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FOR IMMEDIATE RELEASE
Media Contact:
GM: Toni Simonetti 313-665-9005
Hughes: Bob Marsocci 310-662-9986
GM Announces Plan to Split-off Hughes Electronics
News Corp. to acquire 34% of Hughes for $14 per share
GM to sell its 19.9% interest for $3.8 billion
NEW YORK –– General
Motors Corp. and its subsidiary Hughes Electronics Corp. (NYSE: GM, GMH)
today announced that GM intends to split off Hughes, and simultaneously
sell GM’s 19.9 percent economic interest in Hughes to News Corp.
(NYSE: NWS, NWS.A) for $14 per share, or approximately $3.8 billion. GM
would receive about $3.1 billion in cash, and the remainder would be paid
in News Corp. preferred American Depositary Receipts (ADRs).
“General Motors is pleased to have reached an agreement with News
Corp. that provides substantial value to our stockholders and puts Hughes
in a position to capitalize on the future growth potential for direct
broadcast satellite television and other related services,” said
GM President and Chief Executive Officer Rick Wagoner. “This transaction
also offers substantial benefits for both GM’s $1-2/3 stockholders
and GM’s Class H stockholders. For our GM $1-2/3 common stockholders,
the transaction provides a premium for the shares sold by GM and additional
liquidity to GM to further strengthen our balance sheet. It also allows
us to focus on our core automotive operations.”
“In addition to enhanced business prospects for Hughes, the Class
H stockholder would receive direct equity interest in Hughes in place
of the existing tracking stock, and a premium for a portion of their current
interest in GM Class H stock,” Wagoner continued. “Hughes
also would get access to additional management strength and capital to
further expand its business through its affiliation with News Corp., a
successful operator of direct-to-home satellite systems around the world.”
Under terms of the proposed transaction, News
Corp. would acquire an additional 14.1 percent stake in Hughes from holders
of GM Class H common stock through a mandatory exchange of a portion of
their Hughes common stock received in the split-off. They would receive
News Corp stock and/or cash valued at about $14 per share. This price
represents a 22 percent premium over the closing price of GM Class H common
stock based on the closing price of GM Class H stock of $11.48 on Wednesday,
April 9, 2003.
The value of News Corp.’s proposed acquisition
of a 34 percent equity interest in Hughes would be approximately $6.6
billion. The total market value of the Hughes split-off transactions including
the shares presently held by GM is about $17.1 billion based on Wednesday’s
NYSE closing price.
The number of News Corp. preferred ADRs payable
to GM and Hughes stockholders, based on a fixed-price of $14 per Hughes
share, will be adjusted within a collar range of 20 percent above or below
the News Corp. preferred ADR price of $22.40.
Current holders of GM Class H common stock would
first exchange their shares for Hughes common stock on a one-for-one basis,
followed immediately by an exchange of 17.5 percent of the Hughes stock
they receive for approximately $14 per share in cash and/or News Corp.
stock. GM would receive a distribution of $275 million in consideration
of the value enhancement for Class H shareholders arising from the conversion
from a tracking stock to an asset based stock.
The GM benefit plans, which currently hold about
330 million shares of Class H stock, would benefit from the transaction
in the same manner as other GM Class H stockholders.
“This transaction is a win-win situation
for Hughes and News Corp. and also for the residential and commercial
customers of Hughes,” said Jack Shaw, president and chief executive
officer of Hughes. “Hughes and its operating companies will be able
to further enhance their strong management team and be in a much better
position to achieve profitable growth and maximize cash flow. The affiliation
with News Corp. should also strengthen Hughes’ competitiveness while
enhancing its commitment to excellence to our valued customers.”
The transaction is subject to a number of conditions, including approval
by a majority of each class of GM stockholders – GM $1-2/3 and GM
Class H - voting both as separate classes and together as a single class.
The transaction, which has been approved by the GM, Hughes and News Corp.
boards of directors, remains subject to regulatory clearance under the
Hart-Scott-Rodino Act and by the Federal Communications Commission. Completion
of the transaction is also contingent on the receipt of a favorable ruling
from the Internal Revenue Service that the split-off of Hughes from GM
would be tax-free to GM and its stockholders for U.S. Federal Income Tax
purposes. The mandatory exchange of approximately 17.5 percent of the
shares of Hughes common stock distributed to Class H stockholders for
cash and/or News Corp. ADRs would be taxable to the Hughes stockholders
at the time. The transaction is currently expected to close in late 2003
or early 2004.
