Sea Containers Acquires 92 Percent of Silja

Wednesday, August 07, 2002
Sea Containers Ltd. passenger transport operator, marine container lessor and leisure industry investor, announced that its wholly-owned subsidiary, Silja Holdings Ltd., had received acceptances of its tender offer to acquire all the outstanding common stock of Silja Oyj Abp, bringing its total shareholding in Silja to 92 percent. The significance of the 90 percent threshold is that Silja Holdings may now compulsorily acquire all the remaining shares in Silja in accordance with Finnish law. Sea Containers shareholding in Silja was increased to 75% in the second quarter of 2002 which will result in consolidation of Silja's assets and liabilities with those of Sea Containers at June 30th. At June 30, 2002 Silja's assets were approximately $667 million and its liabilities were approximately $432 million. On August 6, 2002 Silja reported an operating profit for the quarter ended June 30, 2002 of $18.4 million. Under an agreement in place at the time of the initial public offering of common shares in Orient-Express Hotels Ltd. in August, 2000, effective July 22, 2002 a subsidiary of Orient-Express Hotels acquired 18,044,478 Class B shares in Orient-Express Hotels from Sea Containers Ltd. and a subsidiary of Sea Containers Ltd. acquired 12,900,000 Class B shares in Sea Containers from subsidiaries of Orient-Express Hotels Ltd. These shares are not counted as "equity shares" while they are owned by the subsidiaries for purposes of earnings per share calculations under U.S. generally accepted accounting principles, but can be voted by the subsidiaries. Each subsidiary will have the power to defeat a hostile takeover bid which is not recommended by its board of directors which would mean, in a takeover situation, that the board could ensure the highest price was achieved for the benefit of all shareholders. Sea Containers has indicated that it intends to reduce its "equity" shareholding in Orient-Express Hotels to 50 percent or less in order to deconsolidate Orient-Express Hotels from its balance sheet. The company's Hoverspeed subsidiary won a landmark case against the U.K. Customs & Excise in a decision of the High Court in London which was handed down on July 31st. In an attempt by the U.K. Treasury to force residents to buy goods incurring high excise and VAT taxes in Britain rather than in France and Belgium where the taxes are much less and payable to the governments of those countries, Hoverspeed's passengers entering Dover, England were systematically harassed, their possessions seized (including cars) and subjected to other indignities, in contravention of European Union law and the Human Rights Act. The High Court pronounced that such actions were unlawful and in many cases disproportionate to the accusation of importation for resale, which was the excuse used by Customs & Excise to justify their actions. This decision opens the door for Hoverspeed to claim for revenue lost by it due to the actions of Customs & Excise which caused the loss of tens of thousands of passengers and cars and retail revenue on its English Channel services in recent years. It remains open for Customs & Excise to appeal the decision of the High Court in which case collection of damages would have to wait for a favorable outcome. Hoverspeed is currently calculating the quantum of its claim for damages.
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