Freightways IPO documents misleading: Securities Commission

Thursday 5th August 2004

A statement by ABN AMRO Capital (Belgium) N.V. in the offer document for the Freightways initial public offer (IPO) that Foundation Shareholders would retain their significant shareholdings for at least 12 months was misleading, according to the Securities Commission.

The Freightways IPO was launched in August 2003. The IPO was made in a combined prospectus and investment statement.

ABN AMRO Capital retained a 19.2% stake in Freightways when the IPO was completed.

In a letter to investors, on page 7 of the offer document, ABN AMRO Capital stated that the Foundation Shareholders (including ABN AMRO Capital) would retain their significant shareholdings for at least 12 months after the IPO. Contrary to this statement, on 27 February 2004 ABN AMRO Capital sold around 15½ million of its Freightways shares. This was done with the consent of the joint lead managers.

The offer document noted at page 12 that transfer restrictions applying to the shares held by Foundation Shareholders were set out on pages 91 and 92. On page 91, the offer document said that Foundation Shareholders had to hold their shares for 12 months unless they had written consent from the Joint Lead Managers to sell.

The Commission is of the opinion that the statement on page 7 of the offer document said what ABN AMRO Capital would do with its shares. It was not referring to what ABN AMRO Capital could do or was allowed to do.

"We believe that the prudent but non expert investor may have been misled into thinking that the Foundation Shareholders would retain their significant shareholdings for at least 12 months" Commission Chairman Jane Diplock said.

"When issuers combine the investment statement and the prospectus they should bear in mind that the investment statement must give information for non-expert investors."

The transaction occurred independently of Freightways Limited. Investors have not suffered a loss on their investment in this case. However, the Commission stresses that offer documents must not mislead investors.

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