The price of 720 pence per share in cash is excellent value for Resolution Shareholders and represents:

Transcription

1 Not for release, publication or distribution in or into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction 16 November 2007 RECOMMENDED ACQUISITION of Resolution plc ( Resolution ) by Impala Holdings Limited ( Impala ), a subsidiary of Pearl Group Limited ( Pearl ) to be implemented by means of a scheme of arrangement under section 425 of the Companies Act 1985 (the Acquisition ) Summary The boards of directors of Pearl and Resolution are pleased to announce their agreement on the terms of the recommended acquisition of the entire issued and to be issued share capital of Resolution by Impala, a subsidiary of Pearl. Under the terms of the Acquisition, each Resolution Shareholder will receive 720 pence in cash for each Resolution Share, valuing Resolution s entire issued and to be issued share capital at approximately 4.98 billion. The price of 720 pence per share in cash is excellent value for Resolution Shareholders and represents: a multiple of 1.20x Resolution s tangible embedded value per share of 602 pence, which is significantly in excess of that paid in recent transactions involving primarily closed life fund businesses in the UK; and a premium of 16.9 per cent. to the closing Resolution share price of 616 pence on 25 July 2007, the day prior to Pearl s announcement disclosing its interest in Resolution, but following Resolution s announcement of its proposed merger with Friends Provident plc ( Friends Provident ). The transaction will create a combined group with assets under management of 85 billion, making it a top ten UK life insurer. Pearl believes that the Resolution management team has considerable strength and expertise in the management of life insurance funds and wishes to retain that strength and expertise within the enlarged group. As previously announced on 19 October 2007, Impala and Pearl have entered into a binding Framework Agreement with Royal London under which, following completion of the Acquisition, Royal London will have the right to acquire (and Impala the right to procure the sale to Royal London of) certain of Resolution s business and assets. The total consideration payable by Royal London for the Royal London Assets is billion (subject to certain post-closing adjustments). 1

2 Pearl remains Resolution s largest shareholder with an aggregate interest in 177,983,359 Resolution Shares, representing approximately per cent. of the existing issued ordinary share capital of Resolution. In addition, Impala has received irrevocable undertakings to vote in favour of the Proposals from the Resolution Directors in respect of such Resolution Shares as they hold at the date of the relevant meeting, representing in aggregate a maximum of approximately 3.7 per cent. of the existing issued ordinary share capital of Resolution. The Acquisition will be made by Impala, a subsidiary of Pearl, and is proposed to be implemented by way of a scheme of arrangement under section 425 of the Companies Act Resolution Shareholders will be entitled to elect to receive loan notes in lieu of cash pursuant to the Loan Note Alternative. Commenting on today s announcement, Hugh Osmond of Pearl said: Resolution and its management team have built an outstanding business and created very significant value for its shareholders. We wish to combine the proven strength and expertise of both teams to create one organisation capable of delivering far more than either of its constituent parts. We believe that this will herald a bright future for policyholders, shareholders and employees of the combined group. Commenting on today s announcement, Clive Cowdery, Chairman of Resolution said: Resolution welcomes both the value delivered to its shareholders and Pearl's commitment to maintaining policyholder improvements. The Board of Resolution is delighted to recommend this transaction which creates a major UK insurer and an expert manager of closed funds. We wish Pearl continued success in this sector. This summary should be read in conjunction with, and is subject to, the full text of the following announcement and the Appendices. Appendix 1 sets out certain further terms and conditions of the Scheme. Appendix 2 sets out the bases and sources of certain of the information contained in this announcement. Appendix 3 contains certain details relating to the irrevocable undertakings given by the Resolution Directors. Appendix 4 contains definitions of certain terms used in this announcement. Page 2

3 Enquiries Pearl Group Limited Terry Eccles +44 (0) Citigate Dewe Rogerson (PR adviser to Pearl and Impala) Anthony Carlisle +44 (0) (0) (mobile) Deutsche Bank (Financial Adviser and Corporate Broker to Pearl) Tadhg Flood / Mike Lamb / Omar Faruqui +44 (0) Louise Miller (Corporate Broking) Morgan Stanley (Financial Adviser and Corporate Broker to Pearl) Simon Robey / Jason Windsor / Laurence Hopkins +44 (0) Mark Brooker (Corporate Broking) ABN AMRO (Financial Adviser to Pearl) Fiona Clutterbuck / Andrew Owens / Samuel Perowne +44 (0) Resolution plc Clive Cowdery / Mike Biggs / Steve Riley +44 (0) Temple Bar Advisory (PR adviser to Resolution) Alex Child Villiers +44 (0) (0) (mobile) Citi (Financial Adviser and Corporate Broker to Resolution) Chris Jillings / John Sandhu +44 (0) Andrew Thompson (Corporate Broking) Lazard (Financial Adviser to Resolution) Jon Hack / Edmund Dilger +44 (0) This announcement is not intended to and does not constitute, of form part of, any offer or invitation to purchase any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Proposals or otherwise. The Proposals will be made through the Scheme Document, which will contain the full terms and conditions of the Proposals, Page 3