Rupert Murdoch, chairman and chief executive of News Corp., would become
chairman of Hughes, and Chase Carey, who is currently serving as an advisor
to News Corp., would become president and chief executive officer of Hughes.
Eddy Hartenstein, Hughes senior executive vice president, would be named
vice chairman of Hughes. Hughes would have 11 directors, the majority
of which would be independent directors.
The Hughes board would consist of Murdoch, Carey,
News Corp. and Fox Entertainment Group President and Chief Operating Officer
Peter Chernin, News Corp. and Fox Entertainment Group Chief Financial
Officer Dave DeVoe, Hartenstein and six independent directors, including
Neal Austrian, former president and chief operating officer of the National
Football League; James Cornelius, chairman of Guidant Corp.; Charles Lee,
chairman of Verizon Communications Inc.; Peter Lund, former president
and chief executive officer of CBS; John Thornton, president of Goldman
Sachs, and another director to be named at a later date.
Hughes would continue to be based in El Segundo,
Calif.
Hughes and News Corp. plan to file registration
statements in connection with the transaction and GM will distribute a
proxy statement/prospectus to all GM common stock stockholders in connection
with the transaction. Investors are urged to read the proxy statement/prospectus
when it becomes available because it will contain important information
about GM, Hughes and News Corp. and the transaction.
Hughes, a world-leading provider of digital television
entertainment, broadband satellite networks and services, and global video
and data broadcasting, is a unit of General Motors Corporation. The earnings
of GM attributable to Hughes are used to calculate the earnings attributable
to the GM Class H stock.
General Motors, the world's largest vehicle manufacturer,
designs, builds and markets cars and trucks worldwide and has been the
global automotive sales leader since 1931. GM employs about 350,000 people
around the world. More GM information can be found at www.gm.com.
# # #
Note to editors:
SCHEDULE OF ACTIVITIES REGARDING
GM/HUGHES/NEWS CORP. ANNOUNCEMENT
General Motors, Hughes and News Corp. will conduct a media conference
call on Wednesday April 9, 2003 at 5:30 p.m. EDT to discuss the transaction.
Media may listen to this meeting and participate in the question-and-answer
session by dialing 888-790-2023 (U.S.) or 712-271-0788 (international).
The passcode for this event is “press.” This event will be
webcast live on the Internet via a hot link on GM Media OnLine (http://media.gm.com
). The webcast also will be broadcast live on the Hughes web site at www.hughes.com.
A taped replay will be available: Please dial 800-839-2808 (U.S.) 402-998-0857
(international).
On Thursday, April 10, 2003, GM, Hughes and News Corp. will hold separate
conference calls for analysts and investors to discuss the transaction
and answer questions.
The News Corp. analyst teleconference will begin at 8:30 a.m. EDT. Investors
may participate by calling 888-592-6705 or 712-271-0119. Media may participate
in a listen-only mode by calling the same number.
The GM investor teleconference will begin at 9:30 a.m. EDT. Investors
may participate by calling 212-271-4571. Media may participate in a listen-only
mode by calling the same number. A taped replay will be available at 800-633-8284
(U.S) and 402-977-9140 (international). The access code for both phone
numbers is 211-404-56.
The Hughes investor teleconference will begin at 10:30 a.m. EDT. Investors
may participate by calling 800-589-4298 (U.S.) or 719-457-2663 (international),
passcode 612-428. Media may participate in a listen-only mode by calling
the same number. A taped replay will be available at 719-457-0820 (U.S).
The access code for both phone numbers is 612-428.
In connection with the proposed transactions, General Motors Corporation
(“GM”), Hughes Electronics Corporation (“Hughes”)
and The News Corporation Limited (“News”) intend to file relevant
materials with the Securities and Exchange Commission (“SEC”),
including one or more registration statement(s) that contain a prospectus
and proxy/consent solicitation statement. Because those documents will
contain important information, holders of GM $1-2/3 common stock and GM
Class H common stock are urged to read them, if and when they become available.
When filed with the SEC, they will be available for free (along with any
other documents and reports filed by GM, Hughes or News with the SEC)
at the SEC’s website, www.sec.gov, and GM stockholders will receive
information at an appropriate time on how to obtain transaction-related
documents for free from GM. Such documents are not currently available.
