AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 2003
REGISTRATION NO. 333-106851
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 4
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ALCAN INC.
(Exact name of Registrant as specified in its charter)
CANADA 3334 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation Classification
or organization) Code Number)
1188 SHERBROOKE STREET WEST
MONTREAL, QUEBEC, CANADA H3A 3G2
TELEPHONE: (514) 848-8000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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ROY MILLINGTON, SECRETARY
ALCAN INC.
1188 SHERBROOKE STREET WEST
MONTREAL, QUEBEC, CANADA H3A 3G2
(514) 848-8000
(Name, address, including zip code and telephone number, including area code, of
agent for service)
---------------------
COPIES TO:
DONALD R. CRAWSHAW SCOTT D. MILLER
SULLIVAN & CROMWELL LLP SULLIVAN & CROMWELL LLP
125 BROAD STREET 1870 EMBARCADERO ROAD
NEW YORK, NEW YORK 10004 PALO ALTO, CALIFORNIA 94303
(212) 558-4000 (650) 461-5600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the consummation of the transaction described herein have been
satisfied or waived.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES, NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES, IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
IS NOT PERMITTED OR WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.
PROSPECTUS U.S. OFFER TO EXCHANGE
(ALCAN LOGO)
OFFER TO EXCHANGE PECHINEY COMMON SHARES,
PECHINEY BONUS ALLOCATION RIGHTS, PECHINEY
OCEANES AND PECHINEY AMERICAN DEPOSITARY SHARES
We are offering to exchange for each Pechiney Common Share, each 10 Pechiney
Bonus Allocation Rights (each Pechiney Bonus Allocation Right entitling the
holder to 0.1 of a Pechiney Common Share) or each 2 Pechiney American Depositary
Shares, or ADSs (each Pechiney ADS representing one-half of one Pechiney Common
Share) tendered:
- E24.60 in cash, and
- the number of Alcan Common Shares equal to 22.9 divided by the "Reference
Value," defined as the greater of (a) 27.4 and (b) an average trading
price of the Alcan Common Shares to be determined and announced before the
open of the fifth French trading day before the expiration of the offers
as described further in this Prospectus, this average being referred to as
the "Average Value," and provided, however, that this number of Alcan
Common Shares shall in no event be less than 0.6001.
Alcan reserves the option to substitute an equivalent amount of cash in place of
all or a portion of the Alcan Common Shares to be issued as consideration in the
offers, valued at the Average Value.
We are offering to exchange for each Pechiney OCEANE (obligations a option de
conversion en actions nouvelles et/ou d'echange en actions existantes) tendered:
- E83.40 in cash.
If, following the conclusion of this offer and the concurrent French offer
(including any subsequent offering period), the number of Pechiney securities
tendered into the offers represents more than 95% of the capital and voting
rights of Pechiney (on a fully diluted basis), Alcan will provide the following
additional consideration to the tendering Pechiney securityholders:
- for each Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights
or each 2 Pechiney ADSs tendered: E1
- for each Pechiney Bonus Allocation Right tendered: E0.10
- for each Pechiney ADS tendered: E0.50
- for each Pechiney OCEANE tendered: E0.40
See "The Offers -- Terms of the Offers" beginning on page 54.
---------------------------
This offer will expire at 5 p.m., New York City time on November 24, 2003,
unless it is extended or
unless it lapses or is withdrawn prior to that time. You may withdraw any
Pechiney securities tendered at any time prior to the expiration.
---------------------------
Alcan is offering to acquire all of the outstanding Pechiney securities through
two separate offers:
- a U.S. offer open to all holders of Pechiney securities (other than
Pechiney ADSs) who are located in the United States and Canada and to all
holders of Pechiney ADSs, wherever located, and
- a French offer open to all holders of Pechiney securities (other than
Pechiney ADSs) who are located in France and to holders of Pechiney
securities (other than Pechiney ADSs) who are located outside of France,
Canada and the United States if, pursuant to the local laws and
regulations applicable to such holders, they are permitted to participate
in the French offer.
These offers together are being made for all issued and outstanding Pechiney
securities, as well as for all Pechiney Common Shares that are held as treasury
stock and all Pechiney Common Shares that are or may become issuable prior to
the expiration of the offers due to the conversion of outstanding Pechiney
OCEANEs or the exercise of Pechiney stock options. The completion of the offers
is subject to a condition. For a discussion of this condition, see "The
Offers -- Condition Precedent." Subject to applicable law and regulations, we
reserve the right to modify or waive this condition in our discretion.
The board of directors of Pechiney has determined that the offers are in the
best interest of Pechiney securityholders and employees and recommends that
Pechiney securityholders tender their Pechiney securities into the offers.
Based on the number of Pechiney securities we understand (based on Pechiney's
Report on Form 6-K dated July 30, 2003) to be currently outstanding (including
Pechiney Common Shares issuable in exchange for Pechiney OCEANEs and upon the
exercise of outstanding Pechiney stock subscription options), Alcan will issue
up to 77,753,201 Alcan Common Shares pursuant to the offers, including up to
38,413,739 Alcan Common Shares pursuant to the U.S. offer.
Alcan Common Shares are listed on the New York Stock Exchange under the symbol
"AL", the Toronto Stock Exchange under the symbol "AL.TO", the London Stock
Exchange under the symbol "ALq.L" and the SWX Swiss Exchange under the symbol
"AL.S". Alcan will apply to list its Alcan Common Shares on Euronext Paris,
subject to the successful completion of the offers.
This prospectus contains detailed information concerning the U.S. offer for
Pechiney securities and the proposed combination of Alcan and Pechiney. We
recommend that you read this prospectus carefully.
For a discussion of risk factors that you should consider in evaluating this
offer, see "Risk Factors" beginning on page 21.
---------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued in
connection with this offer or has passed upon
the adequacy or accuracy of the disclosure in this document. Any representation
to the contrary is a criminal offense in the United States.
---------------------------
This prospectus has not received the visa of the French Commission des
operations de bourse. Accordingly, this prospectus may not be used to make
offers or sales in France in connection with the offer described herein.
---------------------------
The Dealer Manager for the U.S. offer is:
MORGAN STANLEY
October 24, 2003
CERTAIN DEFINED TERMS
Unless otherwise specified or if the context so requires:
- References in this prospectus to "ALCAN," the "COMPANY," "WE," "US" or
"OUR" refer to Alcan Inc., a Canadian corporation, and, where applicable,
its consolidated subsidiaries.
- References to "PECHINEY" refer to Pechiney, a French societe anonyme,
and, where applicable, its consolidated subsidiaries.
- References to "PECHINEY SECURITIES" refer collectively to the Pechiney
Common Shares, Pechiney Bonus Allocation Rights, Pechiney OCEANEs and
Pechiney ADSs.
INFORMATION INCORPORATED BY REFERENCE
This prospectus incorporates important business and financial information about
Alcan and Pechiney by reference and, as a result, this information is not
included in or delivered with this prospectus. Documents incorporated by
reference are available from us without charge. You may also obtain documents
incorporated by reference into this prospectus from the Securities Exchange
Commission Internet site at the URL (or "uniform resource locator")
http://www.sec.gov or by requesting them in writing or by telephone from the
information agent for these offers:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Bankers and Brokers Call: (212) 269-5550
Toll Free Call: (800) 488-8035
TO OBTAIN TIMELY DELIVERY OF THESE DOCUMENTS, YOU MUST REQUEST THEM NO LATER
THAN NOVEMBER 20, 2003. For a list of those documents that are incorporated by
reference into this prospectus, see "Additional Information for
Securityholders -- Incorporation of Certain Documents by Reference" on page 118.
In addition, you may obtain additional information on Alcan and Pechiney from
various public sources. For a list of such sources, please see "Additional
Information for Securityholders -- Incorporation of Certain Documents by
Reference" on page 118.
THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY SALE OR PURCHASE OF SECURITIES
PURSUANT HERETO, IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
IS NOT PERMITTED OR WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE LAWS OF ANY SUCH JURISDICTION.
TABLE OF CONTENTS
PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION..... iii
Accounting Principles..................................... iii
Currencies................................................ iii
No Internet Site is Part of This Prospectus............... iii
Pechiney Information...................................... iv
QUESTIONS AND ANSWERS ABOUT THE OFFERS...................... v
SUMMARY..................................................... 1
Alcan..................................................... 1
Pechiney.................................................. 1
Terms of the Offers....................................... 2
Summary Selected Historical Consolidated Financial Data of
Alcan.................................................. 12
Summary Selected Historical Consolidated Financial Data of
Pechiney............................................... 14
Selected Unaudited Pro Forma Combined Financial
Information; Unaudited Pro Forma Combined
Capitalization......................................... 16
Comparative Per Share Market Information.................. 18
Summary Selected Comparative Historical and Pro Forma Per
Share Data............................................. 19
RISK FACTORS................................................ 21
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 30
THE OFFERS.................................................. 31
Reasons for the Offer..................................... 31
History of Alcan and Background of the Offers; Past
Contacts, Transactions, Negotiations and Agreements.... 38
Chronology of the Decision-Making Process for the
Offers................................................. 39
Financial Analysis of the Offers.......................... 45
Source and Amount of Funds................................ 53
Terms of the Offers....................................... 54
Condition Precedent....................................... 58
Grounds for Withdrawing the Offers........................ 58
Expiration Date; Publication of Results; Subsequent
Offering Period........................................ 59
Subsequent Transactions; Delisting; Compulsory
Acquisition............................................ 59
Effect of the Offers on the Market for Pechiney
Securities............................................. 60
Fractional Shares......................................... 61
Procedures for Tendering Pechiney Securities.............. 62
Withdrawal Rights......................................... 66
Acceptance and Return of Pechiney Securities.............. 66
Delivery of Alcan Common Shares and Cash; Settlement
Date................................................... 67
Fees and Expenses......................................... 67
Listing of Alcan Common Shares............................ 68
Treatment of Pechiney Stock Options and Pechiney Stock
Subscription Options................................... 68
Treatment of Pechiney's Employee Shareholding Plan........ 68
Future Dividend Policy of Pechiney........................ 69
Regulatory Approvals...................................... 69
Comparison of the Rights of Pechiney Shareholders and
Alcan Shareholders..................................... 69
Accounting Treatment...................................... 69
i
TAXATION.................................................... 70
Tax Consequences of Exchanging Pechiney Securities........ 71
Tax Consequences of Owning and Disposing of Alcan Common
Shares................................................. 73
Backup Withholding and Information Reporting.............. 75
INFORMATION ABOUT ALCAN..................................... 77
INFORMATION ABOUT PECHINEY.................................. 78
PRO FORMA COMBINED FINANCIAL STATEMENTS OF ALCAN AND
PECHINEY.................................................. 80
REGULATORY MATTERS.......................................... 91
Competition and Antitrust................................. 91
Investment Controls....................................... 93
Stock Exchanges........................................... 93
Securities Regulatory Authorities......................... 93
DESCRIPTION OF ALCAN'S SHARE CAPITAL........................ 94
Outstanding Series of Share Capital....................... 94
Description of Alcan Preference Shares.................... 94
Description of Alcan Common Shares........................ 95
COMPARISON OF SHAREHOLDERS' RIGHTS.......................... 96
DIRECTORS AND EXECUTIVE OFFICERS............................ 113
Interests of Directors and Executive Officers of Alcan and
Pechiney............................................... 113
Additional Information Regarding Alcan's Directors and
Executive Officers..................................... 113
MARKET PRICE AND DIVIDEND DATA.............................. 114
Market Prices............................................. 114
Dividends................................................. 116
VALIDITY OF THE SECURITIES.................................. 117
EXPERTS..................................................... 117
ADDITIONAL INFORMATION FOR SECURITYHOLDERS.................. 118
Where You Can Find More Information....................... 118
Incorporation of Certain Documents by Reference........... 118
EXCHANGE RATE INFORMATION................................... 120
SERVICE OF PROCESS AND ENFORCEABILITY OF CIVIL LIABILITIES
UNDER U.S. SECURITIES LAWS................................ 121
WHO CAN HELP ANSWER MY QUESTIONS?........................... 121
ii
PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION
ACCOUNTING PRINCIPLES
ALCAN
Alcan prepares its consolidated financial statements in conformity with Canadian
generally accepted accounting principles, which differ in certain significant
respects from generally accepted accounting principles in the United States,
commonly referred to as U.S. GAAP. Please see Note 7 to Alcan's audited
consolidated financial statements included in its Annual Report on Form 10-K for
the year ended December 31, 2002, as amended (the "2002 10-K"), which is
incorporated by reference into this prospectus, and Note 5 to Alcan's unaudited
financial statements included in its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003 (the "2003 Second Quarter 10-Q"), which is also
incorporated by reference into this prospectus, for a description of the
principal differences between Canadian GAAP and U.S. GAAP as they relate to
Alcan's consolidated financial statements and for a reconciliation of certain
relevant balance sheet accounts, net income, comprehensive income (loss) and
accumulated other comprehensive income (loss) as of the dates and for the
periods indicated.
PECHINEY
Pechiney prepares its consolidated financial statements in conformity with
generally accepted accounting principles in France, which differ in certain
significant respects from U.S. GAAP. Please see Note 25 to Pechiney's audited
consolidated financial statements included in its Annual Report on Form 20-F for
the year ended December 31, 2002, as amended (the "2002 20-F"), which is
incorporated by reference into this prospectus, and the Appendix to the Second
Quarter Results 2003 filed with the SEC on Form 6-K on July 30, 2003, which is
also incorporated by reference into this prospectus, for a description of the
principal differences between French GAAP and U.S. GAAP as they relate to
Pechiney's consolidated financial statements and for Pechiney's condensed U.S.
GAAP financial statements and a reconciliation of consolidated net income and
shareholders' equity for the periods indicated.
CURRENCIES
In this prospectus, unless otherwise specified or the context otherwise
requires:
- "$," "U.S. $" or "U.S. dollar" each refer to the United States dollar;
- "E" or "euro" each refer to the euro, the single currency established for
participants in the European Economic and Monetary Union, or the EMU,
commencing January 1, 1999; and
- "CAN $" refers to the Canadian dollar.
Alcan publishes its financial statements in U.S. dollars, and Pechiney publishes
its financial statements in euros. This prospectus contains translations of some
euro amounts into U.S. dollars. These amounts are provided solely for your
convenience. On October 23, 2003, the latest practicable date prior to the date
of this document, the Federal Reserve Bank of New York noon buying rate was
E1.00 = $1.1795. See "Exchange Rate Information" for additional information
regarding the exchange rates between the U.S. dollar and the euro.
NO INTERNET SITE IS PART OF THIS PROSPECTUS
Each of Alcan and Pechiney maintains an Internet site. The Alcan Internet site
is at the URL http://www.alcan.com. The Pechiney Internet site is at URL
http://www.pechiney.com. Information contained in or otherwise accessible
through these Internet sites is not a part of this prospectus. All references in
this prospectus to these Internet sites are inactive textual references to these
URLs and are for your information only.
iii
PECHINEY INFORMATION
Alcan has included in this prospectus information concerning Pechiney known to
Alcan based on publicly available information (primarily filings by Pechiney
with the SEC and the French Commission des operations de bourse, or COB).
Non-public information concerning Pechiney was not available to Alcan for the
purpose of preparing this prospectus. Publicly available information concerning
Pechiney may contain typographical or other errors. Alcan has no knowledge that
would indicate that statements relating to Pechiney contained or incorporated by
reference in this prospectus are inaccurate or incomplete. However, Alcan was
not involved in the preparation of those statements and cannot verify them.
iv
QUESTIONS AND ANSWERS ABOUT THE OFFERS
Q: WHY IS ALCAN MAKING THESE OFFERS? (PAGE 31)
A: The purpose of the offers is to enable Alcan to acquire all of the
outstanding Pechiney securities. Alcan is pursuing its offers for Pechiney
because of the significant value-creating opportunities the offers present
to both Alcan and Pechiney shareholders. The transaction is intended to
enable Alcan to build upon its position as one of the world's leading
aluminum and packaging companies and to benefit from the combined entity's
enhanced scale, financial strength and technological resources as well as
its increased capability to serve customers worldwide. The combined entity
will also benefit from a larger and more diversified low-cost global
position in primary aluminum production with opportunities for profitable
growth, an advanced aluminum fabricating business with facilities around the
world and a leading position in flexible packaging. The addition of Pechiney
will enhance Alcan's research and development and product and process
development capabilities across all of its business sectors.
Reflecting Alcan's significantly increased industrial presence in France,
Alcan has committed to locate:
- in Paris, the global operational headquarters of its packaging business,
- in France, (i) the global operational headquarters of its aerospace
business unit, (ii) the global operational headquarters of its engineered
products group and (iii) the operational headquarters of its European
primary aluminum business and its European smelting operations, and
- in France, its global center for new cell technology development in
primary aluminum.
Alcan believes that its enhanced size and scope as a result of its
acquisition of Pechiney will enable it to capitalize on a greater variety of
strategic options. Alcan intends to continue pursuing value-maximizing
strategies through a careful analysis of the expanded opportunity set that
Alcan will benefit from following the transaction.
The reasons for the offers and combination are described in greater detail
under "The Offers -- Reasons for the Offers" beginning on page 31.
Q: WHAT WILL I RECEIVE IF THESE OFFERS ARE COMPLETED? (PAGE 54)
A: For each Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights or
each 2 Pechiney ADSs that you tender, you will receive:
- E24.60 in cash, and
- the number of Alcan Common Shares equal to 22.9 divided by the "Reference
Value," which is defined as the greater of (a) 27.4 and (b) an average
trading price of the Alcan Common Shares to be determined and announced
before the open of the fifth French trading day before the expiration of
the offers as described further in this Prospectus, this average being
referred to as the "Average Value," and provided, however, that this
number of Alcan Common Shares shall in no event be less than 0.6001.
We will publish by press release the number of Alcan Common Shares that we
will issue for each Pechiney security before the open of the fifth French
trading day before the expiration of the offers. In addition, you may call
the information agent on or after that date toll-free at 1-800-488-8035 to
find out this information.
Alcan reserves the option of substituting an equivalent amount of cash in
place of all or a portion of the Alcan Common Shares to be issued as
consideration in the offers, valued at the Average Value. Alcan will
determine the portion, if any, of the Alcan Common Shares to be substituted
with cash, and will announce by press release the portion of consideration
to be paid in cash, before the open of the fifth French trading day before
the expiration of the offers. In addition, you may call the information
agent on or after that date toll-free at 1-800-488-8035 to find out this
information.
For each Pechiney OCEANE that you tender, you will receive E83.40 in cash.
If, following the conclusion of the offers (including any subsequent
offering period), the
v
number of Pechiney securities tendered into the offers represents more than
95% of the capital and voting rights of Pechiney (based on the same classes
of capital included in the numerator and the denominator of the minimum
tender condition under "The Offers -- Condition Precedent" on page 58),
Alcan will provide the following additional consideration to the tendering
Pechiney securityholders:
- for each Pechiney Common Share tendered: E1
- for each Pechiney Bonus Allocation Right tendered: E0.10
- for each Pechiney ADS tendered: E0.50
- for each Pechiney OCEANE tendered: E0.40
See "The Offers -- Terms of the Offers" beginning on page 54.
Q: ARE THERE ANY CONDITIONS TO ALCAN'S OBLIGATION TO COMPLETE THESE OFFERS?
(PAGE 58)
A: Yes. Alcan's obligation to complete the offers is subject to the condition
that valid acceptances, that have not been withdrawn at the end of the
offering period, in respect of Pechiney securities representing a majority
of the total share capital and voting rights in Pechiney, calculated on a
fully diluted basis, are tendered in this offer and in the French offer, on
a combined basis. We may only waive this minimum tender condition on or
prior to the date that is five French trading days prior to the expiration
of the offer period. If this condition is not met the offers will lapse. See
"The Offers -- Condition Precedent" beginning on page 58.
Q: WILL I KNOW WHETHER THE MINIMUM ACCEPTANCE CONDITION HAS BEEN SATISFIED
BEFORE MY RIGHT TO WITHDRAW PECHINEY SECURITIES FROM THESE OFFERS EXPIRES?
(PAGE 66)
A: No, under the terms of the offers, your withdrawal rights extend only to the
expiration date. The CMF should publish the results of the offers on a
preliminary basis six or seven French trading days after the expiration date
and on a definitive basis not more than nine French trading days after the
expiration date of the offer period.
Q: DOES THE BOARD OF DIRECTORS OF PECHINEY RECOMMEND THAT PECHINEY
SECURITYHOLDERS TENDER THEIR SECURITIES INTO THE OFFERS? (PAGE 44)
A: Yes. The board of directors of Pechiney has reviewed the terms of the offers
and determined that the offers are in the best interests of Pechiney
securityholders and employees and recommends that Pechiney securityholders
tender their securities into the offers.
Q: IF THE OFFERS FOR PECHINEY SECURITIES ARE SUCCESSFUL, WHAT WILL HAPPEN TO
PECHINEY SECURITIES THAT WERE NOT TENDERED OR THAT WERE TENDERED BUT
SUBSEQUENTLY WITHDRAWN? (PAGE 59)
A: The purpose of the offers is to enable Alcan to acquire all of the
outstanding Pechiney securities. If Alcan acquires less than all Pechiney
securities pursuant to the offers, Alcan may exercise its statutory right,
to the extent available, and all other means legally available to it, to
acquire Pechiney securities not tendered. The Company has not determined
whether and when it would seek to acquire any Pechiney securities not
tendered into the offers and expects to make those determinations based on
the circumstances existing at the appropriate time. Such circumstances would
include, among others, the anticipated cost of acquiring the remaining
Pechiney securities, Alcan's then-current ownership percentage of Pechiney
securities, tax considerations and the costs of maintaining a minority
interest in Pechiney. Alcan's board of directors will decide, after weighing
all the relevant circumstances, whether any such acquisition would be in the
best interests of the combined entity and its shareholders. Subject to
applicable law and regulations, Alcan could effect any such acquisition by
way of market purchases, block trades, a subsequent offer or a repurchase
offer. In addition, Alcan may, under certain circumstances and to the extent
permitted by French law, effect such an acquisition by way of a withdrawal
offer and a compulsory acquisition, as described under "The
Offers -- Subsequent Transactions; Delisting; Compulsory Acquisition"
beginning on page 59. The method or methods selected by Alcan to implement
any acquisition of remaining Pechiney securities will be determined by
assessment of all relevant factors at the time, but will primarily be
influenced by considerations of cost and likeli-
vi
hood of success. Alcan may also engage in transactions with Pechiney to
combine and integrate the two businesses. The financial strategies and
dividend policies of Pechiney subsequent to a successful offer may differ
from those that would be followed by Pechiney if it remained an independent
company.
Q: WHAT WILL HAPPEN TO MY PECHINEY STOCK OPTIONS AND PECHINEY COMMON SHARES
HELD IN MY PECHINEY EMPLOYEE SHAREHOLDING PLAN ACCOUNT IF THESE OFFERS ARE
SUCCESSFUL? (PAGE 68)
A: Alcan has not had access to important information relating to Pechiney's
stock option plans and employee shareholding plans, including the terms of
these plans. If these offers are consummated, Alcan will offer, subject to
applicable law and regulations and any applicable restrictions, to purchase
or exchange stock options (including stock purchase options and stock
subscription options), or the Pechiney Common Shares received as a result of
exercising these stock options, and Pechiney Common Shares held in the
Pechiney employee shareholding plan that could not be tendered. The
treatment that Alcan will offer is described under "The Offers -- Treatment
of Pechiney Stock Purchase Options and Pechiney Stock Subscription Options"
and "The Offers -- Treatment of Pechiney's Employee Shareholding Plan."
Q: IF ALCAN ACQUIRES ALL THE PECHINEY SECURITIES IN THESE OFFERS, WHAT
PERCENTAGE OF ALCAN WILL BE OWNED BY FORMER HOLDERS OF PECHINEY SECURITIES?
(PAGE 57)
A: Assuming acceptance in full of Alcan's offers for the Pechiney securities,
and assuming that Alcan does not exercise its option to substitute cash in
place of all or some of the Alcan Common Shares to be issued, and assuming
Alcan issues the maximum number of Alcan Common Shares pursuant to the terms
of the offers, and assuming that Pechiney OCEANEs were not converted into
Pechiney Common Shares prior to being tendered, the former holders, other
than Pechiney and its subsidiaries, of Pechiney securities would own
approximately 17.7% of Alcan's outstanding Common Shares immediately after
the offers.
After completion of these offers, you will hold securities of a company
larger than Pechiney. Accordingly, you will have lower ownership and voting
percentages of Alcan than you now have in Pechiney.
Q: WILL I RECEIVE MY 2003 DIVIDENDS OR INTEREST, OR DIVIDENDS OR INTEREST WITH
RESPECT TO LATER PERIODS, ON MY PECHINEY SECURITIES? (PAGE 69)
A: You will retain the dividend or interest rights associated with your
Pechiney securities after you tender them and, in any case, until we accept
them pursuant to this offer. Once the settlement of the offers has taken
place, we will become the owner of your Pechiney securities and will acquire
all rights associated with those securities. Pechiney has already paid its
declared dividend for the fiscal year ended December 31, 2002. If any
dividends are declared on the Pechiney Common Shares or Pechiney ADSs
tendered in these offers before the date on which we acquire ownership, the
registered holder of those securities as of the record date specified or
applicable in connection with such dividend declaration will receive the
dividends. If any interest becomes payable on the Pechiney OCEANEs tendered
in this offer before the date on which we acquire ownership, the registered
holder of those securities as of the record date specified in accordance
with such interest payment obligation will receive the interest.
Q: WILL I RECEIVE DIVIDENDS ON THE ALCAN SHARES I RECEIVE IN CONNECTION WITH
THIS OFFER? (PAGE 38)
A: The new Alcan Common Shares issued in connection with this offer will have
the same dividend and other rights as our other Common Shares. If any
dividends are declared on the Alcan Common Shares before the date on which
you acquire ownership pursuant to this offer, you will not be entitled to
receive those dividends. Alcan has declared a quarterly dividend for the
fourth quarter of the 2003 fiscal year of $0.15 and such dividend will be
paid on December 19, 2003 to holders of record on November 20, 2003. If the
offers are successful, the settlement date will fall after the record date
for the fourth-quarter dividend, and, as a result, the Alcan Common Shares
delivered to you will not entitle you to receive the fourth-quarter
dividend. See "Market Price and Dividend Data -- Dividends."
vii
Q: WHAT IS ALCAN'S EXPECTED DIVIDEND POLICY AFTER THE OFFERS? (PAGE 38)
A: Alcan currently expects to continue to pursue a policy of paying quarterly
dividends on the Alcan Common Shares. The amount of such future dividends
will be determined by Alcan's board of directors in light of Alcan's
earnings from operations, capital requirements and financial condition.
Dividends paid on Alcan Common Shares held by non-residents of Canada will
generally be subject to Canadian withholding tax which is levied at the
basic rate of 25%, although this rate may be reduced depending on the terms
of any applicable tax treaty. For residents of the U.S. or France, the
treaty-reduced rate is currently 15%.
Q: I HOLD CERTIFICATES FOR PECHINEY ADSs. HOW DO I ACCEPT THIS OFFER? (PAGE 62)
A: If you hold certificates for Pechiney ADSs, complete and sign the letter of
transmittal and send it, together with your American depositary share
certificates and any other required documents, to the U.S. ADR exchange
agent before the expiration of this offer. If your certificates are not
available, you may also follow guaranteed delivery procedures described in
this prospectus. Do not send your certificates to Alcan, the dealer manager
or the information agent.
Q: I HOLD PECHINEY ADSs IN BOOK-ENTRY FORM. HOW DO I ACCEPT THIS OFFER? (PAGE
62)
A: If you hold Pechiney ADSs in book-entry form, complete the confirmation of a
book-entry transfer of your Pechiney ADSs into the U.S. ADR exchange agent's
account at The Depository Trust Company, commonly known as DTC, and send
either an agent's message or a letter of transmittal and any other required
documents to the U.S. ADR exchange agent before the expiration of this
offer.
Q: I HOLD PECHINEY COMMON SHARES, PECHINEY BONUS ALLOCATION RIGHTS OR PECHINEY
OCEANEs THROUGH A U.S. CUSTODIAN, SUCH AS A BROKER, BANK OR TRUST COMPANY.
HOW DO I ACCEPT THIS OFFER? (PAGE 64)
A: If you hold Pechiney Common Shares, Pechiney Bonus Allocation Rights or
Pechiney OCEANEs through a U.S. custodian, you do not need to complete the
letter of transmittal. Instead, your U.S. custodian should either forward to
you the transmittal materials and instructions sent by the French financial
intermediary that holds the shares on behalf of the U.S. custodian as record
owner or send you a separate form prepared by the U.S. custodian. If you
have not yet received instructions from your U.S. custodian, please contact
your U.S. custodian directly. If your Pechiney Common Shares are held in
pure registered form (nominatif pur), you will first have to request that
your shares be converted to administered registered form (nominatif
administre). The conversion takes approximately one to five French business
days.
Q: I HOLD PECHINEY COMMON SHARES, PECHINEY BONUS ALLOCATION RIGHTS OR PECHINEY
OCEANEs THROUGH A FRENCH FINANCIAL INTERMEDIARY. HOW DO I ACCEPT THIS OFFER?
(PAGE 64)
A: If your Pechiney Common Shares, Pechiney Bonus Allocation Rights or Pechiney
OCEANEs are held through a French financial intermediary, you do not need to
complete the letter of transmittal. Instead, your French financial
intermediary should send you transmittal materials and instructions for
accepting this offer before the last day of the offer period. If you have
not yet received instructions from your French financial intermediary,
please contact your French financial intermediary directly. If your Pechiney
Common Shares are held in pure registered form (nominatif pur), you will
first have to request that your shares be converted to administered
registered form (nominatif administre). The conversion takes approximately
one to five French business days.
Q: WILL I HAVE TO PAY ANY BROKERAGE COMMISSIONS OR TRANSACTION FEES? (PAGE 67)
A: Alcan will pay the brokerage fees, if any, and related value added taxes
incurred by Pechiney securityholders tendering into this offer, up to a
limit of 0.3% of the value of each Pechiney security tendered, and subject
to a maximum amount of E150 per account, including all taxes. Pechiney
securityholders will not be reimbursed for any brokerage fees in any event
that the offer is withdrawn or lapses. Financial intermediaries will be paid
a fee, net of tax, of E0.50 per Pechiney Common Share and E0.05
viii
per Pechiney Bonus Allocation Right tendered into this offer, with a minimum
fee of E8 per account and a maximum fee of E200 per account. This fee will
not be paid in the event that the offer is withdrawn or lapses and will not
be paid in any event on Pechiney securities owned by such financial
intermediaries. Alcan will pay the fees charged by the ADS depositary for
Pechiney ADSs tendered into the offer, including any fees charged by the ADS
depositary to redeposit Pechiney Common Shares underlying tendered Pechiney
ADSs that have been previously withdrawn from deposit with the ADS
depositary in the event that the offers are not consummated. For more
information regarding brokerage commissions and fees, see "The
Offers -- Fees and Expenses."
Q: DO I NEED TO DO ANYTHING IF I WANT TO RETAIN MY PECHINEY SECURITIES? (PAGE
62)
A: No. If you want to retain your Pechiney securities, you do not need to take
any action.
Q: WHAT HAPPENS IF THE OFFERS LAPSE, ARE WITHDRAWN OR ARE NOT SUCCESSFUL? (PAGE
58)
A: If the offers for Pechiney securities lapse, are withdrawn or are not
successful, your Pechiney securities will be returned to you without
interest or any other payment being due. This should occur within one to two
French trading days following (i) the announcement of the lapse or
withdrawal, or (ii) the publication by the CMF of the results of the offers,
as the case may be.
Q: WHEN WILL I KNOW THE OUTCOME OF THE OFFERS? (PAGE 59)
A: The CMF should publish the results of the offers for Pechiney securities on
a preliminary basis six or seven French trading days after the expiration
date and on a definitive basis not more than nine French trading days after
the expiration date of the offers. Alcan will issue a press release
regarding the results of the offers promptly after each announcement by the
CMF. We will file those press releases with the SEC.
ix
SUMMARY
To understand this offer and the businesses of Alcan and Pechiney more fully,
you should read carefully this entire prospectus and any documents incorporated
by reference into this prospectus, including the "Cautionary Statement
Concerning Forward-Looking Statements," "Risk Factors," Alcan's consolidated
financial statements and notes thereto incorporated by reference into this
prospectus, and Pechiney's consolidated financial statements and notes thereto
incorporated by reference into this prospectus.
ALCAN (See page 77) PECHINEY (See page 78)
We are a Canadian corporation and the parent Pechiney operates in two core businesses:
company of an international group operating the production of primary aluminum and
in many aspects of the aluminum and fabricated aluminum products and the
specialty packaging businesses. Our production of packaging materials.
operations include:
ALUMINUM: Pechiney's aluminum business is
- the mining and processing of bauxite, comprised of two segments: Primary Aluminum
the basic aluminum ore; Metal and Aluminum Conversion. Aluminum Con-
version includes the activities of four
- the refining of bauxite into alumina; divisions, which include activities
organized around industrial or commercial
- the generation of electricity for use goals shared in common:
in smelting aluminum;
- The Aerospace, Transport, Industry
- the smelting of aluminum from alumina; division;
- the recycling of process and - The Cans, Automotive, Standard Rolled
post-consumer aluminum; Products division;
- the fabrication of aluminum, aluminum - The Foil and Thin Foil/Specialty
alloys and non-aluminum materials into Products division; and
semi-finished and finished products;
- The Extrusions, Casting Alloys,
- the fabrication of aluminum and Automotive division.
non-aluminum engineered products;
PACKAGING: Pechiney's Packaging sector
- the production and conversion of includes the following activities:
specialty packaging and packaging
products for many industries including - Plastic Packaging;
the food, pharmaceutical, cosmetic, per-
sonal care and tobacco sectors; - Cebal Tubes Europe and Cebal Tubes
Americas;
- the distribution and marketing of
aluminum and packaging products; and - Cebal Aerosols;
- in connection with our alumina - Techpack International (TPI); and
operations, the production and sale of
industrial chemicals. - Pechiney Capsules.
We have a network of operations in 42 OTHER ACTIVITIES: Pechiney's other business
countries with approximately 54,000 also includes Ferroalloys and International
dedicated employees, a global customer base, Trade, where Pechiney operates the following
innovative products and advanced three lines of business: a worldwide network
technologies. of sales agencies, which markets products
manufactured by Pechiney and third parties;
For additional information about us, see a non-ferrous metal and other basic material
"-- Summary Selected Historical Consolidated trading operation; and the distribution of
Financial Data of Alcan" below and the Alcan semi-finished aluminum products.
documents incorporated by reference into
this prospectus. For additional information about Pechiney,
see "-- Summary Selected Historical
Our principal executive offices are located Consolidated Financial Data of Pechiney"
at 1188 Sherbrooke Street West, Montreal, below and the Pechiney documents
Quebec, Canada H3A 3G2, and our telephone incorporated by reference into this
number is 514-848-8000. prospectus.
Pechiney's principal offices are located at
7, Place du Chancelier Adenauer, 75116
Paris, France, and its telephone number is
33-1-5628-2000.
1
RECENT DEVELOPMENTS
The following statement of income data for each of the three- and nine-month
periods ended September 30, 2003 and 2002 and the balance sheet data at
September 30, 2003 have been derived from Alcan's unaudited consolidated
financial statements for the quarter ended September 30, 2003, which have been
incorporated by reference into this document. Balance sheet data at December 31,
2002 has been derived from Alcan's consolidated financial statements
incorporated by reference into this document, which have been audited by
PricewaterhouseCoopers LLP, independent accountants. You should read this
selected financial data in conjunction with the information included under Item
5 of our Current Report on Form 8-K dated October 22, 2003.
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2003
------------------- --------------------
2003 2002 2003 2002
-------- -------- --------- --------
(IN MILLIONS OF U.S. DOLLARS EXCEPT PER
SHARE AMOUNTS)
CANADIAN GAAP INFORMATION
Sales and operating revenues................................ 3,480 3,170 10,161 9,204
Income from continuing operations........................... 118 192 155 351
Net income.................................................. 100 191 24 348
Income from continuing operations per Common 0.36 0.59 0.47 1.07
Share -- Basic............................................
Net income per Common Share -- Basic........................ 0.31 0.59 0.06 1.07
Cash dividends per Common Share............................. 0.15 0.15 0.60 0.45
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------- -------------
(IN MILLIONS OF U.S. DOLLARS)
CANADIAN GAAP INFORMATION
Total assets................................................ 18,309 17,538
Long-term debt (including current portion).................. 3,550 3,481
Other debt.................................................. 385 381
Cash and time deposits...................................... 123 109
Shareholders' equity........................................ 8,716 8,625
TERMS OF THE OFFERS
CONSIDERATION (See page 54)... Upon the terms and subject to the conditions
set forth in this prospectus and the related
letter of transmittal and forms of acceptance,
we are offering to exchange:
- for each Pechiney Common Share, each 10
Pechiney Bonus Allocation Rights (each
Pechiney Bonus Allocation Right
entitling the holder to 0.1 of a
Pechiney Common Share) or each 2
Pechiney American Depositary Shares, or
ADSs (each Pechiney ADS representing
one-half of one Pechiney Common Share)
tendered:
- E24.60 in cash, and
- the number of Alcan Common Shares
equal to 22.9 divided by the
"Reference Value," which is defined as
the greater of (a) 27.4 and (b) an
average trading price of the Alcan
Common Shares to be determined and
announced before the open of the fifth
French trading
2
day before the expiration of the offers,
as described further below, this average
being referred to as the "Average
Value", and provided, however, that this
number of Alcan Common Shares shall in
no event be less than 0.6001.
- for each Pechiney OCEANE tendered:
- E83.40 in cash.
Alcan reserves the option, subject to the
agreement of Morgan Stanley & Co. International
Ltd. and Lazard Freres Banque, the presenting
banks for the French offer, to substitute an
equivalent amount of cash in place of all or a
portion of the Alcan Common Shares to be issued
as consideration in the offers, valued at the
Average Value. Alcan will determine and
announce before the open of the fifth French
trading day before the expiration of the offers
the portion, if any, of the Alcan Common Shares
to be substituted with cash. If Alcan exercises
this option, each Pechiney Common Share, each
10 Pechiney Bonus Allocation Rights and each
two Pechiney ADSs tendered will be exchanged
for the same amount of additional cash and the
same number of Alcan Common Shares. The number
of Alcan Common Shares to be issued for each
Pechiney Common Share, each 10 Pechiney Bonus
Allocation Rights or each two Pechiney ADSs,
after determination of the portion of the
consideration paid in cash, is called the
"Offered Exchange Ratio." The Offered Exchange
Ratio will be rounded to the nearest four
decimal places (0.00005 being rounded to
0.0000).
The "Average Value" will be equal to the
arithmetic average of the volume-weighted
average daily trading prices of Alcan Common
Shares on the New York Stock Exchange as they
appear on the Bloomberg on-line information
service (code: VWAP) (expressed in U.S. dollars
and translated into euros at each applicable
day's noon buying rate in New York City for
cable transfers in foreign currencies as
certified for customs purposes by the Federal
Reserve Bank of New York) for 10 U.S. trading
days, chosen at random by a French judicial
officer (huissier de justice) from among the 30
U.S. trading days between (but not including)
the 36(th) and the 5(th) U.S. trading day
preceding the expiration date of the offers.
Alcan will announce the Average Value and the
Offered Exchange Ratio, together with the
portion of the consideration to be paid in
cash, as described above, by press release
before the open of the fifth French trading day
before the expiration date of the offers.
If, following the conclusion of the offers
(including any subsequent offering period), the
number of Pechiney securities tendered into the
offers, as indicated in the results of the
offers published by Euronext Paris, represents
more than 95% of the capital and voting rights
of Pechiney (based on the same classes of
capital listed in the numerator and the
denominator of the minimum tender condition
under "The Offers -- Condition Precedent"
below) Alcan will provide the following
additional consideration to the tendering
Pechiney securityholders:
- E1 for each Pechiney Common Share
tendered in the offers;
3
- E0.10 for each Pechiney Bonus Allocation
Right tendered in the offers;
- E0.50 for each Pechiney ADS tendered in
the offers; and
- E0.40 for each Pechiney OCEANE tendered
in the offers.
No fractional Alcan Common Shares will be
issued in connection with the offers. Alcan or
an intermediary acting for Alcan will aggregate
the fractional Alcan Common Shares that would
otherwise be issued to tendering holders of
Pechiney securities and arrange for them to be
sold in the market. Each tendering holder of
Pechiney securities will receive a pro rata
portion of the net proceeds of a sale instead
of any fractional Alcan Common Shares that
would otherwise have been issued to the holder.
For legal and regulatory reasons, Alcan is
offering to acquire all of the Pechiney
securities through two separate offers:
-- a U.S. offer open to all holders of Pechiney
securities (other than Pechiney ADSs) who
are located in the United States and Canada
and to all holders of Pechiney ADSs,
wherever located, and
-- a French offer open to all holders of
Pechiney securities (other than Pechiney
ADSs) who are located in France and to
holders of Pechiney securities (other than
Pechiney ADSs) who are located outside of
France, Canada and the United States if,
pursuant to the local laws and regulations
applicable to such holders, they are
permitted to participate in the French
offer.
The U.S. and French offers for Pechiney
securities are being made on the same terms and
completion of the offers are subject to the
same conditions. This prospectus covers only
Alcan's U.S. offer for Pechiney securities.
The French offer began on October 7, 2003. The
U.S. offer will begin on October 27, 2003 and
end at 5 p.m., New York City time on November
24, 2003, unless the expiration of the French
offer period is set at a later date or unless
it is extended or it lapses or is withdrawn
prior to that time on the basis of the
conditions of the offers as described in this
prospectus. The French Conseil des Marches
Financiers, or CMF, will only announce the
official initial expiration date of the French
offer once Pechiney has published its Note en
Reponse, or Response Document. The expiration
date of this offer will then be aligned with
the expiration date of the French offer as
established by the CMF. The CMF may decide to
extend the French offer period under certain
circumstances, including in the event of the
initiation of a competing offer, in which case
the U.S. offer period will be likewise
extended. You must tender your Pechiney
securities before the expiration of the U.S.
offer to participate.
If all of the Pechiney securities are tendered
and exchanged pursuant to the terms of these
offers (assuming that Alcan does not exercise
its option to substitute cash in place of all
or some of the Alcan Common Shares to be issued
and assuming that Alcan issues the maximum
number of Alcan Common Shares pursuant
4
to the terms of the offers and assuming that
Pechiney OCEANEs were not converted into
Pechiney Common Shares prior to being
tendered), the current holders, other than
Pechiney and its subsidiaries, of Pechiney
securities will own approximately 17.7% of
Alcan's outstanding Common Shares immediately
after the exchange and the current Alcan
shareholders will own approximately 82.3% of
Alcan's outstanding Common Shares immediately
after the exchange.
CONDITION PRECEDENT (See page
58)........................... The offers are subject to the condition
precedent that valid acceptances, that have not
been withdrawn at the end of the offering
period, in respect of Pechiney securities
representing a majority of the total share
capital and voting rights in Pechiney,
calculated on a fully diluted basis, are
tendered in this offer and the French offer, on
a combined basis. For the purpose of
calculating whether this threshold has been
met, the numerator will include all the
Pechiney securities tendered in this offer and
the French offer, on a combined basis,
including all (i) Pechiney Common Shares
tendered and Pechiney ADSs tendered (each
Pechiney ADS representing one-half of one
Pechiney Common Share), (ii) Pechiney Common
Shares underlying all tendered Pechiney OCEANEs
(taking into account the number of Pechiney
Common Shares into which the tendered Pechiney
OCEANEs could be converted on the expiration
date of the offers), and (iii) Pechiney Common
Shares underlying all tendered Pechiney Bonus
Allocation Rights (each Pechiney Bonus
Allocation Right entitling the holder to 0.1 of
a Pechiney Common Share). The denominator for
this calculation will be comprised of
Pechiney's fully diluted share capital,
including all:
- issued and outstanding Pechiney Common
Shares and treasury stock held by
Pechiney;
- Pechiney ADSs (each Pechiney ADS
representing one-half of one Pechiney
Common Share); and
- Pechiney Common Shares underlying
Pechiney OCEANEs, Pechiney Bonus
Allocation Rights, and all outstanding
Pechiney stock subscription options
(whether or not exercisable during the
offer period).
Under French law and regulations, a waiver of
the minimum tender condition is deemed an
improved offer and Alcan may only file an
improved offer with the CMF on or prior to the
date that is five French trading days prior to
the expiration of the offer period. If this
condition is not met the offers will lapse.
Neither Alcan nor Pechiney securityholders will
know whether the minimum tender condition has
been met until the results of the offers are
published by the CMF following the expiration
of the tender offer period.
If the offers lapse because the condition
precedent is not met, Alcan reserves the right
to commence a new offer, or not to commence a
new offer, in its discretion.
If the offers are withdrawn or lapse, the
Pechiney securities that you tendered in this
offer will be returned to you without interest
or any other payment being due. This should
occur within one to two French trading days
following the announcement of the lapse or
withdrawal.
5
GROUNDS FOR WITHDRAWING THE
OFFERS (See page 58).......... In accordance with French law and regulations,
Alcan reserves the right to withdraw the
offers:
- within five French trading days
following the date of the publication by
the CMF of the offer calendar for a
competing offer for Pechiney or an
improved bid by a competing bidder; or
- with the prior approval of the CMF if,
prior to the publication by the CMF of
the definitive results of the offers,
Pechiney adopts definitive measures that
modify Pechiney's substance ("modifiant
sa consistance") or if the offers become
irrelevant ("sans objet") under French
law.
In addition, as mentioned above, if the tender
threshold condition is not satisfied, the
offers will lapse.
Under French law, if, during the period of
these offers, another offer for Pechiney, or an
improved bid by a competing bidder, is approved
by the CMF, your tenders of Pechiney securities
may be declared null and void by the CMF. In
this event, in order to tender your Pechiney
securities in this offer, if it remains
outstanding, you will be required to re-tender
your Pechiney securities.
Subject to these restrictions, and in
accordance with applicable law and regulations,
Alcan reserves the right, at any time or from
time to time, to terminate these offers or to
amend their terms in any respect, although
Alcan does not currently intend to terminate
these offers.
If the offers are withdrawn or lapse, the
Pechiney securities that you tendered in this
offer will be returned to you without interest
or any other payment being due. This should
occur within one to two French trading days
following the announcement of the lapse or
withdrawal.
EXPIRATION DATE; SUBSEQUENT
OFFERING PERIOD (See page
59)........................... The tender period for this offer has been
established by the CMF, which solely determines
whether or not to extend the offer period.
Alcan may not itself extend the offer period.
This offer will expire at 5 p.m., New York City
time on November 24, 2003, unless the
expiration of the French offer period is set at
a later date, unless the French offer period is
extended, or unless the offer lapses or is
withdrawn prior to that time. The CMF will only
announce the official initial expiration date
of the French offer once Pechiney has published
its Response Document. The expiration date of
this offer will then be aligned with the
expiration date of the French offer as
established by the CMF. The CMF may also extend
the offer period for the French offer under
certain circumstances, including in the event
of the initiation of a competing offer. If the
initial expiration date of the French offer is
later than November 24, 2003, or if the French
offer period is extended, we will announce a
corresponding extension of this U.S. offer. We
expect the definitive results of the offers to
be published by the CMF not more than nine
French trading days following the expiration
date of the offer period; however, upon its
determination that the minimum tender condition
6
for the offers has been satisfied, the CMF will
publish provisional results prior to its
publication of the definitive results. The CMF
may also permit Alcan to open a subsequent
offer period, as described further in the next
paragraph. If the CMF sets the initial
expiration date of the French offer on a date
later than November 24, 2003, or the CMF
decides to extend the French offer period or
permit a subsequent offer period, Alcan will,
on the same day, issue a press release
publicizing the CMF's decision, announcing a
corresponding extension of, or subsequent offer
period for, the U.S. offer and advising the
then-remaining Pechiney securityholders subject
to the U.S. offer that they can tender their
Pechiney securities during the extended or
subsequent offering period.
If, through these offers, we acquire between
two-thirds and 95% of Pechiney's total share
capital and voting rights (on a fully diluted
basis), we will provide a subsequent offering
period of at least 10 French trading days by
issuing a press release publicizing this
decision within 10 French trading days
following the publication of the definitive
results of the offers. The CMF would then set
and publish the calendar for such a subsequent
offering period, which would ordinarily begin
within a few days following the publication by
the CMF of the subsequent offer calendar. In
any such subsequent offering period we will
offer the same consideration being offered
during this initial offering period.
COMPULSORY ACQUISITION
(See page 59)................. If Alcan acquires Pechiney securities
representing at least 95% of the total voting
rights in Pechiney, Alcan may launch, subject
to applicable law and obtaining the requisite
approvals, including the approval by the CMF, a
withdrawal offer or offers (offre publique de
retrait), or buy-out, which, if following the
buy-out Alcan also holds at least 95% of the
total share capital in Pechiney, may be
followed by a compulsory acquisition (retrait
obligatoire), or squeeze-out, of all remaining
Pechiney securities not held by Alcan,
including all Pechiney Common Shares, Pechiney
OCEANEs, Pechiney Bonus Allocation Rights and
Pechiney ADSs. The CMF would establish the
offer calendar for any such withdrawal offer or
compulsory acquisition. The consideration
offered in any such withdrawal offer or
compulsory acquisition may be different from
the consideration offered in this offer. If
such withdrawal offer or compulsory acquisition
constitutes a tender offer for U.S. securities
law purposes, it may be made to U.S. holders of
Pechiney securities in reliance on the "Tier I"
exemption from the U.S. tender offer rules
pursuant to Regulation 14D promulgated under
the Securities Exchange Act of 1934, as
amended, and would be made in accordance with
French law only.
