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Securities Exchange Act of 1934 — Section 14(d)(5)
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| Re: | Offer by BCP Crystal Acquisition GmbH & Co, et al for Celanese AG Division of Corporation Finance File No. 5-57467 Incoming letter dated February 2, 2003 |
Via Facsimile and U.S. Mail
William R. Dougherty
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017-3954
Dear Mr. Dougherty:
We are responding to your letter dated February 2, 2004, a copy of which is attached. Each defined term in this letter has the same meaning as in your correspondence, unless we indicate otherwise.
Based on the representations in your February 2, 2004 letter but without necessarily concurring in your analysis, the United States Securities and Exchange Commission (the "Commission") hereby grants exemptions from:
Based on the representations in your letter dated February 2, 2004, but without necessarily concurring in your analysis, the staff of the Division of Corporation Finance will not recommend enforcement action pursuant to the following regulatory provisions:
The foregoing exemptions and no-action positions are based solely on the representations and the facts presented in your letter dated February 2, 2004, as supplemented by telephone conversations with the Commission staff. The relief is strictly limited to the application of the rules listed above to this transaction. You should discontinue this transaction pending further consultations with the staff if any of the facts or representations set forth in your letter change.
We also direct your attention to the anti-fraud and anti-manipulation provisions of the federal securities laws, including Section 10(b) and 14(e) of the Exchange Act, and Rule 10b-5 thereunder. The participants in this transaction must comply with these and any other applicable provisions of the federal securities laws. The Division of Corporation Finance
expresses no view on any other questions that may be raised by the proposed transaction, including but not limited to, the adequacy of disclosure concerning and the applicability of any other federal or state laws to the proposed transaction.
Sincerely,
For the Commission,
By the Division of Corporation Finance
pursuant to delegated authority,
Mauri L. Osheroff
Associate Director
Division of Corporation Finance
Simpson Thacher & Bartlett llp
425 Lexington Avenue
New York, N.Y. 10017-3954
(212) 455-2000
Facsimile (212) 455-2502
Direct Dial Number: 212.455.7295
E-Mail Address: wdougherty@stblaw.com
VIA FEDERAL EXPRESS
February 2, 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Brian V. Breheny
Chief, Office of Mergers and Acquisitions
Abby Adams
Christina Chalk
Special Counsel, Office of Mergers and Acquisitions
Ladies and Gentlemen:
We are writing on behalf of our clients, BCP Crystal Acquisition GmbH & Co. (the "Offeror"), and the following affiliates of the Offeror who are or will be filing parties to the Schedule TO filed in connection with the transaction described in this letter: BCP Luxembourg Holdings S.à.r.L., Blackstone Crystal Holdings Capital Partners (Cayman) IV Ltd., Blackstone Capital Partners (Cayman) IV L.P., Blackstone Capital Partners (Cayman) Ltd. 1, Blackstone Management Associates (Cayman) IV L.P., and Blackstone LR Associates (Cayman) IV Ltd. (together with the Offeror, the "Blackstone Entities"). On December 16, 2003, the Offeror, a newly formed German limited partnership, announced its decision to commence a cash tender offer (the "Offer") for all outstanding registered ordinary shares with no par value (the "Shares") of Celanese AG, a German stock corporation (Aktiengesellschaft) (the "Company"). The Offer is being commenced today.
As previously discussed with the members of the staff of the Securities and Exchange Commission (the "Commission"), we hereby request that the staff of the Commission (the "Staff") grant exemptive relief to the Blackstone Entities from the provisions of Section 14(d)(5) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the provisions of Rule 14d-11(c), (d) and (e) under the Exchange Act. We further request that the Staff confirm that, based on the facts and circumstances described in this letter, it will not recommend any enforcement action against any of the Blackstone Entities under Rule 14d-4(d)(2)(ii) or Rule 14e-1(b) or (c) under the Exchange Act if the Offer is conducted as described in this letter.1
We are U.S. counsel to the Offeror in connection with the Offer. The descriptions contained in this letter of the German regulatory regime relating to the Offer are based upon discussions with Gleiss Lutz, German counsel to the Offeror, and the descriptions contained in this letter of German tender offer practice and mechanics are based upon discussions with Gleiss Lutz and with Morgan Stanley & Co. Incorporated and Deutsche Bank Securities Inc., financial advisors to the Offeror.
