Jersey Telecom Group Ltd: Redemption of 9% Preference Shares

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A decision made on 26 November 2012:

Decision Reference: MD-TR-2012-0102
Decision Summary Title:	Jersey Telecom Group Ltd redemption of 9% Preference shares		Date of Decision Summary:	21 November 2012
Decision Summary Author:	Treasurer of the States		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Jersey Telecom Group Ltd redemption of 9% Preference shares		Date of Written Report:	21 November 2012
Written Report Author:	Treasurer of the States		Written Report : Public or Exempt?	Public
Subject: JT Group Limited redemption of 20 million 9% Preference Shares of £1 each.
Decision(s): The Minister, being responsible for certain States shareholdings, decided to instruct States of Jersey Investments Limited, to dispose by way of redemption, the 20 million 9% Preference Shares of £1 each, held in JT Group Limited on 30th November 2012.
Reason(s) for decision: To implement the decision made by the States in the Medium Term financial Plan (Project P.69/2012) to dispose of the States 20 million 9% Preference shares of £1 each, held in JT Group Limited. States of Jersey Investments Limited acts as Nominee and Trustee for the majority of the States of Jersey and its Minister for Treasury and Resources shareholdings in accordance with the Declaration of Trust.
Resource Implications: £20 million will be returned to the States of Jersey. £15 million will be applied to the 2013-2015 Capital Programme and £5 million will be used for the Innovation Fund.
Action required: The Company Secretary of States of Jersey Investment Limited to ensure resolutions are passed by States of Jersey Investments Limited and that two directors of the Company sign the JT Group Limited special resolution (Attachment A) and revised Articles of Association (Attachment B). Further, that the share certificate be returned to Jersey Telecom Group Limited for cancellation. Head of Shareholder Relations to arrange for the Treasurer and Deputy Treasurer, acting as Nominee and Trustee ordinary shareholders on behalf of the States of Jersey, to approve and sign the JT Group Limited Special Resolutions (Attachment A) and revised Articles of Association (Attachment B).
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Jersey Telecom Group Ltd: Redemption of 9% Preference Shares

Treasury and Resources

Ministerial Decision Report

JERSEY TELECOMS GROUP LTD REDEMPTION OF 9% PREFERENCE SHARES

1. Purpose of Report

To request States of Jersey Investments Limited to pass resolutions and arrange the disposal, by way of redemption and subsequent cancellation of the 20 million 9% Preference Shares of £1 each, held in JT Group Limited.

2. Background

The States approved the Medium Term Financial Plan (Projet P.69/2012) on 8th November 2012, which included in part F:-

“ to approve, in accordance with Article 32(5)(a) of the Telecommunications (Jersey Law 2002, the disposal by way of redemption of the States 9% Preference Shares in the JT Group Ltd with the redemption value of £20 million being applied, £15 million to the Capital Programme for 2013 to 2015 and the balance of £5 million for Economic Development Department to provide funding for the proposed Innovation Fund.”

The 20 million preference shares were originally issued under Telecommunications (Jersey) Law 2002 articles 33(1)(a) – Telecommunications (Transfer) Regulations 2002 – Regulation 3(1) and form a part of the £40million authorised share capital of JT Group Limited.

In 2002 a Declaration of Trust was signed by the Directors of States of Jersey Investments Limited to hold the preference shares in JT Group Limited on behalf of the States and the Minister for Treasury and Resources.

Preference Shares held with Jersey Telecom Group Limited

The redemption of the preference shares will not dilute the States of Jersey’s 100% ownership in JT Group Limited as no shareholding will be transferred to another organisation outside of the States. The redemption will result in £20 million being remitted to the States of Jersey.

In the 2011 States Accounts, the 20 million £1 preference shares were valued at £29.5 million, in line with the JFRM and FRS26. The overall value of the States’ investment in Jersey Telecom Group Limited is £210.3 million.

The States of Jersey approved the disposal of the shares, at par, which will allow Jersey Telecom to restructure their capital financing as part of the company’s wider strategic objectives.

Recommendation

The Minister, being responsible for the shares in Jersey Telecom, acting on behalf of the States, is recommended to:-

Instruct States of Jersey Investments Limited to pass resolutions to dispose of the States 20 million 9% Preference share holding, of £1 each in JT Group Limited value 30th November 2012;
To ask the Company Secretary of States of Jersey Investment Limited to ensure that two directors of the Company sign the JT Group Limited special resolution (Attachment A) and revised Articles of Association (Attachment B);
Request the Head of Shareholder Relations to arrange for the Treasurer and Deputy Treasurer, acting as Nominee and Trustee ordinary shareholders on behalf of the States of Jersey, to approve and sign the JT Group Limited Special Resolutions (Attachment A) and revised Articles of Association (Attachment B) and
Request the Head of Company Secretary of States of Jersey Investments Limited to return the share certificate to JT Group Limited.

Reason for Decision

To implement the decision made by the States in the Medium Term financial Plan (Project P.69/2012) to dispose of the States of Jersey’s 20 million 9% £1 Preference shares held in JT Group Limited.

States of Jersey Investments Limited acts as Nominee and Trustee for the majority of the States of Jersey and its Minister for Treasury and Resources shareholdings in accordance with the Declaration of Trust.

Resource Implications

£20 million will be returned to the States of Jersey. £15 million will be applied to the 2013-2015 Capital Programme and £5 million will be used for the Innovation Fund.

Report author: Head of Shareholder Relations	Document date : 21st November 2012
Quality Assurance: Director of Financial Planning	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2012-0102 -\WR -JT Group Ltd redemption 9% shares - DS.doc
MD sponsor : Treasurer of the States