 |
Home | Previous Page | |
|
||
 |
|
|
|
||
 |
|
|
|
|
|||||||||||||||
|
|
|||||||||||||||
|
|
Securities and Exchange Act of 1934
|
| Direct Dial Number
212.455.7295 |
E-Mail Address | |
VIA FEDERAL EXPRESS |
December 13, 2004 |
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
| Attn: | Brian V. Breheny
Ladies and Gentlemen:
We are writing on behalf of our clients, Celanese Europe Holding GmbH & Co. KG (formerly known as BCP Crystal Acquisition GmbH & Co. KG, the "Offeror"), and the following affiliates of the Offeror who are filing parties to the Schedule TO filed in connection with the transaction described in this letter: BCP Caylux Holdings Luxembourg S.C.A., Celanese Holdings LLC (formerly known as BCP Crystal Holdings Ltd. 2), Crystal U.S. Holdings 3 L.L.C., Celanese Corporation (formerly known as Blackstone Crystal Holdings Capital Partners (Cayman) IV Ltd.), Blackstone Capital Partners (Cayman) Ltd. 1, Blackstone Capital Partners (Cayman) IV L.P., Blackstone Management Associates (Cayman) IV L.P. and Blackstone LR Associates (Cayman) IV Ltd. (together with the Offeror, the "Blackstone Entities"). As of the commencement of the Mandatory Offer referred to below, the Offeror owned approximately 84.3% of the registered ordinary shares with no par value (the "Shares"), excluding treasury shares, of Celanese AG, a German stock corporation (Aktiengesellschaft) (the "Company"), outstanding as of June 30, 2004, which it acquired pursuant to the earlier voluntary tender offer described in this letter.
On June 22, 2004, it was announced that the Offeror and the Company had entered into a domination and profit and loss transfer agreement on the same day (the "Domination Agreement") pursuant to which the Offeror would be required under applicable German law, among other things, to offer, once the Domination Agreement became operative, to purchase any and all Shares not owned by the Offeror for cash compensation of €41.92 per Share, an amount determined pursuant to applicable German requirements (the "Mandatory Offer"). Under applicable German law, the Offeror is required to pay interest on the cash compensation from the day after the date the Domination Agreement becomes operative at the rate per annum of 2% plus a base rate defined in Section 247 of the German Civil Code (the "Interest"), as reduced by any guaranteed dividend payments. The Domination Agreement became operative, in accordance with its terms, on October 1, 2004 (the "Effective Date"), upon which date the Offeror was required under applicable German law to make payment of the cash compensation upon demand. The Offeror commenced the Mandatory Offer from a U.S. securities law perspective on September 2, 2004 by publication of a summary advertisement in the Wall Street Journal and by making available to shareholders, upon request, the offer document, dated September 2, 2004, the letter of transmittal and the related offering materials. Those offering materials were filed with the Securities and Exchange Commission (the "Commission") under cover of Schedule TO on the same day. The Offeror closed the Initial Offering Period (as hereinafter defined), which was subject to the condition that the Domination Agreement had become operative, and commenced the Subsequent Offering Period (as hereinafter defined), on the Effective Date.
As previously discussed with the members of the staff of the Commission (the "Staff"), we hereby request that the Staff confirm that, based on the facts and circumstances described in this letter, it will grant the Blackstone Entities exemptive relief from the provisions of Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") to allow a subsequent offering period of three months following the Effective Date, subject to additional extension to the extent required by German law (the "Subsequent Offering Period").1 In addition, we request that the Staff confirm that, based on the facts and circumstances described in this letter and insofar as applicable German law provides for the payment of Interest on the cash compensation (and the related potential reduction of such Interest payment in connection with the payment of required guaranteed dividends), it will grant exemptive relief to the Blackstone Entities under Rule 14d-10(a)(2) and Rule 14d-11(f) under the Exchange Act and will not recommend any enforcement action against any of the Blackstone Entities under Rule 14e-1(b) under the Exchange Act, in connection with the payment of fluctuating offer consideration during the Subsequent Offering Period as described above.
We are U.S. counsel to the Offeror in connection with the Mandatory Offer. The descriptions contained in this letter of the German regulatory regime relating to the Mandatory 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 Deutsche Bank Securities Inc., financial advisor to the Offeror.
Background
The Company
The Company is a leading global industrial chemicals company. The Company's portfolio consists of four primary businesses: Chemical Products, Acetate Products, Technical Polymers Ticona and Performance Products. For the six months ended June 30, 2004, the Company had net sales of $1,326 million and an operating profit of $88 million. As of December 31, 2003, the Company had approximately 9,500 employees worldwide on a continuing basis. As of December 31, 2003, the Company had twenty-four production plants and six research centers in ten countries. The Company is a foreign private issuer as defined in Rule 3b-4 of the Exchange Act.
