SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
TELE NORTE CELULAR PARTICIPACOES, S.A.
(Name of subject company (Issuer))
VIVO PARTICIPACOES, S.A.
(Names of Filing Persons (Offerors))
Preferred Stock |
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87924Y105 |
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(Title of classes of securities) |
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(CUSIP number of common stock) |
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Carlos Raimar Schoeninger
Financial Planning and Investor Relations Director
Av.
Dr. Chucri Zaidan, 860
1 andar - lado A - Morumbi
04583-110 Sao Paulo
Tel: +5511 7420-1170
(Name, address, and telephone number of person authorized to receive notices and communications on behalf of Filing Persons)
Copies to:
Diane Kerr
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Telephone: (212) 450-4000
CALCULATION OF FILING FEE
Transaction Valuation* | Amount of Filing Fee* | |
Not applicable* | Not applicable* |
* | A filing fee is not required in connection with this filing as it relates solely to preliminary communications made before the commencement of a tender offer. | |||||||
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Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
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Amount Previously Paid: |
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Filing Party: |
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Form of Registration No.: |
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N/A |
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Date Filed: |
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N/A |
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Check the box if the filing relates solely to preliminary communications made before the commencement of the tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
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third party tender offer subject to Rule 14d-1 |
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issuer tender offer subject to Rule 13e-4 |
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going private transaction subject to Rule 13e-3 |
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amendment to Schedule 13D under Rule 13d-2 |
Check the following box if the filing is a final amendment reporting the results of the tender offer: o
n
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Vivo
consolidates its leadership by adding 4.8 million subscribers and
reaching
35 million subscribers
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n
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Strengthens
its competitive position by expanding its operations to Minas
Gerais
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·
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Telemig
Celular, the leading wireless operator in the Minas Gerais region,
with
3.5 million subscribers and a 31% market share. For the last twelve
months
ending on March, 31st
2007, net
revenues amounted to R$ 1,232 million, with an EBITDA of R$ 383.3
million.
In the first quarter of 2007, Telemig Celular achieved a 38.2% margin,
being one of the most profitable operators in
Brazil.
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·
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Amazonia
Celular, the third wireless operator in the Amazonia region with
1.3
million subscribers and a 22% market share. For the last twelve
months ending on March, 31st,
2007 net
revenues amounted to R$ 454 million, with an EBITDA of R$ 46.3 million
and
reaching a 24.3% margin in the first quarter of
2007.
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·
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Scale
benefits
arising from becoming part of biggest national mobile
network
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·
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Improved
purchasing power
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·
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Benefit
from a
strong brand name with advertisement campaigns at national
level
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·
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Integration
of
Telemig/Amazônia clients into a larger national
community
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·
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Customer