MARKET FOR PECHINEY SECURITIES
AFTER THE OFFERS (See page
60)........................... If Alcan were to launch a buy-out followed by a
squeeze-out, it may then petition Euronext
Paris to cause the delisting of the Pechiney
Common Shares and/or Pechiney OCEANEs.
Furthermore, subject to the completion of the
offers, Alcan intends to cause Pechiney to
terminate its deposit agreement with the
depositary for the
7
Pechiney ADSs, and to petition, or cause
Pechiney to petition, the New York Stock
Exchange to delist the Pechiney ADSs.
If Alcan acquires sufficient Pechiney Common
Shares in the offers to cause the delisting of
the Pechiney Common Shares, then, pursuant to
the terms of the Pechiney OCEANEs, the holders
of the Pechiney OCEANEs may require Pechiney to
redeem the Pechiney OCEANEs for a make-whole
payment. In addition, if less than 10% of the
number of issued Pechiney OCEANEs remains
outstanding following the consummation of these
offers, Alcan may cause Pechiney to redeem the
Pechiney OCEANEs at a redemption price
determined pursuant to the terms of the
Pechiney OCEANEs (such redemption price would
equal an amount that would provide the holder
of a Pechiney OCEANE with a return equal to the
gross yield to maturity that would have been
realized by such holder at maturity). This
redemption price may be lower than the
consideration offered to holders of the
Pechiney OCEANEs in these offers.
PROCEDURES FOR TENDERING
PECHINEY SECURITIES (See page
62)........................... The procedure for tendering Pechiney securities
varies depending on a number of factors,
including (i) whether you hold Pechiney Common
Shares, Pechiney Bonus Allocation Rights,
Pechiney OCEANEs or Pechiney ADSs, (ii) whether
you possess physical certificates or a
financial intermediary holds physical
certificates for you, (iii) whether you hold
your securities in book-entry form and (iv)
whether you hold your Pechiney securities
through a financial intermediary in the United
States or France. You should read carefully the
procedures for tendering your securities
beginning on page 62 of this prospectus as well
as the transmittal materials.
WITHDRAWAL RIGHTS (See page
66)........................... You will be able to withdraw your tender of
Pechiney securities at any time prior to and
including the expiration date. For withdrawal
to be effective, the French financial
intermediary, the U.S. custodian or the U.S.
ADR exchange agent, as applicable, must
receive, prior to the expiration of the offer
period, a timely written notice of withdrawal
at its address set forth on the back cover of
this prospectus. If a subsequent offering
period is provided, you may withdraw any
Pechiney securities tendered during that
subsequent period at any time prior to its
expiration. Withdrawn securities may be
retendered prior to the expiration of the offer
period by following the tender requirements set
forth below under "The Offers -- Terms of the
Offers -- Procedures for Tendering Pechiney
Securities" at page 62.
DELIVERY OF ALCAN COMMON
SHARES AND CASH; SETTLEMENT
DATE (See page 67)............ In the event that these offers are successful,
Alcan Common Shares and cash will be delivered
to tendering holders following the publication
by the CMF of the final results of the offers.
If the offers are consummated, settlement is
currently expected to take place approximately
12 to 18 French trading days following the
expiration date of the offers. Similarly, in
the event of a subsequent offering period, if
any, settlement is expected to occur within 12
to 18 French trading days following the
expiration of that subsequent
8
offer period. With respect to tendered Pechiney
ADSs only, the cash consideration payable in
this offer will be paid in U.S. dollars
calculated by converting the applicable amount
in euros into U.S. dollars using a current spot
exchange rate. If your Alcan Common Shares will
be evidenced by certificates registered in your
name, you may not receive the certificates
until approximately two weeks after the
settlement date.
COMPARISON OF THE RIGHTS OF
PECHINEY SHAREHOLDERS AND
ALCAN SHAREHOLDERS
(See page 96)................. You will receive Alcan Common Shares if you
tender your Pechiney Common Shares, Pechiney
Bonus Allocation Rights or Pechiney ADSs in
this offer (unless Alcan substitutes cash in
place of all of the Alcan Common Shares to be
issued). There are numerous differences between
the rights of a shareholder in Pechiney, a
French societe anonyme, and the rights of a
shareholder in Alcan, a Canadian corporation.
We urge you to review the discussion under
"Comparison of Shareholders' Rights" beginning
on page 96 for a summary of these differences.
ACCOUNTING TREATMENT (See page
69)........................... The acquisition of the Pechiney securities will
be accounted for using the purchase method
under both Canadian and U.S. GAAP. Under the
purchase method, the cost of the purchase will
be based on the cash paid to Pechiney
securityholders, the market value of Alcan
Common Shares issued to Pechiney
securityholders, fair value of any stock
options of Pechiney replaced with stock options
of Alcan and the direct transaction costs. In
Alcan's consolidated financial statements, the
cost of the purchase will be allocated to the
Pechiney assets acquired and liabilities
assumed, based on their estimated fair values
at the acquisition date, with any excess of the
cost over the amounts allocated being
recognized as goodwill. This method may result
in the carrying value of assets, including
goodwill, acquired from Pechiney being
substantially different from the former
carrying values of those assets.
REGULATORY APPROVALS (See page
69)........................... Completion of the offers required receipt of
regulatory approval from the European
Commission and the termination or expiration of
the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
The approval of the European Commission was
obtained, and the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act
expired, on September 29, 2003.
The offers also required the prior approval of
France's Minister of the Economy, Finance and
Industry, which approval was obtained on
September 4, 2003.
LISTING OF ALCAN COMMON SHARES
(See page 68)................. Alcan Common Shares are currently listed on the
New York, Toronto, London and Swiss stock
exchanges. Alcan will apply to list its Alcan
Common Shares on Euronext Paris, subject to the
successful completion of these offers. Alcan
will also apply for the supplemental listing of
the Alcan Common Shares to be issued in these
offers on Euronext Paris and on the New York,
Toronto, London and Swiss stock exchanges.
9
INTERESTS OF DIRECTORS AND
EXECUTIVE OFFICERS OF ALCAN
AND PECHINEY (See page 113)... Based on the number of Alcan Common Shares
issued and outstanding on July 31, 2003, the
directors and officers of Alcan, individually
and the group as a whole, held less than one
percent of the issued and outstanding Alcan
Common Shares.
Pechiney's 2002 20-F states that, as of
December 31, 2002, none of Pechiney's directors
and executive officers held Pechiney securities
that, combined with options to purchase
Pechiney Common Shares they held, would have
entitled them to beneficially own one percent
or more of any class of Pechiney securities.
MATERIAL FRENCH, CANADIAN AND
UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES OF THE
EXCHANGE (see page 70)........
French Taxation.......... The following applies to you if you are a
non-resident of France for French tax purposes
that is not a member of a special class of
taxpayers (as described in "Taxation" below)
for French tax purposes. You will not be
subject to French tax on any capital gain or
loss recognized, for French tax purposes, as a
result of exchanging your Pechiney securities
pursuant to this offer, unless you have a
permanent establishment or fixed base in France
and the Pechiney securities exchanged are part
of the business property of that permanent
establishment or fixed base. The gain or loss,
if any, will equal the difference between the
value of the Alcan Common Shares and the cash
received and your tax basis in your Pechiney
securities exchanged.
Canadian Taxation........ If you are a non-Canadian holder (as defined in
"Taxation" below), then you will not be subject
to Canadian federal tax on any gain that you
realize upon exchanging your Pechiney
securities pursuant to this offer.
United States Federal
Income Taxation.......... The following applies to you if you are a U.S.
holder (as defined in "Taxation" below) that is
not a member of a special class of taxpayers
(as described in "Taxation" below) for U.S.
federal income tax purposes. You will recognize
gain or loss, if any, for United States federal
income tax purposes as a result of exchanging
your Pechiney securities pursuant to this
offer. You will recognize gain or loss in an
amount equal to the difference between the fair
market value of the Alcan Common Shares plus
the amount of cash that you receive in the
exchange and the U.S. dollar value of your
adjusted tax basis in your Pechiney securities
exchanged. Any such gain or loss will be
capital gain or loss, except that in the case
of an exchange of a Pechiney OCEANE, any gain
attributable to accrued interest or market
discount in excess of a de minimis amount will
be treated as ordinary income and any gain or
loss attributable to changes in the U.S.
dollar/euro exchange rate will be treated as
ordinary gain or loss. Long-term capital gain
of a noncorporate U.S. holder currently is
taxable at a maximum rate of 15%.
10
If you are a non-U.S. holder (as defined in
"Taxation" below), you will not be subject to
United States federal income taxation on any
gain or loss recognized or on the interest or
other amounts of ordinary income received in
exchanging your Pechiney securities.
Exceptions, however, are described under
"Taxation -- Tax Consequences of Exchanging
Pechiney Securities -- United States Federal
Income Taxation -- Non-U.S. holders" below.
THE U.S. ADR EXCHANGE AGENT... The Bank of New York has been appointed U.S.
ADR exchange agent in connection with this
offer. The Letter of Transmittal (or facsimile
copies thereof) and certificates for Pechiney
ADSs should be sent by each tendering Pechiney
securityholder or his or her broker, dealer,
bank or other nominee to the U.S. ADR exchange
agent at the addresses set forth on the back
cover of this prospectus.
REQUESTS FOR ASSISTANCE....... If you have questions or want copies of
additional documents, you may contact:
The information agent, D.F. King & Co.,
Inc., at:
48 Wall Street
New York, New York 10005
Banks and Brokers Call: (212) 269-5550
Toll Free: (800) 488-8035
or
The dealer manager, Morgan Stanley & Co.
Incorporated, at:
1585 Broadway
New York, New York 10036
(212) 761-7018
11
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ALCAN
The following statements of income data for each of the three years in the
three-year period ended December 31, 2002 and the balance sheet data at December
31, 2002, 2001 and 2000 have been derived from Alcan's consolidated financial
statements incorporated by reference into this document, which have been audited
by PricewaterhouseCoopers LLP, independent accountants. The statements of income
data for the years ended December 31, 1999 and 1998 and the balance sheet data
at December 31, 1999 and 1998 have been derived from Alcan's audited
consolidated financial statements for those years, which have not been
incorporated by reference into this document.
The statement of income data for each of the six-month periods ended June 30,
2003 and 2002 and the balance sheet data at June 30, 2003 have been derived from
Alcan's unaudited consolidated financial statements for the quarter ended June
30, 2003, which have been incorporated by reference into this document. Balance
sheet data at June 30, 2002 has been derived from Alcan's unaudited consolidated
financial statements for the quarter ended June 30, 2002, which have not been
incorporated by reference into this document.
You should read the data below in conjunction with Alcan's consolidated
financial statements (including the notes thereto) and Management's Discussion
and Analysis of Financial Condition and Results of Operations in the Alcan 2002
10-K and Alcan's 2003 Second Quarter 10-Q, which are incorporated by reference
into this document.
Alcan reports its financial results in U.S. dollars and in conformity with
Canadian GAAP, with a reconciliation to U.S. GAAP. A description of the
principal differences between Canadian GAAP and U.S. GAAP as they relate to
Alcan's consolidated financial statements is set forth in Note 7 of the "Notes
to Consolidated Financial Statements" included in Alcan's 2002 10-K and in Note
5 to the 2003 Second Quarter 10-Q, which are incorporated by reference into this
prospectus.
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
------------------- -----------------------------------------------
2003 2002(1) 2002(1) 2001(1) 2000(1) 1999(2) 1998(2)
-------- -------- ------- ------- ------- ------- -------
(UNAUDITED)
(IN MILLIONS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS)
CANADIAN GAAP INFORMATION(3)
Sales and operating revenues.............. 6,681 6,034 12,327 12,423 9,097 7,324 7,789
Income from continuing operations......... 37 159 376 3 608 448 400
Net income (loss)......................... (76) 157 374 2 610 448 400
Total assets.............................. 18,273 17,316(4) 17,538 17,458 18,389 9,839 9,948
Long-term debt (including current
portion)................................ 3,752 3,715 3,481 3,536 3,528 1,322 1,703
Other debt................................ 348 396 381 553 1,078 167 86
Cash and time deposits.................... 127 124 109 116 249 315 615
Shareholders' equity...................... 8,591 8,385(4) 8,625 8,770 9,009 5,531 5,566
Income (loss) from continuing operations
per Common Share -- Basic............... 0.10 0.49 1.16 (0.01) 2.41 2.01 1.71
Net income (loss) per Common
Share -- Basic.......................... (0.25) 0.48 1.15 (0.02) 2.42 2.01 1.71
Cash dividends per Common Share........... 0.45 0.30 0.60 0.60 0.60 0.60 0.60
12
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
------------------- -----------------------------------------------
2003 2002(1) 2002(1) 2001(1) 2000(1) 1999(2) 1998(2)
-------- -------- ------- ------- ------- ------- -------
(UNAUDITED)
(IN MILLIONS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS)
U.S. GAAP INFORMATION
Income (loss) from continuing operations
before cumulative effect of accounting
change.................................. 36 213 414 (41) 604 455 417
Net income (loss)......................... (116) (537)(4) (336) (54) 606 455 417
Income (loss) from continuing operations
before cumulative effect of accounting
change per Common Share................. 0.10 0.65 (1.27) (0.15) 2.39 2.04 1.79
Net income (loss) per Common
Share -- Basic.......................... (0.37) (1.68) (1.06) (0.19) 2.40 2.04 1.79
Total assets.............................. 18,497 17,341(4) 17,538 17,458 18,389 9,839 9,901
Shareholders' equity...................... 8,232 8,172(4) 8,291 8,570 9,020 5,550 5,561
---------------
(1) In the second quarter of 2003 Alcan committed to a plan to sell certain
non-strategic Packaging operations, which had been acquired in 2000.
Accordingly, certain financial information for the years 2002, 2001 and 2000
has been reclassified to present these businesses as discontinued operations
in the income statement, as assets held for sale and liabilities of
operations held for sale in the balance sheet and as cash flows from (used
for) discontinued operations in the statement of cash flows.
(2) Canadian GAAP information for the years 1999 and 1998 has been restated to
reflect a change in accounting policy, made in 2002, for exchange gains and
losses on the translation of long-term foreign currency denominated monetary
assets and liabilities.
(3) The information above reflects the combination of Alcan and Alusuisse Group
AG on October 17, 2000. For the years 2001 and 2000 Canadian GAAP income
from continuing operations per common share -- basic and diluted -- before
amortization of goodwill was $0.21 and $2.46, respectively.
(4) On January 1, 2002, Alcan adopted new accounting standards concerning
goodwill and other intangible assets. Beginning in 2002, goodwill is no
longer amortized but is subject to annual testing for impairment. For the
years 2001 and 2000, income from continuing operations included amortization
of goodwill amounting to $72 and $16, respectively, in accordance with
accounting standards in effect prior to 2002.
13
SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PECHINEY
The following statements of income data for each of the three years in the
three-year period ended December 31, 2002 and the balance sheet data at December
31, 2002, 2001 and 2000 have been derived from Pechiney's consolidated financial
statements incorporated by reference into this document, which have been audited
by PricewaterhouseCoopers Audit, independent accountants. The statements of
income data for the years ended December 31, 1999 and 1998 and the balance sheet
data at December 31, 1999 and 1998 have been derived from Pechiney's audited
consolidated financial statements for those years, which have not been
incorporated by reference into this document.
The statement of income data for each of the six-month periods ended June 30,
2003 and 2002 and the balance sheet data at June 30, 2003 have been derived from
Pechiney's unaudited consolidated financial statements for the quarter ended
June 30, 2003, which have been incorporated by reference into this document.
Balance sheet data at June 30, 2002 has been derived from Pechiney's unaudited
consolidated financial statements for the quarter ended June 30, 2002, which
have not been incorporated by reference into this document.
You should read the data below in conjunction with Pechiney's consolidated
financial statements (including the notes thereto) and the "Operating and
Financial Review and Prospects" in the 2002 20-F and in Pechiney's Current
Report on Form 6-K, dated July 30, 2003, which are incorporated into this
document by reference.
Pechiney reports its financial results in euros and in conformity with French
GAAP (except that, as described in Note 1 to the consolidated financial
statements in the 2002 20-F, French GAAP does not permit prior periods to be
retroactively restated and the financial statements in the 2002 20-F have been
restated), with a reconciliation to U.S. GAAP. Pechiney also publishes condensed
U.S. GAAP information. A description of the principal differences between French
GAAP and U.S. GAAP as they relate to Pechiney's consolidated financial
statements is set forth in Note 25 of the "Notes to Consolidated Financial
Statements" included in the 2002 20-F and the Appendix to the Second Quarter
Results 2003 filed on Form 6-K on July 30, 2003.
14
FOR THE SIX MONTHS FOR THE YEARS ENDED DECEMBER 31,
ENDED JUNE 30, -----------------------------------------------------
------------------- 2002 2001 2000
2003 2002 (RESTATED) (RESTATED) (RESTATED) 1999 1998
------- ------- ---------- ---------- ---------- ----- ------
(UNAUDITED)
(IN MILLIONS OF EUROS EXCEPT PER SHARE AND PER ADS AMOUNTS)
FRENCH GAAP INFORMATION
Net sales and other operating
revenues............................. 5,527 6,282 12,053 11,667 11,027 9,646 10,012
Net income (loss)...................... 11 46 (55) 234 318 260 311
Total assets........................... 8,209 8,499 8,234 8,699 8,087 7,687 9,282
Long-term debt (including current
portion)............................. 1,513 1,476 1,504 1,008 765 1,076 1,932
Other debt............................. 372 389 390 912 594 456 1,188
Cash and marketable securities......... 351 496 436 445 463 468 1,033
Shareholders' equity................... 2,877 3,195 3,014 3,400 3,277 3,026 2,624
Net income (loss) per Pechiney Common
Share................................ N.A. N.A. (0.72) 2.94 3.94 3.17 3.80
Net income (loss) per Pechiney ADS..... N.A. N.A. (0.36) 1.47 1.97 1.58 1.90
Cash dividends per Pechiney Common
Share................................ N.A. N.A. 1.00 1.00 1.00 0.81 0.80
Cash dividends per Pechiney ADS........ N.A. N.A. 0.50 0.50 0.50 0.40 0.40
U.S. GAAP INFORMATION
Income before cumulative effect of
accounting change.................... 31 126 22 206 318 260 311
Net income (loss)...................... 67 95 (9) 195 318 260 311
Income before cumulative effect of
accounting change per Pechiney Common
Share -- Basic....................... N.A. N.A. 0.26 2.59 3.94 3.17 3.80
Income before cumulative effect of
accounting change per Pechiney Common
Share -- diluted..................... N.A. N.A. 0.26 2.57 3.92 3.16 3.80
Net income (loss) per Pechiney Common
Share -- Basic....................... N.A. N.A. (0.13) 2.45 3.94 3.17 3.80
Net income (loss) per Pechiney Common
Share -- Diluted..................... N.A. N.A. (0.13) 2.43 3.92 3.16 3.80
---------------
N.A. -- Information not available
In 1998 the consolidated financial statements were initially prepared in French
francs and then translated to euros using the official exchange rate of 6.55957
French francs per euro which was fixed on December 31, 1998. The comparability
of Pechiney's consolidated financial statements from one year to another is not
affected by the translation to euros.
15
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION;
UNAUDITED PRO FORMA COMBINED CAPITALIZATION
The following selected unaudited pro forma combined financial information, which
gives effect to the offers, is presented in U.S. dollars and reflects the
combination of Alcan and Pechiney using the purchase method under U.S. GAAP. The
pro forma adjustments are based upon available information and certain
assumptions that Alcan believes are reasonable, including the assumptions that
pursuant to the offers:
- all of the outstanding Pechiney Common Shares are exchanged for Alcan
Common Shares and cash, with a cash component of E25.60 (including the
additional E1 consideration that may be payable in the offers) and a
share component of E22.90 in Alcan Common Shares for every Pechiney
Common Share.
- all of the Pechiney Bonus Allocation Rights are exchanged for Alcan
Common Shares and cash, with a cash component of E25.60 (including the
additional E1 consideration that may be payable in the offers) and a
share component of E22.90 in Alcan Common Shares for every 10 Pechiney
Bonus Allocation Rights (it is assumed that the Pechiney Bonus Allocation
Rights have been satisfied by the issuance of Pechiney Common Shares
during the three-month period ended June 30, 2003).
- all of the Pechiney OCEANEs are exchanged for cash. Each Pechiney OCEANE
is exchanged for E83.80 (including the additional E1 consideration that
may be payable in the offers).
- all of the Pechiney ADSs are exchanged for Alcan Common Shares and cash,
with a cash component of E25.60 (including the additional E1
consideration that may be payable in the offers) and a share component of
E22.90 in Alcan Common Shares for every 2 Pechiney ADSs.
- all of the outstanding Pechiney stock options are exchanged for Alcan
stock options; and
- the cash consideration paid in the offers is financed by additional Alcan
debt.
The selected unaudited pro forma combined financial information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial condition of the combined entities that would have been
achieved had this offer and the French offer been completed during the periods
presented, nor is the selected unaudited pro forma combined financial
information necessarily indicative of the future operating results or financial
position of the combined entities. The unaudited pro forma combined financial
information does not reflect any cost savings or other synergies which may
result from the combination. The unaudited pro forma financial information does
not reflect any special items such as payments pursuant to change of control
provisions or restructuring and integration costs which may be incurred as a
result of the acquisition. In addition, the financial effects of any actions
described in the section "The Offers -- Reasons for the Offers -- Employment
Matters," such as costs of rationalization or synergies, cannot currently be
determined and are therefore not reflected in the unaudited pro forma combined
financial statements. Because Alcan has access only to publicly available
financial information about Pechiney's accounting policies, there can be no
assurance that the accounting policies of Pechiney conform to those of Alcan.
Regulatory clearances from the European Commission, the U.S. Department of
Justice and the Swiss Competition Commission are subject to Alcan divesting
certain businesses, operations or assets of Alcan and/or Pechiney and Alcan
continuing to license certain technologies of Alcan and/or Pechiney to third
parties. Because Alcan has not yet entered into any agreements with purchasers
with respect to these divestitures, they have not been reflected in the
unaudited pro forma combined financial statements. The businesses, operations or
assets that Alcan is required to divest to comply with conditions imposed by
regulatory authorities represent approximately 5% of total unaudited pro forma
combined revenues. See "The Offers -- Reasons for the Offers -- Commitments
Offered to the European Commission and the U.S. Department of Justice to Obtain
Regulatory Approval."
This selected unaudited pro forma combined financial information has been
derived from and should be read in conjunction with the "Pro Forma Combined
Financial Statements of Alcan and Pechiney" on page 80 and the related notes
included herein, and with the respective consolidated financial information of
Alcan and Pechiney as of and for the six months ended June 30, 2003, and as of
and for the year ended December 31, 2002, which are incorporated herein by
reference. All amounts are stated in U.S. dollars. This pro forma information is
subject to risks and uncertainties, including those discussed under "Risk
Factors -- Risks Relating to the Offers -- We Have Not Been Given the
Opportunity to Conduct a Due Diligence Review of
16
the Non-Public Records of Pechiney. Therefore, We May Be Subject to Unknown
Liabilities of Pechiney which May Have a Material Adverse Effect on Our
Profitability And Results of Operations" and "Risk Factors -- Risks Relating to
the Offers -- We Have Not Verified the Reliability of the Pechiney Information
Included in, or Incorporated by Reference into, this Prospectus and, as a
Result, Our Estimates of the Impact of Consummation of the Offers on the Pro
Forma Information in this Prospectus May be Incorrect."
As noted above, Alcan prepares its financial statements in accordance with
Canadian GAAP, and provides a reconciliation of such financial statements to
U.S. GAAP. Since Pechiney does not prepare Canadian GAAP financial information,
but does prepare a U.S. GAAP reconciliation of its financial statements, the pro
forma financial information herein is prepared in accordance with U.S. GAAP.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2003 DECEMBER 31, 2002
------------------- --------------------
(UNAUDITED AND IN MILLIONS OF U.S. DOLLARS
EXCEPT PER SHARE INFORMATION)
Sales and operating revenues........................ 12,802 23,703
Income from continuing operations before
nonrecurring charges or credits directly
attributable to the acquisition................... 56 383
Basic income from continuing operations per Common
Share............................................. 0.14 1.01
AS OF JUNE 30, 2003
-------------------------
(UNAUDITED AND IN
MILLIONS OF U.S. DOLLARS)
Total assets................................................ 29,095
Long-term debt (including current portion).................. 4,654
Short term borrowings....................................... 3,930
Cash and time deposits...................................... 456
Shareholders' equity........................................ 10,379
UNAUDITED CAPITALIZATION
PRO FORMA
ALCAN COMBINED ENTITY
JUNE 30, 2003 JUNE 30, 2003
(US GAAP) (US GAAP)
------------- ---------------
(UNAUDITED AND IN MILLIONS OF
U.S. DOLLARS)
Short term borrowings.................................... 323 3,930
Debt maturing within one year............................ 187 398
Debt not maturing within one year........................ 3,454 4,256
------ ------
Total debt............................................... 3,964 8,584
Minority Interest........................................ 195 363
SHAREHOLDERS' EQUITY
Preference shares........................................ 160 160
Common shares............................................ 4,711 6,792
Retained earnings........................................ 3,273 3,273
Other.................................................... 88 154
------ ------
Total shareholders' equity............................... 8,232 10,379
CONSOLIDATED CAPITALIZATION.............................. 12,391 19,326
====== ======
17
COMPARATIVE PER SHARE MARKET INFORMATION
Alcan Common Shares are listed on the New York Stock Exchange under the symbol
"AL", the Toronto Stock Exchange under the symbol "AL.TO", the London Stock
Exchange under the symbol "ALq.L" and the SWX Swiss Exchange under the symbol
"AL.S". Pechiney Common Shares are listed on Euronext Paris under the ISIN code
FR0000132904 and quoted on SEAQ International in London under the symbol
"PECHaq.L", and Pechiney ADSs are listed on the New York Stock Exchange under
the symbol "PY". Pechiney Bonus Allocation Rights were listed on Euronext Paris
under the ISIN code FR0000951634 through August 4, 2003, and from that date
continue to trade over-the-counter. The following table presents the closing
market prices per security for Alcan Common Shares, Pechiney Common Shares,
Pechiney Bonus Allocation Rights and Pechiney ADSs in euros or U.S. dollars, as
the case may be:
- as reported on the New York Stock Exchange for Alcan Common Shares;
- as reported on the Euronext Paris for Pechiney Common Shares and, for
dates up to August 4, 2003, Pechiney Bonus Allocation Rights;
- as reported on the over-the-counter market for Pechiney Bonus Allocation
Rights;
- as reported on the New York Stock Exchange for Pechiney ADSs.
In each case the prices given are, first, as of July 3, 2003 or July 4, 2003,
which was the last full trading day on the New York Stock Exchange and on
Euronext Paris, respectively, prior to the public announcement of these proposed
offers, second, as of September 11, 2003, which was the last full trading day
prior to the public announcement of the revised offers and, third, as of October
23, 2003, the most recent practicable trading day prior to the date of this
prospectus. See "Market Price and Dividend Data" on page 114 for further
information about historical market prices of these securities.
The following table also presents the implied equivalent closing market prices
per security for Pechiney Common Shares, Pechiney Bonus Allocation Rights and
Pechiney ADSs in U.S. dollars. These prices were calculated by multiplying the
closing market prices per share of Alcan Common Shares by the applicable
exchange ratio for each Pechiney Common Share, each 10 Pechiney Bonus Allocation
Rights and each 2 Pechiney ADSs, assuming for this purpose only that the
Reference Value is equal to the greater of 27.4 and the euro equivalent of the
Alcan Common Share price on the same day, and then adding to those amounts the
U.S. dollar equivalent of the cash portion of the exchange consideration of
E24.60 for each Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights
and each 2 Pechiney ADSs. In calculating the equivalent basis market value per
Pechiney security, euro amounts have been translated into U.S. dollars at a rate
of E1.00 = $1.1503, which was the Federal Reserve Bank of New York noon buying
rate on July 3, 2003, at a rate of E1.00 = $1.1186, which was the Federal
Reserve Bank of New York noon buying rate on September 11, 2003, and at a rate
of E1.00 = $1.1795, which was the Federal Reserve Bank of New York noon buying
rate on October 23, 2003, as applicable.
EQUIVALENT BASIS MARKET VALUE
ALCAN PECHINEY PER PECHINEY SECURITY
------- ------------------------------ --------------------------------
COMMON BONUS BONUS
SHARES COMMON ALLOCATION COMMON ALLOCATION
------- SHARES RIGHTS) ADSS SHARES RIGHTS ADSS
(NYSE; ------ ---------- -------- -------- ---------- --------
U.S. $) (EURO) (EURO) (U.S. $) (U.S. $) (U.S. $) (U.S. $)
------- ------ ---------- -------- -------- ---------- --------
July 3 or July 4, 2003, as
applicable.......................... 31.46 34.70 3.79 19.27 54.59 5.46 27.30
September 11, 2003.................... 34.99 46.26 4.51(1) 26.05 53.13 5.31 26.57
October 23, 2003...................... 39.96 47.30 4.51(1) 27.86 56.03 5.60 28.01
---------------
(1) Bonus Allocation Rights valued as of August 4, 2003. Pechiney Bonus
Allocation Rights were listed on Euronext Paris through August 4, 2003, and
from that date continue to trade over-the-counter in limited trading.
The market prices of Alcan Common Shares and Pechiney Common Shares, Pechiney
Bonus Allocation Rights and Pechiney ADSs are likely to fluctuate prior to the
expiration date of these offers and cannot be predicted. We urge you to obtain
current market information regarding Alcan Common Shares and Pechiney Common
Shares, Pechiney Bonus Allocation Rights and Pechiney ADSs.
18
SUMMARY SELECTED COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
The following tables set forth certain historical per share data for Alcan and
Pechiney as well as unaudited pro forma and equivalent pro forma combined per
share data to reflect the combination of Alcan and Pechiney. The pro forma
adjustments are based upon available information and certain assumptions that
Alcan believes are reasonable, including the assumptions that pursuant to the
offers:
- all of the outstanding Pechiney Common Shares are exchanged for Alcan
Common Shares and cash, with a cash component of E25.60 (including the
additional E1 consideration that may be payable in the offers) and a
share component of E22.90 in Alcan Common Shares for every Pechiney
Common Share.
- all of the Pechiney Bonus Allocation Rights are exchanged for Alcan
Common Shares and cash, with a cash component of E25.60 (including the
additional E1 consideration that may be payable in the offers) and a
share component of E22.90 in Alcan Common Shares for every 10 Pechiney
Bonus Allocation Rights (it is assumed that the Pechiney Bonus Allocation
Rights have been satisfied by the issuance of Pechiney Common Shares
during the three-month period ended June 30, 2003).
- all of the Pechiney OCEANEs are exchanged for cash. Each Pechiney OCEANE
is exchanged for E83.80 (including the additional E1 consideration that
may be payable in the offers).
- all of the Pechiney ADSs are exchanged for Alcan Common Shares and cash,
with a cash component of E25.60 (including the additional E1
consideration that may be payable in the offers) and a share component of
E22.90 in Alcan Common Shares for every 2 Pechiney ADSs.
- all of the outstanding Pechiney stock options are exchanged for Alcan
stock options; and
- the cash consideration paid in the offers is financed by additional Alcan
debt.
The summary selected comparative historical and pro forma per share data is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial condition of the combined entities that would
have been achieved had this offer and the French offer been completed during the
periods presented, nor is the summary selected comparative historical and pro
forma per share data necessarily indicative of the future operating results or
financial position of the combined entities.
This summary selected comparative historical and pro forma per share data has
been derived from and should be read in conjunction with the "Pro Forma Combined
Financial Statements of Alcan and Pechiney" on page 80 and the related notes
included herein, and with the respective consolidated financial information of
Alcan and Pechiney as of and for the six months ended June 30, 2003, and as of
and for the year ended December 31, 2002, which are incorporated herein by
reference. All amounts are stated in U.S. dollars. This pro forma information is
subject to risks and uncertainties, including those discussed under "Risk
Factors -- Risks Relating to the Offers -- We Have Not Been Given the
Opportunity to Conduct a Due Diligence Review of the Non-Public Records of
Pechiney. Therefore, We May Be Subject to Unknown Liabilities of Pechiney Which
May Have a Material Adverse Effect on Our Profitability and Results of
Operations" and "Risk Factors -- Risks Relating to the Offers -- We Have Not
Verified the Reliability of the Pechiney Information Included in, or
Incorporated by Reference into, this Prospectus and, as a Result, Our Estimates
of the Impact of Consummation of the Offers on the Pro Forma Information in this
Prospectus May be Incorrect."
19
ALCAN PECHINEY(1)
------------------------- --------------------------------------------
HISTORICAL PRO FORMA HISTORICAL PER
PER COMBINED PER COMMON EQUIVALENT PER HISTORICAL
COMMON COMMON SHARE COMMON PER ADS
U.S. GAAP INFORMATION SHARE SHARE (RESTATED) SHARE (RESTATED)
--------------------- ---------- ------------ -------------- -------------- ----------
SIX MONTHS ENDED JUNE 30, 2003
Income from continuing
operations...................... $ 0.10 $ 0.14(2) $ 0.42 $ 0.31 $ 0.21
Dividends(3)...................... $ 0.45 $ 0.45 N.A. N.A. N.A.
Book value........................ $25.09 $27.50 $41.29 $30.34 $20.65
YEAR ENDED DECEMBER 31, 2002
Income (loss) from continuing
operations...................... $ 1.27 $ 1.01(2) $(0.13) $(0.10) $(0.07)
Dividends(3)...................... $ 0.60 $ 0.60 $ 1.05 $ 0.77 $ 0.52
Book value........................ $25.29 N.A.(4) $39.76 $29.22 $19.88
---------------
(1) Euro amounts were translated using the average rate of each financial period
for "Income (loss) from continuing operations." Euro amounts were translated
at period-end rate for "Dividends" and "Book value." For more information on
historical currency exchange rates see "Exchange Rate Information" on page
120.
(2) Represents income (loss) from continuing operations before nonrecurring
charges or credits directly attributable to the acquisition.
(3) The Alcan pro forma dividends per share represent the historical per share
dividends paid by Alcan.
(4) Not available because the Unaudited pro forma combined balance sheet is not
presented as at December 31, 2002.
N.A. -- Information not available.
20
RISK FACTORS
You should carefully consider the following risks and the risk factors
incorporated by reference into this prospectus from Item 3 of Pechiney's 2002
20-F, together with the other information contained in or incorporated by
reference into this prospectus, before making any decision concerning the terms
of this offer or whether to accept it. Any of these risks could have a material
adverse effect on our business, financial condition and results of operations,
which could in turn affect the price of our Alcan Common Shares.
RISKS RELATING TO THE OFFERS
INTEGRATION OF THE COMPANIES MAY FAIL OR DISRUPT OPERATIONS.
The anticipated benefits and synergies expected to result from the offers will
depend in part upon whether the operations of Alcan can be integrated in an
efficient and effective manner with those of Pechiney. Successful integration
will require the integration of various aspects of each company's business. The
anticipated benefits expected to result from this integration may not be
achieved completely, if at all. The ability to achieve these anticipated
benefits could be more difficult if the Pechiney board of directors does not
continue to support the offers. Failure to successfully integrate the business
organizations could have a material adverse effect on the financial condition
and results of the operations of Alcan and result in the failure to achieve
certain of the expected benefits from the combination, including synergies and
other operating efficiencies. The integration of the business organizations
could interfere with the activities of one or more of the businesses of the
companies which could have material adverse effects on their operations. In
addition, the integration of the business organizations may involve a number of
other risks, including the diversion of management's attention from the
day-to-day operations of each company's business.
EVEN IF ALCAN CONSUMMATES THE OFFERS, THERE MAY BE A DELAY BEFORE ALCAN CAN
OBTAIN CONTROL OF THE MANAGEMENT OF PECHINEY.
In order for Alcan to take management control of Pechiney following successful
completion of the offers, Alcan will need to take control of the board of
directors of Pechiney. Pursuant to Article L. 225-103, II, 4 of the French
Commercial Code, if Alcan gains control of Pechiney pursuant to the offers,
Alcan may request the board of directors of Pechiney to convene a shareholders'
meeting with an agenda which will provide for the election of the directors. If
such a shareholders' meeting is not convened, Alcan is permitted, after a
reasonable delay and notice to Pechiney's board of directors, to convene a
meeting for the election of directors. This meeting may be held no sooner than
30 days after the publication of a notice announcing the meeting in the French
official legal gazette.
THE VALUE OF THE OFFERS WILL ONLY INCREASE IF THE AVERAGE VALUE OF THE ALCAN
COMMON SHARES INCREASES ABOVE E38.16 PRIOR TO THE CALCULATION OF THE EXCHANGE
RATIO, WHILE THE VALUE OF THE OFFERS COULD DECREASE IF THE AVERAGE VALUE OF
ALCAN'S COMMON SHARES DECLINES BELOW E27.40. THE U.S. DOLLAR VALUE OF THE CASH
CONSIDERATION YOU RECEIVE WILL VARY DEPENDING ON THE EURO/U.S. DOLLAR EXCHANGE
RATE.
The fraction of an Alcan Common Share to be issued in the offers in exchange for
each Pechiney Common Share, Pechiney Bonus Allocation Right and Pechiney ADS
will depend on both the market price of Alcan Common Shares on the New York
Stock Exchange and the euro/U.S. dollar exchange rate. So long as the euro
equivalent of the Average Value, as defined in this prospectus, of the Alcan
Common Shares is between E27.40 and E38.16, the Alcan Common Shares to be issued
in the offers should have a value close to E22.90 per Pechiney Common Share (or
per 10 Pechiney Bonus Allocation Rights or 2 Pechiney ADSs) at the time the
exchange ratio is determined. Because of variation in the trading price of the
Alcan Common Shares and in the euro/U.S. dollar exchange rate, the value of the
Alcan Common Shares actually received for each Pechiney Common Share (or each 10
Pechiney Bonus Allocation Rights or each 2 Pechiney ADSs) is unlikely to be
precisely E22.90. If the Average Value of the Alcan Common Shares is above
E38.16, you will receive 0.6001 of an Alcan Common Share for each Pechiney
Common Share, each 10 Pechiney Bonus Allocation Rights or each 2 Pechiney ADSs
tendered, and the value of the Alcan Common Share consideration received by you
in the offers will likely be above E22.90 per Pechiney Common Share (or per
21
10 Pechiney Bonus Allocation Rights or 2 Pechiney ADSs). If the Average Value of
the Alcan Common Shares is below E27.40, you will receive 0.8358 of an Alcan
Common Share for each Pechiney Common Share (or each 10 Pechiney Bonus
Allocation Rights or each 2 Pechiney ADSs) tendered, and the value of the Alcan
Common Shares consideration received by you in the offers will likely be below
E22.90 per Pechiney Common Share (or per 10 Pechiney Bonus Allocation Rights or
2 Pechiney ADSs).
The cash consideration that will be paid for your Pechiney securities is
determined in euros. As a result, the value of this consideration in U.S. dollar
terms will vary depending on the euro/U.S. dollar exchange rate, which is
expected to fluctuate.
YOU WILL RECEIVE FEWER ALCAN COMMON SHARES IF ALCAN ELECTS TO PAY A HIGHER
PORTION OF THE CONSIDERATION IN CASH.
Alcan has the option to substitute an equivalent amount of cash in place of some
or all of the Alcan Common Shares to be issued as consideration in the offers.
Alcan must make this election and announce it before the open of the fifth
French trading day before the expiration of the offers, and you will have the
ability to withdraw any tendered Pechiney securities between that time and the
expiration of the offers. If Alcan exercises this option, you will receive
fewer, or no, Alcan Common Shares for your tendered Pechiney Common Shares,
Pechiney Bonus Allocation Rights or Pechiney ADSs, and you will receive a
correspondingly higher amount of cash. As a result, in this case, you will be
entitled to fewer, or none, of the possible future dividends and increases in
stock price that holders of Alcan Common Shares may benefit from.
YOU WILL NOT KNOW WHETHER YOU WILL GET THE ADDITIONAL CASH CONSIDERATION BEFORE
THE OFFERS END. IF YOU DECIDE TO TENDER YOUR PECHINEY SECURITIES, YOU SHOULD
ASSUME THAT THE ADDITIONAL CASH CONSIDERATION WILL NOT BE PAID.
If the number of Pechiney securities tendered in the offers (including during
any subsequent offering period) represents more than 95% of the capital and
voting rights of Pechiney (based on the same classes of capital included in the
numerator and the denominator of the minimum tender condition under "The
Offers -- Condition Precedent" below), Alcan will pay additional consideration
of E1 for each Pechiney Common Share, E0.10 for each Pechiney Bonus Allocation
Right, E0.50 for each Pechiney ADS and E0.40 for each Pechiney OCEANE tendered
in the offers. However, neither Alcan nor you will know whether this threshold
has been met until after the expiration of the offers and any withdrawal rights
have expired. As a result, if you decide to tender your Pechiney securities in
the offer, you should assume that you will not receive the additional cash
consideration.
COMPLIANCE WITH CONDITIONS AND OBLIGATIONS IMPOSED IN CONNECTION WITH REGULATORY
APPROVALS COULD ADVERSELY AFFECT THE BUSINESS OF ALCAN AND PECHINEY.
Completion of the transaction was conditional upon receipt of regulatory
approvals from the European Commission and review by the U.S. antitrust
authorities. The approval of the European Commission was obtained on September
29, 2003 and the waiting period under the U.S. Hart-Scott-Rodino Antitrust
Improvements Act expired on the same date. See "Regulatory Matters" beginning on
page 91. In order to obtain the approval of the European Commission, Alcan
committed to the European Commission to divest certain European businesses of
Alcan and/or Pechiney in relation to flat-rolled products, aluminum aerosol
cans, aluminum cartridges and Alcan's anode baking furnace designs, and also
committed to continue to license to third parties the alumina refining
technologies of either Alcan or Pechiney and Pechiney's smelter cell
technologies on terms and conditions comparable to those applicable prior to
this transaction. The approval of the Swiss Competition Commission was subject
to Alcan's compliance with the commitments made to the European Commission.
Alcan has also committed to the U.S. Department of Justice to divest a U.S.
rolling mill of Pechiney, as described under "The Offers -- Reasons for the
Offers -- Commitments Offered to the European Commission and the U.S. Department
of Justice to Obtain Regulatory Approval" below. These divestitures include
operations that account for significant amounts of revenues and net income for
Alcan and Pechiney. Furthermore, Alcan may decide that significant amounts of
additional assets should be disposed of in connection with these divestitures
for various business reasons. These divestitures required
22
for regulatory reasons, and any related divestitures, may have a material
adverse effect upon our business or results of operations in the future.
The proposed acquisition of the Pechiney securities is a notifiable transaction
under the Competition Act (Canada), and as such could not be completed until a
required notification was filed with the Canadian competition authorities and
the relevant waiting period had expired. A required filing in respect of the
proposed transaction was made on July 30, 2003 and the applicable waiting period
expired on September 10, 2003. However, the Canadian competition authorities may
challenge the transaction at any time before or within three years after
completion of the transaction. Such an investigation, if initiated, may have a
material adverse impact on the operations of Alcan or Pechiney. In addition, the
offers were required to be notified to the Swiss Competition Commission under
the competition laws of Switzerland. This notification was filed on September 1,
2003, and on September 29, 2003, the Swiss Competition Commission approved the
transaction subject to Alcan fulfilling the commitments it has made to the
European Commission with respect to the offers.
Other jurisdictions throughout the world claim jurisdiction under their
competition or antitrust laws in respect of acquisitions or mergers that have
the potential to affect their domestic marketplace. A number of these
jurisdictions will have or claim to have jurisdiction to review the transaction.
Such investigations or proceedings, whether by governmental authorities or
private parties, may be initiated and, if initiated, may have a material adverse
impact on the completion of the offers or the operations of Alcan or Pechiney.
ALCAN IS A CANADIAN CORPORATION, AND SHAREHOLDERS OF A CANADIAN CORPORATION HAVE
FEWER RIGHTS AND PRIVILEGES THAN SHAREHOLDERS OF A FRENCH CORPORATION IN CERTAIN
RESPECTS.
Alcan is governed by the Canada Business Corporations Act (the "CBCA") and by
its restated articles of incorporation and by-laws. The CBCA extends to
shareholders certain rights and privileges that may not exist under French law
and, conversely, does not extend certain rights and privileges that shareholders
of a company governed by French law may have. Differences between the CBCA and
French law that could result in shareholders of a Canadian corporation having
fewer rights and privileges than shareholders of a French company include, among
others, additional limitations on transactions with interested directors and
officers under French law, certain restrictive rules governing indemnification
and liability of directors under French law and greater restrictions on
shareholders' proposals and shareholder suits under the CBCA. In addition, Alcan
has adopted a shareholder rights plan, which could limit the rights of Alcan
shareholders in certain circumstances. Pechiney has not adopted such a plan. For
a more detailed comparison of the rights of Alcan shareholders versus the rights
of Pechiney securityholders, see our discussion in the section captioned
"Comparison of Shareholders' Rights" beginning on page 96.
WE HAVE NOT BEEN GIVEN THE OPPORTUNITY TO CONDUCT A DUE DILIGENCE REVIEW OF THE
NON-PUBLIC RECORDS OF PECHINEY. THEREFORE, WE MAY BE SUBJECT TO UNKNOWN
LIABILITIES OF PECHINEY WHICH MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR
PROFITABILITY AND RESULTS OF OPERATIONS.
In commencing the offers and determining their terms and conditions, we have
relied solely and exclusively upon publicly available information relating to
Pechiney, including periodic and other reports for Pechiney as filed with or
furnished to the SEC on Form 20-F and Form 6-K, as well as Pechiney's 2002
Document de reference, as filed with the French Commission des operations de
bourse, or COB. We have not conducted an independent due diligence review of,
nor had access to, any non-public information about Pechiney. As a result, after
the consummation of our offers, we may be subject to unknown liabilities of
Pechiney, which may have a material adverse effect on our profitability, results
of operations and financial position, which we might have otherwise discovered
if we had been permitted by Pechiney to conduct a complete due diligence review.
23
WE HAVE NOT VERIFIED THE RELIABILITY OF THE PECHINEY INFORMATION INCLUDED IN, OR
INCORPORATED BY REFERENCE INTO, THIS PROSPECTUS AND, AS A RESULT, OUR ESTIMATES
OF THE IMPACT OF CONSUMMATION OF THE OFFERS ON THE PRO FORMA INFORMATION IN THIS
PROSPECTUS MAY BE INCORRECT.
In respect of information relating to Pechiney presented in, or incorporated by
reference into, this prospectus, including all Pechiney financial information,
we have relied exclusively upon publicly available information, including
information publicly filed by Pechiney with securities regulatory authorities.
Although we have no knowledge that would indicate that any statements contained
herein based upon such reports and documents are inaccurate, incomplete or
untrue, we were not involved in the preparation of such information and
statements and, therefore, cannot verify the accuracy, completeness or truth of
such information or any failure by Pechiney to disclose events that may have
occurred, but that are unknown to us, that may affect the significance or
accuracy of any such information. Pechiney has not provided representatives of
Alcan access to Pechiney's accounting records and therefore we have not
independently verified certain adjustments and assumptions with respect to
Pechiney's financial information in preparing the pro forma financial
information regarding Pechiney presented in this prospectus. Any financial
information regarding Pechiney that may be detrimental to the combined entity
and that has not been publicly disclosed by Pechiney, or errors in our estimates
due to the lack of cooperation from Pechiney, may have an adverse effect on the
benefits we expect to achieve through the consummation of the offers and may
result in material inaccuracies in the pro forma information included in this
prospectus.
CONSUMMATION OF THE OFFERS MAY RESULT IN ADVERSE TAX CONSEQUENCES TO ALCAN
RESULTING FROM A CHANGE OF OWNERSHIP OF PECHINEY.
We have not had access to information concerning Pechiney's tax situation. It is
possible that the consummation of the offers may result in adverse tax
consequences arising from a change of ownership of Pechiney. The tax
consequences of a change of ownership of a corporation can lead to an inability
to carry-over certain tax attributes, including but not limited to tax losses,
tax credits and/or tax basis of assets. In addition, the change of ownership may
result in other tax costs not normally associated with the ordinary course of
business. Such other tax costs include, but are not limited to, stamp duties,
land transfer taxes, franchise taxes and other levies. The fact that Alcan is
unaware of information relevant to a determination of the potential tax
consequences and related costs represents an additional transaction risk.
THE OFFERS COULD TRIGGER CERTAIN CHANGE OF CONTROL PROVISIONS IN THE EMPLOYMENT
AGREEMENTS OF CERTAIN MEMBERS OF PECHINEY'S SENIOR MANAGEMENT, AS WELL AS CHANGE
OF CONTROL PROVISIONS IN OTHER CONTRACTS OF PECHINEY.
We understand that the employment agreements of certain members of the Pechiney
senior management contain, and that the employment agreements of certain other
employees may contain, change of control clauses providing for compensation to
be granted in the event the employment of these employees is terminated
following the consummation of the offers, either by Pechiney or by those
employees. If successful, the offers would effect such a change of control,
thereby giving rise to potential change of control payments, which could be
substantial and which could materially adversely affect our results of
operations in the period they become payable. In addition, other contracts to
which Pechiney is a party may contain change of control provisions that could be
triggered by the completion of the offers, possibly resulting in termination of
those contracts or increased obligations or loss of benefits to Pechiney.
THE SUBSTANTIAL INCREASE IN THE NUMBER OF ALCAN COMMON SHARES FOLLOWING THE
TRANSACTION MAY ADVERSELY AFFECT THEIR MARKET PRICE.
Upon completion of the offers for Pechiney securities, assuming that all
Pechiney securities are acquired, additional Alcan Common Shares, representing
up to approximately 24.2% of the current common share capital of Alcan, will be
available for trading in the public market. The increase in the number of Alcan
Common Shares may lead to sales of such shares or the perception that such sales
may occur, either of which may adversely affect the market for, and the market
price of, the Alcan Common Shares.