The Offeror
The Offeror is a limited partnership organized under the laws of Germany for the purpose of acquiring all of the outstanding Shares. The Offeror's limited partnership interests are principally owned indirectly by a group of funds advised by The Blackstone Group, which is a private investment firm based in New York, New York.
Ownership Following the Voluntary Tender Offer
Pursuant to a voluntary tender offer completed on April 27, 2004 (the "Voluntary Tender Offer"),2 the Offeror acquired, at a price of €32.50 per Share, a total of 41,588,227 Shares, representing approximately 84.3% of the Shares (excluding treasury shares) outstanding as of June 30, 2004.3 Shortly before the commencement of the Mandatory Offer, the Company advised the Offeror that the Company had received a notification pursuant to German law from one shareholder, who is a U.S. person unaffiliated with the Offeror, indicating that such shareholder held approximately 10.3% of the Shares, excluding treasury shares.4 Based on this information, approximately 5.4% of the outstanding Shares were held by the public at the time of the commencement of the Mandatory Offer. A substantial majority of the Shares are now listed on the Company's German sub-register for shares held in book-entry form through the Clearstream Banking AG booking system. The German sub-register lists only record holders; of those, based on information provided by the German registrar, we understand that only a small percentage (less than 2%) are held by persons readily identifiable as U.S. holders. For the reasons described in the Original No-Action Request Letter under the caption "Tier II Status", the Offeror has been unable to obtain reliable information as to the number or percentage of the remaining 5.4% of the Shares outstanding that were owned by U.S. holders (as determined in accordance with Rule 14d-1(d) of the Exchange Act). The Shares, which are registered under the Exchange Act, were delisted from the New York Stock Exchange, effective as of the opening of business on June 2, 2004, and are currently traded only on the Frankfurt Stock Exchange.
The Mandatory Offer
Domination Agreement
On June 22, 2004, the Offeror and the Company entered into the Domination Agreement, pursuant to which the Company agreed to submit itself to the direction of, and to transfer its entire profits to, the Offeror, and the Offeror agreed to compensate the Company for any annual losses incurred during the term of the Domination Agreement. The Domination Agreement was submitted to and approved by the shareholders of the Company at an extraordinary general meeting of Company shareholders held on July 30 and July 31, 2004 and became operative on the first day of the Company's next fiscal year, October 1, 2004. The Domination Agreement was registered with the commercial register in Germany on August 2, 2004. As a consequence of entering into the Domination Agreement, the Offeror is required to make the payments contemplated by the Mandatory Offer under applicable German law commencing on the Effective Date. According to the terms of the Domination Agreement, the Subsequent Offering Period of the Mandatory Offer will remain open for three months following the Effective Date (as further described below). If any award proceedings concerning the adequacy of the amount of cash compensation or the guaranteed dividend (Spruchverfahren) are commenced by shareholders of the Company, the Offeror is required to keep the Mandatory Offer open under German law until two months after the date on which public announcement is made of the resolution of such proceedings.
Minority shareholder protections in connection with the Domination Agreement
As mandated by German law, the Domination Agreement includes provisions designed to protect the Company's minority shareholders. Section 305(1) of the German Stock Corporation Act (Aktiengesetz) requires that, once a domination and profit and loss transfer agreement becomes operative, the offeror must offer the minority shareholders of the company "fair cash compensation" (angemessene Barabfindung) in exchange for their shares and pay such amount promptly upon acceptance of such offer by any such shareholder. Under Section 305(3) of the German Stock Corporation Act, the offeror is required to make interest payments on such cash compensation, starting from the day after the date the domination and profit and loss transfer agreement becomes operative, as described above. In addition, applicable German law obligates the offeror to provide shareholders of the company who choose not to tender their shares annual guaranteed dividend payments which would be payable for so long as the domination and profit and loss transfer agreement remains in effect and the offeror owns less than 100% of the outstanding shares (excluding treasury shares) of the company. The first such annual guaranteed dividend is expected to become payable on the first banking day following the annual shareholders' meeting of the Company for the fiscal year ending September 30, 2005. In the event the Mandatory Offer remains outstanding at the time such dividend becomes payable, the accrued Interest which would be payable on the fair cash compensation to shareholders accepting the Mandatory Offer at such time or thereafter would be subject to offset by the amount of the annual guaranteed dividend which is paid at such time.