4 including details of how to vote in respect of the Proposals. Any response to the Proposals should be made only on the basis of the information contained in the Scheme Document. Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervising Authority) and with respect to UK commodity derivatives business by the Financial Services Authority; and is regulated by the Financial Services Authority for the conduct of UK business. Deutsche Bank AG is acting exclusively for Impala and Pearl and no-one else in connection with the Acquisition and will not be responsible to anyone other than Impala and Pearl for providing the protections afforded to clients of Deutsche Bank AG nor for providing advice in relation to the Acquisition or any matter referred to in this announcement. Morgan Stanley & Co. Limited is acting exclusively for Impala and Pearl and no-one else in connection with the Acquisition and will not be responsible to anyone other than Impala and Pearl for providing the protections afforded to clients of Morgan Stanley & Co. Limited nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement. ABN AMRO Corporate Finance Limited is acting as financial adviser for Impala and Pearl and no-one else in connection with the Acquisition and will not be responsible to any other person for providing the protections afforded to clients of ABN AMRO Corporate Finance Limited nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement. Dresdner Kleinwort Limited, which is authorised by the Financial Services Authority, is acting as financial adviser for Royal London and no-one else in connection with Royal London s acquisition of the Royal London Assets and will not be responsible to anyone other than Royal London for providing the protections afforded to clients of Dresdner Kleinwort Limited nor for affording advice in relation to Royal London s acquisition of the Royal London Assets or any other related matters referred to herein. Citi is acting as financial adviser to Resolution and no-one else in connection with the Acquisition and will not be responsible to any other person for providing the protections afforded to the clients of Citi nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement. Lazard is acting as financial adviser to Resolution and no-one else in connection with the Acquisition and will not be responsible to any other person for providing the protections afforded to the clients of Lazard nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement. Overseas jurisdictions The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any applicable restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, the Proposals are not being made in or into, and are not capable of acceptance in or from, Australia, Canada or Japan. Custodians, nominees and trustees Page 4

5 should observe these restrictions and should not send or distribute documents in or into Australia, Canada or Japan. The Loan Notes that may be issued pursuant to the Proposals have not been and will not be registered under the Securities Act of 1933, as amended (the "US Securities Act") or under the relevant securities laws of any state or territory or other jurisdiction of the United States. Accordingly, Loan Notes may not be offered or sold in the United States, except in a transaction not subject to, or in reliance on an exemption from, the registration requirements of the US Securities Act and such state securities laws. Any Loan Notes which may be issued pursuant to the Proposals have not been and will not be registered under the relevant securities laws of Japan and any relevant clearances and registrations have not been, and will not be, obtained from the securities commission of any province of Canada. No prospectus in relation to the Loan Notes has been, or will be, lodged with, or registered with, the Australian Securities and Investments Commission or the Japanese Ministry of Finance. Accordingly, unless otherwise determined by Impala and permitted by applicable law and regulation, the Loan Notes may not be, offered, sold, resold, transferred, delivered or distributed, directly or indirectly in or into Canada, Australia or Japan or any other jurisdiction where to do so would violate the laws of that jurisdiction or would require registration thereof in such jurisdiction. US Persons should note that the Scheme relates to the shares of a UK company and will be governed by English law. Neither the proxy solicitation nor the tender offer rules under the US Securities Exchange Act of 1934, as amended, will apply to the Scheme. Moreover, the Scheme will be subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement, which differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules. Financial information included in this announcement and the Scheme documentation has been or will have been prepared in accordance with accounting standards applicable in the UK that may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States. If Impala exercises its right to implement the acquisition of the Resolution Shares by way of a takeover offer, the offer will be made in compliance with applicable US tender offer and securities laws and regulations. No other listing authority or equivalent had reviewed, approved or disapproved of this announcement or any of the proposals described herein. Dealing disclosure requirements Under the provisions of Rule 8.3 of the City Code (the Code ), if any person is, or becomes, interested (directly or indirectly) in 1% or more of any class of relevant securities of Resolution, all dealings in any relevant securities of that company, (including by means of an option in respect of, or a derivative referenced to, any such relevant securities ) must be publicly disclosed by no later than 3.30 p.m. (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the Scheme becomes effective, lapses or is withdrawn or on which the offer period otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an interest in relevant securities of Resolution, they will be deemed to be a single person for the purpose of Rule 8.3. Page 5

6 Under the provisions of Rule 8.1 of the Code, all dealings in relevant securities of Resolution by Impala, Pearl or Resolution, or by any of their respective associates, must be disclosed by no later than noon (London time) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose relevant securities dealings should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel s website at Interests in securities arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an interest by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on the Panel s website. If you are in any doubt as to whether or not you are required to disclose a dealing under Rule 8, you should consult the Panel. Save in relation to information relating to Resolution, the Resolution Directors are not responsible for the contents of this announcement. Page 6