The Company is a global chemicals company. The Company's portfolio consists of five main businesses: Acetyl Products, Chemical Intermediates, Acetate Products, Technical Polymers Ticona and Performance Products. For the nine months ended September 30, 2003, the Company had net sales of EUR 3,262 million and an operating profit of EUR 108 million. As of September 30, 2003, the Company had approximately 10,000 employees worldwide, and 24 production plants and six research centers in ten countries. According to its public filings, the Company is a foreign private issuer as defined in Rule 3b-4 of the Exchange Act.
The Shares are global registered shares, listed on the Frankfurt Stock Exchange (stock exchange symbol: CZZ) and on the New York Stock Exchange, or NYSE (symbol: CZ). The Offeror understands that the Company was the second non-U.S. company (after DaimlerChrysler AG) to list registered shares on the NYSE and is currently one of only four companies that maintain a listing of such shares on the NYSE. The Company's global shares trade directly and simultaneously, during the relevant business hours, on both the Frankfurt Stock Exchange and the NYSE. In that sense, they are distinct from "American Depositary Receipts" or "ADRs" which merely provide evidence of ownership of the underlying shares.
The Company's share register includes (i) a German sub-register for shares held in book-entry form through the Clearstream Banking AG booking system (the "Clearstream System") and (ii) a North American sub-register (the "North American Register") maintained on behalf of the Company by Mellon Investor Services LLC for (a) shares held in physical certificated form2 and (b) shares held in book-entry form through The Depository Trust Company booking system (the "DTC System"). According to information provided by the Company, approximately 80% of the outstanding Shares are held through the Clearstream System.
The Offeror is a limited partnership organized under the laws of Germany for the purpose of effecting the Offer. The Offeror's limited partnership interests are owned indirectly by a group of funds advised by The Blackstone Group, which is a private investment firm based in New York, New York. Blackstone anticipates that, until immediately prior to the time that the Offeror purchases Shares pursuant to the Offer, the Offeror will not have any significant assets or liabilities and will not engage in any activities other than those related to the transactions contemplated by the Offer. Funding to finance the Offer will be provided by equity contributions from Blackstone Capital Partners (Cayman) IV L.P. and certain affiliated funds and co-investors and borrowings by the Offeror and/or affiliated entities.
The Offer is being made to the holders of all of the issued and outstanding Shares at a price of €32.50 in cash per share. The Offer is subject to, and is structured to comply with, the German Securities Acquisition and Takeover Act (Wertpapiererwerbs -und Übernahmegesetz, the "German Takeover Act") and the applicable rules and regulations thereunder and, except to the extent permitted pursuant to the relief requested herein, Sections 14(d) and 14(e) of the Exchange Act and the rules and regulations promulgated thereunder. The Offer is structured as a single offer made concurrently in Germany, the United States and other jurisdictions in which the Offer may be legally extended. The initial offering period is expected to remain open for six weeks and to be followed by a two-week subsequent offering period. Withdrawal rights will be extended for the duration of the initial offering period, but not during the subsequent offering period. The Offer is subject to, among other conditions, the condition that not less than 85% of the Shares (excluding treasury shares held by the Company and/or its subsidiaries) be tendered and not withdrawn prior to the expiration of the initial offering period (the "Minimum Acceptance Condition").