service at national level
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Target
Company
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Offer
Price
per PN Share of any class (1)
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%
Premia Over
Weighted Avg Price for the Last 30 Days until 08/01/07 (²)
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%
Premia Over
Weighted Avg Price for the Last 90 Days until 08/01/07 (²)
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Telemig
Participações
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6.39
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25%
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35.7%
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Tele
Norte
Participações
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0.66
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25%
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52.8%
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Telemig
Celular
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654.72
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25%
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28.7%
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Amazônia
Celular
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10.22
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25%
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26.7%
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Reinforcing leadership with the acquisition of August 2nd, 2007 |
Disclaimer The closing of the acquisition ("Closing") is subject to certain conditions precedent set forth in the stock purchase agreement, including but not limited to the approval of "Agencia Nacional de Telecomunicacoes - ANATEL", the Brazilian Communications regulator. After Closing, the acquisition will also be submitted to "Conselho Administrativo de Direito Economico - CADE", the Brazilian Antitrust Commission. This presentation may contain statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those in the forward looking statements as a result of various factors. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects" and "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Accordingly, analysts and investors should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update them in light of new information or future developments. This presentation has been made public by Vivo Participacoes, S.A. ("Vivo" or the "Company"). Analysts and investors are strongly advised to read the notice of material fact and other relevant documents regarding the acquisition because they contain important information. Further information about the acquisition, the mandatory tender offers and the voluntary tender offers is available at Vivo's Investor Relations website (www.vivo.com.br/ir). The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in any such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions. Vivo is listed on the Bovespa and New York Stock Exchanges. Information may be accessed on the stock symbol VIV (ADS), VIVO3, VIVO4 Slide 02 |
Table of Contents 1 Transaction Overview 2 Estimated Timetable 3 Strategic Rationale 4 Transaction Structure 5 Vivo Pro Forma 6 Conclusions Slide 3 |
1. Transaction Overview o Acquisition of controlling stake in Telemig Part. (53.9% of ONs + 4.3% of PNs) and Tele Norte Part. (51.9% of ONs + 0.1% of PNs) from Telpart Part. for an aggregate value of R$ 1.2 bn (the "Purchase Price") - Telemig Part: R$ 14.21 per ON share(1) and R$ 6.39 per PN share(1) - Tele Norte Part: R$ 1.85 per ON share(1) and R$ 0.66 per PN share(1) o Mandatory Tag Along Offers ("MTO") for ON minorities for an aggregate value of R$ 1.0 bn(2) - Telemig Part: R$ 11.36 per ON share(1), Telemig Celular: R$ 1,990.63 per ON Share(1) - Tele Norte Part: R$ 1.48 per ON share(1), Amazonia Celular: R$ 45.37 per ON share(1) o Following the MTO, Vivo intends to launch a Voluntary Offer ("VTO") for up to 1/3 of the free float of PN shares of Telemig Part., Telemig Celular, Tele Norte Part. and Amazonia Celular, for an aggregate value of R$ 0.6 bn(2): - 25% premium to market price for PN shares(3) o Total Consideration: R$ 2.8 bn(2), resulting in a beneficial interest of 58.2% in Telemig Celular and 54.6% in Amazonia Celular o In addition, Vivo will also acquire from Telpart the rights to subscribe shares to be issued by Telemig Part. and by Tele Norte Part. for R$ 87 million (4) o Transaction