Bonds waive the benefit of the adjustment in the conversion ratio in the event of free allotment of warrants to the shareholders stipulated in article of the note d opération that received approval No dated May 18, 2000 concerning the 2005 Océane Bonds. Conditions of amendments made to bond indenture These amendments, if they are approved by the General Meeting of holders of 2005 Océane Bonds, will be effective only if the following conditions precedent are met: acceptance of the change in the terms of the 2005 Océane Bonds, as stated above, by the special meeting of shareholders of the company called on first notice on December 21, 2004; the free allotment of warrants pursuant to the draft note d opération made available to the holders of Océane Bonds; and the closing, on February 14, 2005 at 5 p.m. at the latest, of a purchase/exchange takeover bid targeting the Océane Bonds pursuant to the draft note d information made available to the holders of Océane Bonds, each bond being compensated by: - one bond of the company with a par value of 14 euros; - a combination of cash and/or new shares of the company. Stage No. 2: free allotment of Warrants Purposes of free allotment The purposes of the free allotment of Warrants are: to enable the shareholders not to be diluted in subscribing for new shares resulting from the exercise of the Warrants; however, if all the Warrants are exercised, no share will be issued in compensation of the 2005 Océane Bonds that are contributed to the purchase/exchange takeover bid described below; to allocate the funds raised through the free allotment of Warrants first to compensate partially the holders of 2005 Océane Bonds who present their bonds in response to the purchase/exchange takeover bid ; and to allocate the rest of the funds raised through the free allotment of Warrants, i.e. a maximum of 14.3 millions euros if all the Warrants are exercised and in the event all 2005 Océane Bonds are contributed to the purchase/exchange takeover bid, for the Company s general financing needs. Terms of Warrants allotted free On December 16, 2004, 1 (one) Warrant for 1 (one) share of Infogrames Entertainment held at the end of the day on December 15, 2004, i.e. a total number of 121,900,566 Warrants issued and allotted free to the shareholders. 2 (two) Warrants will give the right to subscribe 6

7 for 1 (one) share of the Company, at the unit price of 1.11 euros. So if all Warrants are exercised, that will result in the creation of 60,950,283 new shares, subject to the settlement of fractional shares. Warrants may be exercised at any time from December 16, 2004 to December 24, 2004, inclusive. Warrants not exercised before the end of the exercise period will lose all value and become null and void. Warrants will be the subject of an application for admission to the Premier marché of Euronext Paris S.A. Their listing is planned between December 16, 2004 and December 24, They will be removed from the Premier marché at the end of the trading day on December 24, The transaction will be conducted through to completion regardless of the number of Warrants exercised. Stage No. 3: a purchase/exchange takeover bid targeting the 2005 Océane Bonds redeemed for bonds and for cash and/or new shares After the free allotment of Warrants, the Company plans to offer the holders of 2005 Océane Bonds the opportunity to exchange their bonds, firstly, for bonds and, secondly, for cash and/or new shares, each 2005 Océane Bond presented being compensated with: - one bond of the Company with a par value of 14 euros, bearing annual interest at the rate of 6%. These bonds will be redeemed in three equal groups on March 15, 2006, March 15, 2007 and March 15, 2008, respectively. The redemption of the principal and interest owed under that bond will be guaranteed by California U.S. Holdings, Inc. a subsidiary under U.S. law that is wholly owned by the Company, which will pledge some of the Atari Inc. shares that it holds; - an amount in cash and/or a number of new shares determined based on the Warrant exercise price. The following Table presents the compensation for each 2005 Océane Bond presented in response to the purchase/exchange takeover bid if 0%, 25%, 50%, 75% and 100% of the Warrants are exercised, and assuming that all 2005 Océane Bonds are presented in response to the bid: % of Warrants 0% 25% 50% 75% 100% exercised Bond Cash * Number of shares of the Company * * The cash amount and the number of shares will be adjusted based on the necessary roundings. So, for example, if all 2005 Océane Bonds are presented in response to the bid and if 50% of the 121,900,566 Warrants are exercised, the holders of Océane Bonds will receive for each 7

8 Océane bond presented in response to the purchase/exchange takeover bid one bond with a par value of 14 euros, euros in cash and shares of Infogrames Entertainment. The purchase/exchange takeover bid will be subject to an admissibility ruling and an approval on a note d information from the Autorité des marchés financiers. With this new stage, the Company intends to show its determination to reestablish its financial equilibrium, which continues to be one of its priorities. So, before the transaction, the timetable for repayment of bank loans and redemption of bonds is as follows: In million 2004/ / / / / /10 OCEANE OCEANE Other financial debt (1) Total annual repayments (1) consisting of 63.7 Million in bank debt from medium-term credit including 28.8 million falling due on 12/31/04, 26.7 million falling due on 4/1/05 and the balance falling due on April 30, After the transaction, if all 2005 Océane Bonds are presented in response to the bid, the timetable for repayment of bank loans and redemption of bonds would be as follows: In million 2004/ / / / / /10 OCEANE OCEANE Other financial debt Total annual repayments The annual redemptions would thus be spread suitable with respect to the projected cash of the company. Also, the debt to equity ratio would be less than 1 after the transaction if all 2005 Océane Bonds are presented in response to the bid. After the settlement plan, the dilution of the shareholders will be between 0 and 36.6% based on the number of Warrants exercised as indicated in the following table, if all 2005 Océane Bonds are presented in response to the bid: % of Warrants exercised Amount of capital increase (in million ) % of dilution for shareholders 0% 25% 50% 75% 100% % 25.9% 14.4% 2.0% 0% 8

9 Resolution No. 2: Appointment of new representatives of the body of 2005 Océane Bondholders Resolution No. 2 aims to submit to the meeting of Océane Bondholders the appointment of two new main representatives and two new alternate representatives of the body of 2005 Océane Bondholders pursuant to article L of the Commercial Code, following the resignation of the main and alternate representatives who were in office. These appointments, if they are approved, will take effect as of the date of the general meeting making that decision. * * * 9