24
IF THE OFFERS FOR PECHINEY SECURITIES ARE SUCCESSFUL, BUT SOME PECHINEY
SECURITIES REMAIN OUTSTANDING, THE LIQUIDITY AND MARKET VALUE OF THE REMAINING
PECHINEY SECURITIES HELD BY THE PUBLIC COULD BE ADVERSELY AFFECTED BY THE FACT
THAT THEY WILL BE HELD BY A SMALLER NUMBER OF HOLDERS.
Depending upon the number of Pechiney securities acquired pursuant to the
Pechiney offers, following the completion of the offers the Pechiney ADSs may no
longer meet the requirements of the New York Stock Exchange for continued
listing. Moreover, to the extent permitted under applicable law and stock
exchange regulations, Alcan intends to seek to cause the delisting of the
Pechiney ADSs on the New York Stock Exchange, and, if Alcan were to launch a
buy-out followed by a squeeze-out, it may then petition Euronext Paris to cause
the delisting of the Pechiney Common Shares and/or Pechiney OCEANEs.
If the New York Stock Exchange were to delist the Pechiney ADSs, or if Euronext
Paris were to delist the Pechiney Common Shares or Pechiney OCEANEs, the market
for these securities could be adversely affected. Although it is possible that
the Pechiney ADSs, Pechiney Common Shares and Pechiney OCEANEs would be traded
on other securities exchanges or in the over-the-counter market, and the price
quotations would be reported by such exchanges, or through the National
Association of Securities Dealers, Inc. Automated Quotations System or by other
sources, such trading quotations may not occur. In addition, the extent of the
public market for the Pechiney ADSs, Pechiney Common Shares, Pechiney Bonus
Allocation Rights and Pechiney OCEANEs and the availability of such quotations
would, however, depend upon the number of holders and/or the aggregate market
value of the Pechiney ADSs, Pechiney Common Shares, Pechiney Bonus Allocation
Rights and Pechiney OCEANEs, as the case may be, remaining at such time, the
interest in maintaining a market in the Pechiney ADSs, Pechiney Common Shares,
Pechiney Bonus Allocation Rights and Pechiney OCEANEs, as the case may be, on
the part of securities firms and the possible termination of registration of
ADSs under the Securities Exchange Act of 1934. If such registration is
terminated, Pechiney could cease filing periodic reports with the SEC, which
could further impact the value of the Pechiney ADSs. To the extent the
availability of such listings or quotations depends on steps taken by Alcan or
Pechiney, Alcan or Pechiney may or may not take such steps. Therefore, you
should not rely on any such listing or quotation being available.
RISKS RELATING TO THE BUSINESS OF ALCAN IF THE OFFERS ARE SUCCESSFUL
The business of Alcan is and will continue to be subject to a number of risks,
including those listed below. Certain of these risks may be increased by the
completion of the transactions and the acquisition of Pechiney.
INCREASED EXPOSURE TO CURRENCY EXCHANGE RATE FLUCTUATIONS AS A RESULT OF THE
ACQUISITION OF PECHINEY AND THE RESULTING INCREASED PORTION OF OPERATING
EXPENSES INCURRED IN EUROS IS LIKELY TO ADVERSELY AFFECT FINANCIAL RESULTS WHEN
THE EURO INCREASES IN VALUE AS COMPARED TO THE U.S. DOLLAR.
A substantial portion of Alcan's revenue is determined in U.S. dollars while a
significant portion of its costs related to those revenues are incurred in
Canadian and Australian dollars. Additionally, Alcan's earnings from its
European subsidiaries are substantially denominated in euros. Fluctuations in
exchange rates between the U.S. dollar and these currencies give rise to
currency exposure. This exposure is generally favorable to Alcan when the U.S.
dollar strengthens against the Canadian and Australian dollars and unfavorable
when it weakens. Conversely, Alcan is disadvantaged when the U.S. dollar
strengthens against the euro and is advantaged when it weakens. Where judged
appropriate, Alcan seeks to manage a portion of the impact of this risk by
entering into forward currency contracts and options, but such hedging
activities are limited in nature, may be costly and in any event do not normally
extend beyond three years and therefore will not eliminate a material portion of
the potentially significant adverse effect that exchange rate fluctuations could
have on Alcan's results of operations or financial condition over an extended
period. Following completion of the offers, Alcan will be exposed to additional
possibly offsetting currency exchange risk, primarily with respect to the euro,
as a much more significant amount of its revenues generated in Europe is
expected to be generated in U.S. dollars while a more significant portion of its
operating expenses related to those revenues is expected to be incurred in
euros. Such currency exchange risks may have a materially adverse effect on
Alcan's operating results in the future.
25
PECHINEY ENGAGES IN SUBSTANTIAL TRADING AND BROKERAGE ACTIVITIES AND, AS A
RESULT, ALCAN WILL BE EXPOSED TO INCREASED TRADING AND BROKERAGE RISKS INCLUDING
THE RISK OF SIGNIFICANT LOSSES DUE TO ADVERSE PRICE MOVEMENTS, WHICH MAY
ADVERSELY IMPACT ITS FINANCIAL RESULTS.
Pechiney engages in substantial trading and brokerage activities. For example,
Pechiney's 2002 financial statements indicate that E5,036 million, or 42%, of
Pechiney's 2002 net sales resulted from its trading and brokerage operations.
Alcan does not have comparable operations and if the offers are consummated,
will be exposed to the risks of these businesses, including credit and
derivatives risks and the risk of significant losses if prices move contrary to
the expectations of Pechiney at the time the related contracts were entered into
and if Pechiney's risk management procedures prove to be inadequate. The risks
of Pechiney's trading and brokerage businesses may result in material losses to
Alcan after consummation of the offers and such losses may materially adversely
affect Alcan's results of operations, liquidity and financial position.
THE EXTENSIVE USE OF DERIVATIVES IN PECHINEY'S TRADING ACTIVITIES WILL EXPOSE
ALCAN TO INCREASED MARKET AND CREDIT RISK IN DERIVATIVES AND, AS A RESULT, ALCAN
WILL BE SUBJECT TO SIGNIFICANTLY INCREASED MARKET AND CREDIT RISKS RELATING TO
DERIVATIVES, WHICH MAY ADVERSELY IMPACT ITS REVENUES AND EARNINGS.
Each of Alcan and Pechiney uses derivatives to hedge, among other things, its
exposure to changes in exchange rates, interest rates and metals prices. In
addition, Pechiney's trading activities involve extensive use of derivatives.
Alcan will accordingly be subject to significantly increased market and credit
risks relating to derivatives after completion of the offers.
PECHINEY IS SUBJECT TO A BROAD RANGE OF ENVIRONMENTAL LAWS AND REGULATIONS IN
THE JURISDICTIONS IN WHICH IT OPERATES, AND IF THE OFFERS ARE SUCCESSFUL, ALCAN
MAY BE EXPOSED TO INCREASED ENVIRONMENTAL COSTS AND LIABILITIES.
Each of Alcan and Pechiney is subject to a broad range of environmental laws and
regulations in each of the jurisdictions in which it operates. These laws and
regulations, as interpreted by relevant agencies and the courts, impose
increasingly stringent environmental protection standards regarding, among other
things, air emissions, wastewater storage, treatment and discharges, the use and
handling of hazardous or toxic materials, waste disposal practices, and the
remediation of environmental contamination. The costs of complying with these,
including participation in assessments and remediation of sites, could be
significant. In addition, these standards can create the risk of substantial
environmental liabilities, including liabilities associated with divested assets
and past activities. Currently, each of Alcan and Pechiney is involved in a
number of compliance efforts and legal proceedings concerning environmental
matters. Each of Alcan and Pechiney has established reserves for environmental
remediation activities and liabilities. However, environmental matters cannot be
predicted with certainty, and these amounts may not be adequate, especially in
light of potential changes in environmental conditions or the discovery of
previously unknown environmental conditions, the risk of governmental orders to
carry out additional compliance on certain sites not initially included in
remediation in progress, and the potential liability of each of Alcan and
Pechiney to remediate sites for which provisions have not been previously
established. Such future developments could result in increased environmental
costs and liabilities that could have a material adverse effect on Alcan's
financial position and results of operations.
Some of Alcan's and Pechiney's current and potential operations are located in
or near communities that may now, or in the future, regard such operations as
having a detrimental effect on their social and economic circumstances. Should
this occur, the consequences of such a development may have a material adverse
impact upon the profitability or, in extreme cases, the viability of an
operation. In addition, such developments may adversely affect Alcan's ability
to enter into new operations in such location or elsewhere.
26
PECHINEY HAS OPERATIONS IN SEVERAL LESS DEVELOPED COUNTRIES IN WHICH ALCAN DOES
NOT CONDUCT BUSINESS AS WELL AS OPERATIONS IN LESS DEVELOPED COUNTRIES WHERE
ALCAN ALREADY HAS OPERATIONS AND THE ACQUISITION OF SUCH OPERATIONS WILL EXPOSE
ALCAN TO INCREASED POTENTIAL RISKS OF LOSSES FROM OPERATIONS IN LESS DEVELOPED
COUNTRIES.
After the offers Alcan will have increased operations in developing countries
which may be more vulnerable to risks of war, civil disturbances and adverse
governmental action, such as nationalization, re-negotiation or nullification of
existing contracts, leases, permits or other agreements, changes in laws, policy
and currency restrictions, as well as other unanticipated risks, which may
disrupt or impede operations and markets, restrict the movement of funds, impose
limitations on foreign exchange transactions or result in the expropriation of
assets. Any of these factors could materially adversely affect Alcan's
operations in such countries.
PECHINEY HAS RECENTLY INITIATED SEVERAL SIGNIFICANT CAPITAL PROJECTS AND,
FOLLOWING THE CONSUMMATION OF THE OFFERS, ALCAN MAY BE EXPOSED TO RISKS RELATING
TO SUCH PROJECTS, WHICH MAY ADVERSELY AFFECT ITS FINANCIAL RESULTS AND CONDITION
SINCE SUCH PROJECTS WILL RESULT IN INCREASED CAPITAL EXPENDITURE COMMITMENTS AND
THE RISK THAT SUCH PROJECTS MAY BE UNPROFITABLE.
Pechiney has announced its involvement in a number of significant capital
projects for which there is little available information to identify and
quantify commitments and to determine potential financial impact. These include,
for example, Pechiney's Coega smelter project in South Africa and its Bauxilum
bauxite and alumina project in Venezuela. If the offers are completed,
Pechiney's commitments with respect to these capital projects may materially
adversely affect Alcan's results of operations in the future.
ALCAN WILL CONTINUE TO BE EXPOSED TO VOLATILITY IN THE ALUMINUM INDUSTRY AND IN
ALUMINUM END USE MARKETS, WHICH MAY ADVERSELY AFFECT ITS FINANCIAL RESULTS SINCE
SUCH VOLATILITY MAY RESULT IN SIGNIFICANTLY LOWER REVENUES WHILE COSTS REMAIN
CONSTANT.
Alcan is a leading global producer of aluminum and aluminum fabricated products.
The aluminum industry is highly cyclical, with prices subject to worldwide
market forces of supply and demand and other influences. Prices have been
volatile historically and Alcan expects such volatility to continue. Although
Alcan uses contractual arrangements with customers, employs certain measures to
manage its exposure to the volatility of London Metals Exchange based prices and
is product and segment diversified, Alcan's results of operations could be
materially adversely affected by material adverse changes in economic or
aluminum industry conditions generally. Aluminum end use markets, including the
automotive and building and construction sectors, are also cyclical. When
downturns occur in these sectors, decreased demand for aluminum may result in
lower prices for Alcan's products and may have a material adverse effect on
Alcan's results of operations.
ALCAN'S OPERATIONS WILL CONTINUE TO BE EXPOSED TO CHANGES IN CERTAIN ECONOMIC
CONDITIONS AND COULD BE ADVERSELY AFFECTED BY GOVERNMENT ACTIONS, WHICH MAY
ADVERSELY AFFECT ITS FINANCIAL RESULTS AND CONDITION BY INCREASING ITS OPERATING
EXPENSES OR REDUCING ITS REVENUES.
Economic and other factors in the many countries in which Alcan operates,
including inflation, fluctuations in currency and interest rates, competitive
factors, civil unrest and labor problems, could affect Alcan's revenues,
expenses and results of operations. Alcan's operations could also be adversely
affected by government actions such as controls on imports, exports and prices,
new forms of taxation, and increased government regulation in the countries in
which Alcan operates or services customers.
ALCAN'S OPERATIONS WILL CONTINUE TO BE DEPENDENT ON SUBSTANTIAL AMOUNTS OF
ENERGY AND, AS A RESULT, ALCAN'S PROFITABILITY MAY DECLINE IF ENERGY COSTS WERE
TO RISE, OR IF ENERGY SUPPLIES WERE INTERRUPTED.
Alcan consumes substantial amounts of energy in its operations. Although Alcan
generally expects to meet the energy requirements for its aluminum smelters and
alumina refineries from internal sources or from long-term contracts, the
following factors could materially adversely affect its results of operations:
the unavailability of hydroelectric power due to droughts, significant increases
in costs of supplied electricity, interruptions in energy supply due to
equipment failure or other causes or the inability to extend contracts upon
expiration on
27
economical terms. In addition, aluminum smelters generally require an
uninterrupted supply of intense electrical energy, and any interruption of more
than a very short duration, whatever the cause, may have a major technical,
commercial and financial impact on the activities of the facility concerned.
Pechiney currently obtains a significant portion of its electricity requirements
under contracts with Electricite de France. Alcan may not be able to renew or
replace these contracts on comparable terms following their expiry.
If energy costs were to rise, or if energy supplies or supply arrangements were
disturbed, Alcan's profitability may decline, which could lead to a reduction in
any dividends or cause the trading prices of Alcan Common Shares to decline.
ALCAN'S PROFITABILITY WILL BE ADVERSELY AFFECTED BY INCREASES IN THE COST AND
DISRUPTIONS IN THE AVAILABILITY OF RAW MATERIALS.
The raw materials that Alcan uses in manufacturing its products include caustic
soda and calcined petroleum coke and resins. The prices of many of the raw
materials Alcan uses depend on supply and demand relationships at a worldwide
level, and are therefore subject to variation.
Prices for the raw materials Alcan requires may increase and, if they do, Alcan
may not be able to pass on the entire cost of the increases to its customers or
to offset fully the effects of higher raw material costs through productivity
improvements, which may cause its profitability to decline. In addition, there
is a potential time lag between changes in prices under Alcan's purchase
contracts and the point when Alcan can implement a corresponding change under
its sales contracts with its customers. As a result, Alcan cannot necessarily
protect itself from fluctuations in raw materials prices since during the time
lag period Alcan may have to temporarily bear the additional cost of the change
under its purchase contracts, which could have a temporary negative impact on
its profitability.
THE MARKETS FOR ALCAN'S PRODUCTS ARE HIGHLY COMPETITIVE AND THE WILLINGNESS OF
CUSTOMERS TO ACCEPT SUBSTITUTIONS FOR THE PRODUCTS SOLD BY ALCAN IS HIGH, WHICH
COULD ADVERSELY AFFECT ALCAN'S RESULTS OF OPERATIONS.
The markets for aluminum and packaging products are highly competitive. In
addition, aluminum competes with other materials, such as steel, plastics and
glass, among others, for various applications in Alcan's key customer sectors.
The willingness of customers to accept substitutions for the products sold by
Alcan, the ability of large customers to apply buyer power in the marketplace to
affect the pricing for fabricated aluminum or packaging products or other
developments could affect Alcan's results of operations.
ALCAN MAY BE ADVERSELY AFFECTED BY CHANGES IN THE BUSINESS OR FINANCIAL
CONDITION OF ITS SIGNIFICANT CUSTOMERS.
A significant downturn in the business or financial condition of significant
customers supplied by Alcan could materially adversely affect Alcan's results of
operations in a particular period. In addition, if Alcan's existing
relationships with its significant customers materially deteriorate or are
terminated in the future, and Alcan is not successful in replacing business lost
to such customers, Alcan's results of operations may be harmed, which could
materially adversely affect our results of operations and lead to a reduction in
dividends and cause the trading price of Alcan Common Shares to decline.
ALCAN MAY BE SUBJECT TO LIABILITY RELATED TO THE USE OF HAZARDOUS SUBSTANCES IN
PRODUCTION.
Alcan uses a variety of materials and chemicals in its manufacturing processes,
as well in connection with maintenance work on its manufacturing facilities. In
the event that any of these substances or related residues proves to be toxic,
Alcan may be liable for increased costs for health-related claims or removal or
re-treatment of such substances.
Although Alcan does not currently use asbestos or its derivatives as raw
materials in its manufacturing processes, there is some risk of asbestos
exposure associated with the existence of asbestos-containing materials in its
manufacturing buildings and equipment.
28
ALCAN MAY BE EXPOSED TO SIGNIFICANT LEGAL PROCEEDINGS OR INVESTIGATIONS.
Alcan's results of operations or liquidity in a particular period could be
affected by significant legal proceedings or investigations adverse to Alcan,
including product liability, health and safety and other claims.
ALCAN IS EXPOSED TO PREVAILING INTEREST RATES AND EQUITY MARKET RETURNS IN
CONNECTION WITH ITS PENSION PLANS, WHICH MAY RESULT IN ALCAN BEING REQUIRED TO
MAKE LARGE CONTRIBUTIONS TO SUCH PLANS.
Alcan sponsors defined benefit pension plans for its employees in Canada, the
United States, the United Kingdom, Switzerland and certain other countries.
Alcan's pension plan assets consist primarily of listed stocks and bonds. Its
estimate of liabilities and expenses for pensions and other post-retirement
benefits incorporate significant assumptions, including interest rates used to
discount future benefits and expected long-term rates of return on plan assets.
Alcan's results of operations, liquidity or shareholders' equity in a particular
period could be materially adversely affected by equity market returns that are
less than their expected long-term rate of return or a decline of the rate used
to discount future benefits.
If the assets of Alcan's pension plans do not achieve expected investment
returns for any fiscal year, such deficiency would result in one or more charges
against earnings. In addition, changing economic conditions, poor pension
investment returns or other factors may require Alcan to make substantial cash
contributions to the pension plans in the future, preventing the use of such
cash for other purposes. For example, we recently made a significant
contribution to one of our Canadian defined benefit plans as a result of recent
poor investment performance.
ALCAN'S PAST AND FUTURE ACQUISITIONS OR DIVESTITURES MAY ADVERSELY AFFECT ITS
FINANCIAL CONDITION.
Alcan has grown partly through the acquisition of other businesses. There are
numerous risks commonly encountered in business combinations, including the risk
that Alcan may not be able to effectively integrate businesses acquired, or
generate the cost savings and synergies anticipated. Failure to do so could have
a material adverse effect on Alcan's costs, earnings and cash flows.
As part of its strategy for growth, Alcan may continue to make acquisitions,
divestitures or strategic alliances, which may not be completed or may not be
ultimately beneficial to Alcan.
ALCAN MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND IMPLEMENT NEW TECHNOLOGY
REQUIRED FOR ITS BUSINESSES, AND SUCH FAILURE MAY ADVERSELY AFFECT ALCAN'S
PROFITABILITY.
Alcan has invested in and is involved with a number of technology and process
initiatives. Several technical aspects of these initiatives are still unproven
and the eventual commercial outcomes cannot be assessed with any certainty.
Accordingly, the costs and benefits from Alcan's investments in new technologies
and the consequent effects on Alcan's future earnings and financial results may
vary widely from present expectations.
Alcan is committed to protecting its trade secrets and investing in research and
development in order to maintain the benefits of its technology in the future.
However, Alcan may not be able to protect, or continue to develop, some of its
proprietary technology in the future. In addition, Alcan may be subject to
litigation in the future regarding the use of proprietary technology that it has
developed.
ALCAN IS SUBJECT TO THE RISK OF UNION DISPUTES AND ADVERSE EMPLOYEE RELATIONS
AND THESE DISPUTES AND ADVERSE RELATIONS MAY DISRUPT ALCAN'S BUSINESS OPERATIONS
AND ADVERSELY AFFECT ITS FINANCIAL RESULTS.
The majority of our hourly-paid employees are represented by labor unions under
a large number of collective labor agreements. We may not be able to
satisfactorily renegotiate our collective labor agreements when they expire. In
addition, existing labor agreements may not prevent a strike or work stoppage at
our facilities in the future, and any such work stoppage could have a material
adverse effect on our financial condition and results of operations.
29
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this prospectus are
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties. Forward-looking statements include, but are not limited
to, statements concerning industry growth and other trend projections,
anticipated financial or operating performance, business and financial
prospects, strategies, objectives, goals, targets and synergies, and the savings
and benefits anticipated to be realized from the combination of Alcan and
Pechiney. Forward-looking statements in this prospectus are sometimes preceded
by, followed by or include the words "believes", "expects", "estimates",
"intends", "anticipates", "plans", "may", "could", "should", "will" or similar
expressions. Although Alcan's management believes that the expectations
reflected in such forward-looking statements are reasonable, readers are
cautioned that these forward-looking statements by their nature involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future. Many factors, in addition to those discussed elsewhere in
this prospectus and in the documents we incorporate by reference, could cause
actual results and developments to differ materially from those expressed or
implied by these forward-looking statements.
Factors that could cause actual results or outcomes to differ materially from
the results expressed or implied by forward-looking statements include, but are
not necessarily limited to, those discussed in the section "Risk Factors," as
well as, among other things:
- changes in global aluminum supply and demand conditions;
- changes in aluminum ingot prices;
- changes in raw materials costs and availability;
- changes in the relative values of various currencies;
- cyclical demand and pricing within the principal markets for Alcan's and
Pechiney's products;
- changes in government regulations, particularly those affecting
environmental, health or safety compliance;
- fluctuations in the supply of and prices for energy in the areas in which
Alcan or Pechiney maintains production facilities;
- the effect of integrating acquired businesses (including Pechiney) and
the ability to realize anticipated savings and benefits;
- potential catastrophic damage, increased insurance and security costs and
general uncertainties associated with the increased threat of terrorism
or war;
- the effect of international trade disputes on Alcan's or Pechiney's
ability to import materials, export its products and compete
internationally;
- relationships with, and financial and operating conditions of, customers
and suppliers;
- economic, regulatory and political factors within the countries in which
Alcan or Pechiney operate or sell products; and
- factors affecting Alcan's or Pechiney's operations, such as litigation,
labor relations and negotiations and fiscal regimes.
30
THE OFFERS
REASONS FOR THE OFFERS
Alcan is pursuing its offers for Pechiney because of the significant
value-creating opportunities the offers present to both Alcan and Pechiney
shareholders. The transaction is intended to enable Alcan to build upon its
position as one of the world's leading aluminum and packaging companies and to
benefit from the combined entity's enhanced scale, financial strength and
technological resources as well as its increased capability to serve customers
worldwide. The combined entity will also benefit from a larger and more
diversified low-cost global position in primary aluminum production with
opportunities for profitable growth, an advanced aluminum fabricating business
with facilities around the world and a leading position in flexible packaging.
The addition of Pechiney will enhance Alcan's research and development and
product and process development capabilities across all of its business sectors.
Reflecting Alcan's significantly increased industrial presence in France, Alcan
has committed to locate:
- in Paris, the global operational headquarters of its packaging business,
- in France, (i) the global operational headquarters of its aerospace
business unit, (ii) the global operational headquarters of its engineered
products group and (iii) the operational headquarters of its European
primary aluminum business and its European smelting operations, and
- in France, its global center for new cell technology development in
primary aluminum.
Alcan believes that its enhanced size and scope as a result of its acquisition
of Pechiney will enable it to capitalize on a greater variety of strategic
options. Alcan intends to continue pursuing value-maximizing strategies through
a careful analysis of the expanded opportunity set that Alcan will benefit from
following the transaction.
In 1999, Alcan, Pechiney and Alusuisse-Lonza Group AG, or "algroup," proposed a
three-way combination (referred to as the "proposed APA transaction"). At that
time, Alcan, Pechiney and algroup identified a series of compelling strategic
benefits in connection with that transaction. These included:
- a sustainable low-cost position in primary aluminum production,
- the combination of their aluminum fabrication offerings,
- the creation of a world leader in the packaging business,
- leadership in core smelting technology, and
- substantial synergies arising from scale, plant optimization, elimination
of duplication, and implementing best practices throughout the merged
group.
The proposed APA transaction was conditional upon, among other things, receipt
of merger approval from the European Commission. The inability to resolve
certain transaction issues (including agreeing upon the undertakings that were
required in order to meet the objections of the European Commission to the
proposed APA transaction and to resolve the reasons why the European Commission
rejected the parties' offer of remedies made by them with a view to securing
regulatory approval from the European Commission) led Alcan, algroup and
Pechiney to jointly terminate the APA transaction. Alcan was, however, able to
subsequently complete its acquisition of algroup (which was approved by the
European Commission, subject to certain conditions and obligations) and achieve
many of the anticipated benefits from the proposed APA transaction. Alcan is
convinced that the fundamental strategic logic of the proposed APA transaction
remains valid and compelling. Alcan's commitments to the European Commission
(see "-- Commitments Offered to the European Commission and the U.S. Department
of Justice to Obtain Regulatory Approval" on page 36) reflect changes since 1999
in the respective markets served by Alcan and Pechiney and in the outlook for
each company.
Alcan has considered its strategic outlook and believes that the substantial
benefits of its enhanced size and scope, financial strength and improved
strategic flexibility following completion of the transaction substantially
31
outweigh the likely impact of the undertakings that it has made to the European
Commission and the U.S. Department of Justice in order to obtain regulatory
approvals and the other risks associated with the transaction. See
"-- Commitments Offered to the European Commission and the U.S. Department of
Justice to Obtain Regulatory Approval" beginning on page 36.
Alcan has also considered a variety of factors, including lower aluminum prices,
the deterioration in demand from the aerospace industry, the increase in the
relative value of the euro to the dollar, and continued pressure in the
packaging sector as a result of customer consolidation. Alcan has also taken
into account its successful integration of algroup, as well as the complementary
profit enhancement initiatives already underway at both Alcan and Pechiney.
Furthermore, since the acquisition of algroup, Alcan has also successfully
executed the acquisitions of 30% of the Gove alumina refinery, 40% of the
Alouette smelter and VAW's FlexPac packaging business.
BUSINESS PLANS AND EXPECTED BENEFITS OF THE TRANSACTION
Following the transaction, the combined entity will benefit from the
complementary strengths of Alcan and Pechiney. Total revenues of the combined
entity on a pro forma basis will be approximately $24 billion based on 2002
revenues and Alcan will employ approximately 88,000 employees in more than 50
countries around the world.
The pro forma impact of the transaction in terms of revenue and work force
break-down is shown below on a segment basis:
Break-down of 2002 revenues by segment(1)
ALCAN PECHINEY COMBINED ENTITY(2)
---------- ------------------------ ------------------------
% OF % OF
TOTAL TOTAL
% OF % OF EXCL. INT'L % OF EXCL. INT'L
TOTAL TOTAL TRADE TOTAL TRADE
---------- ---------- ----------- ---------- -----------
Primary Aluminum.................... 24% 13% 23% 18% 23%
Conversion.......................... 55% 22% 38% 39% 49%
Packaging........................... 21% 20% 34% 20% 26%
Other............................... 0% 3% 5% 2% 2%
TOTAL (EXCLUDING INTERNATIONAL
TRADE)............................ 100% 58% 100% 79% 100%
International Trade................. 42% 21%
Total............................... 100% 100%
---------------
(1) Using an exchange rate of $1.00 = E0.9454
(2) Derived from Alcan's Canadian GAAP consolidated financial statements for the
year ended December 31, 2002 and Pechiney's French GAAP consolidated
financial statements for the year ended December 31, 2002.
32
Break-down of 2002 work force by segment
COMBINED
ALCAN PECHINEY ENTITY(1)
---------- ---------- ----------
% OF TOTAL % OF TOTAL % OF TOTAL
---------- ---------- ----------
Primary Aluminum....................................... 33% 19% 27%
Conversion............................................. 38% 23% 32%
Packaging.............................................. 27% 48% 36%
Other(2)............................................... 2% 10% 5%
TOTAL.................................................. 100% 100% 100%
---------------
(1) Derived using the same basis of presentation as the unaudited Pro Forma
Combined Financial Statements of Alcan and Pechiney beginning on page 80.
(2) Including International Trade at Pechiney
The aluminum and packaging business units will be among the largest companies in
their respective industries, operating on a global scale. The expected benefits
from this enhanced size and scope and Alcan's plans are outlined below.
Alumina. The combined entity will benefit from:
- an increased ownership position (from 20.4% to 41.4%) in Queensland
Alumina Ltd., the largest and one of the lowest cost alumina producers in
the world,
- the integration of geographically complementary bauxite mining and
alumina refining capacities, and
- opportunities to extend and improve the alumina production technology of
the two companies, technology that will be used by the combined entity as
well as licensed to third parties.
Primary Aluminum. The combined entity is expected to benefit from its larger
low-cost position and opportunities for low-cost growth in primary aluminum
production based on, among other things:
- the increased scale, geographic diversification and integration of the
two companies' low cost smelting systems,
- increased opportunities to sustain and enhance Pechiney's strong position
in new cell, high-amperage smelting technology and to extend its
implementation, with such technology being used by the combined entity as
well as being licensed to third parties,
- opportunities to extend the best manufacturing practices of each company,
including anticipated higher production efficiency through amperage
increases and improved cell operation, and
- an increased ability to evaluate and participate in value-creating
brownfield and greenfield smelting projects worldwide.
Alcan has committed to locate in France the operational headquarters of its
European primary aluminum business.
Fabricated Aluminum. Following the transaction, Alcan will further enhance its
position as a world leader in the fabricated and rolled aluminum products
businesses. The addition of Pechiney's fabrication operations will provide the
combined entity with opportunities to:
- participate, with a strong global position in the specialized and
strategic aerospace market,
- better serve the increasing demand for aluminum applications in the
automotive industry, in both North America and Europe,
- build upon Pechiney's technology and know-how by applying its enhanced
capabilities to the enlarged group's expanded operations, and
33
- increase productivity through global implementation of best practices and
the usage of the world-class rolling technologies of both companies.
Alcan has committed to establish in France the global operational headquarters
of its engineered products group.
Packaging. The combination of Alcan's and Pechiney's flexible and specialty
packaging businesses will create one of the largest packaging companies in the
world with a leading position in flexible packaging, complementary market
positions in North America and Europe and a strong range of value-added
products. The combined packaging business will benefit from:
- an enhanced geographically balanced operating platform offering a global
range of packaging products,
- improved capabilities to serve the needs of multinational customers,
- a strong platform from which Alcan can actively pursue growth
opportunities in this global industry, and
- combining the combined entity's research and development activities and
best practices in developing new products and improving manufacturing
processes.
Alcan has committed to locate in Paris the global operational headquarters of
its packaging business.
International Trade. Alcan intends to evaluate the value creation alternatives
for Pechiney's International Trading business, including the possibility of
incorporating it into Alcan's existing operations. During the course of this
evaluation, Pechiney's International Trading business will be operated on a
stand-alone basis.
Technology. Following completion of the transaction, Alcan intends to continue
to develop Pechiney's world leading technologies, particularly in aluminum
smelting. Specifically, Alcan plans to maintain and enhance Pechiney's research
and development capabilities in France, where Pechiney has established and
nurtured a recognized center of excellence. In particular, Alcan will carry out
research and development relating to metallurgy for the aeronautical, aerospace
and defense industries. Alcan has committed to locate in France the combined
entity's global center for new cell technology development in primary aluminum.
Alcan has also committed to preserve the Pechiney brand name, as such brand name
relates to primary aluminum cell technology, for a period of no less than 10
years.
Benefits to Pechiney and its Shareholders. Pechiney's operations will benefit
from the advantages and opportunities that are expected to result from the
combination of the two companies which are described above. Alcan believes,
based on the information available to it, that as compared to Pechiney's current
situation, Pechiney's operations will be strengthened if the offers are
successful, particularly in the following areas:
- greater access to, and broader choice of, primary materials,
- better operating efficiency,
- economies of scale resulting in reduced costs and increased
competitiveness,
- expanded research and development capacity and improvements in
technology, and
- an expanded range of products offered (especially in packaging).
The offers allow Pechiney shareholders to tender all or only a part of their
Pechiney shares, thereby immediately benefiting from the offers' premium over
the pre-announcement price.
Benefits to Customers. The industries that Alcan and Pechiney serve are
themselves consolidating and becoming increasingly global in the scope of their
operations. Their global and regional customers are seeking financially stable,
full-service suppliers with the scale and regionally-based facilities required
to meet their needs. Following the transaction, the combined entity will be
better positioned to work with its customers on a global basis to address their
expanding needs by supplying them with existing products as well as by
efficiently developing new technologies and applications.
34
Aluminum customers will benefit from working with a company that has a
strengthened low-cost position, enhanced research and development and
technological capabilities and the capacity and geographic scope to address
customers' aluminum fabrication needs around the world.
Packaging customers will benefit from working with a company recognized as a
leading supplier in its key markets, with enhanced technological capability
allowing for improved product innovation and customer support.
ANTICIPATED COST SYNERGIES FROM THE TRANSACTION
Alcan's management currently estimates that combining Alcan and Pechiney will
generate approximately $250 million in annual cost synergies, on a pre-tax
basis, that will be substantially achieved within two years of the completion of
the offers. By way of comparison, Alcan realized synergies of approximately $200
million per year, pre-tax, from the successful integration of algroup. Based on
this experience, as well as Alcan's experience with its cost reduction program
implemented in 2000, Alcan considers its synergy estimates for this transaction
to be realistic, although there can be no assurance that synergies ultimately
realized will not be higher or lower than this estimate, as discussed under
"Risk Factors" beginning on page 21. The synergies contemplated in connection
with this transaction represent approximately 3.8% of Pechiney's 2002 revenues,
excluding revenues from its International Trade segment. By way of comparison,
the synergies realized in the integration of algroup represented approximately
3.9% of algroup's 1998 revenues.
The synergies contemplated in the proposed APA transaction cannot be used as a
benchmark today. The proposed APA transaction was situated in a different
economic environment and contemplated the combination of three companies. Over
the ensuing three years, the economic context has changed and the three entities
involved in the proposed APA transaction have implemented independent strategies
and have undertaken their own cost rationalization programs.
The currently estimated cost synergies should be achieved in the following areas
(with the percentages of the total estimated synergies in parentheses):
- selling, general and administrative expenses (31%): cost savings
realized by combining corporate and head office services and trading,
sales and distribution staff support services;
- operations (15%): operating cost savings realized through the
optimization of production facilities and improvements to productivity;
- logistics and purchasing (26%): raw material, operating and capital cost
savings realized through leveraging project management, purchasing
requirements and supply chain issues on a larger scale;
- research and development (12%): research and development cost savings
realized by focusing research facilities, technical services and
information technology; and
- capital expenditure optimization programs (16%): optimizing the timing
and the sequence of investments available to Alcan and Pechiney to
maximize shareholder returns on these investments.
Alcan's synergies estimates take into consideration the cost reductions realized
by Alcan since 2000, as well as the cost reductions realized by Pechiney since
January 1, 2002 through its Continuous Improvement System, which, according to
Pechiney, has achieved a total of over $200 million in cost reductions through
June 30, 2003.
In order to realize these synergies, Alcan currently estimates that within two
years of the completion of the offers it will incur, in total, approximately
$200 million in costs and make capital expenditures of approximately $50
million.
FINANCIAL RESOURCES FOR SUSTAINED GROWTH
Following the transaction, Alcan will have substantially greater financial
resources than either Alcan or Pechiney alone. Alcan and Pechiney had combined
pro forma 2002 total revenues of approximately $24 billion
35
using the purchase method of accounting under U.S. GAAP. See "Pro Forma Combined
Financial Statements of Alcan and Pechiney" beginning on page 80.
The transaction is anticipated to be accretive in year one to EBITDA, earnings
per share and free cash flow. Looking forward, Alcan also expects that the
combined entity will meet or exceed, in the medium term, Alcan's previously
announced targets of 15% compound annual growth in earnings per share and free
cash flow of at least $400 million per year.
Upon completion of the transaction, the combined entity will have a
debt-to-total-capitalization ratio above Alcan's long-term target of 35%. On a
pro forma basis, the combined entity's debt-to-total-capitalization ratio at
June 30, 2003 was 44% (assuming that Alcan does not exercise its option to
substitute cash in place of all or some of the Alcan Common Shares to be issued
as consideration in the offers). Alcan expects to be able to reduce this ratio
to below its target within three years while preserving the necessary financial
flexibility to maintain Alcan's continued growth.
Alcan has also considered the potential adverse impact and risks of the
transaction, including the increased management attention that will be required
to integrate Pechiney, the costs and covenants associated with the bank
facilities required to pay for the cash element of the offers' consideration,
the risks generally applicable with respect to an investment in Pechiney and the
risks associated with an acquisition that was initially unsolicited, including,
in particular, the impossibility of conducting the pre-acquisition due
diligence, and increased risk of difficulties with Pechiney's management and
employees. For a further discussion of these risks and uncertainties, please see
"Risk Factors" beginning on page 21 and the "Cautionary Statement Concerning
Forward-Looking Statements" on page 30.
COMMITMENTS OFFERED TO THE EUROPEAN COMMISSION AND THE U.S. DEPARTMENT OF
JUSTICE TO OBTAIN REGULATORY APPROVAL
The completion of the offers and the subsequent combination of the businesses of
Alcan and Pechiney are subject to certain regulatory approvals, including, among
others, receipt of merger control approval from the European Commission and
review by the U.S. antitrust authorities. The approval of the European
Commission was obtained on September 29, 2003 and the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act expired on the same day. See
"Regulatory Matters" beginning on page 91.
The approval of the European Commission is subject to the following conditions:
- Alcan will ensure that (i) Alcan's interest in AluNorf (a 50% interest in
a rolling mill held through a joint venture with Norsk Hydro ASA) and its
Gottingen and Nachterstedt rolling mills and (ii) Pechiney's interest in
the rolling mill at Neuf-Brisach, the Rugles foil mill and, at the
purchaser's option, the Annecy rolling mill, will not both be held under
the common ownership and control of the combined entity. The Latchford
recycling facility may also, at the purchaser's option, be included in
the AluNorf or the Neuf-Brisach divestiture. In addition, Alcan will
transfer the research and development capacities related to these assets
to the purchaser.
- Alcan will ensure that (i) Alcan's European activities and (ii)
Pechiney's European activities, each in relation to aerosol cans and
aluminum cartridges, will not both be held under the common ownership and
control of the combined entity.
- Alcan will continue to grant licenses to third parties for the alumina
refining technologies of either Alcan or Pechiney and Pechiney's smelter
cell technologies on terms and conditions equivalent to those in
existence prior to this transaction.
- Alcan will divest its anode baking furnace designs.
As indicated above, Alcan's commitments to the European Commission provide Alcan
with an option to choose among certain assets to divest. As of the date of this
prospectus, Alcan has not determined, in those instances where it has an option
to choose, which assets to divest.
36
In the U.S., Alcan has undertaken to the U.S. Department of Justice to divest
Pechiney's rolling mill located in Ravenswood, West Virginia.
The businesses that are subject to the commitments described above represent
approximately 5% of total pro forma revenues (based on 2002 revenues).
EMPLOYMENT MATTERS
Alcan recognizes the value of Pechiney's employees. Alcan will strive to retain
Pechiney's critical human resources following completion of the transaction.
Industrial Operations. Alcan has not had access to information sufficient to
enable it to clearly state its intentions with respect to Pechiney's work force
and, in particular, has not had access to specific information regarding the
reorganizations contemplated by Pechiney. However, Alcan can confirm that, on
the basis of the information available to it, Alcan does not intend to effect
any significant changes to Pechiney's industrial workforce in France in the next
12 months other than those changes that have been announced by Pechiney.
Accordingly, Alcan has made certain commitments to French authorities relating
to, in particular, not closing industrial sites beyond those closures that have
been previously announced by Pechiney. Alcan is committed to keeping both
Alcan's and Pechiney's employees' representatives informed throughout the offer
process. Alcan has announced that its representatives are available to meet with
representatives of Pechiney's employees in the context of their evaluation of
the offers and Alcan's plans for the integration of the two companies.
Pechiney's Senior Management and Head Office. Alcan has committed to keep
Pechiney's head office in Paris, although its activities and its size will be
changed from those of Pechiney's current head office, since certain business
functions will no longer require as great a physical presence in Paris. Alcan
intends to maintain Pechiney's existing senior management team and head office
operations in place for a transitional period, after which Alcan hopes to be
able to achieve significant cost synergies by rationalizing Pechiney's corporate
head office. Alcan has also committed to locate:
- in Paris, the global operational headquarters of its packaging business,
- in France, (i) the global operational headquarters of its aerospace
business unit, (ii) the global operational headquarters of its engineered
products group and (iii) the operational headquarters of its European
primary aluminum business and its European smelting operations, and
- in France, its global center for new cell technology development in
primary aluminum.
Alcan knows and values the quality of Pechiney's senior management team and
hopes that a large number of Pechiney's executives will be involved in the
management of the combined entity. In order to retain and integrate members of
Pechiney's management team, Alcan will constitute for a transitional period an
ad hoc committee of three persons, one of whom will be a Pechiney
representative, to consider the situation of executives who will not be offered
a position in the combined entity equivalent to that which they occupied at
Pechiney. Alcan's integration of the management of algroup is a tangible example
of Alcan's ability to successfully execute a business combination, and indicates
the potential opportunities for Pechiney's employees. Alcan intends to work with
Pechiney's management team to maintain the continued efficient operation of the
companies' business.
If the offers are successfully completed, Alcan intends that the Alcan board of
directors will appoint to the Alcan board of directors one qualified individual
who has been proposed by Pechiney's board of directors after reasonable
consultation with Alcan. In the event that Pechiney securities representing more
than 75% of Pechiney's share capital and voting rights are tendered in the
offers, Alcan intends that the Alcan board of directors will appoint to the
Alcan board of directors a second such qualified individual who has been
proposed by Pechiney's board of directors after reasonable consultation with
Alcan. The calculation of whether this 75% tender threshold has been reached
will be based on the same classes of capital included in the numerator and
denominator of the minimum tender condition under "The Offers -- Condition
Precedent" beginning on page 58.
37
If the offers are successfully completed, the structure of Pechiney's board of
directors will be modified to reflect Pechiney's new shareholder base.
CONTEMPLATED DIVIDEND POLICY
Pechiney Securities. Alcan is not yet in a position to state what Pechiney's
dividend policy will be in respect of Pechiney securities remaining outstanding
after the offer, but it is likely that such policy will be determined in the
context of Pechiney's integration into the combined entity. This policy could
bring about a large reduction in the level of dividends paid by Pechiney, or
even an end to dividends being paid at all. Pechiney, in the risk factors
section of its 2002 20-F, has itself also indicated that several factors could
lead to a reduction in the amount of any dividends that it pays.
Alcan Common Shares. The new Alcan Common Shares issued in connection with the
offer will have the same dividend and other rights as existing Alcan Common
Shares. Alcan has declared a quarterly dividend for the fourth quarter of the
2003 fiscal year of $0.15 and such dividend will be paid on December 19, 2003 to
holders of record on November 20, 2003. If the offers are successful, the
settlement date will fall after the record date for the fourth-quarter dividend,
and, as a result, the Alcan Common Shares delivered to you will not entitle you
to receive the fourth-quarter dividend. If Alcan decides to declare a quarterly
dividend for the first quarter of the 2004 fiscal year, such dividend will be
paid on or about March 20, 2004 to holders of record on a date to be established
to be on or about February 20, 2004.
HISTORY OF ALCAN AND BACKGROUND OF THE OFFERS; PAST CONTACTS, TRANSACTIONS,
NEGOTIATIONS AND AGREEMENTS
The Proposed Alcan-Pechiney-algroup Three-way Combination
In September 1999, the Company entered into a three-way combination agreement
with Pechiney and algroup. The structure of the proposed combination involved
two independent offers of the Company's Common Shares, one for all of the
outstanding shares of Pechiney and the other for all of the outstanding shares
of algroup. On November 22, 1999, Alcan's shareholders approved the issuance of
Alcan Common Shares under the two independent offers.
On March 13, 2000, following months of intensive work and negotiations with the
European and U.S. competition authorities, the three companies notified the
European Commission that they were withdrawing their notification of the offer
proposal relating to Pechiney and formally abandoned that proposal.
The parties abandoned the Pechiney related offer because the European Commission
had rejected the commitments that the parties offered to remedy the competition
issues identified by the European Commission with respect to the combined APA
entity's share of certain European markets (including aluminum beverage can body
and end stock, aluminum food can sheet and certain packaging products) as in its
view these offered commitments were inadequate to resolve all competition
concerns raised by the proposed APA transaction. The European Commission issued
a press release on March 14, 2000 that explained the competition issues
identified by it and the reasons for its rejection of the commitments proposed
by the parties.
The offer by Alcan for the algroup shares was approved by the European
Commission on March 14, 2000, subject to certain divestitures. On October 17,
2000, the combination of Alcan and algroup was completed, with Alcan acquiring
over 99% of the shares of algroup pursuant to its offer. Alcan acquired the
remaining outstanding algroup shares in 2001, and caused algroup to be de-listed
from the SWX Swiss Exchange.
Alcan-Pechiney Relationships
Alcan, through its Australian subsidiary Alcan South Pacific Pty Limited, holds
a 21.4% equity interest in Queensland Alumina Limited ("QAL") in which Pechiney,
through its subsidiary Pechiney Resources Pty Limited, holds a 20% equity
interest. QAL operates an alumina refinery at Gladstone, Australia, as a
cooperative for the benefit of its shareholders. Each participant in the
refinery supplies bauxite for toll conversion into alumina.
38
Alcan and Pechiney respectively hold 33% and 10% of Halco (Mining) Inc., which
in turn holds 51% of Compagnie des Bauxites de Guinee ("CBG"), with the
remaining 49% held by the Republic of Guinea. CBG's mine in the Boke region of
Guinea has an operating capacity of about 12.7 million tonnes of bauxite a year.
Alcan's Alma smelter in Quebec, Canada uses Pechiney's electrolytic reduction of
alumina technology (AP-30) pursuant to a technology license agreement entered
into as of March 27, 1997. The Alouette smelter, also in Quebec, in which Alcan
recently acquired a total 40% interest, uses the same technology. Alcan's
smelter at Lochaber, Scotland uses an older Pechiney electrolytic reduction
technology (AP-18).
Alcan and Pechiney operate the Copal aluminum slug plant at Beaurepaire, France,
as a production joint venture. Each party provides its own aluminum for
processing at cost. These slugs are used in each party's respective aluminum
aerosol can production operations.
CHRONOLOGY OF THE DECISION-MAKING PROCESS FOR THE OFFERS
On October 7, 2002, Mr. Engen, Alcan's President and Chief Executive Officer,
met Mr. Jean-Pierre Rodier, Pechiney's Chairman and Chief Executive Officer, in
Paris and discussed on an informal basis the interest each company might have in
a renewed combination transaction. The parties agreed to speak further.
On October 23, 2002, Pechiney and Corus Group plc ("Corus") announced that they
had agreed in principle on Pechiney's purchase of Corus' aluminum rolled
products and extrusions businesses. Pechiney's acquisition of this business
would have led to significant additional regulatory complications in an Alcan
combination with Pechiney.
On November 6, 2002, Messrs. Engen and Rodier met in London. Mr. Rodier stated
that Pechiney's current priority was the Corus acquisition and that,
consequently, Pechiney did not wish to continue discussions with Alcan on the
subject of a possible combination at that time.
On March 11, 2003, Corus announced that the supervisory board of Corus Nederland
NV, a subsidiary of Corus that owns Corus' aluminum businesses, had rejected the
sale of the aluminum rolled products and extrusions businesses to Pechiney.
On March 19, 2003, in light of the cancellation of the Corus acquisition,
Messrs. Engen and Rodier again met in Paris to explore the potential for an
Alcan-Pechiney combination. Mr. Rodier said that prior to entering into any
further discussions on the subject, he would bring the matter up at a meeting
with some of Pechiney's directors already scheduled for the following Saturday,
March 23, 2003.
Approximately one week after their March 19 meeting, Mr. Rodier telephoned Mr.
Engen and advised him that he believed that the time was not right for further
consideration of any combination.
Mr. Engen reported on his meetings with Mr. Rodier at the March 27, 2003 and
April 24, 2003 meetings of the Alcan board of directors.
Beginning in May 2003, members of Alcan's management, assisted by advisors,
conducted a review of the feasibility of a transaction combining Alcan and
Pechiney. Alcan's management presented the results of its analysis and views
concerning the potential for an Alcan-Pechiney business combination to Alcan's
board of directors at a meeting held on June 3, 2003. At that meeting, Alcan's
board of directors requested additional information.
On June 5, 2003, a Goldman Sachs research analyst issued a report assigning
Pechiney shares an "outperform" rating, discussing Pechiney's attractiveness to
potential acquirers, focusing on Alcan as a potentially interested party and
stating that Pechiney could merit a value of at least E34 per share to an
acquirer. At the time Pechiney shares were trading at approximately E26 per
share.
On June 17, 2003, Reuters reported that Pechiney's Chairman and Chief Executive
Officer had commented on a combination of Alcan and Pechiney at an analysts'
presentation, stating, "today it would again be a good deal" but that he had no
reason to believe that the regulatory conditions set by competition authorities
would
39
be different from those for the proposed APA transaction. At the time, Pechiney
shares were trading at approximately E29 per share.
Alcan's management made a presentation regarding a potential Alcan-Pechiney
transaction to Alcan's board of directors on June 26, 2003 at a
regularly-scheduled board meeting, to which Alcan's financial and legal advisors
were invited. This presentation reviewed the strategic rationale of the
transaction, initial findings from internal and external due diligence reviews,
and summaries of confidential discussions with the European Commission's Merger
Task Force.