will be funded with cash on-hand and available lines of financing o Sale and Purchase agreement, approved by Vivo and Telpart's boards, signed on August, 2nd 2007 o To be ratified at the respective shareholders meeting on August 21st, 2007 o Closing subject to Anatel approval among other customary conditions (1) Price per 1,000 shares, except for Telemig Celular which is per 1 share. Does not reflect reverse share split announced on May 31, 2007. (2) Assuming full acceptance in mandatory tag along and voluntary offers (3) Based on weighted average prices of the last 30 trading days prior to announcement, considering the most liquid PN share per company (4) Rights to subscribe shares to be issued by Telemig Holding and Amazonia Holding in accordance with CVM Instruction no. 319 Slide 4 |
2. Estimated Timetable Next Steps ---------- 1. Submission of Requests for Anatel Approvals - within 7 days 2. Shareholders Meeting to Approve Transaction - August 21st, 2007 3. Anatel Approval 4. Close of Acquisition of Control - anticipated prior to year-end 5. Filling of MTO with CVM and Launch of VTOs in Brazil and in the US - upon closing 6. Launch MTO - upon registration with CVM 7. Close VTO - up to 45 days from launch 8. Close MTO - up to 45 days from launch Slide 5 |
3. Strategic Rationale Adding two attractive, high margin assets... Telemig Part. Key Figures Tele Norte Part. Key Figures --------------------------------------------- ---------------------------------------------- o 3.5 million subscribers (June 2007) o 1.3 million subscribers (June 2007) o 31% market share, leader in its area o 22% market share o 1Q07 Revenues: R$ 317 million o 1Q07 Revenues: R$ 115 million o 1Q07 EBITDA: R$ 121 million / 38.2% margin o 1Q07 EBITDA: R$ 28 million / 24.3% margin o Net Debt / EBITDA(1): (1.0)x o Net Debt / EBITDA(1): 4.3x ...that will benefit from the acquisition by Vivo o Scale benefits arising from becoming part of biggest national mobile network o Improved purchasing power o Benefit from a strong brand name with advertisement campaigns at national level o Integration of Telemig/Amazonia clients into a larger national community o Customer service at national level (1) Consolidated Net Debt as reported by Telemig Part (net cash of R$ 371.1) and Tele Norte Part (R$ 199.2 million) as of March 31, 2007, consolidated LTM EBITDA of Telemig Part. of R$ 383 million and consolidated LTM EBITDA of Tele Norte of R$ 46 million Slide 6 |
3. Strategic Rationale How will the proposed operation benefit Vivo's shareholders? o Expand operations to reach 84% of pops and 93% of GDP o Reinforce Vivo's leadership by adding 4.8(1) million subscribers resulting in a 32.9% national market-share, with 35 million subscribers o Strengthen Vivo's commercial and competitive position o Addition of two attractive assets that will benefit from being part of Vivo Reinforce Vivo's leadership Source: Anatel figures as of June 2007 Slide 7 |
3. Strategic Rationale Vivo's operations to reach 84% of Brazil total population and 93% of GDP Growth ------ Population (million) 139.1 37.6 158.7 14.1% % of total population 73.6% 19.9% 83.9% Subs('000s - June 30, 2007) 30,241 4,837 35,078 16.0% National Market Share 28.4% 4.5% 32.9% Minas Gerais is a key State o 3rd largest GDP in Brazil: R$ 167 billion (9.4% of Brazil) o Second largest mobile subscriber base in Brazil o Bordering State to SP and Rio with significant corporate activity Source: Anatel Slide 8 |
3. Strategic Rationale Acquisition further increases Vivo's market leadership ... ... adding 4.8 million subscribers and 4.5 p.p of market share (1) Source: Anatel, June 2007 figures Slide 9 |
3. Strategic Rationale Strengthen Vivo's commercial and competitive position o Churn Reduction: applicable to Vivo's roaming customers, given improved coverage o Current Corporate Clients: increase market share within current corporate customers that have significant presence in Minas Gerais o Increase in Gross Additions: presence in Minas Gerais enables additional gross adds in the high end and corporate segments throughout Brazil o Roaming: usage of Vivo's network by Telemig and Amazonia subscribers while roaming in Vivo's coverage area o 850 Mhz spectrum bandwidth: compatible with Vivo's current spectrum ---------- | Scope to create substantial net operating synergies at Vivo: NPV of c. R$ 575 million(1) + Fiscal Synergies: NPV of c. R$ 345 million(2) = Total Synergies at Vivo: NPV of c. R$ 920 million (1) NPV of the estimated net operating synergies at Vivo level (2) Approximate NPV of the tax benefit of the goodwill (agio) generated in the acquisition of Telpart shares and future MTO in the underlying assets assuming 5 year fully tax deductible amortization and 100% acceptance in the MTO Slide 10 |