7 Not for release, publication or distribution in or into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction 16 November 2007 RECOMMENDED ACQUISITION of Resolution plc ( Resolution ) by Impala Holdings Limited ( Impala ), a subsidiary of Pearl Group Limited ( Pearl ) to be implemented by means of a scheme of arrangement under section 425 of the Companies Act 1985 (the Acquisition ) 1. Introduction The boards of Pearl and Resolution are pleased to announce their agreement on the terms of the recommended acquisition of the entire issued and to be issued share capital of Resolution at a price of 720 pence in cash for each Resolution Share. The Acquisition will be made by Impala Holdings Limited, a subsidiary of Pearl. 2. The Acquisition It is intended that the Acquisition will be implemented by way of a Court sanctioned scheme of arrangement under section 425 of the Companies Act Under the terms of the Scheme, which will be subject to the further terms and conditions set out below in Appendix 1 to this announcement and the full terms and conditions to be set out in the Scheme Document, Resolution Shareholders holding Resolution Shares at the Scheme Record Date will receive: for each Resolution Share 720 pence in cash If the Scheme becomes effective, a payment of 720 pence in cash per Resolution Share will be despatched or, where appropriate, credited through CREST, to Resolution Shareholders within 14 days of the Effective Date. The price of 720 pence per share in cash is excellent value for Resolution Shareholders and represents: a multiple of 1.20x Resolution s tangible embedded value per share of 602 pence, which is significantly in excess of that paid in recent transactions involving primarily closed life fund businesses in the UK; and a premium of 16.9 per cent. to the closing Resolution share price of 616 pence on 25 July 2007, the day prior to Pearl s announcement disclosing its interest in Resolution, but following Resolution s announcement of its proposed merger with Friends Provident. Page 7

8 3. Background to and reasons for the Acquisition Background On 25 July 2007, Resolution and Friends Provident announced their proposed merger. On 26 July 2007, Pearl Group announced that it had acquired an aggregate interest in per cent. of the then issued share capital of Resolution. On 19 October 2007, Pearl announced the terms of an all cash offer for Resolution at a price of 691 pence in cash for each Resolution Share. At the time of the announcement, Pearl was Resolution s largest shareholder with an aggregate interest in 112,949,386 Resolution Shares, representing approximately 16.5 per cent. of the then issued share capital of Resolution. On 26 October 2007, Standard Life plc ( Standard Life ) announced an offer for Resolution, the terms of the offer being 517 pence in cash and new Standard Life shares for each Resolution Share. The offer valued each Resolution Share at approximately 715 pence based on Standard Life s share price of pence as at the close of trading on 25 October 2007 and was recommended by the board of Resolution. Also on 26 October, Pearl announced an increased cash offer for Resolution at a price of 720 pence in cash for each Resolution Share, and that it had increased its aggregate interest in Resolution to a total of 165,983,600 Resolution Shares, representing approximately per cent. of the then issued share capital of Resolution. On 29 October 2007, Resolution announced that it had withdrawn its recommendation of the Standard Life offer. On 11 November 2007, Standard Life announced that it had decided not to increase or restructure its offer in any way and, accordingly, Standard Life did not expect its offer to be implemented. On 12 November 2007, Pearl announced that it had further increased its aggregate interest in Resolution to a total of 177,983,359 Resolution Shares, representing approximately per cent. of the issued share capital of Resolution, including approximately 10 million shares Pearl had acquired on 12 November 2007 at a price of 708 pence per Resolution Share. Following agreement between Resolution and Pearl that the transaction would be implemented by way of a scheme of arrangement, the Board of Resolution has now agreed to recommend Pearl s cash offer for Resolution at a price of 720 pence in cash for each Resolution Share. Strategy and benefits for policyholders Pearl was set up in 2005 by Sun Capital and TDR Capital to focus on emerging opportunities in the UK closed fund life and pensions business sector. In April 2005, Pearl acquired the life insurance businesses of HHG plc including Pearl Assurance plc, National Provident Life Limited, NPI Limited and London Life Limited. Today, the Pearl Group is a specialist manager of UK closed life fund business with approximately 3.6 million policies and approximately 27.9 billion of assets under management at 30 June At 30 June 2007, Pearl Group had 1 billion of tangible net assets and embedded value of approximately 2 billion. Page 8

