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University of Cambridge Corporate Workshop

An introduction to company law The dual-track public listing/ private sale of thetrainline.com

Workshop
Introduction Companies Buying, selling and listing companies The proposed initial public offering (IPO) or sale of thetrainline.com Role of the trainee solicitor Questions

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Companies the body corporate


Separate legal entity Owned by shareholders Limited liability Managed by the board of directors Private companies Public and listed companies

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Companies constitution and law


Shares and shareholder rights voting dividends control Directors powers and duties appointed by shareholders delegated power to run the company must act in the companys best interests must exercise skill and care Memorandum and articles of association Corporate law (e.g. The Companies Act 1985)
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Selling a private company


Preparation and vendor due diligence The auction process Principal documents Share purchase agreement sale mechanics warranties/ disclosure non-compete Tax indemnity Other documents Exchange of contracts and completion

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Initial public offerings (IPOs)


AKA listing, flotation, coming to market Preparation and due diligence Advisers involved Why go public? Principal document - the prospectus Process prior to the IPO Launching the IPO

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The dual track IPO or private sale of thetrainline.com

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Parties ownership group

51%

49%

75% 11%

14%

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Overview
thetrainline.com started as a call-centre operation (1997) and then added an online channel (1999), selling rail tickets on behalf of Virgin Rail Group Sells tickets on behalf of most rail companies, and also operates National Rail Enquiries Dual track process formally started March 2006 client preparation from late 2005 Shareholders (especially the majority shareholder, Virgin Group) wanted to raise cash for other business ideas

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Why the dual track?


Creates competitive tension between the IPO and private sale: the bidders in the auction process know that the sellers have another option On the private sale side, price tension created amongst a number of potential purchasers Information memorandum sent to 21 potential bidders, both within the industry, and financial buyers (private equity) But, more professional fees

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Timeline

Summer/ Autumn 2005: internal planning by clients March 2006: Herbert Smith appointed March-June: IPO and private sale preparations May: stock market falls sharply June: to be revealed

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Some factors affecting the decision


IPO: Results in a wider shareholder base institution-only or include the general public in the offer? Increased scrutiny of affairs (public reporting, regulation etc.) Perception of a listed company as being of substance Fluid market for shares post-IPO Access to capital markets for further funds Uncertain valuation until immediately prior to launch Private sale: Known valuation Company remains private less public scrutiny Smaller shareholder base/ sole owner
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The Herbert Smith Team


Corporate IT/ IP Competition Tax Finance Employment / Pensions Share schemes Real Estate
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The role of the trainee solicitor


Legal research Legal due diligence Draft documentation Involvement in the disclosure process against warranties in SPA Liaising with other internal/external professional teams/ co-ordination and project management Attendance at meetings

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Questions?

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