4. Transaction Structure o R$ 1,093 million for controlling stake - 53.9% ONs, 4.3% PNs - 22.7% total capital o R$ 14.21 per ON share1 o R$ 6.39 per PN share1 o R$ 66 million for subscription rights Telemig Participacoes Tele Norte Participacoes Acquisition of Control o R$ 120 million for controlling stake - 51.9% ONs, 0.1% PNs - 19.3% total capital o R$ 1.85 per ON share1 o R$ 0.66 per PN share1 o R$ 21 million for subscription rights o Total Purchase Price for the controlling stakes amounts to R$ 1.2 bn (excl. subscription rights) o This Purchase Price will be adjusted by the Brazilian CDI Rate and will be subject to certain other adjustments as contemplated in the Stock Purchase Agreement 1 Price per 1,000 shares, except for Telemig Celular which is per 1 share. Does not reflect reverse share split announced on May 31, 2007. 11 public copyright(C)vivo2007 |
4. Transaction Structure Mandatory Tender Offers ("MTOs") Telemig Participacoes and Telemig Celular o MTO price per share at 80% of ON control price: - R$ 1.48 per Tele Norte Part ON share1 - R$ 45.37 per Amazonia Celular ON share1 o Total investment of R$ 115 million Tele Norte Participacoes and Amazonia Celular o MTO price per share at 80% of ON control price: - R$ 11.36 per Telmig Part ON share1 - R$ 1,990.63 per Telemig Celular ON share1 o Total investment of R$ 898 million 1 Price per 1,000 shares, except for Telemig Celular which is per 1 share. Does not reflect reverse share split announced on May 31, 2007. o Total cash outlay for the MTOs is approximately R$ 1.0 bn assuming 100% acceptances 12 public copyright(C)vivo2007 |
Voluntary Tender Offers ("VTOs") 4. Transaction Structure o Upon Closing, Vivo intends to launch voluntary tender offers for up to 1/3 of all the free float, of the PN shares of Telemig Part., Tele Norte Part., Telemig Celular and Amazonia Celular at the following prices: o VTOs to be extended to ADRs o Launch is subject to the non-occurrence of material adverse changes o Total estimated cash outlay for the VTOs of R$ 587 million assuming 100% acceptances Target Company Offer Price per PN Share 1 % Premia Over Weighted Avg Price for the Last 30 Days 2 as of August, 1st 2007 % Premia Over Weighted Avg Price for the Last 90 Days 2 as of August, 1st 2007 Telemig Participacoes 6.39 25.00% 35.7% Tele Norte Participacoes 0.66 25.00% 52.8% Telemig Celular 3 654.72 25.00% 28.7% Amazonia Celular 4 10.22 25.00% 26.7% 1 Price per 1,000 shares, except for Telemig Celular which is per 1 share. Does not reflect reverse share split announced on May 31, 2007. 2 The premium over PN shares of Telemig Celular is based on the price of the preferred class C shares (most liquid PN share), the premium over PN shares of Amazonia Celular is based on the price of the preferred class A shares (most liquid PN share) 3 PNB, PNC, PND, PNE,PNF, PNG 4 PNA, PNB, PNC, PND, PNE 13 public copyright(C)vivo2007 |
1,093 898 530 120 115 1,213 1,013 587 2,813 2,521 292 57 Controlling Stake MTO (1) 1/3 PNs VTO (2) Total Consideration 16.7 % 4.2 % 4.1 % 4. Transaction Structure Total Consideration R$ million o Additionally Vivo will acquire subscription rights amounting to R$ 87 million Voting 100.0 % 0.0 % 48.1 % 51.9 % 100.0 % 0.0 % 46.1 % 53.9 % 58.2 % 20.9 % 17.9 % 19.3 % 59.9 % 20.0 % 17.1 % 22.7 % 54.6 % 22.7 % 17.4 % 14.5 % 58.2 % 20.9 % 14.2 % 18.9 % Economic @ Celulares Ownership Economic @ Holdings Telemig Part Tele Norte Part Telemig Part Tele Norte Part Telemig Indirect Amazonia Direct Total 18.3 % 13.4 % 3.9 % Indirect Direct Total 7.0 % 15.7 % Indirect Direct Total 49.9 % 8.3 % 10.9 % 43.7 % Indirect 1 Based on a 80% tag-along for ON minorities both in the holding and in the operating companies, assuming 100% acceptance 2 Assumes 25% premium based on the weighted average price of the last 30 trading days as of August 1st, 2007 taking into consideration the most liquid PN share per company. Assumes 100% acceptance 14 public copyright(C)vivo2007 |