Also on June 26, a Prudential Securities research analyst issued a report on
Alcan stating that the prior proposed Alcan-Pechiney merger could be as good or
better now than at the time of the proposed APA transaction.
On July 2, 2003, Alcan's board of directors held a meeting to discuss further
the potential combination and received additional input from Alcan's management.
After further review and discussion, the directors present unanimously provided
Mr. Engen with the discretion, at his election and with no obligation to act, to
determine and approve the terms of a transaction between Alcan and Pechiney
during the following 90 days, all within certain parameters discussed with the
board of directors.
On July 3, 2003, Mr. Engen's office arranged for a call with Mr. Rodier to be
scheduled for the following morning. Also on July 3, 2003, Reuters reported that
there were rumors concerning a potential tender offer for Pechiney by either
Alcan or Norsk Hydro, and Pechiney's share price rose from E32 to E33.70 on
higher than average volume.
On the morning of July 4, 2003 Mr. Engen spoke to Mr. Rodier and addressed the
developments in the trading markets for Pechiney shares, assured him that Alcan
was not, directly or indirectly, involved in any market purchases of any
Pechiney shares, and asked Mr. Rodier to meet with him that evening in Paris. At
the request of Mr. Rodier, the meeting was held at the offices of Pechiney's
attorneys.
At the July 4, 2003 meeting, Mr. Engen presented to Mr. Rodier the business case
for an Alcan-Pechiney combination, the changes in Alcan and Pechiney and the
aluminum and packaging industries since the proposed APA transaction, the
resulting change in Alcan's perspective which would now permit Alcan to commit
to certain undertakings to address competition concerns and his interest in
establishing the global headquarters of the combined packaging business in Paris
and in exploring the business logic relating to the possibility of establishing
the global headquarters of its aerospace and engineered products business in
Paris. Mr. Engen also discussed the protection Alcan would afford to Pechiney's
French industrial employees, establishing in France the research and development
headquarters for a new cell technology center, and his commitment to a
merit-based program to evaluate the management candidates in a combined company.
Mr. Engen emphasized the need to come to agreement before July 7, 2003, given
market speculation and recent movement in Pechiney's share price, his concern
with respect to the legal requirements and other pressures to disclose and
Alcan's need to protect its interests.
Mr. Rodier advised that he was not in a position to formally respond to Mr.
Engen but went over some of the difficulties Pechiney had endured as a result of
not being able to complete the proposed APA transaction. Mr. Rodier advised Mr.
Engen that Pechiney would have a negative reaction with respect to any
transaction that was subject to a competition regulatory approval condition.
Mr. Engen then presented for discussion the terms of a potential offer he was
considering on behalf of Alcan. That proposal was substantially the same as the
offers described in the initial offer documents filed by Alcan. Mr. Rodier
indicated that it would be necessary to consider the duties to Pechiney
shareholders, employees and customers to determine whether the proposal was the
best deal for Pechiney and its stakeholders. He requested several weeks to
consider the proposal. Mr. Engen raised the issues around Alcan's impending
disclosure requirement and asked if they could continue their discussions the
next day. Mr. Rodier agreed to meet him Saturday afternoon.
On July 5, 2003, Mr. Engen met with Mr. Rodier at the offices of Publicis,
Alcan's communications firm, in Paris. Mr. Engen explained his understanding of
the timeframe related to the European Commission
40
regulatory process, the timeframe associated with a public tender offer process
and the process and timing for review of a public tender offer for Pechiney by
Pechiney's management and board of directors. Mr. Engen and Mr. Rodier together
discussed the timeline for a potential Alcan offer. Mr. Engen again expressed
his concerns regarding the potential need to disclose the Alcan-Pechiney
discussions given market speculation and other factors. Mr. Engen also expressed
the need promptly to commence the competition regulatory review in order to
clarify the undertakings required and permit the resolution of Alcan's and
Pechiney's concerns in light of each company's difficult experiences during the
proposed APA transaction.
Mr. Rodier discussed the potential difficulties of the competition review
process. When asked by Mr. Engen, he indicated that informal discussions among
Pechiney's directors had begun. Mr. Rodier further indicated that the three key
criteria in assessing the merits of any offer would be price, the views of
Pechiney's key managers with respect to potential acquirers of Pechiney and
competition and antitrust issues.
After further discussion, Mr. Engen advised Mr. Rodier that Alcan might issue a
press release as early as Monday morning Paris time, on July 7, 2003, but was
clear that no final decision had yet been made.
On July 6, 2003, Mr. Engen discussed with members of the Alcan Executive
Committee his views with respect to the terms and conditions of the offers and
his decision to proceed with an announcement and filing of the offers on July 7,
2003.
On July 7, 2003, Alcan filed its offers documents with the CMF, the COB and the
SEC.
On July 7, 2003, Pechiney issued a press release indicating that it believed
that Alcan's conditional offers have negative implications for the company, its
employees and its shareholders and that the price offered to Pechiney's
shareholders by Alcan did not reflect Pechiney's strategic value.
On July 9, 2003, Pechiney issued a press release confirming Pechiney's rejection
of the Alcan offers at a Pechiney's board of directors meeting held on July 8,
2003.
Also on July 9, 2003, Mr. Engen, in response to a reporter's question, advised
that he was willing to meet again with Mr. Rodier.
On July 16, 2003, the CMF declared Alcan's offer acceptable (recevable).
On July 23, 2003, Pechiney issued preliminary results for the second quarter of
2003 and announced that it would commence a "road show" to address Alcan's
offers. Beginning in late July 2003, Mr. Rodier and his investment bankers began
road show meetings with investors in Paris, London, New York and Boston.
On July 29, 2003, Pechiney published full second quarter results and reiterated
its opposition to Alcan's offers.
On August 12, 2003, Mr. Engen called Mr. Rodier to discuss the possibility of a
meeting to share views on whether an agreement could be reached on the terms of
revised offers that could be recommended by Pechiney's board of directors. A
meeting was scheduled for August 20, 2003 in Geneva.
On August 18, 2003, Alcan announced that on August 14, 2003 it had notified the
European Commission of the transaction and that on August 18, 2003 it had
offered to the European Commission commitments to address potential competition
concerns in relation to the European markets for certain flat-rolled products,
aluminum aerosol cans and aluminum cartridges. As a result of this notification
and these commitments, the European Commission's initial competition review
period, or "Phase I" review, ended on September 29, 2003.
On August 20, 2003, Mr. Engen and Brian Sturgell, Executive Vice President of
Alcan, met in Geneva with Mr. Rodier and a Pechiney lawyer. During the
discussion, Mr. Engen and Mr. Rodier went over the issues and challenges with
respect to the European competition approval process. Mr. Rodier advised that
the critical issue to Pechiney in respect of the Alcan offers was price. He
outlined arguments supporting a substantially higher price for Pechiney. Mr.
Engen discussed the factors relevant to the price Alcan was willing to pay and
advised that, while Pechiney's board of directors' support may reduce regulatory
uncertainties, a price above E50, in the range Mr. Rodier suggested, exceeded
Alcan's view of fair value. In response to a question from Mr. Engen, Mr. Rodier
suggested that Pechiney could provide certain non-confidential information on
recent
41
developments that were relevant to Pechiney's value and Mr. Engen and Mr. Rodier
arranged for their investment bankers to meet.
On August 21, 2003, Alcan's investment bankers from Lazard and Morgan Stanley
met in Paris with Pechiney's investment bankers from BNP Paribas, Goldman Sachs,
JP Morgan and Rothschild. Pechiney's investment bankers repeated Pechiney's
valuation arguments and described the accounting impact on Pechiney of recently
announced transactions. In response to inquiries on Pechiney's position on
social and employment issues, Pechiney's investment bankers suggested that Alcan
would need to address these issues with Mr. Rodier.
Over the next several days, Alcan's and Pechiney's investment bankers discussed
potential modifications to Alcan's offers that may have allowed the Pechiney
board of directors to recommend the offers.
On Thursday, August 28, 2003, Alcan's investment bankers again met with
Pechiney's investment bankers to provide details on potential modifications of
the financial terms of the offers. These modifications would have revised the
offers to be pure mixed offers (cash and shares) which would have been valued at
a maximum of E47 per share. Alcan would also have been able to elect at its
discretion to pay cash in lieu of all or any part of the Alcan share
consideration. Alcan's investment bankers confirmed that Alcan's commitments on
social and employment issues would remain as in the July 7, 2003 offers.
Later that day, Pechiney's investment bankers met with Alcan's investment
bankers and communicated to them that Pechiney believed the proposed offers were
insufficient.
On Friday, August 29, 2003, Pechiney and Pechiney's investment bankers made
additional calls to Alcan's investment bankers to clarify their response and to
continue discussions. On Friday evening, Alcan's investment bankers called
Pechiney's investment bankers to indicate that discussions on revised terms
would only continue once Alcan was satisfied that a revised proposal would be
duly and promptly considered by the Pechiney board of directors. Alcan's
investment bankers also indicated that if Pechiney's investment bankers
responded that evening, they believed a transaction could be finalized over that
weekend as long as the Pechiney board of directors recognized that Alcan did not
have much further leeway in terms of an increase in value.
Also on August 29, 2003, Alcan filed its Hart-Scott-Rodino notification form,
triggering a 30-day waiting period under the U.S. antitrust laws, which ended on
September 29, 2003.
Early in the evening on August 30, 2003, Mr. Rodier called Mr. Engen to state
that he had tentatively arranged a Pechiney's board of directors meeting for
Sunday, August 31, 2003, to review Alcan's proposal. Mr. Rodier said that in
view of Alcan's proposal, he had asked his investment bankers to review the
terms of the offers with Alcan's investment bankers and that he would like to
meet with Mr. Engen later that evening to discuss the proposal as well as social
and employment issues.
Alcan's investment bankers and Pechiney's investment bankers then met at the
offices of Alcan's legal advisors to discuss various aspects of the proposal,
including price. Following this meeting, Mr. Rodier and Mr. Engen then met and
discussed the proposal, additional social and employment commitments that Mr.
Rodier desired Alcan to make and the possibility of an additional payment if 95%
of the Pechiney shares were tendered. Mr. Rodier also indicated to Mr. Engen
that he could not assure him that the Pechiney board of directors would accept
the financial terms of Alcan's revised proposal. Mr. Rodier and Mr. Engen were
then joined by Mr. David McAusland, Alcan's Senior Vice President, Mergers and
Acquisitions, and Chief Legal Officer and representatives from the parties'
investment bankers who were briefed on the status of discussions, following
which they discussed the process necessary to present a proposal to the Pechiney
board of directors.
On the morning of August 31, 2003, the parties' investment bankers and legal
advisors again met in the offices of Alcan's legal advisors to discuss the
structure and related terms of Alcan's proposal. Mr. Engen and Mr. Rodier met
later that day and Mr. Engen clarified additional commitments that Alcan would
be prepared to make in connection with an agreed proposal.
Following this meeting, at Pechiney's request, Alcan submitted a confidential
written proposal. This proposal was contingent on the Pechiney board of
directors' acceptance at a meeting scheduled for that day. The
42
financial terms of the proposal were as outlined above, including that an
additional euro of consideration would be payable if 95% of Pechiney's shares
were tendered. The proposal also addressed certain social and employment issues.
It was arranged for Mr. Engen to meet with certain members of the Pechiney board
of directors to introduce himself and to present his views on the industrial
logic and reasons for the offers. Later that evening, Pechiney's investment
bankers requested a signed copy of Alcan's proposal which was delivered prior to
the Pechiney board of directors meeting.
Mr. Engen and Alcan's advisors were informed late that night that the Pechiney
board of directors had rejected Alcan's proposal and that Pechiney intended to
make Alcan's proposal and its decision public the following day.
On September 1, 2003, Pechiney issued a press release stating that while Alcan's
proposal constituted an improvement, it still fell short of Pechiney's true
strategic value. The press release also stated that the Pechiney board of
directors noted that, under the proposal, Alcan's offers would remain
conditional on the European Commission approval being received in Phase I. On
the same day, Alcan issued a press release noting that because its proposal had
not been accepted by the Pechiney board of directors, the proposal had lapsed
and discussions with Pechiney had ended.
On September 4, 2003, Mr. Rodier contacted Mr. Engen's office seeking to reopen
discussions.
On September 5, 2003, Alcan's investment bankers informed Pechiney's investment
bankers that under the current circumstances they believed meetings between the
CEOs would not be productive.
Also on September 5, 2003, the French Ministry of Economy, Finance and Industry
announced that Alcan had informed the Ministry of certain commitments it was
prepared to make if Alcan acquired Pechiney and that the Ministry had given its
approval for the transaction. These commitments addressed defense contracts and
related undertakings, the future of existing Pechiney industrial facilities in
France as well as the location in France of headquarters for several business
areas.
On September 8, 2003, Pechiney's investment bankers asked for a meeting and
presented a revised version of the terms included in Alcan's August 31 proposal
without specifying a price. Also on September 8, 2003, Pechiney's investment
bankers indicated that Mr. Rodier and an additional Pechiney board of directors'
member would like to meet with Mr. Engen to present a Pechiney proposal. On
September 9, 2003, Mr. Engen agreed to this meeting.
On September 11, 2003, Mr. Rodier and Mr. H. Onno Ruding, Vice Chairman and
Director of Citibank and a director of Pechiney, met with Mr. Engen and Mr.
McAusland, in Zurich to discuss potential changes to the terms of Alcan's offers
that could be proposed to Pechiney's board of directors. These discussions were
followed by meetings in Paris among Alcan's management, and the parties'
financial and legal advisors on September 11-12, 2003. On September 12, 2003,
Mr. Engen and Mr. Rodier exchanged a letter attaching the terms of revised
offers, which were approved by the Pechiney board of directors that day. The
revised terms of the offers comprised the following:
Pechiney Ordinary Shares/Bonus Allocation Rights (10):
- Pure Offre Publique Mixte -- no subsidiary cash or share offers.
- Cash -- E24.60 per Pechiney share, subject to increase as described
below.
- Alcan shares -- E22.90 in Alcan shares per Pechiney share; each Alcan
share would be valued at the greater of (x) E27.40 or (y) the
volume-weighed average of the Alcan stock price on the New York Stock
Exchange for 10 trading days chosen at random from the 30 trading days
ending 5 days prior to cloture (with each day's price expressed in
euros based upon E/$ exchange rate on the same 10 trading days);
- On the date that the value of the Alcan shares for purposes of the offers
is set and publicly announced, i.e., 5 trading days prior to close of the
offer period, Alcan may, at its discretion and subject to the consent of
the sponsoring banks to the offers, choose to replace any portion of the
Alcan share
43
consideration component with cash in an amount equal to the value of the
Alcan shares so replaced determined on the same basis.
Pechiney OCEANEs:
- Cash -- E83.40 per Pechiney OCEANE, subject to increase as described
below.
Increase in Offer Price:
- If the offers are successful and more than 95% of Pechiney's share
capital and voting rights on a fully diluted basis are tendered in the
offers (including any reopened offers pursuant to Article 5-2-3-1 of the
CMF Regulation), Alcan will provide all Pechiney shareholders that have
tendered their shares with an additional E1 in cash per tendered share.
In this event, Alcan will provide each holder of Pechiney OCEANE
tendering OCEANEs an additional E0.40 per tendered OCEANE.
The letter agreement also addressed:
- Pechiney's support and assistance in receiving governmental approval and
consents;
- Composition of Alcan's board of directors following the offers;
- Undertakings regarding Pechiney's industrial workforce in France and a
transitional period for maintaining Pechiney's senior management and head
office operation;
- Undertakings regarding the location of certain business unit headquarters
in France;
- A process for the fair consideration of Pechiney senior management for
ongoing employment positions within the combined entity; and
- Terms for providing holders of Pechiney stock options with an appropriate
means to benefit from the offers.
On September 15, 2003, Alcan and the presenting banks for the French offer filed
the offer documents for Alcan's revised offer with the CMF, and on September 16,
2003, Alcan filed revised offer documents with the SEC.
On September 29, 2003, Alcan clarified its revised offer with the CMF so that
the Offered Exchange Ratio, as defined under "The Offers -- Terms of the Offers"
on page 54, is in all cases at least equal to 0.6001 of an Alcan Common Share
(disregarding Alcan's option to substitute cash for Alcan Common Shares). The
revised offer was declared acceptable (recevable) by the CMF on the same day.
On October 10, 2003 Pechiney filed a draft of its Response Document (note en
reponse) with the COB and on October 13, 2003 issued a press release detailing
the formal recommendation, or avis motive, of its board of directors following
the meeting of Pechiney's board of directors on October 8, 2003. In its avis
motive, the Pechiney board of directors took note of:
- the industrial and financial proposal included in Alcan's plans; and
- the undertakings that were made on October 8, 2003 by the representatives
of Alcan to the Pechiney Group Workers Committee, in its meeting held on
that date pursuant to the requirements of the French Labor Code. At this
session, Mr. Engen confirmed Alcan's commitment not to make any material
changes to the Pechiney group's existing industrial workforce in France
and that such commitment would be effective for a reasonable period of
time, and that it would take adverse changes in the financial performance
of certain businesses or in the economic environment to terminate this
commitment.
The Pechiney board of directors resolved that the revised offer constitutes the
best value available to the shareholders of Pechiney and resolved by a majority
of 9 votes out of 12 votes present or represented to recommend to holders of
Pechiney securities that they tender their Pechiney securities in the offers.
The three directors of Pechiney who were elected by Pechiney's employees
abstained from voting. The Pechiney board of directors further resolved that the
Pechiney Common Shares held in treasury by Pechiney, to the extent that Pechiney
may freely dispose of such Pechiney Common Shares, would be tendered in the
offers, and
44
noted that Pechiney Common Shares held by direct or indirect subsidiaries of
Pechiney could also be tendered in the offers if such subsidiaries so decide.
Finally, the directors of Pechiney, other than the directors elected by
Pechiney's employees, resolved to tender their own Pechiney Common Shares in the
offers. The directors of Pechiney elected by Pechiney's employees stated that
they were reserving their positions with respect to the tender of their Pechiney
Common Shares in the offers.
FINANCIAL ANALYSIS OF THE OFFERS
Under French law and regulations applicable to the French offer, the French
information memorandum relating to the French offer must include a description
of the financial terms of the offers using a multi-criteria analysis. Morgan
Stanley & Co. International Ltd. and Lazard Freres Banque, as presenting banks
for the French offer, prepared such analysis. Since this analysis has been made
available to those Pechiney securityholders eligible to participate in the
French offer in the French information memorandum, a translation of the analysis
is included in this prospectus. The analysis was performed solely to comply with
French regulations in connection with the preparation of the information
memorandum for the French offer and was not prepared with a view towards
disclosure in other jurisdictions. This analysis was not relied on in any way by
Alcan in its discussions with Pechiney or in connection with establishing the
consideration offered in this offer. In addition, this analysis does not
constitute an opinion of Morgan Stanley or Lazard Freres regarding the fairness
of the consideration offered in this offer from a financial point of view or
otherwise and is not intended to and does not constitute a recommendation to any
Pechiney securityholders with respect to the offers. Moreover, neither Morgan
Stanley nor Lazard Freres has made any independent valuation or appraisal of the
assets or liabilities of Alcan or Pechiney, nor has Morgan Stanley or Lazard
Freres been furnished with any such appraisals.
The following is a translation from French of the original disclosure regarding
the analysis of the offers set forth in the information memorandum for the
French offer.
In this analysis, the term "Offer" means the offer to exchange Alcan Common
Shares and cash for Pechiney Common Shares.
ASSESSMENT OF THE OFFER PRICE FOR PECHINEY SHARES
The consideration proposed in the Offer has been assessed through a
multicriteria analysis based on customary valuation methods.
The principal sources of information and assumptions retained for the purpose of
this valuation are presented. Morgan Stanley and Lazard Freres relied upon the
accuracy and completeness of the information obtained from the sources referred
to in this analysis and did not assume any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of Alcan or Pechiney or concerning the solvency
of or issues relating to solvency concerning Alcan or Pechiney.
I.1.1 PRELIMINARY INFORMATION
I.1.1.1 VALUATION OF THE OFFER
Pechiney securityholders will receive for each Pechiney Common Share tendered in
the Offer:
- E24.6 in cash; and
- the number of Alcan Common Shares equal to 22.9 divided by the "Reference
Value" as defined under "-- Terms of the Offers."
Based on the last 30 trading days preceding September 11, 2003, Alcan Common
Share price, translated into euros, has consistently been above E29.50 and below
E33.50. Consequently, the Average Value as at September 11, 2003 is necessarily
between E27.40 and E38.16 and the value of the Offer, based on this Average
Value, is E47.50.
45
If, following the conclusion of the Offer (including any subsequent offering
period), Alcan owns more than 95% of Pechiney's capital and voting rights, Alcan
will provide additional consideration equal to E1 for each Pechiney Common Share
effectively tendered into the Offer.
Consequently, the terms of the Offer will be assessed based on a value of E47.5
or a value of E48.5 for each Pechiney Common Share.
I.1.1.2 KEY FINANCIAL METRICS
The financial metrics used to assess the terms and conditions of the offer are
derived from the consolidated financial statements of Pechiney for the year
2002, prepared based on generally accepted French accounting principles ("French
GAAP").
Net book value per share as of December 31, 2002 is calculated using the total
number of shares outstanding at the end of this period. This number of shares
equals 77,796,745 (Pechiney Common Shares and Pechiney Preferred Shares "B"
excluding treasury stock).
I.1.2 ASSESSMENT OF THE OFFER
Valuation methods based on prospective performance of Pechiney have not been
employed as Alcan has not had access to provisional information prepared by
Pechiney and has not discussed the prospects of Pechiney with Pechiney's
management.
Pechiney's capital stock is liquid and is listed in Paris and New York, and is
followed by several brokers. Pechiney regularly discloses information on its
financial results, its managerial perspectives and its operational performance
(in particular that related to its technology). It may be assumed that these
elements are reflected in the brokers' reports published with respect to
Pechiney and that the Pechiney Common Share price is a relevant reference.
The terms and conditions of the Offer may be assessed based on the following
criteria.
I.1.2.1 MARKET VALUES
The table below indicates the implicit premiums of the Offer based on (i) the
last quoted share price for Pechiney before the announcement of the revised
offer, i.e., September 11, 2003, (ii) the last quoted share price for Pechiney
before the filing of the initial offer, i.e., July 4, 2003, (iii) the day prior
to Pechiney's share price becoming affected by the July 3, 2003 rumors, i.e.,
July 2, 2003, and (iv) historical share price averages calculated as of July 2,
2003. The implicit premiums of the Offer were calculated using the price of
E47.5 and E48.5 per share value.
PREMIUM PREMIUM
(BASED (BASED
PECHINEY ON ON
(EUROS/SHARE) E47.5) E48.5)
------------- ------- -------
Last quoted price before announcement of revised offer
(September 11, 2003)...................................... 46.3 2.7% 4.8%
Last quoted price before filing of initial offer (July 4,
2003)..................................................... 34.0 39.6% 42.6%
Last quoted price before rumors (July 2, 2003).............. 32.0 48.4% 51.6%
5-day average(1)............................................ 31.1 52.7% 55.9%
1-month average(1).......................................... 29.6 60.5% 63.9%
3-month average(1).......................................... 26.8 77.3% 81.1%
6-month average(1).......................................... 26.4 80.1% 83.9%
12-month average(1)......................................... 30.7 54.6% 57.8%
---------------
Source: Datastream.
(1) Through July 2, 2003.
46
I.1.2.2 BOOK VALUE PER SHARE
The prices of E47.5 and E48.5 per Pechiney Common Share corresponds to premiums
of 22.6% and 25.2%, respectively, on Pechiney's book value per share before
dividends at December 31, 2002. Based on Pechiney's book value after dividends,
the prices of E47.5 and E48.5 per Pechiney Common Share correspond to premiums
of 25.9% and 28.6%, respectively.
I.1.2.3 ANALYSIS OF COMPARABLE COMPANIES
The companies in the aluminum industry are customarily valued on the basis of
their EBITDA (defined as the enterprise value divided by earnings before
interest, taxes, depreciation and amortization). The enterprise value is the sum
of the equity market value, plus financial debt, plus minority interests and
minus cash and cash equivalents (on the basis of consolidated annual accounts at
December 31, 2002).
The Offer's implicit EBITDA multiple may be compared to that of Alcan and Alcoa,
two key listed players in the aluminum sector. Their multiples are presented in
the table below:
MARKET
SHARE PRICE AS OF EQUITY ENTERPRISE 2002 2002 EBITDA 2002 EBITDA
JULY 2, 2003(1) VALUE(2) VALUE(3) REVENUES(4) MARGIN MULTIPLE
(E) (E BILLION) (E BILLION) (E BILLION) (%) (X)
----------------- ------------ ---------------- ------------- ----------- -----------
Alcoa................ 22.2 18.8 26.9 21.4 13.1% 11.7x
Alcan................ 27.4 9.0 12.3 13.2 14.3% 7.9x
Pechiney............. 32.0 2.5 4.1 11.9 6.4%(5) 5.4x
OFFER PRICE IMPLICIT
MULTIPLE (AT
E47.5%)............ 47.5 3.7 5.3 7.0X
OFFER PRICE IMPLICIT
MULTIPLE (AT
E48.5)............. 48.5 3.8 5.4 7.1X
---------------
Sources: Consolidated financial statements, Datastream.
Notes:
(1) Last trading day before rumors.
(2) Including preferred shares.
(3) Enterprise value calculated in U.S. dollars for Alcoa and Alcan, converted
in euros (using the July 2, 2003 exchange rate of E1.00 = U.S. $1.15).
(4) Converted into euro on the basis of an average U.S. $/E exchange rate for
2002 for Alcoa and Alcan of E1.00 = U.S. $0.95.
(5) The EBITDA margin, excluding trading activities, is estimated at 9.9%.
The following items should be taken into account:
- Alcoa is the worldwide leader for aluminum in most key market segments.
Its revenues for 2002 amounted to E21.4 billion vs. E11.9 billion for
Pechiney (and E6.9 billion excluding trading activities). The
profitability of Alcoa, defined as the EBITDA margin, amounted to 13.1%
in 2002, compared to 6.4% for Pechiney. This information is derived from
Alcoa's Annual Reports on Form 10-K for the years ended December 31, 2002
and December 31, 2001.
- Alcan is more comparable to Pechiney in terms of size (E13.2 billion in
revenues for 2002). Alcan's profitability of 14.3% differs materially
from that of Pechiney (6.4%), and Alcan's EBITDA growth of 20% over
2000-2002 differs materially compared to a decrease of EBITDA by 21% for
Pechiney over the same period.
47
- Over the last three years, Pechiney has traded at a discount to the
multiples of Alcoa and Alcan. An analysis performed on a quarterly basis
indicates that the EBITDA multiple of Pechiney was on average 30% below
the average multiple of Alcan and Alcoa over the same period.
Based on the reference unaffected share price of Pechiney on July 2, 2003 and of
the accounts as of December 31, 2002, the company was trading at a multiple of
5.4x EBITDA for 2002. The Offer prices of E47.5 and E48.5 per Pechiney share
correspond to implicit EBITDA multiples for 2002 of 7.0x, i.e., 29.4% above, and
of 7.1x, i.e., 31.3% above, respectively. Based on a price of E47.5, it
represents a discount of 11.6% and 40.1% on the respective multiples of Alcan
and Alcoa. Based on a price of E48.5, it represents a discount of 10.3% and
39.2% on the respective multiples of Alcan and Alcoa.
I.1.2.4 ANALYSIS OF PRECEDENT TRANSACTIONS
This analysis consists of comparing the implicit EBITDA multiples of the Offer,
i.e., 7.0x for a price of E47.5 or 7.1x for a price of E48.5, with the multiples
observed on a selection of transactions that took place in the sector since
1998.
It must be noted that an analysis of such multiples offered in transactions
should take into account the cycle of the aluminum industry at any given time,
the key markets in which Pechiney participates and the market conditions
prevailing at the time of such transactions. Each transaction is, by definition,
specific and the prices offered for each transaction take into account the
dynamics of each transaction, the expected synergies and the pre-transaction
level of valuation of each company at the time of the transactions.
Subject to these conditions, the results of the analysis of precedent
transactions are summarized in the table below:
MULTIPLE OF IMPLICIT IMPLICIT
TRAILING FISCAL PREMIUM OF THE PREMIUM OF THE
YEAR OFFER MULTIPLE OFFER MULTIPLE
DATE TARGET ACQUIRER EBITDA MULTIPLE (AT E47.5) (AT E48.5)
---- -------- ----------- --------------- -------------- --------------
August 2002.......... Sapa Elkem 5.4x
January 2002......... VAW Norsk Hydro 5.5x
-------------------------------------------------------------------------------------------------
February 2000........ Comalco Rio Tinto 8.2x
August 1999.......... algroup Alcan 9.5x
August 1999.......... Reynolds Alcoa 8.9x
March 1998........... Alumax Alcoa 8.5x
-------------------------------------------------------------------------------------------------
2002 TRANSACTIONS
AVERAGE............ 5.5X 28.3% 30.1%
1998-2000
TRANSACTIONS
AVERAGE............ 8.7X (19.6)% (18.4)%
HIGHEST.............. 9.5X (26.3)% (25.3)%
LOWEST............... 5.4X 30.4% 32.4%
---------------
Sources: Consolidated financial statements, offer documents, press releases and
Datastream.
The Offer's implicit multiples correspond to premiums of 30.4% and 32.4%
compared to the transaction with the lowest multiple (VAW/Norsk Hydro, August
2002) and discounts of 26.3% and 25.3% compared to the transaction with the
highest multiple (algroup/Alcan, August 1999). The implicit multiples of the
Offer represent discounts of 19.6% and 18.4% compared with the average multiple
for 1998-2000 transactions but represent premiums of 28.3% and 30.1% compared
with the average multiple for most recent transactions that took place in 2002.
48
In addition to the precedent transactions multiples analysis, the table below
summarizes the premiums to market prices observed at the time of such
transactions. These premiums are based on the average prices for the month
preceding the announcement of each transaction.
PREMIUM TO
1-MONTH
DATE TARGET ACQUIROR SHARE PRICE AVERAGE
---- -------- ----------- -------------------
August 2002................................ Sapa Elkem 1.7%
January 2002............................... VAW Norsk Hydro NA(1)
February 2000.............................. Comalco Rio Tinto 21.7%
August 1999................................ algroup Alcan 10.3%
August 1999................................ Reynolds Alcoa 21.7%
March 1998................................. Alumax Alcoa 37.9%
AVERAGE.................................... 18.7%
---------------
Sources: offer documents, press releases and Datastream.
(1) Not available.
The average premium observed in the selection above is 18.7% and may be compared
to the implicit premiums of the Offer for Pechiney Common Shares (60.5% with a
price of E47.5, i.e., 3.2 times higher, and 63.9% with a price of E48.5, i.e.,
3.4 times higher) based upon a 1-month share price average ending on July 2,
2003.
I.1.2.5 SUMMARY ASSESSMENT OF THE OFFER
CRITERION PREMIUM (AT E47.5) PREMIUM (AT E48.5)
--------- ------------------ ------------------
SHARE PRICE
Last quoted share price before announcement of
revised offer (September 11, 2003)............. 2.7% 4.8%
Last quoted share price before filing of initial
offer (July 4, 2003)........................... 39.6% 42.6%
Last quoted price before rumors (July 2, 2003)... 48.4% 51.6%
5-day average(1)................................. 52.7% 55.9%
1-month average(1)............................... 60.5% 63.9%
3-month average(1)............................... 77.3% 81.1%
6-month average(1)............................... 80.1% 83.9%
12-month average(1).............................. 54.6% 57.8%
COMPARABLE COMPANIES ANALYSIS
Implicit 2002 EBITDA(2) multiple................. (40.1)%/(11.6)% (39.2)%/(10.3)%
PRECEDENT TRANSACTIONS ANALYSIS
Implicit EBITDA(2)(3) multiple................... (26.3)%/30.4% (25.3)%/32.4%
NET BOOK VALUE OF ASSETS
Fiscal year 2002 (before dividends).............. 22.6% 25.2%
Fiscal year 2002 (after dividends)............... 25.9% 28.6%
---------------
(1) Through July 2, 2003.
(2) EBITDA as of last annual consolidated financial statements before
transaction.
(3) EBITDA for the last fiscal year before the transaction.
I.1.3. ASSESSMENT OF THE OFFER FOR PECHINEY BONUS ALLOCATION RIGHTS
Pechiney's extraordinary shareholder meeting held on April 3, 2003 adopted a
draft resolution preparing the way for the conversion of the 1,091,040 Pechiney
Preferred Shares "B" into Pechiney Common Shares. The
49
special assembly of Pechiney Preferred Shares "B" shareholders, meeting on May
27, 2003, approved the following resolution: "The special assembly of Pechiney
Preferred Shares "B" shareholders, considering the applicable law and the
project resolution submitted to the mixed shareholder assembly, approves of the
conversion of 1,091,040 Pechiney Preferred Shares "B" into Pechiney Common
Shares on the basis of 11 Pechiney Common Shares, with full rights attached as
of January 1st, 2003, for every 10 Pechiney Preferred Shares "B"."
Each Pechiney Preferred Share "B" has therefore been automatically converted
into one Pechiney Common Share and the right to a 0.10 additional Pechiney
Common Shares.
The terms of the offer made for Pechiney Common Shares are identical to the
terms of the offer made for Pechiney Bonus Allocation Rights, with a 10 to 1
ratio (as each Pechiney Bonus Allocation Right leads to the attribution of 0.10
Pechiney Common Shares, 10 Pechiney Bonus Allocation Rights being required to
acquire one Pechiney Common Share). Consequently, the assessment of the offer
for Pechiney Bonus Allocation Rights is identical to the assessment of the offer
for Pechiney Common Shares.
ASSESSMENT OF THE OFFER PRICE FOR PECHINEY OCEANES
II.1.1 PECHINEY OCEANE MAIN CHARACTERISTICS
On April 11, 2002, Pechiney issued a bond, due 2007 (maturity on January 1,
2007), convertible into new Pechiney Common Shares and/or exchangeable for
existing Pechiney Common Shares, represented by 7,908,636 bonds of E75.25
nominal value each and bearing interest at a rate of 1.25% per annum (i.e.,
E0.94 coupon payable in arrears on January 1st of each year). Bonds are
redeemable at a price of E82.81 per bond on the maturity date.
The Pechiney OCEANE gross yield to maturity stands at 3.25% as at the issue date
unless previously converted, exchanged, or redeemed.
Each Pechiney OCEANE could initially be converted or exchanged into one Pechiney
Common Share. Since the conversion of Pechiney Preferred Shares "B" into
Pechiney Common Shares (i.e., class A) was approved on May 27, 2003, each
Pechiney OCEANE can be converted or exchanged into 1.001 Pechiney Common Shares
for each bond, as defined in the section "maintenance of bondholders' rights" of
the Pechiney OCEANEs prospectus referred to in the next paragraph. The
conversion option can be exercised at any time from May 21, 2002. In addition,
Pechiney also has the option to redeem the bonds prior to maturity:
- In whole or in part, by way of tender offer or buy-back on Euronext Paris or
otherwise;
- For the outstanding bonds, in whole but not in part, at any time on or after
January 1, 2005 until the 7th working day prior to the redemption date (i.e.,
December 20, 2006) at a price representing for the holders a yield to maturity
identical to that applicable in the case of redemption on the maturity date
(i.e., 3.25%) if the arithmetic mean of the closing prices for the shares on
the Premier Marche of Euronext Paris during 20 consecutive trading days chosen
by Pechiney during the 40 trading days immediately preceding the date of
publication of the notice calling the bonds for redemption, multiplied by the
number of shares then issuable upon conversion or deliverable upon exchange of
one bond is greater than 130% of the early redemption price defined above;
- for the outstanding bonds, in whole but not in part at the redemption price
defined above, if the number of outstanding bonds is less than 10% of the
number of bonds originally issued.
A prospectus describing the Pechiney OCEANEs was approved by the Commission des
operations de bourse on April 3, 2002 under the visa number 02-306. An
unofficial translation of the prospectus is included as Exhibit 2 to Pechiney's
2002 20-F.
50
II.1.2 OFFER PRICE FOR THE PECHINEY OCEANES
The offer price per Pechiney OCEANE is E83.4. This price may be increased to
E83.8 if, following the conclusion of the Offer (including any subsequent
offering period), Alcan owns more than 95% of Pechiney's capital and voting
rights. This price compares to the analysis described in the following
paragraphs:
II.1.2.1 CONVERSION VALUE
The conversion value for a Pechiney OCEANE is determined by multiplying the
conversion ratio (i.e., 1.001) by the offer prices for a Pechiney Common Share
of E47.5 or E48.5. As a result, the conversion value is E47.55 or E48.55,
respectively.
The offer prices for a Pechiney OCEANE represent premiums of 75.4% and 72.6%,
respectively, over the conversion value.
II.1.2.2 TRADING PRICE
The offer price for the Pechiney OCEANES compares to the Pechiney OCEANE
historical trading prices as follows:
PREMIUM PREMIUM
PECHINEY (AT (AT
OCEANE E83.4) E83.8)
-------------- ------- -------
(EUROS/OCEANE) (%) (%)
Closing price before announcement of revised offer
(September 11, 2003)............................ 81.9 1.9% 2.3%
Closing price before filing of initial offer (July
4, 2003)........................................ 76.6 8.9% 9.4%
Closing price before rumors (July 2, 2003) 76.4 9.2% 9.7%
5-day average(1).................................. 76.4 9.1% 9.6%
1-month average(1)................................ 76.2 9.4% 10.0%
3-month average(1)................................ 74.2 12.3% 12.9%
6-month average(1)................................ 72.4 15.1% 15.7%
1-year average(1)................................. 70.5 18.3% 18.9%
---------------
Source: Bloomberg Generic Price (BGN).
(1) Through July 2, 2003.
II.1.2.3 YIELD TO MATURITY
At the offer prices for the Pechiney OCEANE (E83.40 or E83.80), the implied
yield to maturity for a bondholder as from the issue date (April 11, 2002) to
the last date before the date the revised offer was announced (September 11,
2003) stands at 8.17% and 8.53%, respectively.
The yields to maturity based on the offer prices are 2.51 and 2.62,
respectively, times greater than the one offered to a bondholder at the issue
date (i.e., 3.25%) before conversion, exchange or early redemption.
II.1.2.4 THEORETICAL VALUE
The theoretical value of the Pechiney OCEANE has been determined in relation to
the offer prices for the Pechiney Common Shares (i.e., E47.5 and E48.5).
The value of the Pechiney OCEANE presented herein has been calculated using a
valuation model based on the Cox, Ross & Rubinstein method and according to the
market conditions prevailing on July 4, 2003, the last date before the date the
initial offer was announced. The discount rates utilized are those prevailing at
closing on September 11, 2003. The following assumptions have been used:
1. Share price of Pechiney Common Share: E47.5 or E48.5.
51
2. Discount rate: 4.65% based on the interpolated euro swap curve for identical
maturities increased by a margin of 1.30%, reflecting Pechiney's credit
spread as most currently assumed by investors ("Credit Default Swaps" or
"Asset Swaps").
3. Stock borrow: 0.50% (annual cost).
4. Dividend per share: E1.00 per share (dividend paid per Pechiney Common Share
"A" with respect to the 2002 fiscal year).
5. Volatility of Pechiney Common Share: 55.8% based on the 100-day historical
share price volatility on July 4, 2003, the last date before the date the
initial offer was announced.
The computed values using the above assumptions are E83.1 and E83.5
respectively; these values have to be compared to the offer prices per Pechiney
OCEANE of E83.4 and E83.8. The implicit premium is 0.4% in both cases.
The 100-day historical share price volatility as at July 4, 2003 that has been
used for the calculation of the theoretical value of Pechiney OCEANEs equals
55.8%. This volatility was at a level higher than what it had been, on average,
over the 12 or 24 months preceding July 4, 2003 (49.4% on average for the
12-month period, 44.0% on average for 24-month period). If the Pechiney OCEANEs
had been valued using a volatility of 45.8% (10% below the volatility used), the
theoretical value would have been E81.0.
Using identical assumptions and a share price for each Pechiney Common Share of
E34.0 (closing price on July 4, 2003), the theoretical value per Pechiney OCEANE
would stand at E78.5. The offer prices of E83.4 and E83.8 imply premiums of 6.2%
and 6.8%, respectively, over the theoretical value on July 4, 2003.
Using identical assumptions and a share price for each Pechiney Common Share of
E32 (closing price on July 2, 2003), the theoretical value per Pechiney OCEANE
would stand at E78.0. The offer prices of E83.4 and E83.8 imply premiums of 6.9%
and 7.4%, respectively, over the theoretical value on July 2, 2003.
II.1.2.5 SUMMARY
PREMIUM/(DISCOUNT) PREMIUM/(DISCOUNT)
CRITERIA (AT E83.4) (AT E83.8)
-------- ------------------ ------------------
CONVERSION VALUE
Conversion value based on the tender offer
price........................................... 75.4% 72.6%
TRADING PRICE
Closing price before announcement of revised offer
(September 11, 2003)............................ 1.9% 2.3%
Closing price before filing of initial offer (July
4, 2003)........................................ 8.9% 9.4%
Closing price before rumors (July 2, 2003)........ 9.2% 9.7%
5-trading day average(1).......................... 9.1% 9.6%
1-month average(1)................................ 9.4% 10.0%
3-month average(1)................................ 12.3% 12.9%
6-month average(1)................................ 15.1% 15.7%
12-month average(1)............................... 18.3% 18.9%
THEORETICAL VALUE
Value based on a price of E47.5 and E48.5,
respectively, for the underlying share.......... 0.4% 0.4%
Value as of July 4, 2003.......................... 6.2% 6.8%
Value as of July 2, 2003.......................... 6.9% 7.4%
---------------
(1) Through July 2, 2003
52
SOURCE AND AMOUNT OF FUNDS
If all of the existing Pechiney Common Shares, Pechiney Bonus Allocation Rights,
Pechiney OCEANEs and Pechiney ADSs are tendered into the offers (including
Pechiney Common Shares issuable upon exercise of all outstanding Pechiney stock
subscription options and treasury stock held by Pechiney), we expect to pay
approximately E2.84 billion in cash (including the additional consideration that
may be paid in the offers) to holders of Pechiney securities. This amount could
be greater if Alcan exercises its option to substitute an equivalent amount of
cash in place of all or a portion of the Alcan Common Shares to be issued as
consideration in the offers. This amount will be lower if less than 100% of the
currently outstanding Pechiney securities are tendered in the offers or if
additional consideration is not required to be paid. The amount also may vary
depending upon the number of Pechiney securities outstanding at the time of the
closing of the offers. In addition, we currently expect to pay approximately $55
million to cover expenses incurred in connection with the offers, not including
expenses related to the financing of the offers' consideration. We also may be
required to refinance a yet-to-be-defined principal amount of indebtedness of
Pechiney and its subsidiaries as well as potentially certain indebtedness of
ours that we would otherwise have expected to renew shortly. In connection with
this transaction, we have entered into a bridge credit facility permitting
borrowing in the amount of up to $4 billion, which will be used to finance the
acquisition of the Pechiney securities pursuant to the offers and to refinance
certain debt of Pechiney.
Under the terms of a credit agreement that we have entered into with Morgan
Stanley Senior Funding (Nova Scotia) Co., this bank and its parent entity,
Morgan Stanley Senior Funding, Inc., have agreed to underwrite the new bridge
credit facility prior to completion of the offers, subject to certain
conditions.
The credit agreement states that the credit facility will be in the form of a $4
billion 364-day senior bridge term facility that will be used to finance the
acquisition of the Pechiney securities pursuant to the offers and to refinance
certain debt of Pechiney. The bridge term facility will be made available to us
immediately upon the point at which all of the conditions to the offers have
been satisfied and all regulatory approvals or clearances have been obtained.
Borrowings under the bridge term facility will be available in U.S. dollars and,
subject to availability in the London market, in euros. Alcan may refinance this
debt through a variety of means, including from proceeds received in connection
with the sale of assets, the issuance of equity or equity-linked securities, the
issuance of debt securities or substitute bank facilities.
The applicable margin varies for the bridge credit facility according to its
utilization and the credit rating assigned to Alcan at the relevant time, and
ranges from 0.375% per annum to 1.75% per annum. From the effective date, we
will pay a commitment fee on any undrawn and uncanceled amounts in the bridge
credit facility which varies according to the credit rating assigned to Alcan at
the relevant time, and ranges from 0.06% per annum to 0.25% per annum. Interest
on committed LIBOR-based borrowings shall accrue at the applicable margin plus
LIBOR.
Interest on borrowing described in the bridge credit facility as U.S. dollars
base rate borrowings shall accrue at the higher of Royal Bank of Canada's prime
rate for U.S. dollar loans in the U.S. and 0.5% per annum above the Federal
Funds Rate, plus a margin 1.0% lower (but not less than zero) than the margin
for LIBOR-based borrowings.
Terms and conditions usual for facilities of this type apply to the bridge
credit facility, including prepayment provisions (for example, in the event of
certain asset disposals and securities issuances), events of default provisions
(for example, in the event of the change in control of Alcan, cross-default and
bankruptcy), representations and warranties (such as in relation to corporate
existence, authorizations and financial statements), covenants (such as
information undertakings, negative pledge and financial ratio), indemnities and
provisions to protect the margin receivable by the lenders. The bridge credit
facility does not grant the lending banks a security interest.
53
TERMS OF THE OFFERS
Alcan is offering to acquire all of Pechiney's share capital and equity
securities, including:
- all issued and outstanding Pechiney Common Shares, and all Pechiney
Common Shares held as treasury stock;
- all of the outstanding Pechiney OCEANEs;
- all of the Pechiney Common Shares that are issuable prior to the
expiration of the offers upon the conversion of Pechiney OCEANEs;
- all of the outstanding Pechiney Bonus Allocation Rights;
- all of the outstanding Pechiney ADSs; and
- all Pechiney Common Shares issuable upon the exercise of Pechiney Common
Shares subscription options that are or may become exercisable prior to
the expiration of the offers.
Holders of Pechiney stock purchase options or Pechiney stock subscription
options who wish to tender into this offer must exercise their options, and the
Pechiney Common Shares must be credited to their accounts, prior to the
expiration date of the offer in order to be able to participate.
Upon the terms and subject to the conditions set forth in this prospectus and
the related letter of transmittal and forms of acceptance, we are offering to
exchange (not including the additional consideration that may be paid in these
offers):
- for each Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights
(each Pechiney Bonus Allocation Right entitling the holder to 0.1 of a
Pechiney Common Share) or each 2 Pechiney ADSs (each Pechiney ADS
representing one-half of one Pechiney Common Share) tendered:
- E24.60 in cash, and
- the number of Alcan Common Shares equal to 22.9 divided by the
"Reference Value," defined as the greater of (a) 27.4 and (b) the
"Average Value," as defined below, provided, however, that this number
of Alcan Common Shares shall in no event be less than 0.6001. As a
result, if the Average Value of the Alcan Common Shares is greater than
or equal to E38.16, the Reference Value will be 38.16 and 0.6001 Alcan
Common Shares will be issued for each Pechiney Common Share, each 10
Pechiney Bonus Allocation Rights or each 2 Pechiney ADSs tendered, as
the case may be. The Reference Value will therefore have a minimum value
of 27.4 and a maximum value of 38.16.
- for each Pechiney OCEANE tendered:
- E83.40 in cash.
Alcan reserves the option, subject to the agreement of Morgan Stanley & Co.
International Ltd. and Lazard Freres Banque, the presenting banks for the French
offer, to substitute an equivalent amount of cash in place of all or a portion
of the Alcan Common Shares to be issued as consideration in the offers, valued
at the Average Value, as defined below. Alcan will determine and announce by
press release before the open of the fifth French trading day before the
expiration of the offers the portion, if any, of the Alcan Common Shares to be
replaced with cash. In determining whether to exercise its option and, if it
exercises the option, what portion of the Alcan Common Shares to be issued would
be substituted for cash, Alcan will consider, among other factors, the resulting
impact on its credit rating and considerations relating to dilution of existing
shareholders. Under Alcan's bridge credit facility, a two-third approval of the
lending banks (calculated by commitment) is required in order for Alcan to
increase the cash component to more than E29.60 per Pechiney Common Share. If
Alcan exercises this option, each Pechiney Common Share, each 10 Pechiney Bonus
Allocation Rights or each 2 Pechiney ADSs tendered will receive the same amount
of additional cash and the same number of Alcan Common Shares. The number of
Alcan Common Shares to be issued for each Pechiney Common Share, each 10
Pechiney Bonus Allocation Rights or each two Pechiney ADSs, after determination
of the portion of the consideration paid in cash, is called the "Offered
Exchange Ratio." The
54
Offered Exchange Ratio will be rounded to the nearest four decimal places
(0.00005 being rounded to 0.0000).
The "Average Value" will be equal to the arithmetic average of the
volume-weighted average daily trading prices of Alcan Common Shares on the New
York Stock Exchange as they appear on the Bloomberg on-line information service
(code: VWAP) (expressed in U.S. dollars and translated into euros at each
applicable day's noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve Bank
of New York) for 10 U.S. trading days, chosen at random by a French judicial
officer (huissier de justice) from among the 30 U.S. trading days between (but
not including) the 36(th) and the 5(th) U.S. trading day preceding the
expiration date of the offers. The French judicial officer will choose the 10
U.S. trading days from among the pool of 30 U.S. trading days by lot, in a
process that will ensure that each of the 30 U.S. trading days has an equal
chance of being selected. Neither the French judicial officer nor the Company
will have any advance knowledge of, or control over, the 10 U.S. trading days
that are chosen.
Alcan will announce by press release the Average Value and the Offered Exchange
Ratio, together with the portion of the consideration to be paid in cash, as
described above, before the open of the fifth French trading day before the
expiration date of the offers. In addition, you may call the information agent
on or after that date toll-free at 1-800-488-8035 to find out this information.