9 Pearl Group s strategy is to improve risk-adjusted financial returns for its policyholders and other stakeholders, improve policyholder financial security and provide excellent service to its customers. To this end, over the period since April 2005, Pearl Group has: established a leading asset management and asset-liability management platform, Axial Investment Management Limited ( Axial ). Axial brings together a comprehensive blend of risk management, liability modelling, asset allocation and actuarial capabilities; commenced the distribution of Pearl s 500 million estate to policyholders; consolidated and outsourced its administration to Diligenta, a newly created joint venture between Pearl Group and major international technology and outsource provider TCS. Diligenta is committed to a programme of significant investment to improve operating infrastructure and systems, with a consequent improvement in the service offered to Pearl Assurance plc, London Life Limited, National Provident Life Limited and NPI Limited s customers; improved excess group solvency capital to over 700 million, as at 30 June 2007; and significantly grown group embedded value from 1.3 billion as at 30 June 2004 to approximately 2.0 billion as at 30 June Pearl Group intends, in conjunction with Resolution s management team, to apply its proven specialist business model and capabilities to the continued management of the Resolution funds, following its strategy of improving financial returns, security and service for policyholders. 4. Recommendation The Resolution Directors, who have been so advised by Citi and Lazard, consider the terms of the Acquisition to be fair and reasonable. In providing their advice to the Resolution Directors, Citi and Lazard have each taken into account the commercial assessments of the Resolution Directors. The Resolution Directors consider that the Acquisition is in the best interests of Resolution Shareholders as a whole and accordingly have unanimously agreed to recommend that Resolution Shareholders vote in favour of the resolutions relating to the Acquisition to be proposed at the Court Meeting and Resolution s Extraordinary General Meeting. 5. Agreement with The Royal London Mutual Insurance Society Limited ( Royal London ) As announced on 19 October 2007, Impala and Pearl have entered into a binding Framework Agreement with Royal London under which, following completion of the Acquisition, Royal London will have the right to acquire (and Impala the right to procure the sale to Royal London of) certain of Resolution s business and assets. The assets to be acquired by Royal London include, amongst others, Scottish Provident and Scottish Provident International, together with certain net assets and blocks of linked and protection in-force business. Royal London will also acquire certain capabilities of Page 9

10 Resolution Management Services relating to the former Life Division North from which Royal London expects to derive efficiency benefits. The total consideration payable by Royal London for the Royal London Assets is billion (subject to certain post-closing adjustments). In addition, Royal London has agreed to provide approximately 0.3 billion of the debt funding for any offer to be made by Pearl. Royal London is being advised by Dresdner Kleinwort in relation to this transaction. The majority of Resolution s businesses, including Life Division South, Scottish Mutual International, the newly established annuity business Phoenix Pensions Limited, Resolution Asset Management and Resolution Management Services are expected to be retained within the enlarged Pearl Group. 6. Financial services regulators Pearl Group and Royal London are substantial life insurance groups which are regulated by the Financial Services Authority ( FSA ). The FSA has certain criteria it requires acquirers to meet in order for it to approve acquisition of control of an FSA authorised business. Pearl and Royal London have considerable experience of acquiring UK authorised insurance companies and in obtaining the normal FSA approvals that are required for such acquisitions. Pearl and Royal London have formally submitted their applications to the FSA for change of control. Pearl and Royal London are also seeking approval for the transaction from relevant overseas financial services regulators and anticipate obtaining such approvals in a timely manner. 7. Management and employees Impala believes that the management team within the different Resolution businesses has considerable strength and expertise in the management and investment of closed life funds and wishes to retain that strength and expertise within the enlarged group. Generally, Impala believes that the cultures of Pearl and Resolution are similar in their dynamism and value creation mentality. It therefore believes that this is an opportunity to combine the two businesses to create a formidable team. Upon completion of the Acquisition, it is intended that an integration committee be established to oversee the progressive integration of the companies to be retained by Impala. Clive Cowdery has agreed to advise on the integration and optimisation of the enlarged group. Mr Cowdery has stated his intention to pursue other ventures and Pearl wishes him every success with them. As founder of Resolution and as Chairman of The Resolution Foundation s Board of Trustees, Mr Cowdery indicated an interest in retaining the Resolution brand post completion. As Pearl intends to apply the Pearl brand to the Pearl Assets, Pearl has entered into an agreement with Mr Cowdery under which he will acquire ownership of the Resolution brand, and Pearl has been granted licence arrangements for a transitional period. Further details in relation to these arrangements are set out in paragraph 22 below. Page 10