4. Transaction Structure Summary Valuation and Implied Multiples R$ million EV/EBITDA4 EV/Subscriber4 Implied Multiples 2007E 2008E 2007E 2008E 9.1x 8.4x US$ 516 7.3x 6.7x US$ 414 Telemig Celular Amazonia Celular 3,955 735 4,690 346 577 3,767 Acquisition Firm Value (1) Fiscal Benefits (2) NPV of Synergies at Vivo (3) Implied Business Value 1 Implied 100% Firm Value at the operating level and excluding the value attributed to the subscription rights 2 NPV of the tax benefit of the agio generated in the acquisition of Telpart shares and MTO (assuming 100% acceptance) in the underlying assets, over a 5 year fully tax deductible amortization and NOL's from the existing goodwill amortization 3 NPV of the estimated net operating synergies at Vivo level over a period of 10 years. No terminal value assumed for the synergies 4 Implied EV/EBITDA multiple calculated based on median of IBES Consensus (research analysts consensus) for 2007E and 2008E EBITDA and net debt as reported by Telemig and Amazonas as of March 31, 2007 5 Based on the number of 4,837 subscribers as of June 30, 2007. Translated into US$ assuming a 1.881 R$/US$ exchange rate Firm Value Breakdown assuming 100% acceptance in MTO and VTO 15 public copyright(C)vivo2007 |
(R$ million) Vivo Telemig Amazonia Combined % change post transaction Net Revenues 2,851 317 115 3,283 15.1% EBITDA 757 121 28 906 19.7% % EBITDA 26.6% 38.2% 24.3% 27.6% + 1.0 p.p. Capex 235 11.5 3.3 250 6.3% EBITDA - Capex 522 110 25 656 25.7% Net Debt 1 2 3,305 -371 199 6,033 82.5% Net Debt/ EBITDA 3 1.3x -1.0x 4.3x 2.0x + 0.7x Source: Vivo, Telemig and Amazonia ITRs 1 Net Debt reported figures of 1Q07 2 In the pro-forma combined figures the Net Debt includes 100% of Vivo, 100% of Telemig, 100% of Amazonia as well as 100% of Total Consideration as the acquisition will be fully debt funded (total consideration figure is shown on page 14 + the subscription rights value of R$ 87 million) 3 LTM EBITDA as of 1Q07 (Vivo: R$ 2,636.5 M, Telemig: R$ 383.3 M and Amazonia R$ 4 6.3 M) 5. Vivo Pro Forma (1Q 07) 16 public copyright(C)vivo2007 |
6. Conclusions Conclusions o High quality assets with attractive operating margins o Strong strategic fit reinforcing Vivo's competitive positioning and commercial offering o Market friendly transaction structure o Increases shareholders value through significant synergies Reinforcing Vivo's leadership 17 public copyright(C)vivo2007 |
Appendix 18 public copyright(C)vivo2007 |
Appendix Number of Shares ON % ONs PN % PNs Total % Total Telpart Participacoes S.A. 72,581,089,368 53.90% 9,699,320,342 4.27% 82,280,409,710 22.72% Free Float 62,079,503,811 46.10% 217,710,701,817 95.73% 279,790,205,628 77.28% Total 134,660,593,179 100.00% 227,410,022,159 100.00% 362,070,615,338 100.00% ON % ONs PNB % PNBs PNC % PNCs PND % PNDs Telemig Holding 794,764 89.17% 0 0.00% 0 0.00% 0 0.00% Free Float 96,477 10.83% 196.000 100.00% 20,769.000 100.00% 1.000 100.00% Total 891,241 100.00% 196.000 100.00% 20,769.000 100.00% 1.000 100.00% PNE % PNEs PNF % PNFs PNG % PNGs Total % Total Telemig Holding 0 0.00% 0 0.00% 1,180,078 81.76% 1,974,842 83.25% Free Float 3,830 100.00% 12,783 100.00% 263,278 18.24% 397,334 16.75% Total 3,830 100.00% 12,783 100.00% 1,443,356 100.00% 2,372,176 100.00% ON % ONs PN % PNs Total % Total Telpart Participacoes S.A. 64,633,961,594 51.86% 185,778,351 0.09% 64,819,739,945 19.34% Free Float 59,989,880,312 48.14% 210,274,535,100 99.91% 270,264,415,412 80.66% Total 124,623,841,906 100.00% 210,460,313,451 100.00% 335,084,155,357 100.00% ON % ONs PNA % PNAs PNB % PNBs Amazonia Holding 5,098,286,969 89.79% 0 0.00% 0 0.00% Free Float 580,025,992 10.21% 199,959,301 100.00% 576,153,096 100.00% Total 5,678,312,961 100.00% 199,959,301 100.00% 576,153,096 100.00% PNC % PNCs PND % PNDs PNE % PNEs Total % Total Amazonia Holding 0 0.00% 0 0.00% 5,935,414,562 79.68% 11,033,701,531 74.96% Free Float 42,882,395 100.00% 773,921,617 100.00% 1,513,601,270 20.32% 3,686,543,671 25.04% Total 42,882,395 100.00% 773,921,617 100.00% 7,449,015,832 100.00% 14,720,245,202 100.00% Telemig Part Tele Norte Part Amazonia Operadora Telemig Operadora Notes: - Figures do not reflect reverse shares split announced on May 31, 2007 19 public copyright(C)vivo2007 |
Appendix Shareholder Structure Telpart Telemig Part. Tele Norte Part. Telemig Celular Amazonia Celular Free Float Free Float Free Float Free Float ON: 46.10% PN: 95.73% Total: 77.28% ON: 89.79% PN: 65.64% Total: 74.96% ON: 51.86% PN: 0.09% Total: 19.34% ON: 89.17% PN: 79.68% Total: 83.25% ON: 10.83% PN: 20.32% Total: 16.75% ON: 48.14% PN: 99.91% Total: 80.66% ON: 53.90% PN: 4.27% Total: 22.72% ON: 10.21% PN: 34.36% Total: 25.04% 20 public copyright(C)vivo2007 |