If, following the conclusion of the offers (including any subsequent offering
period), the number of Pechiney securities tendered into the offers, as
indicated in the results of the offers published by the CMF, represents more
than 95% of the capital and voting rights of Pechiney (based on the same classes
of capital included in the numerator and the denominator of the minimum tender
condition under "-- Condition Precedent" below), Alcan will provide the
following additional consideration to the tendering Pechiney securityholders:
- E1 for each Pechiney Common Share tendered in the offers;
- E0.10 for each Pechiney Bonus Allocation Right tendered in the offers;
- E0.50 for each Pechiney ADS tendered in the offers; and
- E0.40 for each Pechiney OCEANE tendered in the offers.
Illustrations
The following descriptions and examples illustrate the calculation of the Alcan
Common Shares and cash consideration that may be offered in the offers. "Stock
Component of Consideration" means the fraction of an Alcan Common Share to be
issued as consideration in the offers for each Pechiney Common Share, each 10
Pechiney Bonus Allocation Rights or each 2 Pechiney ADSs, or, as the case may
be, the equivalent amount of cash, valued at the Average Value, to be issued in
place of such Alcan Common Shares.
In valuing Alcan Common Shares at the Average Value, the value of the offers
will be equal to E47.50 for each Pechiney Common Share, each 10 Pechiney Bonus
Allocation Rights or each 2 Pechiney ADSs tendered, as the case may be
(disregarding the additional consideration, if any, that may be paid in the
offers) if the Average Value is between E27.40 and E38.16. The value of the
offers could be lower than E47.50 if, as a result of changes in the trading
price of Alcan Common Shares or changes in the U.S. dollar/euros exchange rate,
the Average Value is lower than E27.40. The value of the offers could be greater
than E47.50 if the Average Value is greater than E38.16. For simplicity, the
following three examples assume that Alcan will not substitute cash for all or
part of the Alcan Common Shares to be issued:
- If the Average Value is E35 (11.8% higher than the euro equivalent of the
trading price of Alcan Common Shares on September 11, 2003, which was the last
trading day before these offers were announced), the Reference Value will also
be 35 and the Pechiney securityholders will receive, for each Pechiney Common
Share, each 10 Pechiney Bonus Allocation Rights or each 2 Pechiney ADSs
tendered, E24.60 in cash and a Stock Component of Consideration of 0.6543
Alcan Common Shares (22.9 divided by 35, rounded to the nearest four decimal
places). Valuing the Alcan Common Shares at the Average Value (E35), the value
of the offers will be E47.50 (disregarding the additional consideration that
may be paid).
55
- If the Average Value is E25 (20.1% lower than the euro equivalent of the
trading price of Alcan Common Shares on September 11, 2003), the Reference
Value will be 27.40 and the Pechiney securityholders will receive, for each
Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights or each 2
Pechiney ADSs tendered, E24.60 in cash and a Stock Component of Consideration
of 0.8358 Alcan Common Shares (22.9 divided by 27.40, rounded to the nearest
four decimal places, 0.00005 being rounded to 0.0000). Valuing the Alcan
Common Shares at the Average Value (E25), the value of the offers will be
E45.50 (disregarding the additional consideration that may be paid).
- If the Average Value is E45 (43.8% higher than the euro equivalent of the
trading price of Alcan Common Shares on September 11, 2003), the Reference
Value will be 38.16 and the Pechiney securityholders will receive for each
Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights or each 2
Pechiney ADSs tendered, E24.60 in cash and a Stock Component of Consideration
of 0.6001 Alcan Common Shares (22.9 divided by 38.16, rounded to the nearest
four decimal places, 0.00005 being rounded to 0.0000). Valuing the Alcan
Common Shares at the Average Value (E45), the value of the offers will be
E51.60 (disregarding the additional consideration, if any, that may be paid).
Since the value of the Stock Component of Consideration is linked to changes in
the trading price of Alcan Common Shares and the U.S. dollar/euro exchange rate,
it is likely that, on the date of settlement of the consideration, the value of
the Stock Component of Consideration will not be exactly equal to E22.90 for
each Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights, or each 2
Pechiney ADSs tendered, even if the Average Value is between E27.40 and E38.16.
Thus, the total value of the cash consideration of E24.60 and the Stock
Component of Consideration at the time of settlement of the consideration will
likely not be exactly equal to E47.50 (disregarding the additional consideration
that may be paid). The following example illustrates this situation:
- If the Average Value is E35, the Reference Value will also be 35 and the
Pechiney securityholders will receive, for each Pechiney Common Share, each 10
Pechiney Bonus Allocation Rights or each 2 Pechiney ADSs tendered, E24.60 in
cash and a Stock Component of Consideration of 0.6543 Alcan Common Shares.
Between the time when the Average Value, and thus the Stock Component of
Consideration, is determined and the date of settlement of the consideration,
the euro equivalent of the market value of Alcan Common Shares may change,
both because of the normal fluctuation of the Alcan Common Shares price on the
New York Stock Exchange and changes in the U.S. dollar/euro exchange rate. If,
on the date of settlement of the consideration, the euro equivalent of the
trading price of Alcan Common Shares is only E34 (versus E35 for the Average
Value), the effective value of the offers will be only E46.80. If, however, on
the date of settlement of the consideration, the euro equivalent of the
trading price of Alcan Common Shares is E36 (versus E35 for the Average
Value), the effective value of the offers will be E48.20. These two
illustrations do not take into account the possible additional consideration
that may be paid.
Alcan has reserved the option to substitute an equivalent amount of cash in
place of all or a portion of the Alcan Common Shares to be issued as
consideration in the offers, valued at the Average Value. Alcan will announce
before the open of the fifth French trading day before the expiration of the
offers, the portion of the consideration to be paid in cash. This option is
illustrated in the following examples (disregarding the additional consideration
that may be paid):
- If the Average Value is E35, the Reference Value will also be 35 and the
Pechiney securityholders would receive, in the absence of exercise of the
substitution option, for each Pechiney Common Share, each 10 Pechiney Bonus
Allocation Rights or each 2 Pechiney ADSs tendered, E24.60 in cash and a Stock
Component of Consideration of 0.6543 Alcan Common Shares. If, for example,
Alcan decides to substitute for a portion of the Alcan Common Shares that
would otherwise be issued an amount equal to E3 for each Pechiney Common
Share, each 10 Pechiney Bonus Allocation Rights or each 2 Pechiney ADSs
tendered, the Pechiney securityholders will receive E27.60 in cash (E24.60
plus E3), and 0.5686 Alcan Common Shares (the difference between 22.9 and 3.0,
or 19.9, divided by the Average Value of E35), instead of 0.6543 Alcan Common
Shares. In this example, the value of the offers after the cash substitution,
based on the Average Value, remains equal to E47.50.
56
- If the Average Value is E45, the Reference Value will be 38.16 and the
Pechiney securityholders would receive, in the absence of the substitution
option, for each Pechiney Common Share, each 10 Pechiney Bonus Allocation
Rights or each 2 Pechiney ADSs tendered, E24.60 in cash and a Stock Component
of Consideration of 0.6001 Alcan Common Shares on the basis of the Average
Value. If, for example, Alcan decides to substitute for a portion of the Alcan
Common Shares that would otherwise be issued an amount equal to E3 for each
Pechiney Common Share, each 10 Pechiney Bonus Allocation Rights or each 2
Pechiney ADSs tendered, the Pechiney securityholders will receive E27.60 in
cash (E24.60 plus E3) and 0.5334 Alcan Common Shares (0.6001 less the result
of dividing 3.0 by the Average Value of E45), instead of 0.6001 Alcan Common
Shares. In this example, the value of the offers after the cash substitution,
based on the Average Value, remains equal to E51.60.
The value of the offers is therefore not changed by any decision by Alcan to
substitute cash for all or a part of the Stock Component of Consideration of the
offers, regardless of the proportion of such substitution.
U.S. Offer and French Offer
For legal and regulatory reasons, Alcan is offering to acquire all of the
Pechiney securities through two separate offers:
- a U.S. offer open to all holders of Pechiney securities (other than
Pechiney ADSs) who are located in the United States and Canada and to all
holders of Pechiney ADSs, wherever located, and
- a French offer open to all holders of Pechiney securities (other than
Pechiney ADSs) who are located in France and to holders of Pechiney
securities (other than Pechiney ADSs) who are located outside of France,
Canada and the United States if, pursuant to the local laws and
regulations applicable to such holders, they are permitted to participate
in the French offer.
The French offer for Pechiney securities commenced on October 7, 2003 and the
U.S. offer will commence on October 27, 2003. The offers are being made on the
same terms and completion of the offers are subject to the same conditions. This
prospectus covers only Alcan's U.S. offer for Pechiney securities.
We have obtained from the Securities and Exchange Commission a number of
exemptions from its otherwise applicable rules and no-action relief to allow the
U.S. offer to proceed in the manner described in this prospectus. Among these
exemptions and relief are the following:
- no-action relief from the provisions of Rule 14d-10(a)(1) under the
Securities Exchange Act of 1934 to permit the U.S. offer to be conducted
concurrently with the French offer; and
- exemptive relief from the provisions of Rule 14e-5 under the Securities
Exchange Act of 1934 to permit the purchase of Pechiney securities in the
French offer during the pendency of the U.S. offer.
As stated above, the U.S. offer will begin on October 27, 2003 and end at 5
p.m., New York City time, on November 24, 2003, unless the expiration of the
French offer period is set at a later date by the CMF, the French offer period
is extended by the CMF or the offers lapse or are withdrawn prior to that time
on the basis of the conditions of the offers as described in this prospectus.
The CMF may set the initial expiration date of the French offer on a date later
than November 24, 2003, and it may extend the initial offer period of the French
offer under certain circumstances, as described under "-- Expiration Date;
Publication of Results; Subsequent Offering Period" below, in which case the
initial offer period of the U.S. offer will be likewise extended. You must
tender your Pechiney securities before the expiration of the U.S. offer to
participate.
If all of the Pechiney securities are tendered and exchanged pursuant to the
terms of the offers (assuming that Alcan does not exercise its option to
substitute cash in place of all or some of the Alcan Common Shares to be issued,
assuming that Alcan issues the maximum number of Alcan Common Shares pursuant to
the terms of the offers and assuming that Pechiney OCEANEs were not converted
into Pechiney Common Shares prior to being tendered), the current holders, other
than Pechiney and its subsidiaries, of Pechiney securities will own
approximately 17.7% of Alcan's outstanding Common Shares immediately after the
exchange and the current Alcan shareholders will own approximately 82.3% of
Alcan's outstanding Common Shares immediately after the exchange.
57
CONDITION PRECEDENT
The offers are subject to the condition precedent that valid acceptances, that
have not been withdrawn at the end of the offering period, in respect of
Pechiney securities representing a majority of the total share capital and
voting rights in Pechiney, calculated on a fully diluted basis on the closing
date of the offers, are tendered in this offer and the French offer, on a
combined basis. For the purpose of calculating whether this threshold has been
met, the numerator will include all the Pechiney securities tendered in this
offer and the French offer, on a combined basis, including all (i) Pechiney
Common Shares tendered and Pechiney ADSs tendered (each Pechiney ADS
representing one-half of one Pechiney Common Share), (ii) Pechiney Common Shares
underlying all tendered Pechiney OCEANEs (taking into account the number of
Pechiney Common Shares into which the tendered Pechiney OCEANEs could be
converted on the expiration date of the offers), and (iii) Pechiney Common
Shares underlying all tendered Pechiney Bonus Allocation Rights (each Pechiney
Bonus Allocation Right entitling the holder to 0.1 of a Pechiney Common Share).
The denominator for this calculation will be comprised of Pechiney's fully
diluted share capital, including all:
- issued and outstanding Pechiney Common Shares and treasury stock held
by Pechiney;
- Pechiney ADSs (each Pechiney ADS representing one-half of one Pechiney
Common Share); and
- Pechiney Common Shares underlying Pechiney OCEANEs, Pechiney Bonus
Allocation Rights, and all outstanding Pechiney subscription stock
options (whether or not exercisable during the offer period).
Under French law and regulations, a waiver of the minimum tender condition is
deemed an improved offer and Alcan may only file an improved offer with the CMF
on or prior to the date that is five French trading days prior to the expiration
of the offer period. If this minimum tender condition is not met, the offers
will lapse. Neither Alcan nor Pechiney securityholders will know whether the
minimum tender condition has been met until the results of the offers are
published by the CMF following the expiration of the tender offer period.
If the offers lapse because the condition precedent is not met, Alcan reserves
the right to commence a new offer, or not to commence a new offer, in its
discretion. If the offers lapse, the Pechiney securities that you tendered in
this offer will be returned to you without interest or any other payment being
due. This should occur within one or two French trading days following the
announcement of the withdrawal or lapse.
GROUNDS FOR WITHDRAWING THE OFFERS
In accordance with French law and regulations, Alcan reserves the right to
withdraw the offers:
- within five French trading days following the date of the publication by
the CMF of the offer calendar for a competing offer for Pechiney or an
improved bid by a competing bidder; or
- with the prior approval of the CMF if, prior to the publication by the
CMF of the definitive results of the offers, Pechiney adopts definitive
measures that modify Pechiney's substance ("modifiant sa consistance") or
if the offers become irrelevant ("sans objet") under French law. The
terms "modifiant sa consistance" and "sans objet" are subject to
interpretation by the CMF. Alcan believes that the term "modifiant sa
consistance" is generally understood to refer to measures taken by a
company following a launch of a tender offer for its securities, such as
the sale of material business segments, which result in a significant
change in the company's business operations. Alcan believes that the term
"sans objet" is generally understood to refer to an offer that becomes
irrelevant and loses its purpose when, for example, an offeror launches a
separate, revised offer for the target company.
In addition, as mentioned above, if the tender threshold condition is not
satisfied, the offers will lapse.
Under French law, if, during the period of these offers, another offer for
Pechiney, or an improved bid by a competing bidder, is approved by the CMF, your
tenders of Pechiney securities may be declared null and void by the CMF. In this
event, in order to tender your Pechiney securities in this offer, if it remains
outstanding, you will be required to re-tender your Pechiney securities.
58
If the offers are withdrawn or lapse, the Pechiney securities that you tendered
in this offer will be returned to you without interest or any other payment
being due. This should occur within one or two French trading days following the
announcement of the withdrawal or lapse.
EXPIRATION DATE; PUBLICATION OF RESULTS; SUBSEQUENT OFFERING PERIOD
The tender period for this offer has been established on the basis of the French
offer's tender period, which is determined by the CMF, which solely determines
whether or not to extend that offer period. Alcan may not itself extend the
offer period.
The offers will expire at 5 p.m., New York City time on November 24, 2003,
unless the expiration of the French offer period is set at a later date by the
CMF, the French offer period is extended by the CMF, or unless the offers lapse
or are withdrawn prior to that time. The CMF will only announce the official
initial expiration date of the French offer once Pechiney has published its
Response Document. The expiration date of this offer will then be aligned with
the expiration date of the French offer as established by the CMF. The CMF may
also extend the offer period for the French offer under certain circumstances,
including in the event of the initiation of a competing offer. If the CMF sets
the initial expiration date of the French offer on a date later than November
24, 2003, or if the CMF extends the initial French offer period, Alcan will, on
the same day, issue a press release publicizing the CMF's decision and
announcing a corresponding extension of the U.S. offer, including the expiry
date and time of the extended offer period and informing Pechiney
securityholders that they may tender or withdraw tendered Pechiney securities
during the extended offer period. We expect the definitive results of the offers
to be published by the CMF not more than nine French trading days following the
expiration date of the offer period; however, upon its determination that the
minimum tender condition for the offers has been met, the CMF will publish
provisional results prior to its publication of the definitive results. The
CMF's publication of the definitive results of the offers will disclose the
total number of each type of Pechiney security tendered, as well as the
percentage of total capital and voting rights represented by those tendered
securities. The CMF may then permit Alcan to open a subsequent offer period
under certain circumstances related to, among other things, the success of the
offers, as described further in the next paragraph. Any such subsequent offer
period would be open to U.S. holders of Pechiney securities. Alcan will issue a
press release publicizing the CMF's decision to permit a subsequent offer
period, announcing the effects of such CMF decision on this U.S. offer and
advising the then-remaining Pechiney securityholders subject to the U.S. offer
that they can tender their Pechiney securities during subsequent offering
period.
If, through this offer and the French offer, on a combined basis, we acquire
between two-thirds and 95% of Pechiney's total share capital and voting rights
(on a fully diluted basis), we will provide a subsequent offering period of at
least 10 French trading days by issuing a press release publicizing this
decision within 10 French trading days following the publication of the
definitive results of the offers. The CMF would then set and publish the
calendar for such a subsequent offering period, which would ordinarily begin
within a few days following the publication by the CMF of a calendar for the
subsequent offering period. In the event of a subsequent offering period, we
will offer the same consideration being offered during this initial offering
period.
The Company will accept any and all Pechiney securities tendered into a
subsequent offering and not validly withdrawn prior to the expiration of the
subsequent offering period. Delivery of Alcan Common Shares and cash to
tendering Pechiney securityholders will occur following the expiration of the
subsequent offering period. See "-- Delivery of Alcan Common Shares and Cash;
Settlement Date" below.
SUBSEQUENT TRANSACTIONS; DELISTING; COMPULSORY ACQUISITION
Alcan has not determined whether and when it would seek to acquire any Pechiney
securities not tendered into the offers and expects to make those determinations
based on the circumstances existing at the appropriate time. Such circumstances
would include, among others, the anticipated cost of acquiring the remaining
Pechiney securities, Alcan's then-current ownership percentage of Pechiney
securities, tax consid-
59
erations and the costs of maintaining a minority interest in Pechiney. Alcan's
board of directors will decide, after weighing all the relevant circumstances,
whether any such acquisition would be in the best interests of the combined
entity and its shareholders. The method or methods selected by Alcan to
implement any acquisition of remaining Pechiney securities will be determined by
assessment of all relevant factors at the time, but will primarily be influenced
by considerations of cost and likelihood of success. Subject to applicable law
and regulations, Alcan could effect any such acquisitions by way of market
purchases, block trades, a subsequent offer or a repurchase offer. The
consideration offered in any such acquisition could differ from the
consideration offered in these offers.
If Alcan were to launch a buy-out followed by a squeeze-out, it may then
petition Euronext Paris to cause the delisting of the Pechiney Common Shares
and/or Pechiney OCEANEs. Furthermore, subject to the completion of the offers,
Alcan intends to cause Pechiney to terminate its deposit agreement, and to
petition, or cause Pechiney to petition, the New York Stock Exchange to delist
the Pechiney ADSs. If the deposit agreement for the Pechiney ADSs is terminated,
holders of Pechiney ADSs will only have the right to receive the Pechiney Common
Shares underlying the Pechiney ADSs upon surrender of any receipt representing
the Pechiney ADSs and payment of applicable fees to the Pechiney ADS depositary.
There is no U.S. public trading market for the Pechiney Common Shares.
If Alcan acquires Pechiney securities representing at least 95% of the total
voting rights in Pechiney, Alcan may launch, subject to applicable law and
obtaining the requisite approvals, including the approval by the CMF, a
withdrawal offer or offers (offre publique de retrait), or buy-out, which, if
following the buy-out Alcan also holds at least 95% of the total share capital
in Pechiney, may be followed by a compulsory acquisition (retrait obligatoire),
or squeeze-out, of all remaining Pechiney securities not held by Alcan,
including all Pechiney Common Shares, Pechiney OCEANEs, Pechiney Bonus
Allocation Rights and Pechiney ADSs (including the Pechiney Common Shares
underlying the Pechiney ADSs). Under French regulations, the offeror is required
to state in its withdrawal offer whether the offer will be immediately followed
by a compulsory acquisition, or whether the offeror has only reserved the right
to proceed with a compulsory acquisition. If it reserves the right to proceed
with a compulsory acquisition, the offeror must decide within 10 French trading
days following the close of the withdrawal offer whether it will proceed with
the compulsory acquisition. The CMF would establish the offer calendar for any
such withdrawal offer or compulsory acquisition. The consideration offered in
any such withdrawal offer may be different from the consideration offered in
this offer, while the consideration offered in any compulsory acquisition will
be limited to cash. This cash consideration, which would not be less than the
value of the consideration in the withdrawal offer, would be subject to the
prior approval of the CMF in France, which reviews its fairness on several
bases, including a multi-criteria analysis by an independent appraiser. If such
withdrawal offer or compulsory acquisition constitutes a tender offer for U.S.
securities law purposes, it may be made to U.S. holders of Pechiney securities
in reliance on the "Tier I" exemption from the U.S. tender offer rules pursuant
to Regulation 14D promulgated under the Securities Exchange Act of 1934, as
amended. As a result, the withdrawal offer and compulsory acquisition could be
conducted in accordance with French law only. Alcan has not determined whether
any such withdrawal offer and compulsory acquisition will be made to U.S.
holders of Pechiney securities, and expects to make such a determination based
on, among other factors, the then number of U.S. holders, the exemptions from
the U.S. tender offer rules available to it and whether there is a need to file
a registration statement with the SEC in connection with any such transaction.
EFFECT OF THE OFFERS ON THE MARKET FOR PECHINEY SECURITIES
If the offers for Pechiney securities are successful, there may no longer be an
active trading market for the Pechiney securities, and their liquidity could be
materially adversely affected.
Pechiney ADSs are listed and traded on the New York Stock Exchange. Pechiney
Common Shares are listed and traded on Euronext Paris and SEAQ International in
London, and Pechiney OCEANEs are listed and traded on Euronext Paris. Depending
upon the number of Pechiney securities acquired pursuant to the offers,
following their completion the Pechiney ADSs may no longer meet the listing
requirements of the New York Stock Exchange, the Pechiney Common Shares and the
Pechiney OCEANEs may no longer meet the
60
requirements of Euronext Paris for continued listing and the Pechiney Common
Shares may no longer meet the requirements of SEAQ International in London for
continued listing. To the extent permitted under applicable law and stock
exchange regulations, Alcan may seek to cause the termination of Pechiney's
deposit agreement relating to the Pechiney ADSs, and the delisting of the
Pechiney ADSs, Pechiney Common Shares and Pechiney OCEANEs on these exchanges.
Any petition for delisting Pechiney securities on Euronext Paris is subject to
the prior approval of the COB, which will consider whether the market for the
Pechiney securities has been materially adversely affected and whether delisting
is in the best interests of the market.
If Alcan acquires sufficient Pechiney Common Shares in the offers to cause the
delisting of the Pechiney Common Shares, then, pursuant to the terms of the
Pechiney OCEANEs, the holders of the Pechiney OCEANEs may require Pechiney to
redeem the Pechiney OCEANEs for a make-whole payment.
Furthermore, pursuant to the terms of the Pechiney OCEANEs, if less than 10% of
the number of issued Pechiney OCEANEs remains outstanding following the
consummation of these offers, Alcan may cause Pechiney to redeem the Pechiney
OCEANEs at a redemption price determined pursuant to the terms of the Pechiney
OCEANEs. This redemption price would equal an amount that would provide the
holder of the Pechiney OCEANE with a return equal to the gross yield to maturity
that would have been realized by such holder at maturity. This redemption price
may be lower than the consideration offered to holders of the Pechiney OCEANEs
in these offers. For example, had this redemption option been available to, and
exercised by, Pechiney on September 11, 2003, the redemption price per Pechiney
OCEANE would have been E78.05.
If one or more of the New York Stock Exchange, Euronext Paris and SEAQ
International in London were to delist the Pechiney ADSs, Pechiney Common Shares
or Pechiney OCEANEs, the market therefor could be adversely affected. Although
it is possible that the Pechiney ADSs, Pechiney Common Shares and Pechiney
OCEANEs would be traded on other securities exchanges or in the over-the-counter
market, and the price quotations would be reported by such exchanges, or through
the National Association of Securities Dealers, Inc. Automated Quotations System
or by other sources, there can be no assurance that any such trading quotations
will occur. The extent of the public market for the Pechiney ADSs, Pechiney
Common Shares and Pechiney OCEANEs and the availability of such quotations would
depend upon the number of holders and/or the aggregate market value of the
Pechiney ADSs, Pechiney Common Shares and Pechiney OCEANEs, as the case may be,
remaining at such time, the interest in maintaining a market in such securities
on the part of securities firms and the possible termination of registration of
Pechiney ADSs under the Securities Exchange Act of 1934. If such registration is
terminated, Pechiney could cease filing periodic reports with the SEC, which
could further impact the value of the Pechiney securities. To the extent the
availability of such listings or quotations depends on steps taken by Alcan,
Alcan may or may not take such steps. Therefore, you should not rely on any such
listing or quotation being available following the successful completion of the
offers.
FRACTIONAL SHARES
No fractional Alcan Common Shares will be issued in connection with the offers.
Each tendering Pechiney securityholder will receive for the portion of the offer
consideration consisting of Alcan Common Shares:
- the number of Alcan Common Shares equal to the Offered Exchange Ratio,
determined as described under "-- Terms of the Offers," multiplied by the
number of Pechiney Common Shares and/or the number of Pechiney Bonus
Allocation Rights divided by 10 and/or the number of Pechiney ADSs
divided by 2 tendered by the Pechiney securityholder in the offer. This
number of Alcan Common Shares will be rounded to the next lowest whole
number.
- in lieu of any fractional Alcan Common Share that would otherwise be
issued, an amount in cash (in euros, rounded to the nearest euro cent)
equal to the product of the relevant fraction of an Alcan Common Share
multiplied by the average sale price on the New York Stock Exchange of
the aggregated fractional Alcan Common Shares that would have otherwise
been issued in the offers, converted into euros (except as described in
the following sentence) at the applicable day's U.S. $/E noon buying rate
in New York City for cable transfers payable in euros, as certified for
customs
61
purposes by the Federal Reserve Bank of New York. The sale proceeds of
fractional Alcan Common Shares that would otherwise have been delivered
in exchange for tendered Pechiney ADSs will not be converted into euros
and will be delivered in U.S. dollars. These aggregated fractional Alcan
Common Shares (rounded down to the nearest whole Alcan Common Share) will
be sold on the market by a registered intermediary charged with
organizing these sales, no later than six French trading days following
the settlement of the offers.
PROCEDURES FOR TENDERING PECHINEY SECURITIES
The following are the procedures to tender your Pechiney ADSs, Pechiney Common
Shares, Pechiney OCEANEs or Pechiney Bonus Allocation Rights.
Procedures for Tendering Pechiney ADSs
Pechiney ADS Certificates. If you hold Pechiney ADS certificates, you may
tender your Pechiney ADSs by delivering prior to the expiration date the
following materials to the U.S. ADR exchange agent at one of its addresses set
forth on the back cover of this prospectus:
- your Pechiney ADS certificates;
- a properly completed and duly executed letter of transmittal, or a
facsimile copy with an original manual signature, with any required
signature guarantees; and
- any other documents required by the letter of transmittal.
Pechiney ADSs in Book-Entry Form. If you hold your Pechiney ADSs in book-entry
form, you may tender your Pechiney ADSs following the procedure for book-entry
transfer described below. If you tender your Pechiney ADSs in this way, you must
take, or cause to be taken, the following actions prior to the expiration date:
- book-entry transfer of such Pechiney ADSs into the U.S. ADR exchange
agent's account at the Depository Trust Company, or DTC, pursuant to the
procedures described below;
- delivery to the U.S. ADR exchange agent at one of its addresses set forth
on the back cover of this prospectus of a properly completed and duly
executed letter of transmittal, or a facsimile copy with an original
manual signature, with any required signature guarantees, or an agent's
message (as defined below); and
- delivery to the U.S. ADR exchange agent at one of its addresses set forth
on the back cover of this prospectus of any other documents required by
the letter of transmittal.
The U.S. ADR exchange agent will establish an account with respect to Pechiney
ADSs at DTC for purposes of this offer within two business days after the date
of this prospectus. Any financial institution that is a participant in DTC's
systems may make book-entry delivery of Pechiney ADSs by causing DTC to transfer
such Pechiney ADSs into the U.S. ADR exchange agent's account in accordance with
DTC's procedure for the transfer. An "agent's message" delivered in lieu of the
letter of transmittal is a message transmitted by DTC to, and received by, the
U.S. ADR exchange agent as part of a confirmation of a book-entry transfer. The
message states that DTC has received an express acknowledgment from the DTC
participant tendering the Pechiney ADSs that such participant has received and
agrees to be bound by the terms of the letter of transmittal and that we may
enforce such agreement against such participant.
Signature Guarantees. Signatures on letters of transmittal generally must be
guaranteed by a firm that is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing is
referred to as an
62
"eligible institution"). However, signature guarantees are not required in cases
in which Pechiney ADSs are tendered:
- by a registered holder of Pechiney ADSs who has not completed either the
box entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on the letter of transmittal; or
- for the account of an eligible institution.
Pechiney ADSs Held in "Street Name." If you hold Pechiney ADSs in "street name"
through your broker, bank or custodian, you should contact your broker, bank or
custodian to discuss the appropriate procedures for tendering.
Pechiney ADS Certificates Registered in Another Name. If a Pechiney ADS
certificate is registered in the name of a person other than the signer of the
letter of transmittal, the certificate representing this security must be
endorsed or accompanied by appropriate stock powers. The stock powers must be
signed exactly as the name or names of the registered owner or owners appear on
the Pechiney ADS certificate, with the signature(s) on the certificates or stock
powers guaranteed as described above.
Partial Tenders. If you wish to tender fewer than all of the Pechiney ADSs
evidenced by any ADRs delivered to the U.S. ADR exchange agent, you must
indicate this in the letter of transmittal by completing the box entitled
"Number of Pechiney ADSs Tendered."
Guaranteed Delivery. If you desire to tender Pechiney ADSs pursuant to this
offer and your Pechiney ADS certificates are not immediately available or you
cannot deliver such certificates and all other required documents to the U.S.
ADR exchange agent prior to the expiration date, or you cannot complete the
procedure for book-entry transfer on a timely basis, you may nevertheless tender
such Pechiney securities provided that all of the following conditions are
satisfied:
- the tender is made by or through an eligible institution;
- a properly completed and duly executed notice of guaranteed delivery,
substantially in the form made available by us, is received by the U.S.
ADR exchange agent as provided below on or prior to the expiration date;
and
- the certificates for your tendered Pechiney securities or a confirmation
of a book-entry transfer of Pechiney securities into the U.S. ADR
exchange agent's account at DTC as described above, in proper form for
transfer, together with a properly completed and duly executed
transmittal letter or a manually executed facsimile copy, with any
required signature guarantee or, in the case of a book-entry transfer, an
agent's message and all other documents required by the letter of
transmittal, are received by the U.S. ADR exchange agent within three New
York Stock Exchange trading days after the date of execution of such
notice of guaranteed delivery.
The notice of guaranteed delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the U.S. ADR exchange agent. The notice of
guaranteed delivery must in all cases include a guarantee by an eligible
institution in the form set forth in such notice. Delivery of documents to DTC
in accordance with its procedures does not constitute delivery to the U.S. ADR
exchange agent.
Treatment of Tendered Pechiney ADS Certificates. The letter of transmittal
authorizes the U.S. ADR exchange agent, as agent and attorney-in-fact for
tendering holders of Pechiney ADSs, among other things, to surrender tendered
Pechiney ADSs to the Pechiney ADS depositary and instruct the Pechiney ADS
depositary to deliver the underlying Pechiney Common Shares even before Alcan
accepts the tendered Pechiney ADSs for exchange. Alcan intends to instruct the
U.S. ADR exchange agent to take these actions promptly after the expiration of
these offers so that the Pechiney Common Shares underlying the Pechiney ADSs
will be tendered as part of the French centralizing procedures within three
business days after the expiration date. Alcan will agree under the letter of
transmittal that if it does not accept the tendered Pechiney ADSs for exchange,
it will cause the Pechiney Common Shares underlying those Pechiney ADSs to be
re-deposited under the deposit agreement and Pechiney ADSs representing those
Pechiney Common Shares to
63
be delivered to the U.S. ADR exchange agent. The U.S. ADR exchange agent will
then return the Pechiney ADSs to you. You will retain beneficial ownership of
tendered Pechiney ADSs unless and until Alcan accepts the tendered Pechiney ADSs
for exchange. After acceptance, you will only have a right to receive the
exchange consideration from Alcan in accordance with this offer.
Procedures for Tendering Pechiney Common Shares
Pechiney Common Shares held through French financial intermediaries. If your
Pechiney Common Shares are held through a French financial intermediary, you
should not complete the letter of transmittal. Instead, your French financial
intermediary should send you transmittal materials and instructions for
participating in this offer. If you have not yet received instructions from your
French financial intermediary, please contact your French financial intermediary
directly.
Pechiney Common Shares held through U.S. Custodians. If you hold your Pechiney
Common Shares through a U.S. custodian, you should not complete a letter of
transmittal. Instead, your U.S. custodian should either forward you the
transmittal materials and instructions sent by the French financial intermediary
that holds the shares on behalf of your U.S. custodian as record owner or send a
separate form prepared by your U.S. custodian. If you have not yet received
instructions from your U.S. custodian, please contact your U.S. custodian
directly.
If you hold Pechiney Common Shares in pure registered (nominatif pur) form, you
cannot tender them unless you first request that they be converted to
administered registered (nominatif administre) form. If you wish to tender such
shares, you must first make the necessary arrangements, including the execution
of a "mandat d'administration" as prescribed by the CMF, for such conversion
with your French financial intermediary or U.S. custodian, as applicable. The
conversion takes approximately one to five French business days.
Procedures for Tendering Pechiney Bonus Allocation Rights
Pechiney Bonus Allocation Rights held through French financial intermediaries.
If your Pechiney Bonus Allocation Rights are held through a French financial
intermediary, you should not complete the letter of transmittal. Instead, your
French financial intermediary should send you transmittal materials and
instructions for participating in this offer. If you have not yet received
transmittal materials and instructions from your French financial intermediary,
please contact your French financial intermediary directly.
Pechiney Bonus Allocation Rights held through U.S. Custodians. If you hold your
Pechiney Bonus Allocation Rights through a U.S. custodian, you should not
complete a letter of transmittal. Instead, your U.S. custodian should either
forward you the transmittal materials and instructions sent by the French
financial intermediary that holds the shares on behalf of your U.S. custodian as
record owner or send a separate form prepared by your U.S. custodian. If you
have not yet received instructions from your U.S. custodian, please contact your
U.S. custodian directly.
Procedures for Tendering Pechiney OCEANEs
Pechiney OCEANEs held through French financial intermediaries. If your Pechiney
OCEANEs are held through a French financial intermediary, you should not
complete the letter of transmittal. Instead, your French financial intermediary
should send you transmittal materials and instructions for participating in this
offer. If you have not yet received instructions from your French financial
intermediary, please contact your French financial intermediary directly.
Pechiney OCEANEs held through U.S. Custodians. If you hold your Pechiney
OCEANEs through a U.S. custodian, you should not complete a letter of
transmittal. Instead, your U.S. custodian should either forward you the
transmittal materials and instructions sent by the French financial intermediary
that holds the shares on behalf of your U.S. custodian as record owner or send a
separate form prepared by your U.S. custodian. If you have not yet received
instructions from your U.S. custodian, please contact your U.S. custodian
directly.
64
Other Requirements
By executing a letter of transmittal or form of acceptance, you will irrevocably
appoint us or our designees as your attorneys-in-fact and proxies. Your
appointment will be to the full extent of your rights with respect to the
Pechiney securities tendered by you and accepted for exchange by us and any and
all other Pechiney securities issued or issuable in respect of such Pechiney
securities on or after October 27, 2003. Your appointment will be effective, and
your voting rights will be affected, only when we accept for exchange your
tendered Pechiney securities in accordance with the terms of the offer. Once we
accept for exchange your tendered Pechiney securities, your appointment will be
irrevocable. Upon the effectiveness of your appointment, all prior proxies given
by you will be revoked without further action, and you will not be able to give
powers of attorney, proxies or written consents with respect to the Pechiney
securities tendered by you and accepted by us. Our designees will have the
authority to exercise all your voting and other rights at any meeting of Alcan's
shareholders, by written consent in lieu of any such meeting or otherwise. Alcan
reserves the right to require that, in order for Pechiney securities to be
deemed validly tendered, immediately upon Alcan's acceptance of such Pechiney
securities for exchange, Alcan must be able to exercise all rights of ownership,
including full voting and disposition rights, with respect to such Pechiney
securities.
If the letter of transmittal, form of acceptance, notice of guaranteed delivery
or any certificates or stock powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or other
persons acting in a fiduciary or representative capacity, such persons should so
indicate when signing. Proper evidence of authority to act must be submitted by
such persons, although we may waive this requirement.
If any Pechiney Common Share, Pechiney Bonus Allocation Right, Pechiney OCEANE
or other evidence of ownership has been mutilated, destroyed, lost or stolen,
you must (1) furnish to your French financial intermediary or U.S. custodian
satisfactory evidence of ownership and of the destruction, loss or theft or such
certificate, (2) indemnify your French financial intermediary or U.S. custodian
against loss, and (3) comply with any other reasonable requirements.
If any Pechiney ADS certificate has been mutilated, destroyed, lost or stolen,
you must contact the Pechiney ADS depositary and comply with the requirements
under the deposit agreement to obtain a replacement Pechiney ADS certificate
before you will be able to tender those Pechiney ADSs in this offer.
Your tender of Pechiney securities pursuant to any of the procedures described
above will constitute your binding agreement with us to the terms and conditions
of this offer.
Determination of Validity
We will determine, in our discretion, all questions as to the validity, form and
eligibility for exchange of any tendered Pechiney securities. Our determination
will be final and binding on the holders of Pechiney securities. We reserve the
absolute right to reject any and all tenders that we determine are not in proper
form. We also reserve the right to waive any defect or irregularity in the
tender or any securities of any particular holder, whether or not similar
defects or irregularities are waived in the case of other securityholders.
Unless otherwise waived by you, your tender of securities will not be valid
until all defects or irregularities have been cured or waived. None of Alcan,
the U.S. ADR exchange agent, the information agent, the dealer manager or any
other person will be under any duty to give notification of any defects or
irregularities in the tender of any securities, or incur any liability for
failure to give any such notification. Our interpretation of the terms and
conditions of this offer will be final and binding on the holders of Pechiney
securities.
In addition, in tendering Pechiney securities you will represent and warrant
that you have full power and authority to tender, sell, assign and transfer your
Pechiney securities (and any distributions) and, when the same are accepted for
exchange by Alcan, Alcan will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and the same will not be subject to any adverse claim. Alcan reserves the right
to reject any Pechiney securities that it determines do not satisfy these
conditions.
65
WITHDRAWAL RIGHTS
You may withdraw Pechiney securities tendered pursuant to this offer at any time
prior to its expiration. If a subsequent offering period is provided, you may
withdraw any Pechiney securities tendered during that subsequent period at any
time prior to its expiration.
For a withdrawal to be effective, the French financial intermediary, the U.S.
custodian or the U.S. ADR exchange agent, as applicable, must receive a timely
written or facsimile transmission notice of withdrawal. Any such notice must
specify the name of the person who tendered the Pechiney securities being
withdrawn, the number of Pechiney securities being withdrawn and the name of the
registered holder if different from that of the person who tendered such
Pechiney securities.
If certificates evidencing Pechiney ADSs being withdrawn have been delivered or
otherwise identified to the U.S. ADR exchange agent, then, prior to the physical
release of such certificates, (1) the U.S. ADR exchange agent also must receive
the name of the registered holder and the serial numbers of the particular
certificate evidencing the Pechiney ADSs and (2) the signature(s) on the notice
of withdrawal must be guaranteed by an eligible institution unless such Pechiney
ADSs have been tendered for the account of an eligible institution. If Pechiney
securities have been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of Pechiney ADSs. If you have tendered
Pechiney Common Shares, Pechiney Bonus Allocation Rights or Pechiney OCEANEs,
the notice of withdrawal must specify the name and number of the Euroclear
France account to be credited with the withdrawn Pechiney securities.
Under French law, if, during the period of these offers, another offer for
Pechiney, or an improved bid by a competing bidder, is approved by the CMF, your
tenders of Pechiney securities may be declared null and void by the CMF. In this
event, in order to tender your Pechiney securities in this offer, if it remains
outstanding, you will be required to re-tender your Pechiney securities.
We will determine, in our sole discretion, all questions as to the form and
validity (including time of receipt) of any notice of withdrawal. Our
determination shall be final and binding on the holders of the Pechiney
securities. None of Alcan, the U.S. ADR exchange agent, the information agent,
the dealer manager or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification. Any Pechiney
securities properly withdrawn will be deemed not to have been validly tendered
for purposes of this offer (or any subsequent offer, as the case may be).
However, withdrawn Pechiney securities may be re-tendered at any time prior to
the expiration date by following the procedures described above under
"-- Procedures for Tendering Pechiney Securities."
ACCEPTANCE AND RETURN OF PECHINEY SECURITIES
Subject to the terms and conditions of the offer, we will exchange Pechiney
securities validly tendered and not properly withdrawn for Alcan Common Shares
and cash (but only cash in the case of Pechiney OCEANEs), or return such
Pechiney securities as promptly as practicable under French tender offer
practice after the expiration date. Subject to applicable rules of the SEC, we
reserve the right to delay acceptance for exchange, or delay exchange, of
Pechiney securities in order to comply in whole or in part with any applicable
law.
Acceptance of Tendered Pechiney Securities
If the offer is successful, we will be deemed to have accepted for exchange
Pechiney securities validly tendered and not properly withdrawn on the
expiration date, as set forth in the final results of the offers (avis de
resultat definitif) published in France in the French official legal gazette by
the CMF. Subject to the terms and conditions of the offers, the newly issued
Alcan Common Shares will be transferred to the account of the financial
intermediary who tendered the Pechiney securities.
Under no circumstances will interest be paid on the exchange of Pechiney
securities for Alcan Common Shares, regardless of any delay in making the
exchange.
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Return of Tendered Pechiney Securities
In case any Pechiney securities tendered in accordance with the instructions set
forth in the offer materials are not accepted for exchange pursuant to the terms
and condition of this offer, we will cause these Pechiney securities to be
returned within one to two French trading days following the announcement of the
lapse or withdrawal of the offers or the publication by the CMF of the results
of the offers, as the case may be.
Miscellaneous
If we increase the consideration offered to any holder of Pechiney securities
prior to the expiration date, we will pay the increased consideration to all
holders of Pechiney securities that are exchanged in this offer, whether or not
such Pechiney securities were tendered prior to the announcement of such
increase. In such circumstances, the CMF may require an extension of the offer
period and may declare prior tenders invalid from the opening of the increased
offer and require re-tenders. No such increase is currently expected.
DELIVERY OF ALCAN COMMON SHARES AND CASH; SETTLEMENT DATE
In the event the offers are successful, Alcan Common Shares and cash will be
delivered to tendering holders of Pechiney securities following the publication
by the CMF of the final results of the offers for Pechiney securities. If the
offers are consummated, the final settlement date for the offers is currently
expected to be within approximately 12 to 18 French trading days following the
expiration date of the offers. Similarly, in the event of a subsequent offering
period, if any, settlement is expected to occur within 12 to 18 French trading
days following the expiration of that subsequent offer period. With respect to
the tendered Pechiney ADSs only, the cash consideration payable in this offer
will be paid in U.S. dollars calculated by converting the applicable amount in
euros into U.S. dollars using a current spot exchange rate. If your Alcan Common
Shares will be evidenced by certificates registered in your name, you may not
receive the certificates until approximately two weeks after the settlement
date.
FEES AND EXPENSES
Except as set forth below, we will not pay any fees or commissions to any broker
or other person soliciting tenders of Pechiney securities pursuant to this
offer.
Alcan will pay the brokerage fees, if any, and related value added taxes
incurred by Pechiney securityholders tendering into this offer, up to a limit of
0.3% of the value of each Pechiney security tendered, and subject to a maximum
amount of E150 per account, including all taxes. Pechiney securityholders will
not be reimbursed for any brokerage fees in any event that the offer is
withdrawn or lapses. Financial intermediaries will be paid a fee, net of tax, of
E0.50 per Pechiney Common Share and E0.05 per Pechiney Bonus Allocation Right
tendered into this offer, with a minimum fee of E8 per account and a maximum fee
of E200 per account. This fee will not be paid in the event that the offer is
withdrawn or lapses and will not be paid in any event with respect to tendered
Pechiney securities owned by such financial intermediaries. Alcan will pay the
fees charged by the ADS depositary for Pechiney ADSs tendered into the offer,
including any fees charged by the ADS depositary to redeposit Pechiney Common
Shares underlying tendered Pechiney ADSs that have been previously withdrawn
from deposit with the ADS depositary in the event that the offers are not
consummated.
Morgan Stanley is acting as dealer manager in the United States in connection
with this offer and they or certain of their affiliates have provided certain
financial advisory services to Alcan in connection with the transactions. Morgan
Stanley will receive reasonable and customary compensation for its services as
financial advisor and dealer-manager. We will indemnify the financial advisor
against specified liabilities and expenses in connection with this offer,
including liabilities under the U.S. federal securities laws.
We have also retained D.F. King & Co., Inc. to act as information agent in
connection with this offer. The information agent may contact holders of
Pechiney securities by mail, telephone, telex, fax, e-mail and personal
interview and may request brokers, dealers and other nominee shareholders to
forward these offer materials to owners of Pechiney securities. The information
agent will receive reasonable and customary fees for these services, plus
reimbursement of out-of-pocket expenses.
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We have retained The Bank of New York to act as U.S. ADR exchange agent in
connection with this offer. We will pay the U.S. ADR exchange agent reasonable
and customary compensation for its services in connection with this offer, plus
reimbursement for out-of-pocket expenses. We will reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
We will indemnify the information agent and the U.S. ADR exchange agent against
specified liabilities and expenses in connection with this offer, including
liabilities under the U.S. federal securities laws.
Indemnification for liabilities under the U.S. federal securities laws may be
unenforceable as against public policy.
The cash expenses to be incurred in connection with this offer will be paid by
Alcan and are estimated in the aggregate to be approximately $84 million. Such
expenses include registration fees, fees and expenses of the financial advisor
and dealer-manager, U.S. ADR exchange agent and information agent, accounting
and legal fees and printing costs and expenses related to the financing of the
offer consideration, among others.
LISTING OF ALCAN COMMON SHARES
Alcan Common Shares are currently listed on the New York, Toronto, London and
Swiss stock exchanges. Alcan will apply to list its Alcan Common Shares on
Euronext Paris, subject to the successful completion of these offers and with a
view to the Euronext Paris listing being effective on the settlement date of
these offers. Alcan will also apply for the supplemental listing of the Alcan
Common Shares to be issued in these offers on the New York, Toronto, London and
Swiss stock exchanges, and will comply with all of the usual requirements of
such exchanges within the time periods specified by such exchanges.
TREATMENT OF PECHINEY STOCK PURCHASE OPTIONS AND PECHINEY STOCK SUBSCRIPTION
OPTIONS
If you are the holder of exercisable Pechiney stock purchase options or Pechiney
stock subscription options and you would like to tender the underlying Pechiney
Common Shares into this offer, you must exercise the options such that the
relevant Pechiney Common Shares are credited to your account on or prior to the
expiration date of the offers.
Alcan has not had access to, and does not know, important information relating
to Pechiney's stock option plans, including the terms of these plans. If these
offers are successful, Alcan will propose to holders of Pechiney stock purchase
options and Pechiney stock subscription options that were not exercised during
the offer period to enter into agreements through which the holders will be
able, at their option, to either (i) at the termination of the transfer
restriction period, exchange Pechiney Common Shares received as a result of
exercising the Pechiney options for Alcan Common Shares on the basis of an
exchange ratio that values each Pechiney Common Share at the consideration
payable for each Pechiney Common Share in these offers, as described above, and
values each Alcan Common Share at the Reference Value, or (ii) receive Alcan
stock options in exchange for the cancellation of existing Pechiney stock
purchase options or Pechiney stock subscription options, with such conversion
being based on a ratio that values each Pechiney Common Share at the
consideration payable for each Pechiney Common Share in these offers, as
described above, and values each Alcan Common Share at the Reference Value.
Alcan will determine the manner of implementing these agreements once it has had
an opportunity to review Pechiney's stock option plans. Pechiney has advised us
that a holder of Pechiney options will generally be entitled to exercise his or
her options during the entire stated exercise period applicable to such options
if such person's employment is terminated as a direct or indirect result of our
acquisition of Pechiney, it being understood that any termination of employment
(other than termination for gross misconduct (faute grave)) or other departure
within 18 months of completion of the offers will be deemed to be termination as
a result of our acquisition of Pechiney.
TREATMENT OF PECHINEY'S EMPLOYEE SHAREHOLDING PLAN
Alcan has not had access to important information relating to Pechiney's
Employee Shareholding Plan. According to Pechiney's 2002 20-F, several Pechiney
mutual investment funds have been created to manage
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this employee savings plan. In the event that any of these mutual investment
funds is not able to tender any Pechiney securities (in particular due to
contractual, regulatory, tax or corporate by-law restrictions) into these offers
prior to their expiration, or, if applicable, prior to the expiration of any
subsequent offer period, and if the offers are successful, Alcan will consider
possible alternatives that may allow, subject to applicable law and regulations,
these mutual investment funds to transfer their Pechiney securities to Alcan on
same terms as in these offers.
In the event that a Pechiney employee that holds his or her Pechiney securities
under the Employee Shareholding Plan directly is restricted from tendering any
of such employee's Pechiney securities into these offers prior to their
expiration, or, if applicable, prior to the expiration of any subsequent offer
period (in particular due to contractual, regulatory, tax or corporate by-law
restrictions), and if the offers are successful, Alcan will offer to purchase or
exchange these Pechiney securities, to the extent permitted by applicable
regulation and at the termination of any restricted period. Alcan will determine
the terms and conditions of any offer to purchase or exchange these Pechiney
securities when it has had the opportunity to review the current status of these
securityholders, although the terms and conditions will be based on the terms of
these offers.