The tender offer materials being provided or made available to the holders of Shares have been prepared in accordance with the requirements of both the German Takeover Act and Sections 14(d) and 14(e) of the Exchange Act and the rules and regulations promulgated thereunder, and are available in either the German language (the "German Offer Materials") or the English language (the "U.S. Offer Materials" and, together with the German Offer Materials, the "Offer Materials"), based on shareholders' requests. The German Offer Materials and the U.S. Offer Materials are substantively identical.
The Offer is being commenced in Germany by publication of the German Offer Materials on the Internet and announcement that the Offer Materials can be picked up free of charge at a specified location. The Offer is being commenced in the United States by publication of a summary advertisement and by mailing the Offer Materials to security holders upon request, each in accordance with Rule 14d-4(a)(2) under the Exchange Act. In addition to making an announcement of the Offer and mailing the offering materials to security holders upon request in accordance with Rule 14d-4(a)(2), the Offeror will make a request to the Company for stockholder lists and security position listings pursuant to Rule 14d-5 under the Exchange Act. Based on discussions with the Company's legal counsel, the Offeror anticipates that, because of German data protection laws, the Company will not be permitted to provide the Offeror with its stockholder lists and security position listings. The Offeror therefore expects that the Company will mail the offering materials, or will cause them to be mailed, to the record holders on such stockholder lists and security position listings, and will otherwise comply with its obligations under Rule 14d-5(b).
Celanese shareholders that hold their Shares in certificated form listed in the North American Register will accept the Offer by returning a completed letter of transmittal to the U.S. depositary.
Celanese shareholders that hold their Shares in book-entry form within the DTC System (together with the certificated shares, the "North American Shares") will accept the Offer by complying with book-entry transfer procedures (or, for shareholders holding their Shares in street name, by following instructions from their broker, dealer, bank or other nominee, which will then comply with such procedures).
Celanese shareholders that hold their Shares in book-entry form within the Clearstream System (such Shares, the "German Shares") will accept the Offer by delivering a declaration of acceptance to the custodian credit institution or financial services institution (a "Custodian Institution") that holds their German Shares. The Custodian Institutions that hold the German Shares for which acceptances of the Offer have been received will effect a book-entry transfer in order to hold the tendered German Shares under a separate designated securities identification number for tendered German Shares within the Clearstream System until the expiration of the Offer.
The German Takeover Act requires the announcement of exact and final results of an offer following the expiration of the initial offering period, and, with respect to any minimum offer condition, the determination of such final results dictates whether such offer has been successful or not. Under German practice, this determination cannot be made until the second or third German banking day following the expiration of the initial offering period. This is because shares may be traded and tendered on the last day of the initial offering period, and the book-entry transfer of such shares into the appropriate securities identification number for tendered German Shares within the Clearstream System can only be effected at or following settlement of the trade, which typically occurs on T+2. While the same gap between tender and settlement occurs in the U.S. markets, it is addressed by the use of notices of guaranteed delivery, a procedure not used in the German markets. The German Takeover Act provides that the Offeror must then prepare and publish the final, official results of the tender offer in a qualifying newspaper, which takes approximately another two German banking days, depending on the applicable newspaper's publication deadlines. Settlement for shares tendered typically occurs within one to two German banking days thereafter.
Although the Offer will be made to all shareholders of the Company in Euros, the Offeror intends to pay holders of tendered North American Shares the offer price converted into U.S. dollars at the WM/Reuters spot rate at the close of business on the day prior to the day on which the Offeror provides funds to the paying agents for the Offer in respect of settlement for such tendered North American Shares, unless such holders elect or take certain steps to receive the offer price in Euros. The Offeror understands that all such holders of North American Shares (whether in certificated or book-entry form) have historically had payment of the Company's Euro-denominated dividends made to them in U.S. dollars in a similar manner.
Holders of North American Shares in certificated form may elect to receive the offer price in Euros by checking the appropriate box on the letter of transmittal.