The parties to a domination and profit and loss transfer agreement typically hire, on a joint basis, an independent expert to assist in determining the appropriate amount of cash compensation and the level of guaranteed dividend to be paid. The independent expert determines these amounts based on a valuation of the company's business and presents its findings in a report to both parties. German law provides that the management board of each party to a domination and profit and loss transfer agreement must produce a report, or the management boards of both parties may produce a joint report, which sets forth detailed information on the domination and profit and loss transfer agreement, including reasons for concluding the agreement and explanations regarding the amounts of the cash compensation and guaranteed dividend payments. In addition, the District Court (Landgericht) (in the jurisdiction where the controlled company has its registered seat), upon petition by the parties to the domination and profit and loss transfer agreement, chooses and appoints by court order one or more duly qualified auditors (Vertragsprüfer) to review the agreement, who are required to issue a report stating their findings. This court-mandated audit and related report are required before a domination and profit and loss transfer agreement can be implemented.
Ernst & Young AG Wirtschaftsprüfungsgesellschaft ("Ernst & Young") served as the independent expert for the Offeror and the Company in connection with the Domination Agreement. In its report dated June 17, 2004 (the "E&Y Report"), Ernst & Young determined that the appropriate cash compensation payment to be offered in the Mandatory Offer was €41.92 per Share. The court-appointed auditor, PwC Deutsche Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft ("PwC"), confirmed that this amount was appropriate under applicable German law in a separate report dated June 22, 2004 (the "PwC Report").
The Domination Agreement was executed, and subsequently approved by the Supervisory Board of the Company, on June 22, 2004. On June 23, 2004, the Management Board of the Company and the Management Board of BCP Management GmbH, as the sole general partner of the Offeror, issued their joint report (the "Joint Report") on the Domination Agreement. The Joint Report, along with the E&Y Report and the PwC Report, were made available to shareholders of the Company beginning on June 25, 2004.
Structure of the Mandatory Offer
The Mandatory Offer is subject to, is required to be conducted in accordance with, and is structured to comply with, the German Stock Corporation Act (Aktiengesetz) and the applicable rulings and interpretations 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. Unlike the Voluntary Tender Offer, the Mandatory Offer is not considered, from a German legal perspective, to be a takeover offer or a tender offer and is therefore not subject to regulation under the German Securities Acquisition and Takeover Act (WpÜG). In contrast to the Voluntary Tender Offer, the German Stock Corporation Act does not require, for instance, the publication or dissemination of an offer document or compliance with German takeover offer laws in connection with the Mandatory Offer. Under German law and practice, the Offeror would simply notify depositary banks that the Domination Agreement had become operative, depositary banks would then send a short letter to clients making them aware of the availability of the offer consideration, and a shareholder would notify its depositary bank if it desired to exchange shares for the offer consideration. In addition, it is also customary in Germany, although not legally required, for the Offeror to publish an advertisement in German newspapers to inform shareholders about the commencement of the Mandatory Offer. If a minority shareholder wished to exchange Shares, it could do so at any time during the three-month period following the Effective Date (such period being subject to extension in the event of certain award proceedings challenging the adequacy of the cash compensation or the guaranteed dividend as described above) and receive the applicable offer consideration within a few days. The Offeror is required under applicable German law to accept Shares and make prompt payment of the applicable cash compensation beginning on the Effective Date.
In order to conduct the Mandatory Offer in compliance with Sections 14(d) and 14(e) of the Exchange Act and the rules and regulations promulgated thereunder (except to the extent permitted pursuant to the relief requested herein) while still comporting with the requirements of German law and practice, we structured the Mandatory Offer so that it commenced, from a U.S. securities law perspective, by summary advertisement 20 U.S. business days in advance of the date when the Offeror was required pursuant to German law to begin to exchange Shares for cash compensation (the "Initial Offering Period"). The Mandatory Offer was subject to the condition that the Domination Agreement had become operative, which occurred in accordance with its terms on October 1, 2004. Since, following such time, shareholders have been, and will continue to be, entitled under applicable German law to prompt payment for their Shares as and when they are tendered, we consummated the Mandatory Offer once the Domination Agreement became operative on October 1, and then commenced a continuing subsequent offering period, during which payment has been, and will continue to be, made promptly as and when Shares were tendered, but during which withdrawal rights would not be provided. The Offeror has been making, and will continue to make, payments to the tendering shareholders in the same manner and currency as in the Voluntary Tender Offer as described in the Original No-Action Request Letter, except that during the Subsequent Offering Period the exchange rate used to convert the offer consideration into U.S. dollars has been and will continue to be the WM/Reuters spot rate at the close of business three business days prior to the settlement date for such tendered shares. If, at any point during the Mandatory Offer, the Shares become eligible for deregistration under the Exchange Act, we expect that the Company would effect such deregistration. However, for so long as the Mandatory Offer remains open, the Blackstone Entities would continue to comply with Sections 14(d) and 14(e) of the Exchange Act and the rules and regulations promulgated thereunder (except to the extent permitted pursuant to the relief requested herein), unless and until they request, and are granted, further relief from the Staff.