FUTURE DIVIDEND POLICY OF PECHINEY
Alcan is not in a position at this stage to state what their dividend policy
will be in respect of Pechiney securities after successful offers, but it is
likely that such policy will be determined in the context of Pechiney's
integration into the combined entities. This policy could bring about a large
reduction in the level of dividends paid by Pechiney, or an end to dividends
being paid. Pechiney, in the risk factors section of its 2002 20-F, has itself
also indicated that several factors could lead to a reduction in the amount of
any dividends that it pays.
REGULATORY APPROVALS
Completion of the offers required receipt of merger control approval from the
European Commission and the termination or expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The
European Commission's approval was obtained on, and the waiting period ended on,
September 29, 2003. See "Regulatory Matters -- Competition and Antitrust" on
page 91.
The offers also required the prior approval of France's Minister of the Economy,
Finance and Industry, which approval was obtained on September 4, 2003. See
"Regulatory Matters -- Investment Controls" on page 93.
COMPARISON OF THE RIGHTS OF PECHINEY SHAREHOLDERS AND ALCAN SHAREHOLDERS
You will receive Alcan Common Shares if you tender your Pechiney securities in
the offer. There are numerous differences between the rights of a shareholder in
Pechiney, a French societe anonyme, and the rights of a shareholder in Alcan, a
Canadian corporation. We urge you to review the discussion under "Comparison of
Shareholders' Rights" beginning on page 96 for a summary of these differences.
ACCOUNTING TREATMENT
The acquisition of the Pechiney securities will be accounted for using the
purchase method under both Canadian and U.S. GAAP. Under the purchase method,
the cost of the purchase will be based on the cash paid to Pechiney
securityholders, the market value of Alcan Common Shares issued to Pechiney
securityholders, fair value of any stock options of Pechiney replaced with stock
options of Alcan and the direct transaction costs. In Alcan's consolidated
financial statements, the cost of the purchase will be allocated to the Pechiney
assets acquired and liabilities assumed, based on their estimated fair values at
the acquisition date, with any excess of the cost over the amounts allocated
being recognized as goodwill. This method may result in the carrying value of
assets, including goodwill, acquired from Pechiney being substantially different
from the former carrying values of those assets.
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TAXATION
This section describes the material United States federal income, French and
Canadian tax consequences of exchanging your Pechiney securities pursuant to
this offer and the material United States federal income and Canadian tax
consequences of owning and disposing of Alcan Common Shares acquired pursuant to
this offer. It applies to you only if you hold your Pechiney securities, and
will hold your Alcan Common Shares, as a capital asset for United States federal
income tax purposes. This section is the opinion of Sullivan & Cromwell LLP
insofar as it relates to United States federal income and French tax law, and is
the opinion of Hugh Berwick, Alcan's senior tax counsel, insofar as it relates
to matters of Canadian tax law. This section does not apply to you if you are a
resident of France for French tax purposes, or a member of a special class of
holders subject to special rules, including, with respect to the French or
United States federal income tax consequences:
- a dealer in securities or currencies,
- a trader in securities that elects to use a mark-to-market method of
accounting for securities holdings,
- a tax-exempt organization,
- a life insurance company,
- a holder of Pechiney OCEANEs that is a bank,
- a person liable for alternative minimum tax,
- with respect to the tax consequences of exchanging Pechiney Common
Shares, Pechiney Bonus Allocation Rights or Pechiney ADSs, a person that
actually or constructively owns 10% or more of Pechiney voting stock;
- with respect to the tax consequences of owning and disposing of Alcan
Common Shares, a person that actually or constructively will own 10% or
more of Alcan voting stock after the exchange,
- with respect to French taxation, a person that together with his or her
spouse, if any, and their ascendants and descendants, directly or
indirectly, hold or have held more than 25% of the rights to Pechiney's
earnings (droits aux benefices sociaux) at any time during the five years
preceding the exchange,
- a person that holds Pechiney securities, or, after the exchange, will
hold Alcan Common Shares, as part of a straddle or a hedging or
conversion transaction, and
- a U.S. holder (as defined below) whose functional currency is not the
U.S. dollar.
This section is based on the United States Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed regulations, published
rulings and court decisions, and the French tax laws, as well as on the income
tax conventions between the United States of America and the Republic of France
(the "French Treaty") and between the United States of America and Canada (the
"Canadian Treaty"), all as currently in effect. With respect to Canadian tax
matters, it is further based on the current provisions of the Income Tax Act
(Canada) (the "ITA"), the regulations thereunder, specific proposals to amend
the ITA, the regulations announced before the date of this prospectus and the
current administrative and assessing practices of the Canada Customs and Revenue
Agency. All of these laws are subject to change, possibly on a retroactive
basis.
You are a non-resident of France for French tax purposes if you are a beneficial
owner of Pechiney securities that exchanges its Pechiney securities pursuant to
this offer, and, for French income tax purposes, you are not:
- an individual (i) whose principal residence is located in France or who
resides in France for more than 183 days during a year, (ii) maintains
his or her household in France, (iii) carries out his or her principal
professional activity in France, or (iv) whose principal center of
economical interests is located in France, or
- an enterprise with its registered office located in France or operating a
business in France.
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You are a U.S. holder if you are a beneficial owner of Pechiney securities that
exchanges its Pechiney securities pursuant to this offer, and you are for United
States federal income tax purposes:
- a citizen or resident of the United States,
- a United States domestic corporation,
- an estate whose income is subject to United States federal income tax
regardless of its source, or
- a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
You are a non-U.S. holder if you are a beneficial owner of Pechiney securities
that exchanges Pechiney securities pursuant to this offer, and you are not a
United States person for United States federal income tax purposes.
You are a non-Canadian holder if you are a beneficial owner of Pechiney
securities that exchanges Pechiney securities pursuant to this offer and at any
relevant time
- you are not and are not deemed to be resident in Canada for purposes of
the ITA;
- you do not hold or use and are not deemed to hold or use the Pechiney
securities in a business carried on in Canada; and
- you are not an insurer carrying on business in Canada and elsewhere.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE UNITED STATES FEDERAL,
STATE AND LOCAL, AND THE CANADIAN, FRENCH AND OTHER TAX CONSEQUENCES OF
EXCHANGING YOUR PECHINEY SECURITIES AND OF OWNING AND DISPOSING OF ALCAN COMMON
SHARES IN YOUR PARTICULAR CIRCUMSTANCES. IN PARTICULAR, YOU SHOULD CONFIRM
WHETHER YOU ARE ELIGIBLE FOR THE BENEFITS OF THE FRENCH TREATY OR CANADIAN
TREATY WITH YOUR ADVISOR AND SHOULD DISCUSS ANY POSSIBLE CONSEQUENCES OF FAILING
TO BE SO ELIGIBLE.
This section does not constitute legal or tax advice to any particular holder of
Pechiney securities.
TAX CONSEQUENCES OF EXCHANGING PECHINEY SECURITIES
FRENCH TAXATION
For French income tax purposes, if you are a French non-resident, you will not
be subject to French tax on any capital gain or loss recognized upon exchanging
your Pechiney securities pursuant to this offer unless you have a permanent
establishment or fixed base in France and the Pechiney securities exchanged is
part of the business property of that permanent establishment or fixed base. In
that case, the gain or loss, if any, generally will equal the difference between
the value of the Alcan Common Shares and cash received, and your adjusted tax
basis in your Pechiney securities exchanged. Such gain or loss would be
recognized upon the exchange and subject to French income tax under the ordinary
rules.
CANADIAN TAXATION
A non-Canadian holder will not be subject to Canadian federal tax in respect of
any gain or loss realized on Pechiney securities exchanged in the offer. In
addition, a person that is resident of Canada for purposes of the ITA, but that
is resident of the United States for purposes of the Canadian Treaty and is
otherwise eligible for the benefits of the Canadian Treaty, will not be subject
to Canadian federal tax in respect of any gain or loss realized on Pechiney
securities exchanged in the offer, provided that such person does not hold the
Pechiney securities in a manner that is effectively connected with or pertains
to a permanent establishment (as defined in the Canadian Treaty) through which
the holder carries on business in Canada or a fixed base through which the
holder performs independent personal services in Canada.
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UNITED STATES FEDERAL INCOME TAXATION
U.S. HOLDERS. If you are a U.S. holder, you will recognize capital gain or
loss, if any, as a result of exchanging a Pechiney Common Share, Pechiney Bonus
Allocation Right or Pechiney ADS for a combination of Alcan Common Shares and
cash equal to the difference between
- the sum of the value of the Alcan Common Shares, determined in U.S.
dollars, and the amount of the cash payment you receive in the exchange
and
- your tax basis, determined in U.S. dollars, in the Pechiney Common Share,
Pechiney Bonus Allocation Right or Pechiney ADS that you exchange.
For this purpose, the value of the Alcan Common Shares received will equal the
fair market value of such shares on the date of the exchange, determined in U.S.
dollars. You should generally be able to treat the mean between the highest and
lowest selling prices of Alcan Common Shares on the date of exchange on the
stock exchange where Alcan Common Shares are principally traded as the fair
market value of an Alcan Common Share on the date of exchange. Alcan believes
that, for this purpose, the New York Stock Exchange should be treated as the
stock exchange where Alcan Common Shares are principally traded.
If you receive any Alcan Common Shares pursuant to this offer, your tax basis in
each such share immediately after the exchange will equal its fair market value
and your holding period in each such share will begin on the day after the
exchange date.
If you exchange a Pechiney OCEANE for cash, you will be required to include in
ordinary income any cash that is attributable to accrued but unpaid interest on
the Pechiney OCEANE and any original issue discount that has accrued on the
Pechiney OCEANE prior to the exchange. You will recognize gain or loss, if any,
in the exchange equal to the difference between
- the amount of the cash payment you receive in the exchange, reduced by
the portion of the cash payment that is attributable to accrued interest,
and
- your adjusted tax basis, determined in U.S. dollars and after taking into
account any original issue discount that has accrued prior to the
exchange, in the Pechiney OCEANE that you exchange.
Any such gain or loss will generally be capital gain or loss except that (a) any
gain or loss that is attributable to changes in the U.S. dollar/euro exchange
rate during the period in which you held your Pechiney OCEANE will be ordinary
income or loss and (b) if you purchased your Pechiney OCEANE with market
discount in excess of a de minimis amount, any gain that you recognize will be
ordinary income to the extent of any accrued market discount on your Pechiney
OCEANE that you have not yet included in income.
For foreign tax credit purposes, gain or loss that you recognize upon an
exchange of Pechiney securities pursuant to this offer generally will be income
or loss from sources within the United States if such gain or loss is capital
gain or loss or ordinary gain or loss that is attributable to changes in the
U.S. dollar/euro exchange rate. Any original issue discount and accrued interest
that you include in income with respect to a Pechiney OCEANE will generally be
treated as income from sources outside the United States and any market discount
that you include in income with respect to a Pechiney OCEANE will likely be
treated as income from sources outside the United States. Any gain or loss that
you recognize upon an exchange of Pechiney securities pursuant to this offer
will generally be treated as "passive income" or, in certain cases, "financial
services income," which is treated separately from other types of income for
foreign tax credit limitation purposes.
If you are a noncorporate U.S. holder, capital gain will be taxable at a maximum
rate of 15% if your holding period in the Pechiney security that you exchange
exceeds one year on the date of exchange. The deductibility of capital losses is
subject to limitations.
If you recognize a loss upon an exchange of a Pechiney OCEANE for cash and the
portion of such loss that is attributable to changes in the U.S. dollar/euro
exchange rate is $50,000 or more, then you may be required to specially report
such loss on Internal Revenue Service Form 8886. You should consult with your
tax advisor as to whether you will be subject to any such reporting obligation.
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NON-U.S. HOLDERS. Except as otherwise described below with respect to amounts
received in respect of accrued interest, if you are a non-U.S. holder, you will
not be subject to United States federal income tax on any gain or loss
recognized as a result of exchanging your Pechiney securities pursuant to this
offer unless
- the gain or loss is "effectively connected" with your conduct of a trade
or business in the United States, and the gain is attributable to a
permanent establishment that you maintain in the United States if that is
required by an applicable income tax treaty as a condition for subjecting
you to United States taxation on a net income basis, or
- you are an individual who is present in the United States for at least
183 days in the taxable year of the sale and
- your "tax home" for United States federal income tax purposes is in the
United States or
- the gain is attributable to an office or other fixed place of business
that you maintain in the United States.
If you are a non-U.S. holder of a Pechiney OCEANE, the amount of cash received
in exchange for your Pechiney OCEANE that is attributable to accrued interest is
exempt from United States federal income tax, whether or not you are engaged in
a trade or business in the United States, unless
- you are an insurance company carrying on a United States insurance
business to which the interest is attributable, within the meaning of the
Internal Revenue Code, or
- you both
- have an office or other fixed place of business in the United States to
which the interest is attributable and
- derive the interest in the active conduct of a banking, financing or
similar business within the United States.
If you are a corporate non-U.S. holder that under the rules described above is
subject to United States federal income tax on the exchange of your Pechiney
securities, you may also, under certain circumstances, be subject to an
additional branch profits tax at a 30% rate or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate.
TAX CONSEQUENCES OF OWNING AND DISPOSING OF ALCAN COMMON SHARES
TAXATION OF DIVIDENDS
CANADIAN TAXATION
Dividends (including deemed dividends) on Alcan Common Shares paid to a
non-Canadian holder will generally be subject to a Canadian non-resident
withholding tax. The general withholding tax rate of 25% may be reduced pursuant
to the provisions of a treaty entered into between Canada and the country in
which the recipient or beneficial owner of such dividends is a resident. Under
the Canadian Treaty the rate of such Canadian non-resident withholding tax is
reduced to 15%. In addition, under the Canadian Treaty, dividends on Alcan
Common Shares paid to certain pension, retirement or charitable organizations
that are eligible for the benefits of the Canadian Treaty and exempt from tax in
the United States will generally be exempt from Canadian withholding tax.
UNITED STATES FEDERAL INCOME TAXATION
U.S. HOLDERS. Under the United States federal income tax laws, if you are a
U.S. holder, the gross amount of any dividend Alcan pays with respect to its
Alcan Common Shares to you out of its current or accumulated earnings and
profits (as determined for United States federal income tax purposes) is subject
to United States federal income taxation. If you are a noncorporate U.S. holder,
dividends paid to you in taxable years beginning before January 1, 2009 that
constitute qualified dividend income will be taxable to you at a maximum tax
rate of 15% provided that you hold the Alcan Common Shares for more than 60 days
during the
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120-day period beginning 60 days before the ex-dividend date and meet other
holding period requirements. Dividends Alcan pays with respect to Alcan Common
Shares generally will be qualified dividend income.
You must include any Canadian tax withheld from the dividend payment in this
gross amount even though you do not in fact receive it. The dividend is taxable
to you when you receive it, actually or constructively. The dividend will not be
eligible for the dividends-received deduction generally allowed to United States
corporations in respect of dividends received from other United States
corporations. Distributions with respect to Alcan Common Shares in excess of
Alcan's current and accumulated earnings and profits, as determined for United
States federal income tax purposes, will be treated as a non-taxable return of
capital to the extent of your basis in the Alcan Common Shares and thereafter as
capital gain.
Subject to certain limitations, the Canadian tax withheld in accordance with the
Treaty and paid over to Canada will be creditable against your United States
federal income tax liability. Special rules apply in determining the foreign tax
credit limitation with respect to dividends that are subject to the maximum 15%
tax rate. To the extent a refund of the tax withheld is available to you under
Canadian law or under the Treaty, the amount of tax withheld that is refundable
will not be eligible for credit against your United States federal income tax
liability.
Dividends will generally be income from sources outside the United States, but
generally will be "passive income" or "financial services income," which is
treated separately from other types of income for purposes of computing the
foreign tax credit allowable to you.
NON-U.S. HOLDERS. If you are a non-U.S. holder, dividends paid to you in
respect of Alcan Common Shares will not be subject to United States federal
income tax unless the dividends are "effectively connected" with your conduct of
a trade or business within the United States, and the dividends are attributable
to a permanent establishment that you maintain in the United States if that is
required by an applicable income tax treaty as a condition for subjecting you to
United States taxation on a net income basis. In such cases you generally will
be taxed in the same manner as a U.S. holder. If you are a corporate non-U.S.
holder, "effectively connected" dividends may, under certain circumstances, be
subject to an additional "branch profits tax" at a 30% rate or at a lower rate
if you are eligible for the benefits of an income tax treaty that provides for a
lower rate.
TAXATION OF CAPITAL GAINS
CANADIAN TAXATION
Gains realized by a non-Canadian holder on a sale or other disposition of Alcan
Common Shares generally will not be subject to Canadian tax unless such shares
constitute "taxable Canadian property" to such non-Canadian holder. The Alcan
Common Shares may constitute "taxable Canadian property" to a non-Canadian
holder if:
- they are held or used in a business carried on in Canada; or
- at any time in the five years immediately preceding the disposition, the
non-Canadian holder, persons with whom the non-Canadian holder did not
deal at arm's length, or the non-Canadian holder and such non-arm's
length persons, owned or had under any option or right to acquire 25% or
more of the issued shares of any class or series of the capital stock of
Alcan.
Even where the Alcan Common Shares constitute "taxable Canadian Property" to a
non-Canadian holder, the gain from the sale or disposition of such shares may
also be exempt from Canadian tax pursuant to the provisions of a treaty entered
into by Canada and another country. Under the Canadian Treaty, such gain will
generally be exempt from Canadian tax unless the Alcan Common Shares derive
their value principally from real property situated in Canada (as defined in the
Canadian Treaty).
A disposition of Alcan Common Shares to Alcan (unless the shares are acquired in
the open market in the manner in which shares would normally be purchased by any
member of the public) will result in a deemed dividend to a non-Canadian holder
equal to the amount by which the consideration paid by Alcan for the Alcan
Common Shares exceeds the paid-up capital of such shares for purposes of the
ITA. The amount of
74
such deemed dividend will be subject to the withholding tax described under
"-- Taxation of Dividends -- Canadian Taxation" above.
UNITED STATES FEDERAL INCOME TAXATION
U.S. HOLDERS. If you are a U.S. holder and you sell or otherwise dispose of
your Alcan Common Shares received pursuant to this offer, you will recognize
capital gain or loss for United States federal income tax purposes equal to the
difference between the U.S. dollar value of the amount that you realize and your
adjusted tax basis, determined in U.S. dollars, in your Alcan Common Shares. See
"Tax Consequences of Exchanging Pechiney Securities -- United States Federal
Income Taxation" above for your initial tax basis in, and the start of your
holding period of, the Alcan Common Shares received pursuant to this offer.
Capital gain of a noncorporate U.S. holder that is recognized before January 1,
2009 is generally taxed at a maximum rate of 15% where the holder has a holding
period greater than one year. The gain or loss will generally be income or loss
from sources within the United States for foreign tax credit limitation
purposes.
NON-U.S. HOLDERS. If you are a non-U.S. holder, you will not be subject to
United States federal income tax on gain recognized on the sale or other
disposition of your Alcan Common Shares unless:
- the gain is "effectively connected" with your conduct of a trade or
business in the United States, and the gain is attributable to a
permanent establishment that you maintain in the United States if that is
required by an applicable income tax treaty as a condition for subjecting
you to United States taxation on a net income basis, or
- you are an individual, you are present in the United States for 183 or
more days in the taxable year of the sale and
- your "tax home" for United States federal income tax purposes is in the
United States or
- the gain is attributable to an office or other fixed place of business
that you maintain in the United States.
If you are a corporate non-U.S. holder, "effectively connected" gains that you
recognize may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or at a lower rate if you are eligible for
the benefits of an income tax treaty that provides for a lower rate.
BACKUP WITHHOLDING AND INFORMATION REPORTING
If you are a noncorporate U.S. holder, information reporting requirements, on
Internal Revenue Service Form 1099, generally will apply to:
- dividend payments or other taxable distributions made to you within the
United States,
- cash payments made to you pursuant to an exchange of Pechiney securities
for cash pursuant to this offer, and
- the payment of proceeds to you from the sale of Alcan Common Shares
effected at a United States office of a broker.
Additionally, backup withholding may apply to such payments if you are a
noncorporate U.S. holder that:
- fails to provide an accurate taxpayer identification number,
- is notified by the Internal Revenue Service that you have failed to
report all interest and dividends required to be shown on your federal
income tax returns, or
- in certain circumstances, fails to comply with applicable certification
requirements.
If you are a non-U.S. holder, you are generally exempt from backup withholding
and information reporting requirements with respect to:
- dividend payments made to you outside the United States by Alcan or
another non-United States payor and
75
- other dividend payments and the payment of the proceeds from the sale of
Alcan Common Shares effected at a United States office of a broker, as
long as the income associated with such payments is otherwise exempt from
United States federal income tax, and:
- the payor or broker does not have actual knowledge or reason to know that
you are a United States person and you have furnished the payor or
broker:
- an Internal Revenue Service Form W-8BEN or an acceptable substitute
form upon which you certify, under penalties of perjury, that you are a
non-United States person, or
- other documentation upon which it may rely to treat the payments as
made to a non-United States person in accordance with U.S. Treasury
regulations, or
- you otherwise establish an exemption.
Payment of the proceeds from the sale of Alcan Common Shares effected at a
foreign office of a broker generally will not be subject to information
reporting or backup withholding. However, a sale of Alcan Common Shares that is
effected at a foreign office of a broker will be subject to information
reporting and backup withholding if:
- the proceeds are transferred to an account maintained by you in the
United States,
- the payment of proceeds or the confirmation of the sale is mailed to you
at a United States address, or
- the sale has some other specified connection with the United States as
provided in U.S. Treasury regulations,
unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above are
met or you otherwise establish an exemption.
In addition, a sale of Alcan Common Shares effected at a foreign office of a
broker will be subject to information reporting if the broker is:
- a United States person,
- a controlled foreign corporation for United States tax purposes,
- a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a
specified three-year period, or
- a foreign partnership, if at any time during its tax year:
- one or more of its partners are "U.S. persons," as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership, or
- such foreign partnership is engaged in the conduct of a United States
trade or business,
unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above are
met or you otherwise establish an exemption. Backup withholding will apply if
the sale is subject to information reporting and the broker has actual knowledge
that you are a United States person.
You generally may obtain a refund of any amounts withheld under the backup
withholding rules that exceed your income tax liability by filing a refund claim
with the United States Internal Revenue Service.
76
INFORMATION ABOUT ALCAN
BUSINESS DESCRIPTION
Alcan is the parent company of an international group involved in many aspects
of the aluminum and packaging industries. Through subsidiaries, joint ventures
and related companies around the world, the activities of Alcan include bauxite
mining, alumina refining, production of chemicals, power generation, aluminum
smelting, manufacturing, recycling, packaging, as well as research and
development. Alcan employs approximately 54,000 people.
In the 101 years since it was established, Alcan has developed a unique
combination of competitive strengths. Alcan is a multicultural and multilingual
market-driven company reflecting the differing corporate and social
characteristics of the 42 countries in which it operates. Alcan is one of the
most international aluminum and packaging companies and is the global leader in
the production and sale of rolled aluminum products.
Alcan's six operating segments are:
BAUXITE, ALUMINA AND SPECIALTY CHEMICALS, headquartered in Montreal, Canada,
comprising Alcan's worldwide activities related to bauxite mining, alumina
refining and the production of specialty chemicals, operating seven bauxite
mines and deposits in five countries and five alumina plants in three countries;
PRIMARY METAL, also headquartered in Montreal, comprising smelting operations,
power generation and production of primary value-added ingot in the form of
sheet ingot, extrusion billet, rod and foundry ingot, as well as engineering
services and trading operations for alumina and aluminum, operating or having
interests in 16 smelters in seven countries;
ROLLED PRODUCTS AMERICAS AND ASIA, headquartered in Cleveland, Ohio, U.S.A.,
encompassing aluminum sheet and light gauge products, operating 16 plants in six
countries;
ROLLED PRODUCTS EUROPE, headquartered in Zurich, Switzerland, comprising
aluminum sheet, including automotive, can and lithographic sheet, plate and foil
stock operating 11 plants in four countries;
ENGINEERED PRODUCTS, headquartered in Neuhausen, Switzerland, producing
fabricated aluminum products, including wire and cable, components for the mass
transportation, automotive, building, display, eletromechanical and other
industrial markets, as well as sales and service centers throughout Europe,
operating 47 plants in 17 countries; and
PACKAGING, also headquartered in Zurich, consisting of Alcan's worldwide food
flexible, foil, specialty, pharmaceutical and cosmetics packaging businesses,
operating 76 plants in 14 countries.
Alcan's corporate head office, located in Montreal, focuses on strategy
development and capital deployment, while overseeing governance, policy, legal,
compliance, human resources and finance matters.
HISTORY
Alcan is a limited liability Canadian company, incorporated on June 3, 1902,
with its headquarters and registered office in Montreal, Canada. It was formed
as a subsidiary of the Pittsburgh Reduction Company, one of the founding
companies of the aluminum industry, to establish a smelter and hydroelectric
power facility in Shawinigan, Quebec. In 1928, the international operations and
domestic U.S. operations were separated into two competing companies that became
Alcan and Alcoa Inc., respectively. During the Second World War, substantial
expansion of hydroelectric and smelting capacity took place in Quebec to supply
aluminum for the war effort. In the 1950s, Alcan added hydroelectric and
smelting in British Columbia. During the postwar period, Alcan expanded
internationally and invested in fabricating activities to stimulate demand for
its primary metal production.
In 2000, Alcan entered into a combination agreement with algroup, which
consisted of an independent offer of Alcan Common Shares for all of the
outstanding shares of algroup. On October 17, 2000, after clearance from
competition authorities, the combination was completed, with Alcan acquiring
over 99% of the shares of algroup by virtue of its offer. Alcan acquired the
remaining shares in algroup in 2001 by virtue of statutory right and caused
algroup to de-list from the SWX Swiss Exchange.
Today, Alcan is a multinational company engaged in all aspects of the aluminum
and packaging industries on an international scale.
77
INFORMATION ABOUT PECHINEY
BUSINESS DESCRIPTION
Pechiney operates in two core businesses (positions and market shares presented
in this section are based on internal estimates of Pechiney as discussed in
Pechiney's publicly available disclosure): the production of primary aluminum
and fabricated aluminum products and the production of packaging materials.
Pechiney's aluminum technology is recognized as a world leader. Pechiney
believes that it is also one of the world leaders in the production of packaging
materials for the food, healthcare and beauty industries on the basis of 2002
sales. It is the world's largest producer of collapsible tubes. Pechiney's other
activities include the production of ferroalloys and international trade.
ALUMINUM: Pechiney's aluminum business is comprised of two segments: Primary
Aluminum Metal and Aluminum Conversion.
Primary Aluminum is Europe's second and the world's fifth largest producer of
primary aluminum on the basis of 2002 obtainable production capacity. It also
holds interests in companies that produce bauxite and alumina. Primary Aluminum
also licenses alumina and aluminum production technology and related equipment.
Aluminum Conversion includes the activities of four divisions:
- The Aerospace, Transport, Industry division includes the production of
aluminum rolled products for transport markets (aerospace, sea and
ground, excluding automotive) and industry, as well as the production of
hard alloy extrusions;
- The Cans, Automotive, Standard Rolled Products division includes the
production of aluminum rolled products at Neuf Brisach for the can,
automotive and standard rolled products market;
- The Foil and Thin Foil/Specialty Products division includes Pechiney
Eurofoil's foil and thin foil activities at Dudelange, Flemalle and
Rugles, as well as different specialty activities (circles, precoated
sheets, etc.);
- The Extrusions, Casting Alloys, Automotive division manufactures and
markets aluminum soft alloy sections for the construction, transport and
equipment markets, as well as casting alloys used almost exclusively in
the automotive market. The division is also in charge of Pechiney
Automotive, a cross-division structure specially dedicated to the
automotive market.
PACKAGING: In 2002, Pechiney's Packaging sector included the following
activities:
- Plastic Packaging, an important North American and European producer of
flexible packaging for the food, healthcare and specialty markets;
- Cebal Tubes Europe and Cebal Tubes Americas, which together are the world
leader in the manufacture of flexible plastic, laminated and aluminum
tubes for the cosmetics, personal care and healthcare markets on the
basis of 2002 production;
- Cebal Aerosols, the world's largest manufacturer of seamless aluminum
aerosol and spray cans;
- Techpack International (TPI), one of the world's principal producers of
plastic packaging for makeup, perfume and cosmetics on the basis of 2002
sales;
- Pechiney Capsules, which produces caps and overcaps for wines and
spirits.
OTHER ACTIVITIES: Pechiney's other business also includes Ferroalloys, where
Pechiney mainly produces silicon and ferroalloys as well as abrasives and
refractories, and International Trade, where Pechiney operates the following
three lines of business: a worldwide network of sales agencies, which markets
products manufactured by Pechiney and third parties; a non-ferrous metal and
other basic material trading operation; and the distribution of semi-finished
aluminum products.
78
NEW ORGANIZATION: The aluminum activities of Pechiney were divided, effective
as of February 1, 2003, into two distinct sectors:
- the Primary Aluminum sector, which includes in a single entity
bauxite-alumina-aluminum production activities and ferroalloys;
- the Aluminum Conversion sector, comprised of rolled products, extrusions
and casting alloys used in a wide variety of markets: aerospace,
automotive, sea transport, rail, industry, industrial equipment,
construction and beverage cans.
CONVERSION OF PECHINEY PREFERRED SHARES "B" TO PECHINEY COMMON SHARES
Pursuant to resolutions adopted at an extraordinary meeting of Pechiney's
shareholders on April 3, 2003 and an extraordinary meeting of the holders of
Pechiney's Preferred Shares "B" on May 27, 2003, the 1,091,040 outstanding
Pechiney Preferred Shares "B" were converted into Pechiney Common Shares
effective June 4, 2003, at the exchange ratio of 11 Common Shares for 10
Preferred Shares "B." In this conversion, each Pechiney Preferred Share "B" was
automatically converted into one Pechiney Common Share, with the holders of the
Pechiney Preferred Shares "B" also receiving one Pechiney Bonus Allocation Right
per Pechiney Preferred Share "B." Each Pechiney Bonus Allocation Right gives the
holder the right to acquire 0.10 of a Pechiney Common Share, with 10 Pechiney
Bonus Allocation Rights being required to acquire one Pechiney Common Share. No
fractional Pechiney Common Shares will be issued in exchange for Pechiney Bonus
Allocation Rights. The Bonus Allocation Rights, whose ISIN code is FR0000951634,
were listed on Euronext Paris through August 4, 2003, and from that date
continue to trade over-the-counter. Under French law, the Pechiney Bonus
Allocation Rights may be bought and sold, and remain exercisable in round lots
of 10 by their holders, for a period of two years from the date of the
publication of a notice in France regarding the two-year period of exercise.
That notice was published on June 4, 2003. At the expiry of this two-year
period, any underlying Pechiney Common Shares that have not been exchanged for
Pechiney Bonus Allocation Rights will be sold on the market. In connection with
the conversion of the Pechiney Preferred Shares "B," the "A" designation
formerly assigned to the Pechiney Common Shares was eliminated.
79
PRO FORMA COMBINED FINANCIAL STATEMENTS OF ALCAN AND PECHINEY
The following unaudited pro forma combined balance sheet and unaudited pro forma
combined statement of income, which give effect to the offers, are presented in
U.S. dollars and reflect the combination of Alcan and Pechiney using the
purchase method under U.S. GAAP. The pro forma adjustments are based upon
available information and certain assumptions that pursuant to the offers:
- all of the outstanding Pechiney Common Shares are exchanged for Alcan
Common Shares and cash, with a cash component of E25.60 (including the
additional consideration that may be payable in the offers) and a share
component of E22.90 in Alcan Common Shares for every Pechiney Common
Share.
- all of the Pechiney Bonus Allocation Rights are exchanged for Alcan
Common Shares and cash, with a cash component of E25.60 (including the
additional consideration that may be payable in the offers) and a share
component of E22.90 in Alcan Common Shares for every 10 Pechiney Bonus
Allocation Rights (it is assumed that the Pechiney Bonus Allocation
Rights have been satisfied by the issuance of Pechiney Common Shares
during the three-month period ended June 30, 2003).
- all of the Pechiney OCEANEs are exchanged for cash. Each Pechiney OCEANE
is exchanged for E83.80 (including the additional consideration that may
be payable in the offers).
- all of the Pechiney ADSs are exchanged for Alcan Common Shares and cash,
with a cash component of E25.60 (including the additional consideration
that may be payable in the offers) and a share component of E22.90 in
Alcan Common Shares for every 2 Pechiney ADSs.
- all of the outstanding Pechiney stock options are exchanged for Alcan
stock options; and
- the cash consideration paid in the offers is financed by additional Alcan
debt.
The unaudited pro forma combined balance sheet and unaudited pro forma combined
statement of income are presented for illustrative purposes only and are not
necessarily indicative of the operating results or financial condition of the
combined entities that would have been achieved had this offer and the French
offer been completed during the periods presented, nor are the unaudited pro
forma combined balance sheet and unaudited pro forma combined statement of
income necessarily indicative of the future operating results or financial
position of the combined entities. The unaudited pro forma combined balance
sheet and unaudited pro forma combined statement of income do not reflect any
cost savings or other synergies which may result from the combination. The
unaudited pro forma financial information does not reflect any special items
such as payments pursuant to change of control provisions or restructuring and
integration costs which may be incurred as a result of the acquisition. In
addition, the financial effects of any actions described in the section "The
Offers -- Reasons for the Offers -- Employment Matters," such as costs of
rationalization or synergies, cannot currently be determined and are therefore
not reflected in the unaudited pro forma combined financial statements. Because
Alcan has access only to publicly available financial information about
Pechiney's accounting policies, there can be no assurance that the accounting
policies of Pechiney conform to those of Alcan.
Regulatory clearances from the European Commission, the U.S. Department of
Justice and the Swiss Competition Commission are subject to Alcan divesting
certain businesses, operations or assets of Alcan and/or Pechiney and Alcan
continuing to license certain technologies of Alcan and/or Pechiney to third
parties. Because Alcan has not yet entered into any agreements with purchasers
with respect to these divestitures, they have not been reflected in the
unaudited pro forma combined financial statements. The businesses, operations or
assets that Alcan is required to divest to comply with conditions imposed by
regulatory authorities represent approximately 5% of total unaudited pro forma
combined revenues. See "The Offers -- Reasons for the Offers -- Commitments
Offered to the European Commission and the U.S. Department of Justice to Obtain
Regulatory Approval."
The unaudited pro forma combined balance sheet and unaudited pro forma combined
statement of income have been derived from and should be read in conjunction
with the respective consolidated financial information of Alcan and Pechiney as
of and for the six months ended June 30, 2003, and as of and for the year ended
December 31, 2002, which are incorporated herein by reference. All amounts are
stated in
80
U.S. dollars. This pro forma information is subject to risks and uncertainties,
including those discussed under "Risk Factors -- Risks Relating to the
Offers -- We Have Not Been Given the Opportunity to Conduct a Due Diligence
Review of the Non-Public Records of Pechiney. Therefore, We May Be Subject to
Unknown Liabilities of Pechiney Which May Have a Material Adverse Effect on Our
Profitability and Results of Operations" and "Risk Factors -- Risks Relating to
the Offers -- We Have Not Verified the Reliability of the Pechiney Information
Included in, or Incorporated by Reference into, this Prospectus and as a Result,
Our Estimates of the Impact of Consummation of the Offers on the Pro Forma
Information in this Prospectus May be Incorrect."
As noted above, Alcan prepares its financial statements in accordance with
Canadian GAAP, and provides a reconciliation of such financial statements to
U.S. GAAP. Since Pechiney does not prepare Canadian GAAP financial information,
but does prepare a U.S. GAAP reconciliation of its financial statements, the pro
forma financial information herein is prepared in accordance with U.S. GAAP.
81
ALCAN AND PECHINEY -- U.S. GAAP
UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF JUNE 30, 2003
FRENCH
GAAP
CANADIAN TRANSLATED
GAAP ALCAN US HISTORICAL
HISTORICAL GAAP ALCAN US PECHINEY
ALCAN ADJUSTMENTS GAAP (RECLASSIFIED)
---------- ----------- -------- --------------
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS)
ASSETS
CURRENT ASSETS
Cash and time deposits.................. 127 (10) 117 339
Marketable securities................... -- -- -- 62
Receivables............................. 1,982 14 1,996 1,703
Inventories............................. 2,220 (101) 2,119 1,656
Deferred income taxes................... -- -- -- 52
Current assets held for sale............ 83 -- 83 --
------ ----- ------ -----
4,412 (97) 4,315 3,812
Deferred charges and other assets....... 665 962 1,627 779
Property, plant and equipment - net..... 10,452 (938) 9,514 3,338
Other intangible assets - net........... 319 122 441 154
Goodwill................................ 2,353 (200) 2,153 713
Excess of purchase price over book value
of net assets acquired................ -- -- -- --
Deferred income taxes................... -- -- -- 564
Long term assets held for sale.......... 72 -- 72 --
------ ----- ------ -----
Total assets............................ 18,273 (151) 18,122 9,360
====== ===== ====== =====
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Payables................................ 2,509 (75) 2,434 2,228
Short-term borrowings................... 348 (25) 323 424
Debt maturing within one year........... 235 (48) 187 211
Current liabilities of operations held
for sale.............................. 41 -- 41 --
------ ----- ------ -----
3,133 (148) 2,985 2,863
Debt not maturing within one year....... 3,517 (63) 3,454 1,514
Deferred credits and other
liabilities........................... 1,631 672 2,303 1,325
Deferred income taxes................... 1,198 (253) 945 210
Long term liabilities of operations held
for sale.............................. 8 -- 8 --
Minority interests...................... 195 -- 195 168
SHAREHOLDERS' EQUITY
Preference shares....................... 160 -- 160 --
Common shareholders' equity Common
shares................................ 4,711 -- 4,711 2,131
Retained earnings..................... 3,279 (6) 3,273 1,416
Other................................. 441 (353) 88 (267)
------ ----- ------ -----
8,591 (359) 8,232 3,280
------ ----- ------ -----
Total liabilities and shareholders'
equity................................ 18,273 (151) 18,122 9,360
====== ===== ====== =====
PECHINEY US PRO FORMA
GAAP PECHINEY US ADJUSTMENTS PRO FORMA
ADJUSTMENTS GAAP (NOTE 5) COMBINED
----------- ----------- ----------- ---------
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS)
ASSETS
CURRENT ASSETS
Cash and time deposits.................. -- 339 -- 456
Marketable securities................... -- 62 -- 62
Receivables............................. 276 1,979 -- 3,975
Inventories............................. 2 1,658 -- 3,777
Deferred income taxes................... (17) 35 -- 35
Current assets held for sale............ -- -- -- 83
--- ----- ------ ------
261 4,073 -- 8,388
Deferred charges and other assets....... (64) 715 24(b) 2,366
Property, plant and equipment - net..... (1) 3,337 -- 12,851
Other intangible assets - net........... -- 154 -- 595
Goodwill................................ 39 752 (752)(b) 2,153
Excess of purchase price over book value
of net assets acquired................ -- -- 2,114(b) 2,114
Deferred income taxes................... (8) 556 -- 556
Long term assets held for sale.......... -- -- -- 72
--- ----- ------ ------
Total assets............................ 227 9,587 1,386 29,095
=== ===== ====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Payables................................ 230 2,458 -- 4,892
Short-term borrowings................... -- 424 3,183(a) 3,930
Debt maturing within one year........... -- 211 -- 398
Current liabilities of operations held
for sale.............................. -- -- -- 41
--- ----- ------ ------
230 3,093 3,183 9,261
Debt not maturing within one year....... -- 1,514 (712)(b) 4,256
Deferred credits and other
liabilities........................... 62 1,387 -- 3,690
Deferred income taxes................... -- 210 (17)(b) 1,138
Long term liabilities of operations held
for sale.............................. -- -- -- 8
Minority interests...................... -- 168 -- 363
SHAREHOLDERS' EQUITY
Preference shares....................... -- -- -- 160
Common shareholders' equity Common
shares................................ -- 2,131 (50)(b) 6,792
Retained earnings..................... 26 1,442 (1,442)(b) 3,273
Other................................. (91) (358) 424(b) 154
--- ----- ------ ------
(65) 3,215 (1,068) 10,379
--- ----- ------ ------
Total liabilities and shareholders'
equity................................ 227 9,587 1,386 29,095
=== ===== ====== ======
The accompanying notes are an integral part of the unaudited pro forma combined
financial statements.
See Note 6 for sensitivity analyses.
82
ALCAN AND PECHINEY -- U.S. GAAP
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FROM CONTINUING OPERATIONS
BEFORE NONRECURRING CHARGES OR CREDITS DIRECTLY ATTRIBUTABLE TO THE ACQUISITION
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2003.
FRENCH
GAAP
CANADIAN TRANSLATED
GAAP ALCAN US HISTORICAL
HISTORICAL GAAP ALCAN US PECHINEY
ALCAN ADJUSTMENTS GAAP (RECLASSIFIED)
----------- ----------- ----------- --------------
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS)
REVENUES
Sales and operating
revenues.............. 6,681 (15) 6,666 6,135
COSTS AND EXPENSES
Cost of sales and
operating expenses.... 5,286 43 5,329 5,391
Depreciation............ 455 (37) 418 213
Goodwill amortization... -- -- -- 16
Selling, administrative
and general
expenses.............. 339 (1) 338 324
Research and development
expenses.............. 61 -- 61 53
Interest................ 104 (2) 102 63
Restructuring,
impairment and other
special charges....... (14) (6) (20) 67
Other expenses
(income).............. 109 22 131 (19)
----------- --- ----------- -----
6,340 19 6,359 6,108
Income (loss) before
income taxes and other
items................. 341 (34) 307 27
Income taxes............ 292 (15) 277 17
----------- --- ----------- -----
49 (19) 30 10
Equity income........... 1 18 19 6
Minority interests...... (13) -- (13) (3)
----------- --- ----------- -----
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition.... 37 (1) 36 13
Dividends on preference
shares................ 3 -- 3 --
----------- --- ----------- -----
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition
attributable to common
shareholders.......... 34 (1) 33 13
----------- --- ----------- -----
Income from continuing
operations before
nonrecurring charges
or credits directly
attributable to the
acquisition per common
share
Basic................. 0.10 0.10 --
Diluted............... 0.10 0.10 --
Weighted average of
common shares
outstanding
Basic................. 321,609,871 321,609,871
Diluted............... 321,873,812 321,873,812
PECHINEY PRO FORMA
US GAAP PECHINEY US ADJUSTMENTS PRO FORMA
ADJUSTMENTS GAAP (NOTE 5) COMBINED
----------- ----------- ----------- -----------
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS)
REVENUES
Sales and operating
revenues.............. 1 6,136 -- 12,802
COSTS AND EXPENSES
Cost of sales and
operating expenses.... (4) 5,387 -- 10,716
Depreciation............ -- 213 -- 631
Goodwill amortization... (16) -- -- --
Selling, administrative
and general
expenses.............. -- 324 -- 662
Research and development
expenses.............. -- 53 -- 114
Interest................ (2) 61 22(c) 185
Restructuring,
impairment and other
special charges....... -- 67 -- 47
Other expenses
(income).............. 3 (16) -- 115
--- ----- ------ -----------
(19) 6,089 22 12,470
Income (loss) before
income taxes and other
items................. 20 47 (22) 332
Income taxes............ 1 18 (8)(d) 287
--- ----- ------ -----------
19 29 (14) 45
Equity income........... 2 8 -- 27
Minority interests...... -- (3) -- (16)
--- ----- ------ -----------
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition.... 21 34 (14) 56
Dividends on preference
shares................ -- -- -- 3
--- ----- ------ -----------
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition
attributable to common
shareholders.......... 21 34 (14) 53
--- ----- ------ -----------
Income from continuing
operations before
nonrecurring charges
or credits directly
attributable to the
acquisition per common
share
Basic................. -- -- -- 0.14
Diluted............... -- -- -- 0.14
Weighted average of
common shares
outstanding
Basic................. 371,629,544
Diluted............... 372,141,381
The accompanying notes are an integral part of the unaudited pro forma combined
financial statements.
This pro forma combined statement of income does not include any amortization of
the excess purchase price, which may be material. See Note 6 for sensitivity
analyses.
83
ALCAN AND PECHINEY -- U.S. GAAP
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FROM CONTINUING OPERATIONS
BEFORE NONRECURRING CHARGES OR CREDITS DIRECTLY ATTRIBUTABLE TO THE ACQUISITION
FOR THE YEAR ENDED DECEMBER 31, 2002
FRENCH
GAAP
TRANSLATED
CANADIAN HISTORICAL
GAAP ALCAN US PECHINEY
HISTORICAL GAAP ALCAN US (RECLASSIFIED;
ALCAN ADJUSTMENTS GAAP RESTATED)
----------- ----------- ----------- --------------
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS)
REVENUES
Sales and operating
revenues............. 12,327 (28) 12,299 11,395
COSTS AND EXPENSES
Cost of sales and
operating expenses... 9,748 75 9,823 10,032
Depreciation........... 835 (70) 765 317
Goodwill
amortization......... -- -- 29
Goodwill impairment.... 93
Selling, administrative
and general
expenses............. 573 (1) 572 577
Research and
development
expenses............. 115 115 85
Interest............... 202 (4) 198 79
Restructuring,
impairment and other
special charges...... 69 69 137
Other expenses
(income)............. 114 2 116 64
----------- --- ----------- ------
11,656 2 11,658 11,413
Income (loss) before
income taxes and other
items.................. 671 (30) 641 (18)
Income taxes............. 295 (17) 278 37
----------- --- ----------- ------
376 (13) 363 (55)
Equity income............ 3 51 54 3
Minority interests....... (3) (3) --
----------- --- ----------- ------
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition..... 376 38 414 (52)
Dividends on preference
shares................. 5 5 2
----------- --- ----------- ------
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition
attributable to common
shareholders........... 371 38 409 (54)
=========== === =========== ======
Income from continuing
operations before
nonrecurring charges or
credits directly
attributable to the
acquisition per common
shares
Basic.................. 1.16 1.27 --
Diluted................ 1.15 1.27 --
Weighted average of
common shares
outstanding
Basic.................. 321,208,914 321,208,914 --
Diluted................ 322,423,183 322,423,183 --
PECHINEY PRO FORMA
US GAAP PECHINEY US ADJUSTMENTS PRO FORMA
ADJUSTMENTS GAAP (NOTE 5) COMBINED
----------- ----------- ----------- -----------
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS)
REVENUES
Sales and operating
revenues............. 9 11,404 -- 23,703
COSTS AND EXPENSES
Cost of sales and
operating expenses... (6) 10,026 -- 19,849
Depreciation........... -- 317 -- 1,082
Goodwill
amortization......... (29) -- -- --
Goodwill impairment.... (20) 73 -- 73
Selling, administrative
and general
expenses............. -- 577 -- 1,149
Research and
development
expenses............. -- 85 -- 200
Interest............... 1 80 76(e) 354
Restructuring,
impairment and other
special charges...... -- 137 -- 206
Other expenses
(income)............. -- 64 5(e) 185
--- ------ ------ -----------
(54) 11,359 81 23,098
Income (loss) before
income taxes and other
items.................. 63 45 (81) 605
Income taxes............. 5 42 (30)(f) 290
--- ------ ------ -----------
58 3 (51) 315
Equity income............ 14 17 -- 71
Minority interests....... -- -- -- (3)
--- ------ ------ -----------
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition..... 72 20 (51) 383
Dividends on preference
shares................. 2 7
--- ------ ------ -----------
Income (loss) from
continuing operations
before nonrecurring
charges or credits
directly attributable
to the acquisition
attributable to common
shareholders........... 72 18 (51) 376
=== ====== ====== ===========
Income from continuing
operations before
nonrecurring charges or
credits directly
attributable to the
acquisition per common
shares
Basic.................. -- -- -- 1.01
Diluted................ -- -- -- 1.01
Weighted average of
common shares
outstanding
Basic.................. -- -- -- 371,228,587
Diluted................ -- -- -- 372,690,752
The accompanying notes are an integral part of the unaudited pro forma combined
financial statements.
This pro forma combined statement of income does not include any amortization of
the excess purchase price, which may be material. See Note 6 for sensitivity
analyses.
84
ALCAN AND PECHINEY -- U.S. GAAP
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- U.S. GAAP
(IN MILLIONS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
These unaudited pro forma combined financial statements have been prepared to
reflect the combination of Alcan and Pechiney using the purchase method.
Because Alcan has access only to publicly available financial information about
Pechiney's accounting policies, there can be no assurance that the accounting
policies of Pechiney conform to those of Alcan.
The unaudited pro forma combined financial statements are based on the following
assumptions related to the combination:
- all of the outstanding Pechiney Common Shares (including Pechiney Common
Shares underlying the Pechiney ADSs and excluding those held by Pechiney
and one of its subsidiaries) are tendered for exchange for a combination
of Alcan Common Shares and cash;
- Pechiney Common Shares were issued during the three-month period ended
June 30, 2003 in satisfaction of the Pechiney Bonus Allocation Rights;
- all of the outstanding Pechiney OCEANEs are tendered for exchange for
cash, including a premium of $61 million over book value;
- all of the outstanding Pechiney's stock options are replaced by Alcan
stock options based on the exchange ratio and at a strike price equal to
the market value of an underlying Alcan Common Share and no Pechiney
stock options are exercised in connection with the combination;
- the cash consideration for the offers is financed by additional Alcan
debt;
- for purposes of calculating the purchase price and the pro forma
adjustments, an exchange rate of $1.1671 for E1.00 has been used;
- the fair value per Alcan Common Share used to determine the number of
Alcan Common Shares to be issued is $41.60, which is the average of the
closing price for Alcan Common Shares on the New York Stock Exchange for
the six trading days beginning October 10, 2003 and ending on October 17,
2003. This estimate of value is preliminary; and
- the number of Alcan Common Shares to be issued is 50.02 million, which is
calculated by taking the share portion of the consideration in the offers
($2,081 million) and dividing it by the assumed fair value per Alcan
Common Share of $41.60.