Holders of North American Shares in book-entry form through the DTC System will be unable to make an equivalent election because The Depository Trust Company does not have the ability to deliver payments to its participants in currencies other than U.S. dollars, and The Depository Trust Company will therefore agree with the Offeror's paying agent to have the Euro offer price converted into U.S. dollars. The Offer Document will include disclosure to that effect. Since shareholders who hold their Shares through the DTC System have in effect agreed that, by participating in that system, they will receive all payments through The Depository Trust Company in U.S. dollars, the Offer Document will inform such shareholders that, should they wish to receive Euros, they should transfer their Shares to the Clearstream System. To do so, a shareholder would need to have or to open a securities account with an institution which is a member in the Clearstream System. Shareholders would request that their broker, dealer, bank or other nominee transfer the Shares into such account. We understand that, (i) because there is a direct link between the DTC System and the Clearstream System, these transfers could be effected within one to two business days and (ii) the Depository Trust Company would charge a fee of approximately $5 for such transfer. It is possible that the shareholder's broker, dealer, bank or other nominee could charge a fee in connection with such a transfer as well. In principle, any shareholder whose Shares are held in the Clearstream System could do the reverse as a means of electing to receive U.S. dollars in consideration for their Shares. In effect, therefore, all holders of Shares in book-entry form would receive payment in the currency in which they currently receive dividends, but would have the ability to receive the offer price in the alternative currency.
The German Takeover Act requires that, following a successful offer, the Offeror must provide a two-week subsequent offering period during which shareholders may tender their shares for the same consideration offered in the initial offering period. This may begin only after the Offeror publishes the final, official results of the tender offer. The subsequent offering period therefore typically begins the day after the fourth or fifth German banking day following the expiration of the initial offering period.
German practice also provides for a single settlement for all shares tendered during the subsequent offering period, which, as with the initial offering period, typically occurs three to seven German banking days following the expiration of the subsequent offering period. This is due to the logistical requirements of the tender procedures described above. The Offeror's financial advisors are not aware of any instance in German practice in which daily or periodic settlement has been made during a subsequent offering period.
Although most of the relief requested by this letter (other than with respect to certain extensions of the Offer) would be available to "Tier II" qualifying companies under Rule 14d-1(d), the Offeror is unable to conclusively determine whether the Offer would qualify for such relief since it has been unable to determine what the relevant U.S. shareholding was as of January 3, 2004, the 30th day prior to the proposed commencement date of the Offer. According to information provided by the Company, as of June 30, 2003, the most recent date for which reliable information is available, U.S. holders (as determined in accordance with Rule 14d-1(d) of the Exchange Act, "U.S. Holders") held approximately 43% of the outstanding Shares not held by holders of more than 10% of the Shares. The Offeror has been informed by the Company that, in order for it to determine the level of U.S. ownership of the Shares, it must engage an outside service provider to work with the Company's registrar to compile that information. Historically, the Company has only done this once a year, as of the end of the calendar year and in conjunction with the preparation of its annual accounts. This year for the first time, the Company undertook to identify this information twice a year (as of June 30 and as of December 31). The Offeror understands that this information typically takes at least six weeks to compile. With the assistance of counsel for the Company, the Offeror has sought to obtain this information as of December 31, 2003 from Thomson Financial ("Thomson"), which has been engaged by the Company to conduct a review of share ownership for the purposes of the Company's annual accounts. Thomson, however, is currently unable to account for approximately 15% of the outstanding Shares, and its current information with respect to the remaining 85% is only preliminary and is subject to verification and further change. However, the Offeror is not aware of any information that would indicate that there has been a significant increase in the level of U.S. ownership of the Shares. Therefore, since the Offeror cannot obtain more recent reliable share information and since the Offer would not qualify for Tier II treatment based on the information available as of June 30, 2003, the Blackstone Entities are requesting the relief described in this letter with respect to certain points of conflict between U.S. laws and practice and those of Germany (see footnote 41 of the Cross-Border Release).
