Ballast Ham Dredging and Van Oord ACZ to merge

Reasons for the transaction

After consultations with various parties, Royal BAM Group has come to the conclusion that Van Oord is the most attractive partner for BHD. The proposed transaction will create a company which maximises the strategic position and competitiveness of Van Oord and BHD and enables the combined business to occupy a leading position in the international dredging market. The new company will enjoy considerable synergies, including (i) stronger market positions due to the merger of activities and the worldwide presence, (ii) cost savings related to the composition and deployment of the fleet and (iii) savings on capital expenditure. The proposed shareholding structure, with the family-owned company MerweOord as strategic majority shareholder, Royal BAM Group, and NPM as financial shareholder with a long-term view, will create a company whose stability is secured.

Structure of the transaction

The merger of BHD and Van Oord will be achieved by uniting the two companies and by refinancing.

Royal BAM Group will realise a value of approximately €427 million for BHD. In addition, the company has received a dividend of €30 million from BHD in respect of 2002. The amount of approximately  €427 million is made up of €260 million in cash and the value of the shareholding in the new company. This shareholding comprises 21.5% of the ordinary shares of the combined dredging business plus cumulative financing preference shares amounting to €70 million. These financing shares, which confer no voting rights, will pay a dividend of 6%.

In the allocation of goodwill, Royal BAM Group has attributed an amount of approximately €105 million to BHD, as per year-end 2002. On this basis and also depending on the final 2003-result of BHD, the effect of the transaction on the Royal BAM Group net result for 2003 will be roughly neutral. Based on the information currently available, Royal BAM Group maintains the profit outlook for 2003 as stated at the time of the interim results for 2003.

On the assumption that the transaction will be completed before the end of 2003, Royal BAM Group expects that the company’s capital base as at year-end 2003 – as previously forecasted – will amount to between 18 and 19% of the balance sheet total. The cash proceeds related to this transaction will be used to repay the bridging loan. After this repayment, a limited amount of €40 million will remain of the bridging loan, which initially amounted to €750 million.

The proposed transaction gives MerweOord an interest of 47.6% and NPM an interest of 30.9% in the ordinary shares. The various parties aim to achieve a shareholder structure in the short term under which MerweOord will hold at least 51% of the ordinary shares. Via an agreement on voting rights with NPM, MerweOord will be able to cast 51% of the votes with immediate effect.

The new company

BHD and Van Oord will be integrated into a single company, trading under the name Van Oord NV.  The new combined company will hold a strong position in the dredging market. This is driven by the size and composition of the combined fleet, the market position in offshore activities and coastal works and a worldwide presence. Both companies already work together in joint ventures on various projects, most recently on the land reclamation projects in Singapore and the projects in Dubai (Palm Island, World Island, Deira Corniche) among others. The combined company’s projected turnover (pro forma) in 2003 will be approximately €850 million. The total number of employees is approximately 3,000. Forced redundancies will be avoided as much as possible.

The Management Board will consist of Jac. G. van Oord – chairman (Van Oord), A.H. Godri (BHD), J. van Herwijnen (BHD), A.J. van de Kerk (Van Oord), P.H.G. de Ridder (Van Oord) and O.F. Verkerke (BHD). The Supervisory Board will consist of A.P.H. van Baardewijk (chairman), J.G. van Oord, R.O. Prins, W. van Vonno and D. de Waard.

The head office of the new company will be the present BHD headquarters in Rotterdam.

Next steps

The transaction will be submitted for approval to Extraordinary Shareholders’ Meetings of Royal BAM Group and MerweOord. The Extraordinary Shareholders’ Meeting of Royal BAM Group is expected to take place on 5 November 2003. MerweOord will hold an Extraordinary Shareholders’ Meeting in the first week of November.

In the weeks ahead, both companies will be taking further steps to reach full agreement on the transaction. The parties will each be conducting due diligence investigations. The relevant competition authorities, the Social and Economic Council, the trade unions, the Financial Markets Authority and Euronext have either already been or will be advised of the proposed transaction. The transaction will be submitted for consultation to the Works Councils of BHD, Van Oord and Royal BAM Group.

Profile of Van Oord

Van Oord is an international company active in dredging, the offshore industry and coastal works. In 2002, with a workforce of 1,000, the company achieved a turnover of €338 million.

Profile of BHD

BHD is a leading player in dredging worldwide. The company was formed in 2001 by the merger of HAM and Ballast Nedam Baggeren. In 2002, with a workforce of 2,150, the company achieved a turnover of €629 million.

Further information:

Royal BAM Group:

• Press: A.C. Pronk, +31 (0) 70 372 21 21, apronk@hbg.nl
• Analysts: P. Verbraeken, +31 (0) 30 659 88 56, p.verbraeken@bamgroep.nl

Van Oord:

• A.G.M. Groothuizen, +31 (0) 183 642 200, bgroothuizen@voacz.com