11 Royal London s strategic objectives include delivering significant growth in the UK protection sector and strengthening its position in the international life and investment market. Royal London s interest in acquiring the Royal London Assets is to accelerate achievement of these objectives. Royal London attaches significant value to the franchise represented by Scottish Provident and SPILA and the skills, experience and achievements of the existing management and employees of those businesses and of those in Resolution s Life Division North. On the basis of the information received to date, it is anticipated, as part of the acquisition by Royal London of the Royal London Assets, that employees who are wholly or mainly assigned to the business of Scottish Provident, the SPILA Companies and Resolution s Life Division North would be transferred to Royal London. In addition, it is also anticipated that any other Resolution employees who are wholly or mainly employed in relation to the Royal London Assets would be transferred to Royal London. Both Impala and Royal London intend that the employment rights of the Resolution employees will be fully safeguarded. Neither Impala nor Royal London has any current intention to change the major locations of Resolution s places of business and no proposals currently exist to materially change the conditions of employment of any of Resolution s employees. However, over time, it is expected that some efficiencies will be achievable across the enlarged Royal London Group. Appropriate proposals will be made in due course to participants of the Resolution Share Schemes. Options and awards granted under the Resolution Share Schemes which are not already exercisable or which have not already vested will become exercisable or will vest either as a result of the Order sanctioning the Scheme or the Scheme becoming effective subject, where applicable, to the extent performance tests are satisfied. To the extent that the vesting of options and awards under the Resolution Share Schemes is limited as a result of the application of time pro-rating, Pearl intends to pay to the participant an amount in cash equal to the offer price for each Resolution Share that does not vest less (where the option or award has an exercise price) the exercise price, such sum to be paid to the participant at the same time as the consideration under the Acquisition. Where a participant in the Resolution Share Schemes suffers a tax disadvantage as a result of having to exercise options or awards early, Pearl intends to pay to the participant an amount in cash in order to compensate the participant for this disadvantage. 8. Information on Pearl Pearl Group is a specialist manager in the UK closed life and pension funds sector. Pearl Group comprises four main life insurance subsidiary companies, Pearl Assurance plc, National Provident Life Limited, NPI Limited and London Life Limited. Pearl Group had approximately 27.9 billion of assets under management and approximately 3.6 million policies as at 30 June Pearl Group was acquired by Sun Capital and TDR Capital in April Page 11

12 9. Information on Resolution Resolution is the holding company of a group of companies that specialises in the ownership and administration of in-force UK life funds and is a member of the FTSE 100 Index. Resolution was formed on 6 September 2005 on the completion of the merger of Britannic Group and Resolution Life Group. In September 2006, Resolution completed the acquisition of the UK and offshore life insurance businesses of Abbey National plc together with the associated new business infrastructure and services companies. Resolution had gross assets on an IFRS basis of 63.5 billion at 30 June 2007, with total funds under management of 57 billion. 10. Information on Impala Impala, a UK resident subsidiary of Pearl, is a private limited company which was incorporated on 9 July Impala has no trading activities other than in connection with the proposed Acquisition. Impala is owned as to 75 per cent. by Pearl and as to 12.5 per cent. by each of Sun Capital Investments No.2 Limited (a company under the ultimate control of Sun Capital) and Hera Investments No.2 Limited (a company indirectly owned by TDR Capital) respectively. The current directors of Impala are Manjit Dale, Edward Hawkes, Hugh Osmond, Simon Smith and Blair Thompson. Further information relating to Impala will be set out in the Scheme Document. 11. Information on Royal London Royal London is the largest mutual life and pensions company in the UK with group funds under management of 32.7 billion. Group businesses serve around three million customers and employ 2,570 people (figures quoted are as at 30 June 2007). Its businesses focus on those sectors of the market which value premium propositions, operating through a number of brands: - Scottish Life: UK pensions sector - Bright Grey: UK protection sector - Scottish Life International: offshore investment sector - Royal London Asset Management: fund management - Royal London Administration Services: life and pensions administration 12. Financing of the Acquisition The cash consideration payable by Impala under the terms of the Proposals will be funded from existing cash resources of Pearl, funds from Pearl s shareholders, the consideration payable by Royal London and debt facilities entered into for the purpose of the Acquisition. In addition, and as previously announced, Royal London has agreed to provide 0.3 billion of the debt funding associated with the Acquisition. Page 12

13 ABN AMRO, Deutsche Bank and Morgan Stanley confirm that they are satisfied that resources are available to Impala to satisfy full acceptance of the Acquisition. 13. Irrevocable undertakings Impala has received irrevocable undertakings to vote in favour of the Proposals and the resolutions at the Court Meeting and EGM from the Resolution Directors in respect of such Resolution Shares as they hold at the date of the relevant meeting, representing in aggregate a maximum of approximately 3.7 per cent. of the existing issued ordinary share capital of Resolution. These undertakings are in respect of both their entire beneficial holdings of Resolution Shares and any other Resolution Shares in which they are interested and will cease to have any effect if the Scheme is withdrawn or otherwise lapses or the Implementation Agreement is terminated in accordance with its terms. The obligations in the irrevocable undertakings also cease to be binding in certain circumstances where the Resolution Directors fiduciary duties require. In addition, Clive Cowdery s irrevocable undertaking provides that he will not vote his shares on the Scheme if, because of the arrangements in relation to the Resolution name described in paragraph 22 below, he receives legal advice that to vote at the Court Meeting would be prejudicial to the Court s approval of the Scheme, or if Impala otherwise requests him not to. Given the Company will be in a close period from 1 January 2008 and that, if unexpected delays were to occur, it is possible that the transaction could complete after 6 April 2008 when capital gains tax rates will increase materially on certain gains, the Resolution Directors irrevocable undertakings provide that they may sell some or all of their shares in accordance with the following process: the Resolution Director will first give Impala notice of the intention to sell; Impala will have the right to give notice to acquire the relevant shares, in which case the Resolution Director will be required to sell the shares to Impala; the price at which Impala shall be entitled to acquire the relevant shares shall be the lesser of the volume weighted average price of the Resolution Shares over the preceding 3 trading days and 720 pence; and any shares which Impala does not elect to acquire may be sold by the Resolution Director in the market at a price not exceeding 720 pence per share. In the case of Clive Cowdery s irrevocable undertaking, the number of Resolution Shares in respect of which Impala has the above right shall, at any time, be such number as, together with all other Resolution Shares in which Impala, its concert parties and persons who have given Impala irrevocable undertakings are interested for the purposes of the City Code, does not exceed per cent. of the voting issued share capital of Resolution. Appendix 3 contains certain details relating to the irrevocable undertakings given by the Resolution Directors. 14. Structure of the Acquisition, delisting and re-registration It is intended that the Acquisition will be effected by means of a Court sanctioned scheme of arrangement between Resolution and Resolution Shareholders under section 425 of the Companies Act The procedure will involve an application by Resolution to the Court to sanction the Scheme and confirm the cancellation or transfer to Impala (as the case may be) of all Scheme Shares. Resolution Shareholders will be entitled to elect to receive Loan Notes in lieu of cash pursuant to a Loan Note Alternative, details of which are set out below. Page 13