The combination will be accounted for as a "purchase" in accordance with U.S.
GAAP with Alcan being identified as the acquirer.
The unaudited pro forma combined balance sheet is presented as if the
combination between Alcan and Pechiney had been effective June 30, 2003 while
the unaudited pro forma combined statements of income are presented as if the
combination between Alcan and Pechiney had been effective January 1, 2002.
The purchase price will be allocated to the Pechiney assets acquired and
liabilities assumed based on their estimated fair market value.
85
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS --
U.S. GAAP -- (CONTINUED)
For the purpose of the unaudited pro forma combined financial statements, no
purchase price allocation has been performed since Alcan has limited information
about Pechiney.
CASH SHARE
PORTION PORTION TOTAL
----------- ----------- ------
Number of Pechiney securities outstanding at June 30,
2003(1)................................................. 77,855,739 77,855,739
Price for each Pechiney security (in euros)............... E 25.6 E 22.9
----------- -----------
Total consideration for the Pechiney Common Shares (in
millions of euros)...................................... 1,993 1,783
=========== ===========
Assumed exchange rate..................................... 1.1671 1.1671
=========== ===========
Total consideration for Pechiney Common Shares (in
millions)............................................... $ 2,326 $ 2,081 $4,407
Cash consideration for Pechiney OCEANEs (7,908,636 bonds
at E83.8 at the assumed exchange rate of
E1 = $1.1671)(in millions):............................. 773
Transactions costs (net of tax of $15)(in millions)....... 40
Assumed fair value of Alcan stock options issued to
replace Pechiney stock options (in millions)(2)......... 66
------
Total purchase price (in millions)........................ $5,286
------
Less (in millions):
Book value of Pechiney shareholders' equity
(excluding Pechiney's goodwill of $752)............ 2,463
Book value of Pechiney OCEANEs and related
unamortized deferred issue costs................... 709
------
Excess of purchase price over book value of shareholders'
equity and Pechiney OCEANEs (in millions)............... $2,114
------
---------------
(1) Excluding 4,767,044 Pechiney Common Shares held by Pechiney and one of its
subsidiaries.
(2) Includes 3,484,950 Pechiney stock options assumed to be outstanding as at
June 30, 2003.
The pro forma information is based on preliminary estimates and assumptions set
forth below in note 5. These adjustments and allocation of purchase price are
preliminary. Due to the limited financial and other information available to
Alcan's management, the excess of the purchase price over the book value of the
assets to be acquired has been allocated to "Excess of purchase price over book
value of net assets acquired." The final purchase price allocation will be
completed after asset and liability valuations are finalized by Alcan's
management. A final determination of these fair values, which cannot be made
prior to the completion of the combination, will include Alcan's management's
consideration of all pertinent factors. This final valuation will be based on
the actual net tangible and intangible assets of Pechiney that exist as of the
date of the completion of the combination. Any final adjustments may change the
allocation of purchase price which could affect the fair value assigned to the
assets and liabilities and could result in material changes to the unaudited pro
forma combined financial statements. Amount preliminarily allocated to "Excess
of purchase price over book value of net assets acquired" will be allocated to
various classes of assets, including intangible assets with indefinite lives,
intangible assets with definite lives and goodwill. These final allocations may
result in a material increase in amortization of assets. In addition, the impact
of ongoing integration activities, the timing of the completion of the
combination and other changes in Pechiney's net tangible and intangible assets
prior to the completion of the combination could cause material differences in
the information presented.
The accompanying unaudited pro forma combined financial statements are based on
and should be read in conjunction with the historical consolidated financial
statements of Alcan and Pechiney for the year ended
86
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS --
U.S. GAAP -- (CONTINUED)
December 31, 2002 and for the six-month period ended June 30, 2003, including
the notes thereto which are incorporated by reference in this document. Certain
reclassifications have been made to the Pechiney historical financial statements
to conform to the expected presentation to be used by Alcan upon completion of
the combination and based on certain assumptions made by Alcan.
The pro forma adjustments are based upon available information and include
certain assumptions and adjustments, which the management of Alcan believes to
be reasonable. However, Alcan's adjustments and assumptions do not reflect any
input from Pechiney, as discussed above. These adjustments are directly
attributable to the combination and are expected to have a continuing impact on
Alcan's business, results of operations and financial position. The pro forma
information does not reflect cost savings expected to be realized from the
elimination of certain expenses and from the synergies to be created and the
costs to implement such cost savings or synergies. No assurance can be given
that operating cost savings and synergies will be realized. The pro forma
financial information does not reflect any special items such as payments
pursuant to change of control provisions or restructuring and integration costs
which may be incurred as a result of the acquisition.
To compute the pro forma $66 included in the purchase price relating to the
assumed fair value of Alcan stock options issued to replace Pechiney stock
options, Alcan used a Black-Scholes valuation model based on the
weighted-average assumptions used to compute the pro forma compensation expense
as reported in Alcan's historical consolidated financial statements. The
principal assumptions used are: dividend yield of 1.65%; expected volatility of
35.73%; risk-free interest rate of 3.5% and expected life of 6 years. Alcan
management has not yet determined how these options would be treated and,
accordingly, the value and the accounting for any treatment of the Pechiney
options may differ from those presented. Should all the holders of Pechiney
options exercise their Pechiney options after the consummation of the offers,
and Alcan exchange the resulting Pechiney Common Shares for Alcan Common Shares
at an exchange ratio equivalent to that assumed in this pro forma financial
information, unaudited pro forma combined Short-term borrowings would increase
by $30, Common shareholders' equity would increase by $93 and Excess of purchase
price over book value of net assets acquired would increase by $123. The impact
on annual pro forma combined interest expense and pro forma combined income from
continuing operations before nonrecurring charges and credits directly
attributable to the acquisition would be less than $1 and the per share impact
would be nil. See "The Offers -- Treatment of Pechiney Stock Purchase Options
and Pechiney Stock Subscription Options".
The unaudited pro forma combined financial statements are not necessarily
indicative either of the results that actually would have been achieved if the
transactions reflected therein had been effective during the periods presented
or of the results which may be obtained in the future.
2. FOREIGN CURRENCY TRANSLATION
The Pechiney historical balance sheet information and related pro forma
adjustments as of June 30, 2003 have been translated into U.S. dollars at the
June 30, 2003 rate of exchange of U.S. $1 = 0.8772 euros. The Pechiney
historical statements of income information for the year ended December 31,
2002, the six-month period ended June 30, 2003 and related pro forma adjustments
to the unaudited pro forma statements of income have been translated at the
average rates of exchange of U.S. $1 = 0.9454 euros and U.S. $1 = 0.9009 euros,
respectively.
3. DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP AS THEY APPLY TO ALCAN
Refer to Note 7 of the Alcan consolidated financial statements which are
incorporated by reference into this prospectus for a description of the
differences between Canadian and U.S. GAAP as they apply to Alcan. However,
investments in joint ventures have been accounted for using the equity method in
these pro forma combined financial statements. In Alcan's consolidated financial
statements incorporated by reference into this document, joint ventures are
accounted for using the proportionate consolidation method.
87
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS --
U.S. GAAP -- (CONTINUED)
4. DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP AS THEY APPLY TO PECHINEY
Refer to Note 25 of the Pechiney financial statements which are incorporated by
reference into this prospectus for a description of the differences between
French and U.S. GAAP as they apply to Pechiney.
5. UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined financial statements incorporate the following
adjustments:
The following adjustments have been made to prepare the pro forma balance sheet
and statement of income. Pro forma statement of income adjustments are assumed
to occur as of January 1, 2002. Pro forma balance sheet adjustments are assumed
to occur at June 30, 2003.
UNAUDITED COMBINED PRO FORMA
BALANCE SHEET AS AT JUNE 30, 2003 (IN MILLIONS OF U.S. DOLLARS)
a) Borrowing under new credit facility to finance acquisition
of Pechiney securities
Debit Cash......................... 3,183
Credit Short-term borrowings................... 3,183
b) Reflecting consideration for Pechiney Common Shares,
Pechiney OCEANEs, Pechiney ADSs and Pechiney stock options,
financing costs of $29 and transaction costs of $55 by
issuance of Alcan Common Shares for an estimated value of
$2,081, issuance of Alcan replacement options with an
estimated value of $66 and cash of $3,099. Reflecting
deferred income taxes of $17 related to transaction costs,
Pechiney's deferred issue costs (i.e., Pechiney OCEANEs) and
allocation of the purchase price by elimination of
Pechiney's goodwill; the elimination of deferred issue costs
(i.e., Pechiney OCEANEs); the elimination of Pechiney's
shareholders' equity accounts, and the allocation of the
remainder to excess of purchase price over book value of net
assets acquired (see note 6 for sensitivities)
Debit Excess of purchase price over book value
of net assets acquired................... 2,114
Deferred financing costs................. 24
Debt not maturing within one year........ 712
Deferred income taxes.................... 17
Pechiney Common Shares................... 2,131
Retained earnings........................ 1,442
Credit Pechiney goodwill...................... 752
Cash.................................... 3,183
Other equity............................ 358
Alcan Common Shares..................... 2,081
Alcan stock options..................... 66
88
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS --
U.S. GAAP -- (CONTINUED)
UNAUDITED COMBINED PRO FORMA
INCOME STATEMENT FOR THE SIX MONTHS ENDED JUNE 30, 2003
(IN MILLIONS OF U.S. DOLLARS)
c) Interest expense on debt issued to finance acquisition and
retirement of Pechiney OCEANEs at an assumed annual interest
rate of 1.6%................................................ 25
Financing costs relating to the new 365-day credit facility
entered into in connection with the transaction............. 8
Elimination of interest and amortization of premium on
Pechiney OCEANEs............................................ (11)
22
======
d) Income tax recovery on line item (c) at 36% for Alcan and
34% for Pechiney............................................ (8)
======
UNAUDITED COMBINED PRO FORMA
INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2002
(IN MILLIONS OF U.S. DOLLARS)
e) Interest expense on debt issued to finance acquisition and
retirement of Pechiney OCEANEs at an assumed annual interest
rate of 1.6%................................................ 51
Financing costs relating to the new 365-day credit facility
entered into in connection with the transaction............. 41
Elimination of interest and amortization of premium on
Pechiney OCEANEs............................................ (16)
Write-off of deferred issue costs on Pechiney OCEANEs....... 5
------
81
======
f) Income tax recovery on line item (e) at 36% for Alcan and
34% for Pechiney............................................ (30)
======
The 1.6% assumed annual interest rate on debt issued to finance the acquisition
and retirement of the Pechiney OCEANEs was determined based on the current
3-month LIBOR rate plus a margin of 0.5%, pursuant to the bridge credit facility
that Alcan has entered into in connection with the transaction. See "The
Offers -- Source and Amount of Funds."
6. SENSITIVITY ANALYSIS
The unaudited pro forma combined financial statements are based upon the
assumption that 100% of the Pechiney Common Shares (including Pechiney Common
Shares underlying the Pechiney ADSs and excluding the Pechiney Common Shares
held by Pechiney and one of its subsidiaries) are exchanged for Alcan Common
Shares and cash in the offers. Should Alcan obtain only 94.9% of the Pechiney
Common Shares, pro forma common shareholders' equity as of June 30, 2003 would
decrease by $106 and Short-term borrowings would decrease by $155. Pro forma
minority interest would increase by $164. Pro forma income from continuing
operations before nonrecurring charges or credits directly attributable to the
acquisition for the year ended December 31, 2002 would increase by $2 or $0.00
per common share, and for the six-month period ended June 30, 2003 would
increase by $1 or $0.00 per common share. For each further 10% decrease in the
number of Pechiney Common Shares exchanged, pro forma common shareholders'
equity as of June 30, 2003 would decrease by $197 and Short-term borrowings
would decrease by $212 million. Pro forma minority interest would increase by
$321. Pro forma income from continuing operations before nonrecurring charges or
credits directly attributable to the acquisition for the year ended December 31,
2002, would be unchanged as the increase in the minority interests caused by a
smaller number of shares exchanged is offset by the
89
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS --
U.S. GAAP -- (CONTINUED)
reduction in the after-tax interest expense due to the reduction in Short-term
borrowings, and for the six-month period ended June 30, 2003 would decrease by
$2 or $0.01 per common share.
For every $100 of the "Excess of Purchase Price over book value of net assets
acquired" which is allocated to tangible and identifiable assets with definite
lives, pro forma combined annual income from continuing operations before
nonrecurring charges or credits directly attributable to the acquisition would
decrease by $3 or $0.01 per common share, assuming an amortization period of 20
years, estimated to be their average remaining useful life.
For each 12.5 basis points increase (decrease) in the interest rate on
short-term borrowings assumed to finance the acquisition, pro forma combined
annual income from continuing operations before nonrecurring charges or credits
directly attributable to the acquisition would decrease (increase) by $2, or
$0.01 per common share.
The unaudited pro forma combined financial statements are based upon the
assumption that 100% of the Pechiney OCEANEs are exchanged in the offers. For
every $100 million amount of Pechiney OCEANEs that are not exchanged, Pro forma
combined income from continuing operations before nonrecurring charges or
credits directly attributable to the acquisition would decrease by approximately
$2 million, or $0.01 per common share, being the impact of the higher interest
expense on the Pechiney OCEANEs compared to Alcan's incremental short term
borrowing rate.
If the "Average Value" per Alcan Common Share determined as described under "The
Offers -- Terms of the Offers" is less than or equal to E27.40, the maximum
number of Alcan Common Shares to be issued would be 65.1 million. At this
maximum share level, pro forma combined income from continuing operations before
nonrecurring charges or credits directly attributable to the acquisition per
common share for the year ended December 31, 2002 and the six-month period ended
June 30, 2003 would be $0.97 and $0.14, respectively.
For each $1.00 change in the fair value per Alcan Common Share when the "Average
Value" (as defined under "The Offers -- Terms of the Offers") is equal to or
below E27.40, the total purchase price, the excess of purchase price over book
value of assets acquired, and common shareholders' equity would change by
$65.10.
For each $1.00 change in the fair value per Alcan Common Share when the "Average
Value" (as defined under "The Offers -- Terms of the Offers") is equal to or
above E38.16, the total purchase price, the excess of purchase price over book
value of assets acquired, and common shareholders' equity would change by
$46.70.
At the assumed Alcan Common Share price of $41.60, for every additional $300
million of Alcan Common Share purchase consideration that Alcan elects to pay in
cash, pro forma combined annual income from continuing operations before
nonrecurring charges or credits directly attributable to the acquisition would
decrease by $3 or $0.01 per common share.
90
REGULATORY MATTERS
In order to complete these offers, Alcan was required to obtain approvals from
the European Commission and the U.S. Federal Trade Commission and Department of
Justice. These approvals were obtained on September 29, 2003, subject to the
commitments described under "The Offers -- Reasons for the Offers -- Commitments
Offered to the European Commission and the U.S. Department of Justice to Obtain
Regulatory Approval" on page 36.
Other jurisdictions throughout the world claim jurisdiction under their
competition or antitrust laws in respect of acquisitions or mergers that have
the potential to affect their domestic marketplace. A number of these
jurisdictions have or will claim to have jurisdiction over the proposed
transaction. Although Alcan does not anticipate that there will be any
investigations or proceedings in any such jurisdiction that would have a
material impact on the completion of the offers or the operations of Alcan or
Pechiney, there can be no assurance that such investigations or proceedings,
whether by governmental authorities or private parties, will not be initiated
and, if initiated, will not have a material adverse impact on the completion of
the offers or the operations of Alcan or Pechiney.
Alcan is not aware of any material licenses or regulatory permits that it holds
which might be adversely affected by the completion of the offers for Pechiney
securities or of any material approval or other action by any federal,
provincial, state or foreign government or any administrative or regulatory
agency that would be required to be obtained prior to making the offers or
accepting securities pursuant thereto except as have been obtained or applied
for, or as described herein.
COMPETITION AND ANTITRUST
EUROPEAN UNION COMPETITION LAWS
Alcan and Pechiney both conduct business in the Member States of the European
Union. Council Regulation (EEC) No. 4064/89 (as amended) requires that certain
mergers or acquisitions involving parties with aggregate worldwide sales and
individual European Union sales exceeding certain thresholds be notified to and
approved by the European Commission before such mergers and acquisitions are
consummated. The aforementioned Regulation gives the Member States of the
European Union the right to request that the European Commission refer
jurisdiction to review a merger to their national competition authorities under
the provisions of the relevant national merger law where it may have an effect
on competition in a distinct national market. Such a request must be made within
three weeks of the transaction's notification to the European Commission. No
such request was made by a Member State within this time period.
Alcan made its notification of the transaction to the European Commission on
August 14, 2003. On August 18, 2003, Alcan offered certain commitments to the
European Commission to resolve the competition issues that may be raised by the
transaction in relation to the European markets for certain flat-rolled
products, aluminum aerosol cans and aluminum cartridges. On September 8, 2003,
Alcan offered certain additional commitments to the European Commission in
relation to anode baking furnace designs, alumina refining technology and
aluminum smelter cell technology. On September 26, 2003, Alcan made certain
modifications to the commitments offered on August 18 and September 8, 2003 to
resolve certain remaining concerns of the European Commission and offered the
modified commitments to the European Commission. See "The Offers -- Reasons for
the Offers -- Commitments Offered to the European Commission and the U.S.
Department of Justice to Obtain Regulatory Approval" above. Accordingly, the
European Commission had six weeks from notification of the transaction to either
approve the transaction or to open an in-depth investigation, lasting a maximum
of a further four months (which is sometimes referred to as a "Phase II
review"), which would have caused the offers to lapse. The European Commission's
approval was obtained on September 29, 2003, subject to Alcan complying with the
conditions and obligations attached to the European Commission's decision. The
European Commission's decision can be challenged before the Court of First
Instance of the European Communities by, among others, Pechiney and competitors
of Alcan or Pechiney. Subject to review by the Court of First Instance, once the
European Commission has adopted a decision approving the transaction, that
decision can be revoked by it only if it subsequently concludes that its
approval of the transaction was granted on the basis of false or misleading
information furnished in the notification or
91
otherwise furnished by Alcan, or if Alcan has failed to comply with the
conditions and obligations to which the approval decision is subject.
UNITED STATES HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
its associated rules, a share offer may not be completed until notification has
been filed with the Federal Trade Commission, or the "FTC," and the Antitrust
Division of the U.S. Department of Justice, or the "DOJ," and the required
waiting period has expired or been terminated. The required waiting period may
be terminated by the FTC and the DOJ before its expiration. If the FTC or the
DOJ believes that the share exchange would violate the federal antitrust law by
substantially lessening competition in any line of commerce affecting U.S.
consumers, the FTC and the DOJ have the authority to challenge the transaction
by seeking a federal court order enjoining the transaction. Alcan filed the
notification under the Hart-Scott-Rodino Antitrust Improvements Act on August
29, 2003. In order to obtain the approval of the DOJ, Alcan entered into a
consent decree, on September 29, 2003, with the DOJ pursuant to which Alcan has
undertaken to divest Pechiney's rolling mill located in Ravenswood, West
Virginia. The applicable waiting period then expired on September 29, 2003. See
"The Offers -- Reasons for the Offers -- Commitments Offered to the European
Commission and the U.S. Department of Justice to Obtain Regulatory Approval."
Notwithstanding this consent decree with the DOJ, other governmental
authorities, including state attorneys general, and private persons may seek to
enjoin the consummation of the share exchange under antitrust laws or may seek
conditions to completion of the combination. There can be no assurance that a
challenge to the offers on antitrust grounds will not be made or, if a challenge
is made, that it would not be successful.
COMPETITION ACT (CANADA)
The proposed acquisition of the Pechiney securities is a notifiable transaction
under the Competition Act (Canada). Notifiable transactions cannot be completed
under the Competition Act (Canada) until a required notification is filed with
the Commissioner of Competition and the relevant waiting period has expired. A
long-form filing under the Competition Act (Canada) in respect of the proposed
transaction was made on July 30, 2003, and the applicable waiting period expired
on September 10, 2003.
The Commissioner of Competition has jurisdiction to challenge any transaction
that has the effect of lessening or preventing competition substantially in a
relevant market and such a challenge may be made any time before or within three
years after completion of the transaction. The expiration of the waiting period
referred to in the preceding paragraph does not bar the Commissioner of
Competition from bringing a proceeding. There can be no assurance that an
investigation or a proceeding by the Commissioner of Competition will not be
initiated and, if initiated, will not have a material adverse impact on the
operations of Alcan or Pechiney. However, on October 14, 2003 the Commissioner
of Competition issued a "no action" letter to Alcan indicating that he did not
find that there were sufficient grounds at that time to initiate proceedings
before Canada's Competition Tribunal under the merger provisions of the
Competition Act (Canada) in respect of Alcan's acquisition of the Pechiney
securities.
SWISS COMPETITION COMMISSION
The transaction is required to be notified to the Swiss Competition Commission
under the competition laws of Switzerland, as Switzerland is not a member of the
European Union or a party to the European Economic Area Agreement. Generally,
the Swiss Competition Commission has one month following the date of
notification to decide whether to open an extended investigation of a proposed
acquisition. If no investigation is opened by the end of that waiting period,
the transaction may be completed. If the Commission opens an investigation, the
transaction may not close until the Commission renders its final decision or
grants a special authorization. Investigations must be completed within a four
month period.
Alcan filed its notification with the Swiss Competition Commission on September
1, 2003. On September 29, 2003, the Swiss Competition Commission approved the
transaction, subject to the condition that Alcan fulfill the commitments that it
has made to the European Commission with respect to the offers.
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OTHER JURISDICTIONS
Alcan and Pechiney have assets and sales in numerous jurisdictions throughout
the world other than the European Union, the United States, Canada and
Switzerland. Many of those jurisdictions have antitrust or competition laws that
could require that notifications be filed and clearances obtained prior to
completion of the proposed transaction. Other jurisdictions require filings
following completion of the transaction. Appropriate filings will be made in
those jurisdictions where it is determined that a filing is required.
The antitrust or competition laws of certain jurisdictions outside of the
European Union, the United States, Canada and Switzerland permit relevant
agencies to investigate and take proceedings in respect of transactions that are
perceived to have an effect on competition in the jurisdiction. Although Alcan
does not anticipate that there will be any investigations or proceedings that
would have a material impact on the completion of the offers or the operations
of Alcan or Pechiney, there can be no assurance that such investigations or
proceedings, whether by governmental authorities or private parties, will not be
initiated and, if initiated, will not have a material adverse impact on the
completion of the offers or the operations of Alcan or Pechiney.
INVESTMENT CONTROLS
Under French foreign investment control rules, the acquisition of any business
engaged in the defense sector is subject to the prior approval of the French
Minister of the Economy, Finance and Industry, who has a two-month period from
the date of notification to approve or prohibit the proposed acquisition. As
certain Pechiney subsidiaries are currently engaged in the defense sector, a
formal application in relation to the offers for Pechiney securities was filed
with the Minister by Alcan on July 7, 2003. Alcan obtained the approval of the
Minister on September 4, 2003. In obtaining this approval, Alcan made certain
commitments to the Minister in respect of commitments made by Pechiney with
respect to its ongoing programs in the aerospace, aeronautical and defense
fields.
STOCK EXCHANGES
Alcan Common Shares are currently listed on the New York, Toronto, London and
Swiss stock exchanges. Alcan will apply to list its Alcan Common Shares on
Euronext Paris, subject to the successful completion of these offers, with a
view to the Euronext Paris listing being effective on the settlement date of
these offers. Alcan will also apply for the supplemental listing of the Alcan
Common Shares to be issued in these offers on the New York, Toronto, Paris,
London and Swiss stock exchanges, and will comply with all of the usual
requirements of such exchanges within the time periods specified by such
exchanges.
SECURITIES REGULATORY AUTHORITIES
The offers for Pechiney securities will be made in accordance with French laws,
U.S. federal and state securities law and Canadian securities law. The Alcan
Common Shares issued pursuant to the offers for Pechiney securities to holders
resident in the United States and Canada and to holders of Pechiney ADSs will be
registered with the SEC.
The offers for Pechiney securities are not being made to holders of Pechiney
securities in jurisdictions outside of France, the United States or Canada where
the making or acceptance of such offer would not be in compliance with the laws
of such jurisdictions. However, Alcan may seek exemption orders or take such
other actions as it may deem necessary in order to extend the offers for
Pechiney securities to holders in such jurisdictions. On September 19, 2003,
Alcan was granted exemptions by the securities regulatory authorities in Canada,
permitting the offers for Pechiney securities to be made to holders of Pechiney
securities in Canada without compliance with the take-over bid requirements
otherwise applicable.
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DESCRIPTION OF ALCAN'S SHARE CAPITAL
OUTSTANDING SERIES OF SHARE CAPITAL
AUTHORIZED OUTSTANDING*
---------- ------------
Common Shares............................................... Unlimited 322,040,012
Preference Shares, issuable in series, of which the
following series are outstanding:......................... Unlimited
Floating Rate Cumulative Redeemable Preference Shares,
Series C, 1984 Issue................................... 4,200,000 4,200,000
Floating Rate Cumulative Redeemable Preference Shares,
Series C, 1985 Issue................................... 1,500,000 1,500,000
Cumulative Redeemable Preference Shares, Series E......... 3,000,000 3,000,000
---------------
* As at September 30, 2003.
DESCRIPTION OF ALCAN PREFERENCE SHARES
The authorized capital of Alcan includes an unlimited number of preference
shares, issuable in series. Alcan currently has three outstanding series of
preference shares, consisting of
- Alcan Floating Rate Cumulative Redeemable Preference Shares, Series C,
1984 Issue (the "Alcan Series C 1984");
- Alcan Floating Rate Cumulative Redeemable Preference Shares, Series C,
1985 Issue (the "Alcan Series C 1985," and together with the Alcan Series
C 1984, the "Alcan Series C"); and
- Alcan Cumulative Redeemable Preference Shares, Series E (the "Alcan
Series E," and together with the Alcan Series C, the "Alcan Preference
Shares").
Alcan may issue an unlimited number of preference shares of additional series
from time to time upon approval by the Alcan board of directors for such
consideration as the Alcan board of directors decides appropriate, without the
need of further shareholder authorization. However, the Alcan board of directors
is not allowed to create or issue any series of preference shares with voting
rights, other than voting rights arising only in the event of non-payment of
dividends, without the consent of Alcan's common shareholders, given by way of
special resolution. The terms of any preference shares, including dividend
rates, conversion and voting rights, if any, redemption prices and similar
matters will be determined by the Alcan board of directors prior to issuance.
The holders of each class of Alcan Preference Shares will be entitled to receive
cumulative cash dividends at the following rates:
- Alcan Series C: quarterly dividends in an amount determined by applying
to CAN $25 per share 25% of the greater of (1) 72% of the average of the
Canadian prime interest rates quoted by two major Canadian banks for
stated periods, and (2) the lesser of 7.5% and the average of the
Canadian prime interest rates quoted by two major Canadian banks for
stated periods.
- Alcan Series E: quarterly dividends in an amount determined by applying
to CAN $25 per share 25% of 75% of the average of the Canadian prime
interest rates quoted by two major Canadian banks for stated periods.
The holders of Alcan Preference Shares are not entitled to vote at meetings of
Alcan shareholders unless Alcan fails to pay six quarterly dividends on such
Alcan Preference Shares. Thereafter, so long as such dividends remain in
arrears, the holders will be entitled, voting separately as a class, to elect
two members of the board of directors of Alcan.
The Alcan Preference Shares are fully paid and nonassessable.
94
In the event that Alcan liquidates, dissolves or winds up or distributes its
assets among Alcan shareholders for the purpose of winding up its affairs, the
holders of the Alcan Preference Shares will be entitled to receive, in
preference to holders of the Alcan Common Shares, the sum of CAN $25 per Alcan
Preference Share plus all accrued and unpaid dividends. Additionally, if such
distribution is voluntary, an additional amount equal to the premium, if any,
will be payable on redemption.
The Alcan Preference Shares are redeemable at Alcan's option at CAN $25 per
Alcan Preference Share plus all accrued and unpaid dividends.
Unless all dividends then payable on the Alcan Preference Shares have been
declared and paid or set apart for payment, Alcan will not:
- pay any dividends, other than stock dividends, or make any distributions
on any shares ranking junior to the Alcan Preference Shares with respect
to the payment of dividends or return of capital,
- retire for value any shares ranking junior to the Alcan Preference Shares
with respect to payment of dividends or return of capital, or
- except in connection with the exercise of a retraction privilege, retire
less than all of a series of the Alcan Preference Shares.
The Alcan Preference Shares are listed on the Toronto Stock Exchange.
DESCRIPTION OF ALCAN COMMON SHARES
Alcan Common Shares are subject to the rights of the holders of the Alcan
Preference Shares, as described above, and of any other preferred securities
issued in the future.
The holders of Alcan Common Shares are entitled to one vote per share at all
meetings of shareholders of Alcan, to participate ratably in any dividends which
may be declared on Alcan Common Shares by the board of directors of Alcan and,
in the event of liquidation, dissolution or winding-up or other distribution of
assets or property of Alcan, to a pro rata share of the assets of Alcan after
payment of all liabilities and obligations. The Alcan Common Shares have no
pre-emptive, redemption or conversion rights. All outstanding Alcan Common
Shares and all Alcan Common Shares to be issued under this prospectus will be
fully paid and nonassessable.
The provisions of the Canada Business Corporations Act require that the
amendment of certain rights of holders of any class of shares, including the
Alcan Common Shares, must be approved by not less than two-thirds of the votes
cast by the holders of such shares. A quorum for any meeting of the holders of
Alcan Common Shares is 40% of the Alcan Common Shares then outstanding.
Therefore, it is possible for the rights of the holders of Alcan Common Shares
to be changed other than by the affirmative vote of the holders of the majority
of the outstanding Alcan Common Shares. In circumstances where certain rights of
holders of Alcan Common Shares may be amended, however, holders of Alcan Common
Shares will have the right, under the Canada Business Corporations Act, to
dissent from such amendment and require Alcan to pay them the then fair value of
their Alcan Common Shares.
Shareholders of Alcan are also entitled to rights and privileges under the
Shareholder Rights Plan, pursuant to a Shareholders Rights Agreement, dated as
of December 14, 1989, as amended and restated as of April 22, 1999, between
Alcan Aluminum Limited and CIBC Mellon Trust Company, as rights agent, which is
summarized under "Comparison of Shareholders' Rights."
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COMPARISON OF SHAREHOLDERS' RIGHTS
The rights of shareholders of Alcan are governed by the Canada Business
Corporations Act, provincial securities legislation and the provisions of the
Alcan Restated Articles of Incorporation and by-laws. The rights of shareholders
of Pechiney are governed by French company law and by the provisions of
Pechiney's Articles of Association ("statuts"). The following is a summary of
the material differences between the rights of Alcan and Pechiney shareholders.
These differences arise from differences between the Canada Business
Corporations Act and the French company law and between Alcan's Restated
Articles of Incorporation and by-laws and Pechiney's statuts. For more complete
information, you should read the articles and by-laws of Alcan and the statuts
of Pechiney.
ALCAN PECHINEY
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Size and Alcan's Restated Articles of Pechiney's statuts provide that the board
Qualifications of Incorporation provide that the of directors of Pechiney shall consist of
the Board of board of directors of Alcan shall no fewer than 11, nor more than 22
Directors consist of not less than nine, nor members, of which no fewer than nine nor
more than 20 members. The board of more than 18 shall be elected by the
directors of Alcan currently shareholders of Pechiney during an
consists of 11 members. Under the ordinary shareholders' meeting. These
Canada Business Corporations Act, members may be natural persons or legal
at least 25% of the directors must entities. As of March 25, 2003, the board
be resident Canadians, subject to of directors of Pechiney consisted of 12
certain limited exceptions. The members, including 3 members elected by
Canada Business Corporations Act Pechiney's employees.
also requires that a corporation
whose securities are publicly Two or, if the board is comprised of 12 or
traded have not fewer than three more members, three directors must be
directors, at least two of whom elected by and from among the employees of
are not officers or employees of Pechiney and its direct and indirect
the corporation or any of its French subsidiaries.
affiliates.
Also, pursuant to Pechiney's statuts, if,
Under the Canada Business in the aggregate, employees hold 3% or
Corporations Act, directors may be more of Pechiney's share capital, one
elected for a term expiring not directors must be a designee of these
later than the third annual employee-shareholders (either directly or
meeting of shareholders following through a fonds commun de placement
the election. If no term is d'entreprise). This designee is ultimately
specified, a director's term appointed by Pechiney's shareholders
expires at the next following during an ordinary shareholders' meeting
annual meeting of shareholders. A from among two or more candidates
director may be nominated for designated by employee-shareholders.
re-election to the board of Currently, Pechiney does not have a
directors at the end of his or her director designated by
term. Currently, all of the employee-shareholders.
members of Alcan's board of
directors are elected at each Under French company law, each director
annual meeting. must be a shareholder of the corporation.
Under Pechiney's statuts, a director must
Alcan's Restated Articles of hold at least 200 shares for as long as he
Incorporation provide that the or she serves as a director.
directors can appoint one or more
additional directors above the French company law provides that each
number elected at the prior director is eligible for reappointment
meeting provided that the total upon expiration of his or her term of
number of directors so appointed office, which is fixed at four years by
does not exceed one-third of the Pechiney's statuts, provided that no more
number of directors elected at the than one-third of the directors may be
previous annual meeting. over 70 years old.
Alcan has a non-executive chairman The chairman of the board of directors
elected by its board of directors.
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ALCAN PECHINEY
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of Pechiney is elected by and from among
the board members.
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Duties of the Board of Alcan's Restated Articles of Pechiney's statuts provide that the board
Directors Incorporation provide for no of directors of Pechiney determines
restrictions on the business the Pechiney's strategy and ensures its
corporation may conduct. Under the implementation. Subject to the powers
Canada Business Corporations Act, expressly granted by the statuts or
the directors have the power to pursuant to French company law to the
manage the business and affairs of shareholders' meetings or to the directeur
Alcan and owe fiduciary duties to general, the board takes up all questions
Alcan. In exercising these powers relating to the effective operation of
and discharging these duties, each Pechiney and settles all issues concerning
director must act honestly and in its affairs.
good faith with a view to the best
interests of the corporation. This Pechiney's directors owe a duty of loyalty
duty of care requires that the and care to the company. The directors are
directors exercise the care, held accountable, either individually or
diligence and skill that a jointly, as applicable, to the company or
reasonably prudent person would to third parties for breaches of
exercise in comparable legislative or regulatory provisions
circumstances. applicable to public limited companies,
for violations of the statuts and for
mismanagement.
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Transactions with Under the Canada Business French company law provides for prior
Interested Directors Corporations Act, a director or approval and control of transactions
or Officers officer must disclose in writing entered into between, directly or
to the corporation, or request to indirectly, the corporation and its
have entered in the minutes of directors, directeur general, directeur
meetings of directors, the nature general delegue, or any entity in which
and extent of his or her interest any of these persons is at the same time
in any material contract or an owner, partner with unlimited
material transaction, whether made liability, managing director, member of
or proposed, with the corporation. the supervisory board or an executive
If such interest exists, the officer, unless the transaction is entered
director may not, subject to in the ordinary course of business and
certain exceptions, vote on any under normal terms and conditions.
resolution to approve the contract Transactions entered into between a
or transaction. A contract or company and one of its shareholders
transaction for which disclosure holding, directly or indirectly, more than
of interest is required is not 10% of the voting rights, or with an
invalid, and the director or entity controlling such a shareholder, are
officer is not accountable to the also considered related party
corporation or the shareholders transactions.
for any profit realized form the
contract or transaction, because The interested party has the obligation to
of the director's or officer's inform the board of directors of the
interest in the contract or existence of the related party
transaction if (i) such interest transaction.
is properly disclosed, (ii) the
contract or transaction is Related party transactions must be pre-
approved by the disinterested approved by the majority of the
directors or by the shareholders, corporation's disinterested directors. The
and (iii) the contract or president of the board of directors must
transaction was fair and then report the authorized transaction to
reasonable to the corporation when the corporation's statutory auditors
it was approved. within one month following its conclusion.
The auditors prepare a special report on
Where a material contract or the transaction which is submitted to the
material transaction is proposed shareholders at their next meeting, during
or entered into that, in the which shareholders
ordinary course of the
corporation's business, would not
require approval by the directors
or shareholders, the interested
director or
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ALCAN PECHINEY
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officer shall disclose in writing consider the transaction for ratification
to the corporation or request to (with any interested shareholder being
have entered in the minutes of excluded from voting). If the transaction
meetings of directors, the nature is not ratified by the shareholders, it
and the extent of his or her remains enforceable by third parties as
interest forthwith after the against the corporation, but the latter
director or officer becomes aware may in turn hold the board of directors or
of the contract or transaction or interested officer liable for any damages
proposed contract or transaction. suffered as a result thereof.
A shareholder has the right to Under French company law, certain related
access the minutes of a board party transactions, like insider loans,
meeting during which a director are strictly prohibited.
made a mandatory disclosure of
material interests in transactions Any related party transaction concluded
or contracts that involve the without the prior consent of the board of
corporation. directors can be nullified by the
corporation or any of its shareholders
acting on its behalf if it causes damages
to the corporation. Furthermore, the
interested related party may be held
liable on this basis.
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Indemnification; Under the Canada Business French company law prohibits provisions of
Liability Corporations Act, a corporation statuts that purport to limit the
of Directors may indemnify a director or liability of directors. Thus, any
officer of the corporation, a provision of a French company's statuts
former director or officer of the that subordinates legal proceedings
corporation or another individual against directors to the prior approval or
who acts or acted at the to the authorization of the general
corporation's request as a shareholders' meeting or which provides in
director or officer or an advance for the waiver of such proceedings
individual acting in a similar is void. French company law also provides
capacity (collectively referred to that a resolution adopted by the general
as an "indemnified individual"), shareholders' meeting cannot result in the
of another entity, against all extinction of an action brought against
costs, charges and expenses, directors for damages due to breach of
including an amount paid to settle duty in their official capacity.
an action or satisfy a judgment,
reasonably incurred by the Under French company law, a company may
individual in respect of any indemnify a director for legal costs and
civil, criminal, administrative, expenses in only a limited number of
investigative or other proceeding circumstances. If a director is sued in
in which the individual is his or her capacity as a director, by a
involved because of that third party and is ultimately found to
association with the corporation have committed no fault and otherwise
or other entity. prevails on all counts, but is required to
bear all or some legal costs and expenses,
In addition, a corporation may the company may reimburse the director
advance moneys to a director, pursuant to an indemnification
officer or other individual for arrangement.
the costs, charges and expenses of
a proceeding referred to in the French company law also permits a company
previous paragraph. However, the to maintain directors' and officers'
individual shall repay the moneys insurance. A French corporation is
if he or she does not fulfill the responsible, subject to certain
following indemnification exceptions, to third parties for the
conditions. consequences of the decisions of its
directors. However, if those decisions
A corporation may not indemnify an qualify as mismanagement, the relevant
individual, unless the individual
(a) acted honestly and in good
faith with a view to the best
interests of the corporation, or,
as the case may be, to the best
interests of the other entity for
which the individual acted as a
director or officer or in a
similar capacity at the
corporation's request; and
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ALCAN PECHINEY
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(b) in the case of a criminal directors may, under certain conditions,
or administrative action or have to indemnify the corporation in full
proceeding that is enforced by a or in part.
monetary penalty, the individual
had reasonable grounds for
believing that the individual's
conduct was lawful (collectively
referred to as the
"indemnification conditions").
A corporation may with the
approval of a court indemnify an
indemnified individual, or advance
moneys as described above, in
respect of an action by or on
behalf of the corporation or other
entity to procure a judgment in
its favor, to which the individual
is made a party because of the
individual's association with the
corporation or other entity
against all costs, charges and
expenses reasonably incurred by
the individual in connection with
such action if the individual
fulfils the indemnification
conditions.
Despite the foregoing paragraphs,
an indemnified individual is
entitled to indemnity from the
corporation in respect of all
costs, charges and expenses
reasonably incurred by the
individual in connection with the
defense of any civil, criminal,
administrative, investigative or
other proceeding to which the
individual is subject because of
the individual's association with
the corporation or other entity,
if the individual seeking
indemnity:
(a) was not judged by the
court or other competent authority
to have committed any fault or
omitted to do anything that the
individual ought to have done; and
(b) fulfils the
indemnification conditions.
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Election and Removal Shareholders of a corporation Pechiney's statuts provide that its
of Directors; governed by the Canada Business directors, other than the employee-
Vacancies Corporations Act elect directors representative directors and employee-
by ordinary resolution at each shareholder representative directors, are
annual meeting of shareholders at elected by the shareholders for 4-year
which such an election is terms. Non-employee directors are elected
required. Under the Canada by a majority vote of Pechiney's
Business Corporations Act, the shareholders at ordinary shareholders'
shareholders of Alcan may remove meetings. Employee-representative
any director before the expiration directors are elected by and from among
of his or her term of office and Pechiney's employees. Employee-
may elect any qualified person in shareholder representative directors (of
such director's stead for the which Pechiney currently has none), are
remainder of such term by a
resolution passed by a majority of
the
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ALCAN PECHINEY
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votes cast at a special meeting of elected by Pechiney's shareholders from
shareholders called for that among the nominees designated by
purpose. Under the Canada Business Pechiney's employee-shareholders.
Corporations Act, vacancies that
exist on the board of directors Under French company law, directors may
may be filled by the board if the not be elected at a general shareholders'
remaining directors constitute a meeting if the agenda for the meeting did
quorum. In the absence of a not provide for the election of directors,
quorum, the remaining directors unless such election is necessary to fill
shall call a special meeting of a vacancy.
shareholders to fill the vacancy.
The members of the board of directors of
Pechiney other than those representing the
employees may be removed, with or without
cause, by a majority vote of the
shareholders. Under French company law,
removal of a director will not subject the
corporation to liability unless the
removal was injurious and/or vexatious.
Employee-representative directors may only
be removed for cause, following a decision
of the President of the Tribunal de Grande
Instance, acting upon the request of the
majority of the board of directors.
Pursuant to French company law and
Pechiney's statuts, a vacancy on the board
of directors may be filled by appointment
by the remaining directors (provided that
at least the minimum required number of
directors is in office), subject to
ratification by the shareholders at the
next ordinary general meeting. Any vacancy
left by the employee-representative
directors is immediately filled by the
employees. Any vacancy left by an
employee-shareholder representative
director is filled at the next general
meeting of shareholders.
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Shareholder Nomination Any shareholder of a corporation Under French company law, shareholders may
governed by the Canada Business nominate individuals for the board of
Corporations Act may make directors at an ordinary shareholders'
nominations at a shareholder meeting. Information regarding candidates
meeting for the election of must be made available to the shareholders
directors. Such nominations may be by the board of directors of the
made as a shareholder proposal corporation no less than 15 days before
that is included in the the meeting. In addition, if the agenda
corporation's proxy material if for the shareholders' meeting includes the
the proposal is signed by the election of directors, any shareholder may
holders of not less than 5% of the propose a candidate for election at the
shares of any class entitled to shareholders' meeting, even if the
vote at the meeting to which the shareholder has not followed the
proposal is presented. procedures to make such nomination in
Shareholders of Canadian advance of the shareholders' meeting.
corporations may also
independently solicit proxies for
the election to the board of
directors of nominees other than
those presented by management.
Historically,
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ALCAN PECHINEY
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Alcan's corporate governance
committee has recommended
candidates for election to the
board of directors and the
shareholders elect those nominees
at each annual meeting.
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Shareholders' Meetings Under the Canada Business Three types of shareholders' meeting exist
Corporations Act, the directors of under French company law: ordinary,
a corporation must call an annual extraordinary and special. French company
meeting not later than 18 months law requires an annual ordinary general
after the corporation comes into meeting of the shareholders to be held
existence and thereafter, not within six months of the end of the
later than 15 months after holding company's fiscal year.
the last preceding annual meeting.
All shareholders' meetings, whether
The Canada Business Corporations ordinary, extraordinary or special, are
Act provides that special held pursuant to an announcement published
shareholder meetings may be called in a French official legal gazette
by the board of directors at any (Bulletin des annonces civiles
time and must be called by the obligatoires or BALO) at least 30 days
board of directors when before the date of the meeting. In
requisitioned by holders of not addition, a notice convening the meeting
less than 5% of the issued shares must be published in the BALO and in a
of the corporation that carry the newspaper authorized to publish legal
right to vote at the meeting announcements. This convening notice must
sought. If the board of directors appear no fewer than 15 days for the first
fails to call a properly notice (on first call) and six days for
requisitioned meeting within 21 the following notice (on second call). The
days after receiving the request, same notice must be sent to each
any shareholder who signed the shareholder holding shares in registered
requisition may call the meeting. form at least one month prior to the date
of the publication in the newspaper and to
Shareholders' meetings, whether the auditors of the company. In the event
annual or special, shall be held the board of directors of Pechiney fails
within Canada. However, a meeting to publish such notice or call a required
may be held at a place outside meeting, a meeting may be convened by
Canada if the place is specified Pechiney's statutory auditor or a court
in the articles or if all the appointed agent. A court may be requested
shareholders entitled to vote at to appoint an agent by:
the meeting agree that the meeting
is to be held at that place. - one or more shareholders holding in the
Notice of the time and place of a aggregate at least 5% of the capital for a
meeting must be sent by the general meeting or 5% of a specific
corporation not less than 21 nor category of shares for special meetings;
more than 50 days before the
meeting to each shareholder - the employees' committee in case of
entitled to vote at the meeting, emergency;
each director of the corporation
and the auditors of the - any interested party in cases of
corporation. On the application of emergency; or
a director, a shareholder entitled
to vote at a meeting or the - as long as Pechiney remains listed on
Director appointed under the the Euronext Paris, certain duly qualified
Canada Business Corporations Act, associations of shareholders.
a court may order a shareholder
meeting to be held. Quorum for an ordinary general
shareholders' meeting consists of the
Under Alcan's by-laws, the holders holders of 25% of the shares entitled to
of 40% of the shares entitled to vote at this meeting on the first call,
vote at a meeting, present in with no quorum on the second call, if
person or by proxy, constitute a
quorum.
Any person entitled to notice of a
shareholder meeting may attend
that meeting. A shareholder may
appoint a proxyholder, who need
not be a
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shareholder, to attend and act at required. Quorum for an extraordinary
the meeting in accordance with the shareholders' meeting consists of 33.33%
authority conferred by the proxy. of the shares entitled to vote at this
meeting on the first call, and 25% of the
shares on the second call, if required.
Quorum for a special shareholders' meeting
consists of the holders of 50% of the
shares entitled to vote at the meeting on
the first call, and 25% of the shares on
the second call, if required.
At ordinary shareholders' meetings, action
is taken by a majority of the votes cast,
whereas a super-majority equal to
two-thirds of the votes cast is required
for most actions taken at any
extraordinary shareholders' meeting or any
special shareholders' meeting.
Attendance at a shareholders' meeting is
subject to certain conditions, including:
- a holder of registered shares must have
its shares in its name;
- a holder of bearer shares must obtain
from the accredited financial intermediary
a certificate indicating the number of
shares owned by such holder (certificat
d'immobilisation) and stating that such
shares are not transferable until the date
and time fixed for such meeting.
Under French law, certain additional
conditions apply to shareholders holding
shares through a mandatory or other
representative.
Subject to these conditions, all
shareholders, upon proof of their
identity, have the right to participate in
shareholders' meetings.
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Shareholders' Under the Canada Business Under French company law, shareholders
Proposals Corporations Act, an eligible representing, individually or
registered holder or beneficial collectively, a defined percentage (less
owner of shares who is entitled to than 5%) of the capital of Pechiney may
vote at an annual meeting of request that a resolution that they
shareholders may submit a proposal proposed for adoption at the shareholder
consisting of matters that the meeting be included in the agenda. Such
person proposes to raise at the request must be made within 10 days of the
next annual meeting. Upon receipt publication of the announcement notice of
of the proposal, a corporation the shareholders' meeting in the BALO and
that solicits proxies shall set must specify the reasons for such
out the proposal in the management resolution. In addition, French company
proxy circular and, if requested law requires that the board of directors
by the shareholder, include in the of Pechiney respond during such meeting to
management proxy circular a any questions submitted in writing by any
statement by the shareholder of shareholder.
not more than 500 words in support
of the proposal, and the name and
address of the shareholder.
A corporation may within 21 days
after
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receiving a shareholder proposal,
notify the shareholder of its
intention to omit the proposal
from the management proxy circular
if:
- the proposal is not submitted to
the corporation at least 90 days
before the anniversary date of the
notice of meeting that was sent to
shareholders in connection with
the previous annual meeting of
shareholders;
- it clearly appears that the
primary purpose of the proposal is
to enforce a personal claim or
redress a personal grievance
against the corporation or its
directors, officers or security
holders;
- it clearly appears that the
proposal does not relate in a
significant way to the business or
affairs of the corporation;
- not more than two years before
the receipt of a proposal, a
person failed to present, in
person or by proxy, at a meeting
of shareholders, a proposal that
at the person's request, had been
included in a management proxy
circular relating to the meeting;
- substantially the same proposal
was submitted to shareholders in a
management proxy circular or a
dissident's proxy circular
relating to a meeting of
shareholders held not more than
five years before the receipt of
the proposal and did not receive
the prescribed minimum amount of
support at the meeting; or
- the right to submit a proposal
is being abused to secure
publicity.
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Payment of Dividends Under the Canada Business The distributable profits (benefice
Corporations Act, a corporation distribuable) available for distribution
may pay a dividend by issuing to the shareholders of a French company as
fully paid shares of the dividends are comprised of net income in
corporation. A corporation may each fiscal year, after deduction for
also pay a dividend in money or depreciation and provisions, as increased
property unless there are or reduced, as the case may be, by a
reasonable grounds for believing profit or loss carried forward from prior
that: years, less any contributions to legal
reserves.