Extension of the Subsequent Offering Period
Rule 14d-11 under the Exchange Act allows an offeror to provide a subsequent offering period of three to twenty business days. Applicable German law and the terms of the Domination Agreement require, however, that shareholders be entitled to exchange their Shares for prompt payment of the offer consideration for a period of at least three months following the date the Domination Agreement becomes operative, subject to extension in the event that dissenting shareholders institute certain award proceedings whereby the cash compensation or the guaranteed dividend is subject to review by a German court. If these award proceedings are commenced, the offer must remain open as long as they remain unresolved. We are unable to predict how long it might take to resolve such award proceedings, but understand that it could take months or even years. Once they are finally resolved, whether by final judicial determination, settlement, withdrawal or otherwise, the offer must remain open (at the higher price determined pursuant to the determination or settlement, if applicable), for two months after the date on which public announcement is made of the resolution of such proceedings. This extension is required so that shareholders can determine whether to tender for a period of time following final resolution of these proceedings. We therefore respectfully request the Staff grant exemptive relief from Rule 14d-11 to permit, in accordance with German law and practice, the Offeror to provide a subsequent offering period that extends for so long as the Offeror is obligated to keep the Mandatory Offer open pursuant to applicable German law. 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 Sanofi-Synthélabo for Ordinary Shares and ADSs of Aventis (June 10, 2004); the Offer by Serena Software, Inc. for Shares and ADSs of Merant plc (April 13, 2004); the Offer by Schlumberger Limited for Ordinary Shares of Sema plc (March 2, 2001); and the Offer by Amerada Hess Corporation for Shares and ADSs of LASMO plc (December 13, 2000).
Payment of Interest on the Offer Price
As described above, the Offeror is obligated under German law to pay, in addition to the cash compensation amount, Interest thereon from the day after the Domination Agreement becomes operative, but subject to reduction (on a prospective basis) to the extent that a guaranteed dividend is ultimately paid. As explained above, the Subsequent Offering Period commenced on the same date the Domination Agreement became operative. Rule 14d-11(f) under the Exchange Act requires that the amount of consideration being offered during the Subsequent Offering Period be the same as that offered during the Initial Offering Period. By virtue of the daily accrual of Interest, however, and the potential reduction thereof that will occur if guaranteed dividend payments are ultimately made, as required by applicable German law, during the Subsequent Offering Period, this is not permissible under German law in the context of the Mandatory Offer. We are therefore respectfully requesting that the Staff grant exemptive relief to the Blackstone Entities under Rule 14d-11(f) to offer consideration during the Subsequent Offering Period which is higher than that offered during the initial offering period solely by virtue of the Interest accrued thereon and any reductions thereof as a result of guaranteed dividend payments. In addition, to the extent that Rule 14e-1(b) under the Exchange Act, which prohibits an offeror from, among other things, increasing or decreasing the consideration offered in a tender offer unless the tender offer remains open for at least 10 U.S. business days from the date that notice of such change is first published or sent or given to security holders, could be deemed applicable by virtue of the change in the offer consideration during the Subsequent Offering Period, we are respectfully requesting that the Staff confirm that it will not recommend any enforcement action against any of the Blackstone Entities under Rule 14e-1(b) to permit the Offeror to offer consideration which will fluctuate during the Subsequent Offering Period because of the Interest accrued thereon and any reductions thereof as a result of guaranteed dividend payments.
Under Rule 14d-10(a)(2) under the Exchange Act, the consideration paid to any security holder pursuant to the tender offer must be the highest consideration paid to any other security holder during such tender offer. The promulgating release (Releases Nos. 33-6653 and 34-23241; corrected in Releases No. 33-6653B and 34-23241B) (the "Best Price Release") indicates that the purpose of Rule 14d-10(a)(2) is to eliminate discriminatory treatment among security holders who may desire to tender their shares. The obligation of the Offeror to pay Interest on the cash compensation during the Subsequent Offering Period, and any reduction thereof as a result of any guaranteed dividend payment made by the Offeror, would conflict with the provisions of Rule 14d-10(a)(2) as the consideration paid to tendering shareholders of the Company would depend on when such tenders are made. We are therefore respectfully requesting that the Staff grant exemptive relief to the Blackstone Entities under Rule 14d-10(a)(2) to permit the Offeror to pay consideration which will fluctuate during the Subsequent Offering Period because of the Interest accrued thereon and any reductions thereof as a result of guaranteed dividend payments.