14 The implementation of the Scheme will be subject to the further terms and conditions set out in Appendix 1 and the full terms and conditions which will be set out in the Scheme Document and will only become effective if, among other things, the following events occur: - a resolution to approve the Scheme is passed by a majority in number of the Scheme Shareholders present and voting (and entitled to vote), either in person or by proxy at the Court Meeting, representing not less than three-quarters in value of the Scheme Shares held by such Scheme Shareholders; - the special resolution to implement the Scheme is passed at the Extraordinary General Meeting; and - the Scheme is sanctioned (with or without modification), and the associated Reduction of Capital is confirmed, by the Court and the Scheme becomes effective by registration of the Court Orders with the Registrar of Companies and the issue by the Registrar of Companies of a certificate under section 138 of the Companies Act 1985 in relation to the Reduction of Capital associated with the Scheme. The purpose of the Scheme is to provide for Impala to become the owner of the whole of the issued and to be issued ordinary share capital of Resolution not already held by it. This is expected to be achieved by the transfer of certain Scheme Shares (the Transfer Shares ) to Impala either pursuant to elections for Loan Notes or on transfer from other Pearl Group members in return for cash and the cancellation of the remaining Scheme Shares (the Cancellation Shares ) and the application of the reserve arising from such cancellation in paying up in full a number of new Resolution Shares (which is equal to the number of Cancellation Shares) and issuing them to Impala. As part of the Scheme, Scheme Shares held by members of the Pearl Group other than Impala and Loan Note Elected Shares are currently intended to be reclassified into Transfer Shares and all other Scheme Shares will be reclassified into Cancellation Shares. If the Scheme has not become effective by 30 June 2008, or such later date as Impala and Resolution may agree (with, where applicable, the consent of the Panel) and the Court may allow, it will lapse. Upon the Scheme becoming effective, it will be binding on all Resolution Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the EGM (and if they attended and voted, whether or not they voted in favour), with cash consideration (in respect of the Scheme Shares) being despatched by Impala to Resolution Shareholders no later than 14 days after the Effective Date. Resolution intends to apply to the UK Listing Authority for the listing of Resolution Shares to be cancelled and to the London Stock Exchange for Resolution Shares to cease to be admitted to trading on the London Stock Exchange s main market for listed securities, with effect as of or shortly following the Effective Date. It is also intended that, following such delisting and cancellation, Resolution will be reregistered as a private company under the relevant provisions of the Companies Act. Page 14