Section 14(d)(5) of the Exchange Act provides that the securities tendered in a tender offer may be withdrawn at any time after 60 days from the date of the original offer.
German law does not provide for withdrawals after the expiration of the initial offering period. However, due to the German tender procedures described above, the Offeror will not know for approximately two to three German banking days following the expiration of the initial offering period whether the Minimum Acceptance Condition has been met, and therefore whether it will accept tendered Shares for payment. The Offeror is bound by the results of that determination and has no opportunity to rely on the failure of any other conditions during that determination period.
While not currently expected based on the proposed length of the initial offering period (42 days), it is possible that, due to extensions of the initial offering period (which, pursuant to German law, may be made only in limited circumstances), the 60th day from commencement could occur prior to or during this time period between the expiration of the initial offering period and the time when the Offeror is able to determine if the Minimum Acceptance Condition has been met and tendered Shares are therefore accepted for payment. If that were to occur, permitting withdrawals during the period while the results of the Offer are being determined could render satisfaction of the Minimum Acceptance Condition illusory. Accordingly, we request exemptive relief from the provisions of Section 14(d)(5) of the Exchange Act insofar as that section would permit holders who tendered into the Offer to withdraw their Shares at any time which is both (a) after 60 days from the commencement of the Offer and (b) during the period (expected to be no more than seven German banking days) following the expiration of the initial offering period and prior to the date on which the Offeror accepts tendered Shares for payment.
Rule 14d-11(d) under the Exchange Act provides that a bidder may provide a subsequent offering period if, among other things, the bidder "announces the results of the tender offer, including the approximate number and percentage of securities deposited to date, no later than 9:00 a.m. Eastern time on the next U.S. business day after the expiration date of the initial offering period and immediately begins the subsequent offering period." Under U.S. law, "approximate" numbers and percentages are adequate; in U.S. practice, approximate, rather than final, numbers are announced, including with respect to shares subject to guaranteed delivery procedures.
As described above, however, the applicable German requirement relating to the commencement of the subsequent offering period requires the publication of exact and final results. For this reason, German practice is to allow two to three German banking days following the expiration of the initial offering period in order to effect the book-entry transfers necessary for that determination. Preparation for publication of those results typically occurs on the third or fourth German banking day following the expiration of the initial offering period, and publication itself typically occurs on the following banking day (i.e., the fourth or fifth German banking day following expiration). The subsequent offering period would then commence on the day following publication.
We therefore request exemptive relief from Rule 14d-11(d) to permit, in accordance with German law and practice, the commencement of the subsequent offering period on the day following the publication of the final results of the tender offer (expected to be the day after the fourth or fifth German banking day following the closing of the initial offering period).
Rule 14e-1(c) under the Exchange Act prohibits a person making a cash tender offer from failing to pay the consideration offered or to return the securities deposited by or on behalf of security holders promptly after the termination or withdrawal of such offer. Rule 14d-11 provides that a bidder in a tender offer may elect to provide a subsequent offering period if, among other things, the bidder immediately accepts and promptly pays for all securities tendered during the initial offering period and the bidder immediately accepts and promptly pays for all securities as they are tendered during the subsequent offering period.
In accordance with German practice, payment for Shares tendered during the initial offering period will be made approximately three to seven German banking days following the expiration of the initial offering period. Payment for Shares accepted for payment pursuant to the subsequent offering period of the Offer will be made approximately three to seven German banking days after the termination of the two-week subsequent offering period described above. If at the end of the initial offering period it is determined that any condition to the Offer set forth in the Offer Materials has not been satisfied or waived by the Offeror, and the Offer is therefore terminated without the acceptance for payment by the Offeror of any Shares, all tendered Shares would be returned without undue delay.
We therefore request exemptive relief from Rule 14d-11(c) and (e), and further request that the Staff confirm that it will not recommend enforcement action under Rule 14e-1(c), to permit the payment for, or return of, Shares tendered in the Offer in the manner described above.