If you have any questions or require any further information, please contact the undersigned at (212) 455-7295. If for any reason you do not concur with any of the views expressed in this letter, we respectfully request an opportunity to confer with you before the issuance of any written response.
/s/ William R. Dougherty
Dr. Christian Cascante, LL.M.
Maybachstraße 6
Referenz/reference
Datum/date
U.S.A.
Christina Chalk Celanese Europe Holding GmbH & Co. KG Ladies and Gentlemen,
We refer to the letter dated December 13, 2004, from William R. Dougherty, a member of the firm of Simpson Thacher & Bartlett LLP, New York, writing to you on behalf of our clients, Celanese Europe Holding GmbH & Co. KG, formerly known as BCP Crystal Acquisition GmbH & Co. KG (the "Offeror"), and certain affiliates of the Offeror (the ,,Letter"). In the Letter, the Offeror respectfully requested that the Staff grant exemptive relief, and/or confirm that it will not recommend any enforcement action, under certain provisions of the U.S. securities laws in connection with an offer to exchange any and all registered ordinary shares of Celanese AG not owned by the Offeror for cash compensation (the ,,Mandatory Offer"). The Mandatory Offer is required by German law in connection with the domination agreement concluded between the Offeror and Celanese AG. The Letter also made reference to our firm and to certain discussions about the German legal situation in connection with the Mandatory Offer.
Herewith, we acknowledge that we have been and are German counsel to the Offeror and that the reference in the Letter to discussions with us about the description of the German regulatory regime and German tender offer practice and mechanics contained in the Letter is correct. We have reviewed the Letter, and we believe the descriptions of the German regulatory regime and German tender offer practice and mechanics are accurate. If we can be of any further assistance or if you have any further questions, please do not hesitate to contact the undersigned.
Sincerely
/s/ Christian Cascante
- Christian Cascante -
________________________
http://www.sec.gov/divisions/corpfin/cf-noaction/blackstone121604.htm
Partner
D-70469 Stuttgart
T +49 711 8997-151
F +49 711 855096
christian.cascante@gleisslutz.com
www.gleisslutz.com
BCP Crystal 2004_12_13
13. Dezember 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Brian V. Breheny
Chief, Office of Mergers and Acquisitions
Special Counsel, Office of Mergers and Acqui-
sitions
Letter of William R. Dougherty dated December 13, 2004
1 We believe that the relief requested is consistent with the relief granted by the Commission in a number of similar transactions: Offer by Sanofi-Synthélabo for Ordinary Shares and ADSs of Aventis (June 10, 2004); Serena Software, Inc. Offer for Shares and ADSs of Merant plc (April 13, 2004); Schlumberger Limited's Offer for Sema plc (March 2, 2001); and Amerada Hess Corporation Offer for Shares and ADSs of LASMO plc (December 13, 2000).
2 The Voluntary Tender Offer is described in a no-action request letter filed with the Commission on February 2, 2004; see BCP Crystal Acquisition GmbH & Co. KG, et. al for Celanese AG available (February 2, 2004) (the "Original No-Action Request Letter"), a copy of which is attached hereto.
3 Since June 30, 2004, the number of outstanding Shares has increased, due to the exercise of outstanding options to purchase Shares. However, the Company did not have a reliable figure for the outstanding Shares as of any date following June 30, 2004, and prior to the commencement of the Mandatory Offer. The number of Shares (excluding treasury shares) outstanding as of November 15, 2004 was 50,078,268, compared to 49,321,468 as of June 30, 2004.
4 The Company received this information in a notification made by such shareholder pursuant to Section 21 of the German Securities Exchange Act (WpHG) on July 23, 2004. Section 21 of the German Securities Exchange Act requires a shareholder to notify a company when, among other things, the shareholder exceeds the threshold of 10% of the outstanding shares, including treasury shares, of the company. Following the Company's receipt of the notification, the shareholder withdrew the notice. The Company advised the Offeror that it believed the notice was withdrawn because the shareholder based its calculation on the number of outstanding shares, excluding treasury shares (which as noted above results in an ownership level of approximately 10.3%), rather than including treasury shares (which results in an ownership level of approximately 9.3%, under the filing threshold).
Home | Previous Page
Modified: 12/29/2004