15 The Scheme will contain a provision for Resolution to consent, on behalf of all persons concerned, to any modification of or addition to the Scheme or to any condition that the Court may approve or impose. Impala reserves the right to elect to implement the acquisition of the Resolution Shares by way of a takeover offer. In such event, the Offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme except that the Offer may exclude Resolution Shareholders resident in certain overseas jurisdictions. Further details of the Scheme, including an indicative timetable for its implementation, will be contained in the Scheme Document, together with details on how Resolution Shareholders may participate in the Proposals. 15. Loan Note Alternative As an alternative to some or all of the cash consideration which would otherwise be receivable under the Scheme, Resolution Shareholders (other than Restricted Overseas Persons, who may not participate in the Loan Note Alternative) will, subject to the conditions and further terms which will be set out in the Scheme Document and the Loan Note Form of Election, be able to elect to receive Loan Notes to be issued by Impala on the following basis: For every 1 of cash consideration 1 nominal value of Loan Notes Restricted Overseas Persons may not participate in the Loan Note Alternative. The Loan Notes will be issued by Impala, credited as fully paid, in amounts and integral multiples of 1 and the balance of any entitlement that is not a whole multiple of 1 will be disregarded and not issued. The Loan Notes are intended to be Non-Qualifying Corporate Bonds. The Loan Notes will constitute direct, unsecured and unsubordinated obligations of Impala. The Loan Notes will bear interest at a rate of six-month sterling LIBOR less 1 per cent. to be determined on the first business day of each interest period. Interest will be payable by half-yearly instalments in arrears (less any tax) on 30 June and 31 December in each year. The first payment of interest will be made on the First Payment Date. On the First Payment Date, interest will be paid in respect of the period from (and including) the date of issue of the relevant Loan Notes to (but excluding) the First Payment Date. The Loan Notes will be redeemable, on not less than 14 days notice, in whole or in part for cash at par at the option of noteholders on any business day between the First Payment Date and the Redemption Date (both dates inclusive). Unless Impala decides otherwise, no Loan Notes will be issued by Impala unless, on or before the date on which the Scheme becomes effective in accordance with its terms, the aggregate nominal value of all Loan Notes to be issued as a result of valid elections for the Loan Note Alternative exceeds 10 million. If such aggregate nominal value is less than 10 million, any such election shall, unless Impala decides otherwise, be void and the relevant Resolution Shareholders will be deemed to have elected for cash. Impala may redeem all (but not some only) of the Loan Notes (so long as they have been in issue for at least 6 months) if the aggregate nominal value of the outstanding Loan Notes falls below 5 million. Impala may purchase any Loan Notes which have been in issue for at least 6 months at a price by tender available to all holders of Loan Notes. The Loan Notes may be redeemed in minimum denominations of 500. If not previously redeemed, Page 15

16 the Loan Notes will be redeemed on the Redemption Date. Any Loan Notes outstanding on the final redemption date will be redeemed at par together with any accrued interest (less any tax) on that date. The Loan Notes will be transferable to certain limited categories of persons, but no application will be made for them to be listed on, or dealt on, any stock exchange or other trading facility. Up to a maximum amount of 500 million of Loan Notes in aggregate, nominal value will be available under the Loan Note Alternative. To the extent that Resolution Shareholders validly elect to receive Loan Notes pursuant to the Loan Note Alternative which in aggregate nominal value exceed such amount, the entitlement of each Resolution Shareholder who so validly elects will be scaled down pro rata to the number of Resolution Shares in respect of which he has elected for the Loan Note Alternative. Loan Notes that may be issued pursuant to the Proposals have not been and will not be registered under the US Securities Act or under the relevant securities laws of any state or territory or other jurisdiction of the United States. Accordingly, Loan Notes may not be offered or sold in the United States, except in a transaction not subject to, or in reliance on an exemption from, the registration requirements of the US Securities Act and state securities laws. Unless Impala otherwise determines, the relevant clearances and registrations have not been, nor will they be, sought or obtained, nor have any steps been taken, nor will any steps be taken, to enable the Loan Notes to be publicly offered in compliance with applicable securities laws of Australia, Canada or Japan (or any province or territory thereof, if applicable) or any other jurisdiction. Accordingly, the Loan Notes (subject to certain exceptions) may not be offered, sold, resold, transferred, or delivered, directly or indirectly, in, into or from, Australia, Canada or Japan or any other jurisdiction where to do so would violate the laws of that jurisdiction or would require registration thereof in such jurisdiction. The Loan Note Alternative will be conditional upon the Scheme becoming unconditional and effective and will remain open for election until the Loan Note Deadline. The Loan Notes and the Loan Note Instrument will be governed by and construed in accordance with English Law and will be unsecured obligations of Impala, ranking pari passu with its other unsecured obligations apart from those which are preferred by any insolvency or other similar law or any law relating to creditors rights generally. Full details of the Loan Notes and the Loan Note Alternative will be contained in the Scheme Document. 16. Implementation Agreement Resolution, Impala and Pearl have entered into an Implementation Agreement which contains certain assurances in relation to the implementation of the Scheme in accordance with an agreed indicative timetable and related matters including provisions governing the conduct of business of Resolution and providing information and undertaking certain preparatory work in connection with the implementation of the Framework Agreement, in each case pending the Effective Date. Further information regarding the Implementation Agreement will be set out in the Scheme Document. In particular, the Implementation Agreement contains the principal provisions set out below: Page 16