GM and its directors and executive officers and Hughes and certain of
its executive officers may be deemed to be participants in the solicitation
of proxies or consents from the holders of GM $1-2/3 common stock and
GM Class H common stock in connection with the proposed transactions.
Information about the directors and executive officers of GM and their
ownership of GM stock is set forth in the proxy statement for GM’s
2002 annual meeting of shareholders filed with the SEC and available free
of charge at the SEC’s website at www.sec.gov. Investors may obtain
additional information regarding the interests of such participants by
reading the prospectus and proxy/consent solicitation statement if and
when it becomes available.
Participants in GM’s solicitation may also be deemed to include
the following persons whose interests in GM are not described in the proxy
statement for GM’s 2002 annual meeting:
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Patrick T. Doyle Corporate VP and Treasurer, Hughes
Michael J. Gaines Corporate VP and CFO, Hughes
Sandra A. Harrison Senior VP, Hughes
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Larry D. Hunter Senior VP and General Counsel
Mr. Shaw beneficially owns 4,084 shares of GM $1-2/3 common stock and
2,244,987 shares of GM Class H common stock. Ms. Austin beneficially owns
3,293 shares of GM $1-2/3 common stock and 1,632,071 shares of GM Class
H common stock. Mr. Doyle beneficially owns 746 shares of GM $1-2/3 common
stock and 511,149 shares of GM Class H common stock. Mr. Gaines beneficially
owns 482 shares of GM $1-2/3 common stock and 298,745 shares of GM Class
H common stock. Ms. Harrison beneficially owns 1,632 shares of GM $1-2/3
common stock and 916,136 shares of GM Class H common stock. Mr. Hartenstein
beneficially owns 3,036 shares of GM $1-2/3 common stock and 1,962,614
shares of GM Class H common stock. Mr. Hunter beneficially owns 0 shares
of GM $1-2/3 common stock and 485,130 shares of GM Class H common stock.
The above ownership information includes shares that are purchasable under
options that are exercisable within 60 days of April 9, 2003. In addition,
each of Mr. Shaw, Ms. Austin, Mr. Doyle, Mr. Gaines, Ms. Harrison, Mr.
Hartenstein and Mr. Hunter holds options to acquire shares of GM Class
H common stock that are not exercisable within 60 days of April 9, 2003.
Each of Mr. Shaw, Ms. Austin, Mr. Doyle, Mr. Gaines, Ms. Harrison, Mr.
Hartenstein and Mr. Hunter has a severance agreement with Hughes that
provides for severance in the event of an involuntary termination after
a change in control, and each also has a retention agreement that provides
for certain payments in the event of a change in control.
Investors may obtain additional information regarding the interests of
the participants by reading the prospectuses and proxy/solicitation statements
if and when they become available. This communication shall not constitute
an offer to sell or the solicitation of an offer to buy any securities,
nor shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No
offering of securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as amended.
Materials included in this document contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause actual results to be
materially different from historical results or from any future results
expressed or implied by such forward-looking statements. The factors that
could cause actual results of GM, Hughes and News to differ materially,
many of which are beyond the control of GM, Hughes or News include, but
are not limited to, the following: (1) operating costs, customer loss
and business disruption, including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or suppliers,
may be greater than expected following the transaction; (2) the regulatory
approvals required for the transaction may not be obtained on the terms
expected or on the anticipated schedule; (3) the effects of legislative
and regulatory changes; (4) an inability to retain necessary authorizations
from the FCC; (5) an increase in competition from cable as a result of
digital cable or otherwise, direct broadcast satellite, other satellite
system operators, and other providers of subscription television services;
(6) the introduction of new technologies and competitors into the subscription
television business; (7) changes in labor, programming, equipment and
capital costs; (8) future acquisitions, strategic partnerships and divestitures;
(9) general business and economic conditions; and (10) other risks described
from time to time in periodic reports filed by GM, Hughes or News with
the SEC. You are urged to consider statements that include the words “may,”
“will,” “would,” “could,” “should,”
“believes,” “estimates,” “projects,”
“potential,” “expects,” “plans,” “anticipates,”
“intends,” “continues,” “forecast,”
“designed,” “goal,” or the negative of those words
or other comparable words to be uncertain and forward-looking. This cautionary
statement applies to all forward-looking statements included in this document.
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