(1) the corporation is, or would
after the payment be, unable to Under French law, Pechiney is required to
pay its liabilities as they become allocate five percent of its net profits
due; or in each fiscal year to a legal reserve
fund until the amount in such reserve fund
(2) the realizable value of the is equal to 10% of the nominal amount of
corporation's assets would thereby the outstanding share capital. This legal
be less than the aggregate of its reserve is distributable only upon the
liabilities and stated capital of liquidation of the company.
all classes.
The board of directors declares
the payment of dividends and
determines the amount thereof.
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Except in the case of a decrease in share
capital, no distribution may be made to
shareholders, if as a result of such
distribution, the shareholders' equity
would fall below the amount of the share
capital increased by those reserves which
may not be distributed according to
applicable legal provisions or the
statuts. The amount of dividends is fixed
at the ordinary general meeting of
shareholders at which the annual accounts
are approved, following the prior
recommendation of the board of directors.
If the company has earned a profit since
the end of the preceding fiscal year, the
board of directors may, in certain
instances, distribute interim dividends to
the extent of such profit.
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Voting Rights Under the Canada Business According to Pechiney's statuts, each
Corporations Act, an amendment to share entitles its holder to one vote.
a corporation's articles generally Under French company law, the fundamental
requires shareholder approval by actions, including the following, require
special resolution. A special the approval of the holders of a qualified
resolution is a resolution passed majority of at least two-thirds ( 2/3) of
by a majority of not less than the shares entitled to vote:
two-thirds of the votes cast by
the shareholders who are entitled - amendments to the statuts;
to vote on the resolution in
person or by proxy at the annual - transfer of the registered office to a
or special meeting called for such non-neighboring department;
purpose, whether or not the shares
held by them are designated as - increase or decrease of share capital;
voting shares in the corporation's
articles of incorporation. In - denial of the shareholders' preemptive
certain cases, a special rights;
resolution to approve an
extraordinary corporate action, - authorization of employee stock option
such as an amendment to the and/or purchase plans;
articles of incorporation that
adversely affects the rights of a - authorizations of mergers, spin-offs,
particular class or series of partial contribution of assets,
shares, may also be required to be dissolution of the corporation, as well
approved separately by the holders as, disposition of all or substantially
of a class or series of shares, all of the assets of Pechiney if such
including a class or series that disposition would entail a modification of
does not otherwise carry the right the company's corporate purpose; and
to vote.
- the issuance of share capital.
Under the Canada Business
Corporations Act, unless the In addition, the transformation of the
articles or by-laws otherwise corporation into another type of legal
provide, the directors may, by entity requires, depending on the new type
resolution, make, amend or repeal of entity, either a unanimous vote of the
any by-law that regulates the shareholders or the approval of the
business or affairs of a holders of a qualified majority of at
corporation. Where the directors least 75% or two-thirds ( 2/3) of the
make, amend or repeal a by-law, shares entitled to vote.
they are required under the Canada
Business Corporations Act to
submit the by-law, amendment or
repeal to the shareholders at the
next meeting of shareholders. The
shareholders may confirm, reject
or amend the by-law,
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amendment or repeal, by an
ordinary resolution, which is a
resolution passed by a majority of
the voting shareholders.
Under the Canada Business
Corporations Act, the following
transactions also require
shareholder approval by special
resolution:
- amalgamations, other than an
amalgamation between a parent
corporation and one or more of its
wholly-owned subsidiaries or
between two or more of such
subsidiaries, continuances, sales,
leases or exchanges of all or
substantially all of the property
of a corporation other than in the
ordinary course of business;
- liquidations; and
- dissolutions.
In certain cases, a special
resolution to approve an
extraordinary corporate action
must also be approved separately
by the holders of a class or
series of shares or by a majority
of the votes cast by disinterested
shareholders.
A corporation may also apply to a
court for an order approving an
arrangement, which could include
an amendment of the corporation's
articles, an amalgamation, a
transfer of all or substantially
all the property of a corporation
to another corporation in exchange
for property, money or securities
of the corporation, or liquidation
and dissolution of the corporation
where it is not insolvent and
where it is not practicable for
the corporation to make such
fundamental change in accordance
with the provisions of the Canada
Business Corporations Act. The
court may make any interim or
final order it thinks fit with
respect to such proposed
arrangement. Generally, an
arrangement involving a public
company must receive shareholder
approval as a condition of
obtaining the court order.
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Appraisal Rights The Canada Business Corporations There are no appraisal rights under French
Act provides that shareholders company law or Pechiney's statuts. Under
entitled to vote on certain applicable French stock market
matters are entitled to exercise regulations, the CMF is responsible for
dissent rights and be paid the deciding upon the acceptability of a
fair value of their shares. The tender offer by analyzing the value of the
Canada Business Corporations Act consideration
does not distinguish for this
purpose between
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listed and unlisted shares. Such offered with reference to customary
matters include the following: valuation criteria and the nature of the
target company. Its avis de recevabilite
- any amalgamation with a can be challenged in court by any
corporation, other than with interested party during 10 days.
certain subsidiary corporations;
For additional information, see the
- an amendment to the articles to discussion under "Take-Over Bids and
add, change or remove any Compulsory Acquisition of Shares" below.
provisions restricting the issue,
transfer or ownership of shares;
- a continuance under the laws of
another jurisdiction;
- a sale, lease or exchange of all
or substantially all of the
property of the corporation other
than in the ordinary course of
business;
- a proposed arrangement
transaction, where a court order
issued in connection with an
application for court approval of
the arrangement permits the
exercise of dissent rights; or
- certain amendments to the
articles of a corporation which
require a separate class or series
vote, provided that a shareholder
is not entitled to dissent if an
amendment to the articles is
effected by a court order made in
connection with an action for an
oppression remedy.
Under the Canada Business
Corporations Act, a shareholder
may, in addition to exercising
dissent rights, seek an oppression
remedy for any act or omission of
a corporation which is oppressive,
unfairly prejudicial to or that
unfairly disregards a
shareholder's interest.
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Oppression Remedy The Canada Business Corporations Under French company law, a shareholder
Act provides an oppression remedy may not exercise its voting right in a
that enables the court to make any manner that (i) is contrary to the
order, both interim and final, to interest of the company, and (ii) has the
rectify the matters complained of sole purpose of unfairly favoring a
if the court is satisfied, upon particular group of shareholders (e.g., a
application by a complainant, as majority or a group of minority
defined below, that: shareholders) to the detriment of the
other shareholders.
- any act or omission of the
corporation or an affiliate Damages may be sought by any shareholder
effects a result, that is harmed, and a proceeding for
nullity of the vote may be brought by any
- the business or affairs of the shareholder or director of the company.
corporation or an affiliate are or
have been carried on or conducted, French company law provides that the
or complainant may claim for the entire
prejudice suffered by the company. A
- the powers of the directors of complainant may also seek nullity of the
the corporation or an affiliate
are or have been exercised
in a manner that is oppressive or
unfairly prejudicial to, or that
unfairly
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disregards the interests of, any action claimed to be oppressive. The court
security holder, creditor, may order the company to pay for the
director or officer of the complainant's legal costs and
corporation or an affiliate. disbursements.
A complainant includes: The statute of limitations for a
shareholder suit is 3 years from the date
- a present or former registered of the action giving rise to the damages,
holder or beneficial owner of or, in certain cases, from the date of its
securities of a corporation or any discovery, unless the action is qualified
of its affiliates; as criminal, in which case the statute of
limitation would be 10 years.
- a present or former officer or
director of the corporation or any
of its affiliates;
- the director appointed under the
Canada Business Corporations Act;
and
- any other person who in the
discretion of the court is a
proper person to make such an
application.
Because of the breadth of the
conduct which can be complained of
and the scope of the court's
remedial powers, including the
power to order liquidation and
dissolution of the corporation
concerned, the oppression remedy
is very flexible and may be relied
upon to safeguard the interests of
shareholders and other
complainants that have a
substantial interest in the
corporation. Under the Canada
Business Corporations Act, it is
not necessary to prove that the
directors of a corporation acted
in bad faith in order to seek an
oppression remedy.
Additionally, under the Canada
Business Corporations Act, a court
may order a corporation or its
subsidiary to pay the
complainant's interim costs,
including legal fees and
disbursements. Although the
complainant may be held
accountable for the interim costs
on final disposition of the
complaint, it is not required to
give security for costs in an
oppression action.
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Shareholder Suits Under the Canada Business Under French company law, any shareholder,
Corporations Act, a complainant whatever percentage of the capital of
may apply to the court for leave Pechiney it represents, or any group of
to bring an action in the name of shareholders representing, in the
and on behalf of a corporation or aggregate, a certain portion of the
any subsidiary, or to intervene in capital of Pechiney (depending on the
an existing action to which such outstanding capital of Pechiney), may
corporation is a party, for the bring an action for and on behalf of
purpose of prosecuting, defending Pechiney (action sociale) against board
or discontinuing the action on members to allow the corporation to
behalf of the corporation or any recover any damages suffered by it.
subsidiary. Under the Canada
Business Corporations Act, no
action may be brought and no
intervention in an action may be
made unless the court is
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satisfied that:
- the complainant has given 14
days notice to the directors of
the corporation or its subsidiary
of the complainant's intention to
apply to the court and the
directors of the corporation or
its subsidiary do not bring,
diligently prosecute or defend or
discontinue the action;
- the complainant is acting in
good faith; and
- it appears to be in the
interests of the corporation or
its subsidiary that the action be
brought, prosecuted, defended or
discontinued.
Under the Canada Business
Corporations Act, the court in
such a derivative action may make
any order it thinks fit including:
- an order authorizing the
complainant or any other person to
control the conduct of the action;
- an order giving directions for
the conduct of the action;
- an order directing that any
amount adjudged payable by a
defendant in the action shall be
paid, in whole or in part,
directly to former and present
security holders of the
corporation or its subsidiary
instead of to the corporation or
its subsidiary; and
- an order requiring the
corporation or its subsidiary to
pay legal fees and any other costs
reasonably incurred by the
complainant in connection with the
action.
Additionally, under the Canada
Business Corporations Act, a court
may order a corporation or its
subsidiary to pay the
complainant's interim costs,
including legal fees and
disbursements. Although the
complainant may be held
accountable for the interim costs
on final disposition of the
complaint, the complainant is not
required to give security for
costs in a derivative action. Once
commenced, a derivative proceeding
may not be discontinued or settled
without the court's approval.
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Inspection of Books The shareholders, directors and Under French corporate law shareholders or
and Records creditors of a corporation their proxies may examine a number of
incorporated under the Canada corporate records relating to the previous
Business Corporations Act, and three fiscal years, including:
their agents and legal
representatives, may examine:
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- the corporation's articles and - the corporation's statuts;
by-laws and any amendments
thereto; - shareholder lists, including the name,
address and shareholding of registered
- minutes of meetings and shareholders;
resolutions of the corporation's
shareholders; - consolidated financial statements;
- a list of directors; and - reports of the board of directors and
the statutory auditors;
- a securities register;
- proposed resolutions;
during the usual business hours of
the corporation free of charge. A - minutes of shareholders' meetings;
shareholder of the corporation is
entitled, on request and without - information relating to directorial
charge, to take extracts from candidates;
those materials and to receive one
copy of the articles and by-laws - the total overall compensation paid to
of the corporation and any the corporation's ten highest-paid
amendments thereto. employees;
As Alcan is a public company, any - the list of attendees at shareholders'
person, upon payment of a meetings; and
reasonable fee and providing to
Alcan or its agent an affidavit - a list of the corporation's directors
confirming the name and address of and statutory auditors.
the applicant and stating that the
list and any supplemental lists Shareholders may consult and make a copy
obtained will not be used other of the documents listed above at any time
than in connection with: at the company's registered office.
Shareholders also have the right to make
- an effort to influence one copy of the documents that are
shareholder voting; available for consultation.
- an offer to acquire securities Shareholders have additional inspection
of Alcan; or rights prior to a shareholders' meeting.
Prior to a shareholders' meeting,
- any other matter relating to the shareholders have the right to receive
affairs of Alcan; information, including:
may require Alcan or its agent to - the agenda for the meeting;
provide a current list setting out
the names of Alcan's registered - a table showing results of operations
holders of shares, options and for the previous five years;
rights, the number of shares owned
by each shareholder and the - the report of the board of directors
address of each holder of shares that will be presented at the meeting;
and rights as shown on the records
of the corporation. - a summary of the company's financial
situation over the previous fiscal year
and the latest annual financial
statements;
- the statutory auditors' reports; and
- the proposed resolutions to be presented
at the meeting.
During this period, shareholders may
always consult the list of the
corporation's shareholders.
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Preemptive Rights Under the Canada Business Under French company law, an existing
Corporations Act, if the articles shareholder of a corporation has a
of a corporation so provide, no preemptive right to subscribe for any
shares of a class shall be issued, shares or any securities convertible into,
except in limited circumstances, or otherwise giving access to, shares
unless the shares have first been either immediately or with the passage of
offered to shareholders holding time and issued by such corporation in
shares of that class, and those proportion to the shares already held
shareholders have preemptive
rights to
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acquire the offered shares in by such shareholder, unless such right is
proportion to their holdings of excluded at an extraordinary general
the shares of that class, at such shareholders' meeting with a two-thirds
price and on such terms as those majority. According to French company law,
shares are to be offered to under certain conditions, unexercised
others. Alcan's Restated Articles preemptive rights may be individually
of Incorporation do not currently waived by the shareholders or transferred
provide for preemptive rights of to third parties. If expressly authorized
the holders of any of its at the extraordinary general shareholders'
outstanding shares. meeting approving the capital increase,
the shareholders, as well as the third
parties to whom preemptive rights were
transferred, may subscribe for the shares
subject to the capital increase above and
beyond their pro rata interest in the
share capital of the corporation by
subscribing the stock reserved for
shareholders who neither exercised nor
transferred their preemptive rights.
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Take-Over Bids and If a share acquisition constitutes Under applicable French stock exchange
Compulsory a take-over bid and is not regulations, where a natural person or a
Acquisition of otherwise exempt, it must be made legal entity, acting alone or in concert,
Shares to all holders of the relevant come to hold, directly or indirectly, more
class by way of a formal offer and than a third of the securities or more
offering circular in the form than a third of the voting rights of a
prescribed under Canadian listed company, this person or legal
securities legislation. A entity is obliged to make a tender offer
"take-over bid" includes any offer for the entire capital of the company and
to acquire a number of voting the other securities giving access, either
securities which, when added to immediately or with the passage of time,
the existing holdings of the to the capital or to the voting rights of
offeror and its joint actors, the company. Such offer must be on terms
would constitute 20% or more of and conditions that are acceptable to the
that class of securities. The bid CMF.
must remain open for a period of
35 days and, if the consideration The same provisions apply to any natural
offered under the bid includes person or legal entity acting alone or in
shares, the bid documents must concert:
contain prospectus-like disclosure
with respect to the issuer of the (i) which holds directly or indirectly
shares. There are several between one-third and one-half of the
exemptions under which an offer securities or the voting rights of a
which constitutes a "take-over company and which, in less than twelve
bid" may be made on an "exempt consecutive months, increases the number
basis"; that is, without that of securities or the voting rights it
offer having to be extended to all holds in the Company by at least 2%; or
security holders. The most
frequently used exemptions are: (ii) where more than one-third of the
capital or voting rights of a listed
- the private purchase exemption, company is held by another company and
which permits acquisitions of any constitutes an essential part of such
number of securities in private company's assets and where:
agreements with not more than 5
persons or companies if the value (a) a person acquires the control (as
of the consideration does not determined by French company law) of this
exceed 115% of the market price of other company; or
the class of securities; and
(b) a group of persons acting in
- normal course purchases in any concert holds more than 50% of the capital
12-month period through the or of
facilities of a stock exchange of
up to 5% of the class of
securities outstanding at the
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commencement of such period at the voting rights of this other company
prices not in excess of the market without any of these persons continuing to
price. hold the control individually.
Under the Canada Business French stock exchange regulations provide
Corporations Act, if within 120 certain exemptions to the obligation to
days of a take-over bid the make such mandatory offer, which could be
holders of 90% of the shares of allowed by the CMF.
any class, excluding shares held
by or on behalf of the offeror, The bid must, subject to certain
accept the take-over bid of that exceptions, remain open for a period of 25
offeror, the offeror is entitled trading days.
to acquire the remaining shares of
that class. The holders of the Under applicable French stock market
shares not tendered to the regulations, a shareholder who comes to
take-over bid may elect to hold, alone or in concert, at least 95% of
transfer the shares to the offeror the total voting rights of a listed
on the terms of the take-over bid company may initiate a withdrawal offer
or to demand payment of the fair (offre publique de retrait), or buy-out,
value of those shares. which, if following the buy-out the
shareholder also holds, alone or in
The securities laws and policies concert, at least 95% of the total share
of certain Canadian provinces capital in the listed company, could be
regulate take-over bids and followed by a compulsory acquisition or
related transactions involving squeeze out (retrait obligatoire) of the
Canadian public companies, remaining minority shareholders. In the
including bids for securities of a case of one majority shareholder holding
corporation by its insiders, bids 95% of the total share capital and voting
by a corporation to acquire its rights, any holder of voting equity
own securities and going private securities who does not belong to the
transactions in which the majority group can also apply to the CMF
interests of shareholders would be to require the majority shareholder or
terminated in certain group of shareholders to file a withdrawal
circumstances, such as a offer, and to thus offer to acquire the
compulsory acquisition of shares shares of the minority.
described in the preceding
paragraph. Depending on the
circumstances, these laws and
policies seek to enhance minority
shareholder protections by
providing for such things as
independent valuations, approval
by a majority of the minority
shareholders concerned and
enhanced disclosure, and by
recommending the use of
independent directors to review
such matters.
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Shareholder Rights Each of the Alcan Common Shares Pechiney does not have a shareholder
Plan carries one right to purchase rights plan.
additional common shares pursuant
to the Company's Shareholder
Rights Plan. The terms of the
rights are contained in the
Shareholders Rights Agreement,
which is governed by the laws of
Ontario and Canada. The rights
expire in 2008, subject to
re-confirmation at the Annual
Meeting of Shareholders in 2005.
The rights under the rights plan
are not currently exercisable, nor
may they be separated from the
Alcan Common Shares. Subject to
specified exceptions and
qualifications, on the tenth
business
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day after the first to occur of:
- the acquisition by a person or
group of affiliated or associated
persons of beneficial ownership
of 20% or more of Alcan's
outstanding voting shares; or
- a bid to acquire 20% or more of
Alcan's outstanding voting
shares,
holders of rights, with the
exception of the acquiring or
bidding party, will be entitled to
purchase from Alcan, upon payment
of the exercise price (currently
$200.00), the number of Alcan
Common Shares that can be
purchased for double the exercise
price, based on the market value
of the Alcan Common Shares at the
time the rights become
exercisable. At and after such
time the rights will also be
transferable separately from the
Alcan Common Shares. The exercise
price mentioned above is subject
to adjustment according to the
terms of the rights plan to
account for, among other things,
adjustments to the Alcan Common
Shares such as stock splits, stock
dividends and distributions to
shareholders.
The rights agreement has a
permitted bid feature which allows
a take-over bid to proceed without
the rights becoming exercisable,
provided that the bid meets
specified minimum specified
standards of fairness and
disclosure, even if the board of
directors of Alcan does not
support the bid.
The rights may be redeemed by the
board of directors of Alcan prior
to the expiration or
reauthorization of the rights
agreement, with the prior consent
of the holders of rights or Alcan
Common Shares, for $0.01 per
right. In addition, under
specified conditions, the board of
directors of Alcan may waive the
application of the rights
agreement for particular share
acquisitions or take-over bids,
and in that event the board of
directors of Alcan will be deemed
to have elected to redeem the
rights at $0.01 per right.
112
DIRECTORS AND EXECUTIVE OFFICERS
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF ALCAN AND PECHINEY
ALCAN
Based on the number of Alcan Common Shares issued and outstanding on July 31,
2003, the directors and officers of Alcan, individually and the group as a
whole, held less than one percent of the issued and outstanding Alcan Common
Shares.
PECHINEY
Pechiney's 2002 20-F states that, as of December 31, 2002, none of Pechiney's
directors and executive officers held Pechiney securities that, combined with
options to purchase Pechiney Common Shares they held, would have entitled them
to beneficially own one percent or more of any class of Pechiney securities.
Alcan has not reviewed any contracts between Pechiney and its executive
officers. However, Alcan understands that certain of such contracts provide for
compensation to be paid in the event employment is terminated voluntarily or
involuntarily following a change of control of Pechiney, and that consummation
of the offers could constitute such a change of control.
ADDITIONAL INFORMATION REGARDING ALCAN'S DIRECTORS AND EXECUTIVE OFFICERS
Each of the Directors of Alcan is a citizen of Canada, except for Mr. Travis
Engen and Mr. William R. Loomis, Jr., who are citizens of the United States of
America, Mr. Roland Berger and Mr. Gerhard Schulmeyer, who are citizens of the
Federal Republic of Germany and Ms. Christine Morin-Postel, who is a citizen of
the Republic of France.
Each of the Executive Officers of Alcan is a citizen of Canada, except for Mr.
Travis Engen, Mr. Richard B. Evans, Mr. Brian W. Sturgell, Ms. Cynthia Carroll,
Ms. Martha Finn Brooks and Mr. Thomas J. Harrington, who are citizens of the
United States of America, Mr. Christopher Bark-Jones, who is a citizen of the
United Kingdom, Mr. Kurt Wolfensberger, who is a citizen of Switzerland, and Mr.
Armin Weinhold, who is a citizen of the Federal Republic of Germany.
113
MARKET PRICE AND DIVIDEND DATA
MARKET PRICES
ALCAN
The principal trading markets for Alcan Common Shares are the New York Stock
Exchange and The Toronto Stock Exchange. The table below sets forth, for the
periods indicated, the reported high and low quoted prices of the Alcan shares
on the New York Stock Exchange and The Toronto Stock Exchange.
NEW YORK STOCK TORONTO STOCK
EXCHANGE PRICE EXCHANGE PRICE PER
PER ALCAN SHARE ALCAN SHARE
---------------------- -------------------
HIGH LOW HIGH LOW
-------- -------- -------- --------
(U.S. $) (U.S. $) (CAN $) (CAN $)
2001
First Quarter............................... 39.86 33.00 61.76 49.45
Second Quarter.............................. 48.50 35.50 73.70 56.37
Third Quarter............................... 43.76 28.95 67.50 45.50
Fourth Quarter.............................. 37.56 28.94 59.25 46.95
2002
First Quarter............................... 41.78 34.53 65.73 55.60
Second Quarter.............................. 40.00 35.27 62.95 53.61
Third Quarter............................... 37.04 23.87 56.11 37.76
Fourth Quarter.............................. 32.05 23.39 50.10 37.25
2003
First Quarter............................... 31.97 26.45 49.29 39.08
Second Quarter.............................. 32.74 27.48 44.21 39.75
Third Quarter............................... 39.55 30.01 53.25 41.48
Fourth Quarter (through October 23, 2003)... 42.52 39.30 56.40 54.42
114
PECHINEY
Pechiney Common Shares are listed for trading on the Premier Marche of Euronext
Paris under the ISIN code FR0000132904. Pechiney ADSs are listed on the New York
Stock Exchange. The table below sets forth, for the periods indicated, the
reported high and low quoted prices of the Pechiney Common Shares on the Premier
Marche of Euronext Paris and of the Pechiney ADSs on the New York Stock
Exchange.
PRICE PER PECHINEY
COMMON SHARE PRICE PER PECHINEY ADSS
------------------ ------------------------
HIGH LOW HIGH LOW
------ ------ --------- ---------
(EURO) (EURO) (U.S. $) (U.S. $)
2001
First Quarter.............................. 57.30 43.50 26.30 19.70
Second Quarter............................. 68.60 45.22 30.00 20.35
Third Quarter.............................. 63.40 30.04 26.80 16.05
Fourth Quarter............................. 59.40 40.35 26.05 18.65
2002
First Quarter.............................. 63.80 57.05 28.13 25.25
Second Quarter............................. 61.85 45.20 27.75 22.65
Third Quarter.............................. 48.93 26.90 24.10 13.58
Fourth Quarter............................. 39.60 24.50 19.50 12.17
2003
First Quarter.............................. 34.30 20.37 18.00 13.95
Second Quarter............................. 32.21 22.10 18.00 12.30
Third Quarter.............................. 47.52 30.35 27.67 17.60
Fourth Quarter (through October 23,
2003).................................... 47.97 47.21 28.32 27.38
Pechiney OCEANEs are listed for trading on the Premier Marche of Euronext Paris
under the ISIN code FR0000188401. The table below sets forth, for the periods
indicated, the reported high and low quoted prices of the Pechiney OCEANEs on
Euronext Paris.
PRICE PER
PECHINEY OCEANE
---------------
HIGH LOW
------ ------
(EURO) (EURO)
------ ------
2002
Second Quarter (beginning April 4, 2002).................... 76.30 71.00
Third Quarter............................................... 72.00 63.00
Fourth Quarter.............................................. 75.00 66.55
2003
First Quarter............................................... 75.85 69.00
Second Quarter.............................................. 72.00 71.25
Third Quarter............................................... 83.06 76.29
Fourth Quarter (through October 23, 2003)................... 83.22 83.07
115
Pechiney Bonus Allocation Rights were listed for trading on the Premier Marche
of Euronext Paris under the ISIN code FR0000951634 until August 4, 2003, and
have since been trading over-the-counter. The table below sets forth, for the
periods indicated, the reported high and low quoted prices of the Pechiney Bonus
Allocation Rights on the Euronext Paris.
PRICE PER
PECHINEY BONUS
ALLOCATION RIGHT
-----------------
HIGH LOW
------- -------
(EURO) (EURO)
2003
Second Quarter (beginning June 3, 2003)..................... 3.44 2.22
Third Quarter............................................... 4.85(1) 2.93(1)
Fourth Quarter (through October 23, 2003)................... NA NA
---------------
(1) Pechiney Bonus Allocation Rights were listed on Euronext Paris through
August 4, 2003, and from that date continue to trade over-the-counter in
limited trading.
DIVIDENDS
Alcan. The following table sets forth the aggregate amounts of dividends paid
on each Alcan Common Share in respect of the nine-month period ended September
30, 2003 and each of the five fiscal years ended December 31, 2002.
U.S. DOLLARS PER
ALCAN COMMON SHARE
---------------------
Nine-month period ended September 30, 2003.................. 0.45 (0.15 quarterly)
Year ended December 31,
2002...................................................... 0.60 (0.15 quarterly)
2001...................................................... 0.60 (0.15 quarterly)
2000...................................................... 0.60 (0.15 quarterly)
1999...................................................... 0.60 (0.15 quarterly)
1998...................................................... 0.60 (0.15 quarterly)
Pechiney. The following table sets forth the amounts of dividends paid on each
Pechiney Common Share and the U.S. dollar equivalent of the amount of dividends
paid on each Pechiney ADS for each of the five fiscal years ended December 31,
2002.
EURO PER PECHINEY U.S. DOLLARS PER
COMMON SHARE PECHINEY ADS(1)
----------------- ----------------
Year ended December 31,
2002................................................ 1.00 0.52
2001................................................ 1.00 0.45
2000................................................ 1.00 0.47
1999................................................ 0.81 0.41
1998................................................ 0.80 0.47
---------------
(1) Translations of euro amounts into U.S. dollars were made at the Federal
Reserve Bank of New York noon buying rate on the last trading day of the
respective years.
116
VALIDITY OF THE SECURITIES
The validity of the Alcan Common Shares to be issued pursuant to the offer will
be passed upon by Roy Millington, Alcan's Corporate Secretary. Certain Canadian
tax consequences of the offer will be passed upon for Alcan by Hugh Berwick,
Alcan's senior tax counsel. Certain U.S. and French tax consequences of the
offer will be passed upon for Alcan by Sullivan & Cromwell LLP.
EXPERTS
The consolidated financial statements of Alcan incorporated into this document
by reference to the 2002 10-K have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP (Montreal, Canada), independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of Pechiney incorporated into this
document by reference to the 2002 20-F have been so incorporated in reliance on
the report of PricewaterhouseCoopers Audit (Paris, France), independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
117
ADDITIONAL INFORMATION FOR SECURITYHOLDERS
WHERE YOU CAN FIND MORE INFORMATION
Alcan files annual, quarterly and special reports and other information with the
Securities and Exchange Commission. Pechiney files annual and special reports
and certain other information with the SEC. You may read and copy any reports,
statements or other information on file at the SEC's Public Reference Room
located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC
maintains an Internet site at the URL http://www.sec.gov that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. The Pechiney ADSs and Alcan Common Shares are
listed on the New York Stock Exchange and, consequently, the periodic reports,
proxy statements and other information filed by Pechiney and Alcan with the SEC
can be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
Alcan has filed with the SEC a registration statement on Form S-4 to register
the Alcan Common Shares that holders of Pechiney securities will receive
following completion and acceptance of the offers. This prospectus does not
contain all the information set forth in the registration statement, some parts
of which are omitted in accordance with the rules and regulations of the SEC.
For further information, you should refer to the registration statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be a part of this prospectus, except for
any information superseded by information contained in this prospectus.
Information furnished under Item 9 or Item 12 of our current reports on Form 8-K
is not incorporated by reference in this prospectus and Registration Statement.
We furnished information under Item 12 of our current reports on Form 8-K filed
on April 16, 2003 and July 22, 2003. This prospectus incorporates by reference
the documents set forth below that Alcan and Pechiney have previously filed with
the SEC. These documents contain important information about Alcan and Pechiney
and their financial condition.
ALCAN SEC FILINGS (FILE NO. 1-3677) PERIOD
----------------------------------- ------
Annual Report on Form 10-K for the year ended Year ended December 31, 2002
December 31, 2002, as amended (the "Annual
Report on Form 10-K"), including:
- those portions of Alcan's Annual
Report for the year ended December 31,
2002, and
- those portions of Alcan's Management
Proxy Circular for the annual meeting
of shareholders held on April 24,
2003,
that are expressly incorporated by reference
in the Annual Report on Form 10-K
Quarterly Reports on Form 10-Q Quarters ended March 31, 2003, as amended,
and June 30, 2003
Current Reports on Form 8-K Filed on January 21, 2003, May 2, 2003 (as
amended), July 8, 2003, September 11, 2003,
September 15, 2003 and October 22, 2003.
PECHINEY SEC FILINGS (FILE NO. 1-14110) PERIOD
--------------------------------------- ------
Annual Report on Form 20-F, as amended Year ended December 31, 2002
Reports of Foreign Private Issuer on Form 6-K Filed on April 30, 2003, July 25, 2003 and
July 30, 2003.
118
We also incorporate by reference into this prospectus additional documents that
we may file with the SEC after the date of the filing of any amendment to the
registration statement of which this prospectus forms a part and prior to the
effectiveness of the registration statement, and additional documents that we
may file with the SEC after the date of this prospectus until the expiration of
the U.S. offer except that we do not incorporate information furnished under
item 9 or item 12 of our current reports on Form 8-K. We also incorporate by
reference into this prospectus the financial information in the Report of
Foreign Private Issuer on Form 6-K that Pechiney is expected to file with the
SEC on or about November 4, 2003 in connection with its announcement of its
results of operations for the three- and nine-month periods ended September 30,
2003.
You may obtain copies of any of the documents incorporated by reference into
this prospectus through Alcan or the SEC. Alcan makes available free of charge
through its Internet site, accessible at the URL http://www.alcan.com, all of
Alcan's reports and other information filed with or furnished to the SEC by
means of a hyperlink to the SEC's EDGAR database of electronic filings. Alcan
also posts on its Internet site annual and quarterly reports filed with the SEC
as soon as reasonably practicable after the reports are electronically filed
with the SEC.
You may also obtain documents incorporated by reference into this prospectus at
no cost by requesting them in writing or by telephone at the following address:
Alcan Inc.
1188 Sherbrooke Street West
Montreal, Quebec, Canada H3A 3G2
Attn: Secretary
Tel.: 514-848-8000.
If you would like to receive documents before the expiration of the U.S. offer,
please make your request no later than November 20, 2003, two business days
before the expiration date of the offers.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS TO DECIDE WHETHER TO PARTICIPATE IN THE U.S.
OFFER. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM THAT WHICH IS CONTAINED IN, OR INCORPORATED BY REFERENCE INTO,
THIS PROSPECTUS. THIS PROSPECTUS IS DATED OCTOBER 24, 2003. YOU SHOULD NOT
ASSUME THAT THE INFORMATION CONTAINED IN, OR INCORPORATED BY REFERENCE INTO,
THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND NEITHER THE
MAILING OF THIS PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE OF ALCAN COMMON
SHARES IN THE OFFERS SHALL CREATE ANY IMPLICATIONS TO THE CONTRARY.
119
EXCHANGE RATE INFORMATION
The following tables show, for the periods indicated, information concerning the
exchange rate between the U.S. dollar and the euro. The average rates presented
in these tables were calculated by using the average of the exchange rates on
the last day of each month during the relevant period. This information is
provided solely for your information, and we do not represent that euros could
be converted into U.S. dollars at these rates or at any other rate. These rates
are not the rates used by Alcan or Pechiney in the preparation of their
respective consolidated financial statements incorporated by reference into this
prospectus.
The data provided in the following table is expressed in U.S. dollars per euro
and is based on noon buying rates published by the Federal Reserve Bank of New
York for the euro. On October 23, 2003, the exchange rate between the U.S.
dollar and the euro expressed in U.S. dollar per euro was E1.00 = $1.1795. The
data provided in the following table for the period prior to January 1999 is
based on noon buying rates for the French franc converted into the euro at the
fixed rate established by the European Council of Ministers of
FF 6.55957 = E1.00.
YEAR ENDED DECEMBER 31, HIGH LOW AVERAGE PERIOD END
----------------------- ------ ------ ------- ----------
1998........................................... N/A N/A N/A 1.1739
1999........................................... 1.1812 1.0016 1.0653 1.0070
2000........................................... 1.0335 0.8270 0.9232 0.9388
2001........................................... 0.9535 0.8730 0.8952 0.8901
2002........................................... 1.0485 0.8594 0.9454 1.0485
2003 (through October 23, 2003)................ 1.1870 1.0361 1.1170 1.1795
MONTHS IN 2002 AND 2003 HIGH LOW
----------------------- ------ ------
November........................................ 1.0139 0.9895
December........................................ 1.0485 0.9927
January......................................... 1.0861 1.0361
February........................................ 1.0875 1.7080
March........................................... 1.1062 1.0545
April........................................... 1.1180 1.0621
May............................................. 1.1853 1.1200
June............................................ 1.1870 1.1423
July............................................ 1.1580 1.1164
August.......................................... 1.1390 1.0871
September....................................... 1.1650 1.0845
October (through October 23, 2003).............. 1.1812 1.1596
120
SERVICE OF PROCESS AND
ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. SECURITIES LAWS
Alcan is a Canadian corporation. Most of Alcan's directors and officers, as well
as certain experts named in this prospectus, are not citizens or residents of
the United States and all or a substantial part of the assets of these
individuals may be located outside the United States. Also, a large part of our
assets are located outside the United States. As a result, it may be difficult
for you to effect service of process within the United States upon these
individuals or to realize against them or Alcan within the United States upon
judgments of courts of the United States predicated upon civil liabilities under
the Securities Act of 1933. Roy Millington, our Corporate Secretary, has advised
us, however, that the civil liability provisions of that Act may be enforced in
original actions taken in the Province of Quebec against us or any such
individual, but judgments of United States courts predicated on such provisions
will not be enforceable in the Province of Quebec unless they meet the
requirements for the recognition and enforcement of foreign judgments under the
Civil Code of Quebec.
WHO CAN HELP ANSWER MY QUESTIONS?
If you have more questions about this offer, you should contact the information
agent at the address or telephone numbers set forth in the inside front cover of
this prospectus under "Information Incorporated by Reference."
Additional copies of this prospectus, the letter of transmittal and the forms of
acceptance may be obtained from the information agent, brokers, dealers,
commercial banks or trust companies.
TO OBTAIN TIMELY DELIVERY OF THESE DOCUMENTS, YOU MUST REQUEST THEM NO LATER
THAN NOVEMBER 20, 2003.
121
(ALCAN LOGO)
ALCAN INC.
The U.S. ADR Exchange Agent for the U.S. Offer is:
THE BANK OF NEW YORK
By Mail: For Notice of Guaranteed Delivery By Hand or Overnight Courier:
By Facsimile:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212)-815-6433 101 Barclay Street
Church Street Station Receive and Deliver Window,
New York, New York 10286-1248 For confirmation telephone: Street Floor
(212)-815-6212 New York, New York 10286
The Information Agent for the U.S. Offer is:
D.F. KING & CO., INC.
48 Wall Street
New York, New York 10005
Banks and Brokers Call: (212) 269-5550
Call Toll Free: (800) 488-8035
The Dealer Manager for the U.S. Offer is:
MORGAN STANLEY
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7018
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Canada Business Corporations Act (the "Act"), the governing act to which
Alcan Inc. (the "Corporation") is subject, provides that,
(1) a corporation may indemnify a director or officer of the corporation, a
former director or officer of the corporation or another individual who
acts or acted at the corporation's request as a director or officer, or an
individual acting in a similar capacity, of another entity, against all
costs, charges and expenses, including an amount paid to settle an action
or satisfy a judgment, reasonably incurred by the individual in respect of
any civil, criminal, administrative, investigative or other proceeding in
which the individual is involved because of that association with the
corporation or other entity.
(2) a corporation may advance moneys to a director, officer or other
individual for the costs, charges and expenses of a proceeding referred to
paragraph (1). However, the individual shall repay the moneys if he or she
does not fulfill the conditions of paragraph (3).
(3) a corporation may not indemnify an individual under paragraph (1)
unless the individual
(a) acted honestly and in good faith with a view to the best interests
of the corporation, or, as the case may be, to the best interests of the
other entity for which the individual acted as a director or officer or
in a similar capacity at the corporation's request; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, the individual had reasonable
grounds for believing that the individual's conduct was lawful.
(4) A corporation may with the approval of a court indemnify a person
referred to in paragraph (1), or advance moneys under paragraph (2), in
respect of an action by or on behalf of the corporation or other entity to
procure a judgment in its favor, to which the individual is made a party
because of the individual's association with the corporation or other
entity as described in paragraph (1) against all costs, charges and
expenses reasonably incurred by the individual in connection with such
action if the individual fulfils the conditions set out in paragraph (3).
(5) Despite paragraph (1), an individual referred to in paragraph (1) is
entitled to indemnity from the corporation in respect of all costs, charges
and expenses reasonably incurred by the individual in connection with the
defense of any civil, criminal, administrative, investigative or other
proceeding to which the individual is subject because of the individual's
association with the corporation or other entity as described in paragraph
(1), if the individual seeking indemnity:
(a) was not judged by the court or other competent authority to have
committed any fault or omitted to do anything that the individual ought
to have done; and
(b) fulfils the conditions set out in paragraph (3).
The Directors' Standing Resolution pertaining to indemnification of Directors
and Officers of the Corporation represents, in general terms, the extent to
which directors and officers may be indemnified by the Corporation under the
Act. This resolution provides as follows:
"17. INDEMNITY (1) Subject to the limitations contained in the governing Act
but without limit to the right of the Corporation to indemnify as provided for
in the Act, the Corporation shall indemnify a Director or Officer, a former
Director or Officer, or a person who acts or acted at the Corporation's request
as a Director or Officer of a body corporate of which the Corporation is or was
a Shareholder or creditor (or a person who undertakes or has undertaken any
liability on behalf of the Corporation or at the Corporation's request on behalf
of any such body corporate) and his heirs and legal representatives, against all
costs, charges and expenses, including an amount paid to settle an action or
satisfy a judgment, reasonably incurred by him in respect of any civil,
criminal, administrative, investigative or other proceeding to which he is made
a party by
II-1
reason of being or having been a Director or Officer of the Corporation or such
body corporate or by reason of having undertaken such liability.
(2) ADVANCE OF COSTS -- The Corporation shall advance moneys to a Director,
Officer or other individual for the costs, charges and expenses of a proceeding
referred to in subsection (1). The individual shall repay the moneys if the
individual does not fulfill the conditions of subsection (3).
(3) LIMITATION -- The Corporation may not indemnify an individual under
subsection (1) unless the individual
(a) acted honestly and in good faith with a view to the best interests of
the Corporation; and
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he had reasonable grounds for believing
that his conduct was lawful."
The Corporation also has an insurance policy covering Directors and Officers of
the Corporation and of its subsidiaries against certain liabilities which might
be incurred by them in their capacities as such, but excluding those claims for
which such insured persons could be indemnified by the Corporation or its
subsidiaries.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS AND SCHEDULES.
(a) The following Exhibits are filed herewith unless otherwise indicated:
EXHIBIT INDEX
PAGINATION BY
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
------- ----------- -------------
3.1 Restated Articles of Incorporation, dated as of September
12, 2002 (incorporated herein by reference to Exhibit 3 to
the Quarterly Report on Form 10-Q of Alcan for the quarter
ended September 30, 2002 (File No. 1-3677)).................
3.2 By-law No. 1A (incorporated herein by reference to Exhibit
3.5 to the Annual Report on Form 10-K of Alcan for the
fiscal year ended December 31, 1987 (File No. 1-3677))......
3.3 Amendments to By-law No. 1A (incorporated herein by
reference to Exhibit 3.2 to the Quarterly Report on Form
10-Q of Alcan for the quarter ended June 30, 2002 (File No.
1-3677))....................................................
4 Shareholder Rights Agreement, dated as of December 14, 1989,
as amended and restated as of April 22, 1999, between Alcan
Aluminum Limited and CIBC Mellon Trust Company, as rights
agent (incorporated herein by reference to Schedule B of the
Management Proxy Circular filed as Exhibit 99 to the Annual
Report on Form 10-K for the fiscal year ended December 31,
1998 (File No. 1-3677)).....................................
5 Opinion of Roy Millington regarding validity of securities
being
registered*.................................................
8.1 Opinion of Sullivan & Cromwell LLP regarding United States
and French tax consequences of the offer*...................
8.2 Opinion of Hugh Berwick regarding Canadian tax consequences
of the offer*...............................................
21 List of Subsidiaries of Alcan (incorporated herein by
reference to Exhibit 21 to the Annual Report on Form 10-K
for the fiscal year ended December 31, 2002, as amended
(File No. 1-3677))..........................................
23.1 Consent of PricewaterhouseCoopers LLP as auditors of the
financial statements of Alcan...............................
23.2 Consent of Roy Millington (included in the opinion filed as
Exhibit 5 to this registration statement)...................
23.3 Consent of Sullivan & Cromwell LLP (included in the opinion
filed as Exhibit 8.1 to this registration statement)........
23.4 Consent of Hugh Berwick (included in the opinion filed as
Exhibit 8.2 to this registration statement).................
II-2
PAGINATION BY
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
------- ----------- -------------
23.5 Consent of PricewaterhouseCoopers Audit as auditors of the
financial statements of Pechiney............................
24.1 Powers of Attorney of Directors of Alcan Inc. signing by an
attorney-in-fact*...........................................
24.2 Power of Attorney of the authorized representative in the
United States of America of Alcan Inc. signing by an
attorney-in-fact*...........................................
99.1 Letter of Transmittal (Pechiney ADSs).......................
99.2 Notice of Guaranteed Delivery (Pechiney ADSs)...............
99.3 Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (Pechiney ADSs)................
99.4 Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (Pechiney ADSs)...
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9...............................
99.6 Form of Acceptance for Pechiney Common Shares...............
99.7 Form of Acceptance for Pechiney Bonus Allocation Rights.....
99.8 Form of Acceptance for Pechiney OCEANEs.....................
99.9 Technical Notice to French Financial Intermediaries and U.S.
Custodians (Pechiney Common Shares, Pechiney Bonus
Allocation Rights and Pechiney OCEANEs).....................
99.10 Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (Pechiney Common
Shares, Pechiney Bonus Allocation Rights and Pechiney
OCEANEs)....................................................
99.11 Consent of Morgan Stanley & Co. International Ltd. .........
99.12 Consent of Lazard Freres Banque ............................
99.13 Agreement, dated as of September 12, 2003, between Alcan
Inc. and Pechiney*..........................................
99.14 Letter, dated September 12, 2003, on behalf of Alcan Inc. to
Pechiney regarding Pechiney's stock option plans............
---------------
* Previously filed.
(b) Financial Statement Schedules
Not Applicable.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total U.S. dollar value of securities offered
would not exceed that which was registered) and any derivation
from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
II-3
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(5) That every prospectus (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act of 1933, as amended, and is
used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) That, for the purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(7) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of
this form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request.
(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration
statement when it became effective.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Montreal, Canada, on
October 24, 2003.
Alcan Inc.
By: /s/ TRAVIS ENGEN
------------------------------------
Name: Travis Engen
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities indicated on October 24, 2003:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ TRAVIS ENGEN President, Chief Executive Officer October 24, 2003
------------------------------------------------ and Director (Principal Executive
Travis Engen Officer)
* Director October 24, 2003
------------------------------------------------
Roland Berger
* Director October 24, 2003
------------------------------------------------
L. Denis Desautels
* Chairman of the Board of Directors October 24, 2003
------------------------------------------------
L. Yves Fortier
* Director October 24, 2003
------------------------------------------------
William R. Loomis, Jr.
Director
------------------------------------------------
Christine Morin-Postel
* Director October 24, 2003
------------------------------------------------
J.E. Newall
* Director October 24, 2003
------------------------------------------------
Guy Saint-Pierre
* Director October 24, 2003
------------------------------------------------
Gerhard Schulmeyer
* Director October 24, 2003
------------------------------------------------
Paul M. Tellier
Director
------------------------------------------------
Milton K. Wong
/s/ GEOFFERY E. MERSZEI Executive Vice President and Chief October 24, 2003
------------------------------------------------ Financial Officer (Principal
Geoffery E. Merszei Financial Officer)
II-5
SIGNATURE TITLE DATE
--------- ----- ----
/s/ THOMAS J. HARRINGTON Vice President and Controller October 24, 2003
------------------------------------------------ (Principal Accounting Officer)
Thomas J. Harrington
* Authorized Representative in the October 24, 2003
------------------------------------------------ United States of America
William H. Jairrels
*By: /s/ ROY MILLINGTON October 24, 2003
------------------------------------------
Roy Millington as Attorney-in-fact
II-6
EXHIBIT INDEX
PAGINATION BY
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
------- ----------- -------------
3.1 Restated Articles of Incorporation, dated as of September
12, 2002 (incorporated herein by reference to Exhibit 3 to
the Quarterly Report on Form 10-Q of Alcan for the quarter
ended September 30, 2002 (File No. 1-3677)).................
3.2 By-law No. 1A (incorporated herein by reference to Exhibit
3.5 to the Annual Report on Form 10-K of Alcan for the
fiscal year ended December 31, 1987 (File No. 1-3677))......
3.3 Amendments to By-Law No. 1A (incorporated herein by
reference to Exhibit 3.2 to the Quarterly Report on Form
10-Q of Alcan for the quarter ended June 30, 2002 (File No.
1-3677))....................................................
4 Shareholder Rights Agreement, dated as of December 14, 1989,
as amended and restated as of April 22, 1999, between Alcan
Aluminum Limited and CIBC Mellon Trust Company, as rights
agent (incorporated herein by reference to Schedule B of the
Management Proxy Circular filed as Exhibit 99 to the Annual
Report on Form 10-K for the fiscal year ended December 31,
1998 (File No. 1-3677)).....................................
5 Opinion of Roy Millington regarding validity of securities
being registered*...........................................
8.1 Opinion of Sullivan & Cromwell LLP regarding United States
and French tax consequences of the offer*...................
8.2 Opinion of Hugh Berwick regarding Canadian tax consequences
of the offer*...............................................
21 List of Subsidiaries of Alcan (incorporated herein by
reference to Exhibit 21 to the Annual Report on Form 10-K
for the fiscal year ended December 31, 2002, as amended
(File No. 1-3677))..........................................
23.1 Consent of PricewaterhouseCoopers LLP as auditors of the
financial statements of Alcan...............................
23.2 Consent of Roy Millington (included in the opinion filed as
Exhibit 5 to this registration statement)...................
23.3 Consent of Sullivan & Cromwell LLP (included in the opinion
filed as Exhibit 8.1 to this registration statement)........
23.4 Consent of Hugh Berwick (included in the opinion filed as
Exhibit 8.2 to this registration statement).................
23.5 Consent of PricewaterhouseCoopers Audit as auditors of the
financial statements of Pechiney............................
24.1 Powers of Attorney of Directors of Alcan Inc. signing by an
attorney-in-fact*...........................................
24.2 Power of Attorney of the authorized representative in the
United States of America of Alcan Inc. signing by an
attorney-in-fact*...........................................
99.1 Letter of Transmittal (Pechiney ADSs).......................
99.2 Notice of Guaranteed Delivery (Pechiney ADSs)...............
99.3 Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (Pechiney ADSs)................
99.4 Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (Pechiney ADSs)...
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9...............................
E-1
PAGINATION BY
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
------- ----------- -------------
99.6 Form of Acceptance for Pechiney Common Shares...............
99.7 Form of Acceptance for Pechiney Bonus Allocation Rights.....
99.8 Form of Acceptance for Pechiney OCEANEs.....................
99.9 Technical Notice to French Intermediaries and U.S.
Custodians (Pechiney Common Shares, Pechiney Bonus
Allocation Rights and Pechiney OCEANEs).....................
99.10 Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (Pechiney Common
Shares, Pechiney Bonus Allocation Rights and Pechiney
OCEANEs)....................................................
99.11 Consent of Morgan Stanley & Co. International Ltd. .........
99.12 Consent of Lazard Freres Banque.............................
99.13 Agreement, dated as of September 12, 2003, between Alcan
Inc. and Pechiney*..........................................
99.14 Letter, dated September 12, 2003, on behalf of Alcan Inc. to
Pechiney regarding Pechiney's stock option plans............
---------------
* Previously filed.
E-2