Rule 14e-1(b) under the Exchange Act prohibits an offeror from increasing or decreasing the percentage of the class of securities being sought or the consideration offered or the dealer's soliciting fee to be given in a tender offer unless the tender offer remains open for at least ten U.S. business days from the date that notice of such change is first published or sent or given to security holders. Rule 14d-4(d)(2)(ii) under the Exchange Act requires that, in the context of a registered offer, in the event an offeror changes the offer price or makes a similarly significant change to the terms of the offer, the offeror must extend the tender offer by ten U.S. business days and disseminate the material change to the target shareholders. In Release No. 33-7760, the Commission stated that it believed these time periods represent general guidelines that should be applied uniformly to all tender offers.
Under German law, a similar material change occurring during the last two weeks of the initial offering period would require that the offering period remain open for an additional two calendar weeks from the end of the initial offering period. The applicable German law requires an extension of exactly two weeks. In the event that such a change were to occur during the last few days of the initial offering period, and the resulting two-week extension occurred over a period that included U.S. federal holidays, Rule 14e-1(b) and compliance with the Commission's position regarding the applicability of Rule 14d-4(d)(2)(ii) would require a longer extension than that permitted by German law. Accordingly, we hereby request that the Staff confirm that it will not recommend enforcement action under Rule 14d-4(d)(2)(ii) or Rule 14e-1(b) if in such circumstances the Offeror keeps the offering period open for a period of two calendar weeks in accordance with German law.
Based on the foregoing, we respectfully request that the Staff grant exemptive relief to the Blackstone Entities from the provisions of Section 14(d)(5) of the Exchange Act and the provisions of Rule 14d-11(c), (d) and (e) under the Exchange Act, and confirm that it will not recommend any enforcement action against any of the Blackstone Entities under Rule 14d-4(d)(2)(ii) or Rule 14e-1(b) or (c) under the Exchange Act if the Offer is conducted as described in this letter.
We believe the relief requested herein is consistent with that granted by the Commission in similar situations in the past, such as that granted with respect to the offer by Alcan Inc. for Common Shares, Bonus Allocation Rights, ADSs and OCEANEs of Pechiney (October 6, 2003); Serono S.A. for all outstanding shares, ADSs, OCEANEs and Warrants of Genset (September 12, 2002); the offer by Vodafone AirTouch Plc Offer for Mannesmann Aktiengesellschaft (December 22, 1999); and the offer by Rhone-Poulenc S.A. for Hoechst AG (December 20, 1999. We also believe that the relief requested in this letter is consistent with the Commission's guidance set forth in the Cross-Border Release.
If you require any further information, please contact the undersigned at (212) 455-7295.
Sincerely,
/s/ William R. Dougherty
William R. Dougherty
cc: Paul Dudek, Office Chief, Office of International Corporate Finance
1 We believe that the relief requested in this letter is consistent with the relief granted by the Commission in a number of similar transactions: see, e.g., Offer by Alcan Inc. for Common Shares, Bonus Allocation Rights, ADSs and OCEANEs of Pechiney (October 6, 2003); Serono S.A. Offer for All Outstanding Shares, ADSs, OCEANEs and Warrants of Genset (September 12, 2002); Vodafone AirTouch Plc Offer for Mannesmann Aktiengesellschaft (December 22, 1999); and Rhone-Poulenc S.A. Exchange Offer for Hoechst AG (December 20, 1999). We also believe that the relief requested in this letter is consistent with the Commission's guidance set forth in the Commission's release "Cross-Border Tender and Exchange Offers, Business Combinations and Rights Offerings" (Release Nos. 33-7759, 34-42054, 39-2378; International Series Release No. 1208) (the "Cross-Border Release").
2 According to Mellon Investor Services LLC, approximately 280 shareholders hold Shares in certificated form.
http://www.sec.gov/divisions/corpfin/cf-noaction/blackstone020304.htm
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