17 Undertakings to implement the Scheme Resolution has undertaken to Impala to take certain steps to implement the Scheme, including the despatch of the Scheme Document, convening the Court Meeting and the EGM and taking the steps to seek the Court Orders at the relevant court hearings to make the Scheme effective. Impala has undertaken to use best efforts to achieve satisfaction of the conditions set out in Appendix 1 as promptly as practicable and has agreed that immediately prior to the Scheme Hearing, it will waive all remaining Conditions other than those set out in paragraph 1 of Appendix 1 unless it has notified and provided reasonable details of any circumstance which it considers sufficient to satisfy the Panel that it is entitled to treat any Condition as being capable of being invoked. In addition, the Implementation Agreement contains a covenant from Resolution to put a resolution to the EGM under which the shareholders of Resolution shall direct the Resolution Directors, subject only to the Conditions, to use their reasonable endeavours to ensure that the Scheme becomes effective notwithstanding any Competing Proposal or any fiduciary duties. Non solicitation arrangements Resolution has undertaken not to solicit, initiate or otherwise seek to procure any Competing Proposal. Resolution has undertaken to inform Impala if it receives any approach in relation to a Competing Proposal or any request for information under Rule 20.2 of the City Code. Termination The Implementation Agreement may be terminated in certain circumstances, without prejudice to the rights of the parties which have arisen prior to termination, including the following: (a) (b) (c) Impala and Resolution agree in writing to terminate it; any condition to the Acquisition is invoked so as to cause the Acquisition not to proceed; a Competing Proposal becomes or is declared wholly unconditional or is otherwise completed; or (d) the Acquisition does not become effective by 30 June In addition, in the event that Resolution fails to recommend the Acquisition, or withdraws or adversely amends its recommendation of the Acquisition or the Resolution Directors determine that certain actions are inconsistent with their fiduciary duties, then the obligations on Resolution and Impala will cease to binding, except that Resolution will continue to be bound to undertake certain procedural steps necessary for the implementation of the Scheme. Page 17

18 17. Disclosure of interests in Resolution relevant securities As at the time of this announcement: - the Pearl Group owns 177,983,359 Resolution Shares representing approximately per cent. of the issued share capital of Resolution. As at the close of business on 13 November 2007, the latest practicable business day prior to the date of this announcement: - the interests of Royal London consisted of a long position of 8,054,604 Resolution Shares; - the interests of the Deutsche Bank Group consisted of a long position of 90,237 Resolution Shares; - the interests of Morgan Stanley consisted of a long position of 4,200 Resolution Shares and a short position of 1,076,816 Resolution Shares; and - the interests of Dresdner Kleinwort consisted of a long position of 15,000 Resolution Shares. Save as disclosed above and in paragraph 13, neither Impala nor any of the directors of Impala nor, so far as Impala is aware, any person acting in concert with Impala (including ABN AMRO Group and its parent, RFS Holdings N.V.), has any interest in or right to subscribe for Resolution relevant securities, has any short position in respect of Resolution relevant securities (whether conditional or absolute and whether in the money or otherwise, including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery) or has borrowed or lent any Resolution relevant securities (save for any borrowed shares which have been either on lent or sold). 18. Securities in Issue In accordance with Rule 2.10 of the City Code, as at close of business on 15 November 2007, being the last Business Day prior to this announcement, Resolution had 686,442,891 ordinary shares of 5 pence each in issue (ISIN number GB ). 19. Overseas Shareholders The availability of the Proposals to Resolution shareholders who are not resident in the United Kingdom may be affected by the laws of their relevant jurisdiction. Such persons should inform themselves of, and observe any applicable legal or regulatory requirements of their jurisdiction. If you remain in doubt, you should consult an appropriate independent professional adviser in the relevant jurisdiction without delay. 20. Expected timetable It is currently expected that shareholder documentation in relation to the Acquisition will be despatched in December 2007 with the EGM in January 2008 and completion in February Page 18

19 21. General The Scheme will be made on the terms and subject to the Conditions set out herein and in Appendix 1, and to be set out in the Scheme Document. The Scheme Document will be posted to Resolution Shareholders and made available, for information only, to participants in the Resolution Share Schemes, as soon as practicable. The Scheme will be governed by English law. The Scheme will be subject to the applicable requirements of the City Code, the Takeover Panel, the London Stock Exchange and the UK Listing Authority. Neither Pearl nor Impala nor, so far as Pearl and Impala are aware, any person acting in concert with Pearl or Impala, has any arrangement in relation to relevant Resolution securities. For these purposes, arrangement includes any indemnity or option arrangement and any agreement or understanding, formal or informal, of whatever nature, relating to relevant Resolution securities which may be an inducement to deal or refrain from dealing. 22. Resolution name As founder of Resolution and as Chairman of The Resolution Foundation s Board of Trustees, Mr Cowdery indicated an interest in retaining the Resolution brand post completion. Since Pearl intends to apply the Pearl brand to the Pearl Assets, Pearl and Clive Cowdery have entered into an agreement which provides, conditional on completion of the Acquisition, for the transfer from Pearl to Clive Cowdery of the right to the Resolution name and certain associated intellectual property rights. These arrangements are required to be supported by a fairness opinion from Citi and Lazard and are conditional on the approval of the independent Resolution Shareholders at the Extraordinary General Meeting. Further details will be set out in the Scheme Document. Appendix 1 sets out the Conditions and certain further terms of the Scheme. Appendix 2 sets out the bases and sources of certain of the information contained in this announcement. Appendix 3 contains certain details relating to the irrevocable undertakings given by the Resolution Directors. Appendix 4 contains the definitions of certain terms used in this announcement. Enquiries Pearl Group Limited Terry Eccles +44 (0) Citigate Dewe Rogerson (PR adviser to Pearl and Impala) Anthony Carlisle +44 (0) (0) (mobile) Page 19