REG - Trinity Mirror PLC - Placing Announcement <Origin Href="QuoteRef">TNI.L</Origin> - Part 2

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28/10/2015 07:02

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to it and that it has fully observed such laws and obtained all such
governmental and other guarantees, permits, authorisations, approvals and
consents which may be required thereunder and complied with all necessary
formalities and that it has not taken any action or omitted to take any action
which will or may result in any of the Joint Bookrunners, the Company or any
of their respective directors, officers, agents, employees or advisers acting
in breach of the legal or regulatory requirements of any jurisdiction in
connection with the Placing; 
 
(t)              that it has all necessary capacity and has obtained all
necessary consents and authorities to enable it to commit to its participation
in the Placing and to perform its obligations in relation thereto (including,
without limitation, in the case of any person on whose behalf it is acting,
all necessary consents and authorities to agree to the terms set out or
referred to in this Announcement) and will honour such obligations; 
 
(u)            that it (and any person acting on its behalf) will make payment
for the Placing Shares allocated to it in accordance with this Appendix on the
due time and date set out herein, failing which the relevant Placing Shares
may be placed with other persons or sold as the Joint Bookrunners may in their
absolute discretion determine and without liability to such Placee; 
 
(v)             that its commitment to take up Placing Shares on the terms set
out herein and in the contract note will continue notwithstanding any
amendment that may in future be made to the terms of the Placing, and that
Placees will have no right to be consulted or require that their consent be
obtained with respect to the Company's or the Joint Bookrunners' conduct of
the Placing; 
 
(w)            that its allocation (if any) of Placing Shares will represent a
maximum number of Placing Shares which it will be entitled, and required, to
take up, and that the Joint Bookrunners or the Company may call upon it to
take up a lower number of Placing Shares (if any), but in no event in
aggregate more than the aforementioned maximum; 
 
(x)             that the person whom it specifies for registration as holder
of the Placing Shares will be (i) itself or (ii) its nominee, as the case may
be. None of the Company or any of the Joint Bookrunners will be responsible
for any liability to stamp duty or stamp duty reserve tax or other similar
taxes resulting from a failure to observe this requirement. Each Placee and
any person acting on behalf of such Placee agrees to indemnify the Company and
each Joint Bookrunner in respect of the same on an after-tax basis on the
basis that the Placing Shares will be allotted to the CREST stock account of
Numis who will hold them as nominee on behalf of such Placee until settlement
in accordance with its standing settlement instructions; 
 
(y)             that none of the Joint Bookrunners, any of their respective
affiliates or any person acting on behalf of any of them, is making any
recommendations to it or, advising it regarding the suitability of any
transactions it may enter into in connection with the Placing and that
participation in the Placing is on the basis that it is not and will not be a
client of any Joint Bookrunner and that no Joint Bookrunner has any duties or
responsibilities to it for providing the protections afforded to such Joint
Bookrunner's respective clients or customers or for providing advice in
relation to the Placing nor in respect of any representations, warranties,
undertakings or indemnities contained in the Placing Agreement nor for the
exercise or performance of any of its rights and obligations thereunder
including any rights to waive or vary any conditions or exercise any
termination right; 
 
(z)             that in making any decision to take up the Placing Shares, it
has knowledge and experience in financial, business and international
investment matters as is required to evaluate the merits and risks of taking
up the Placing Shares. It further confirms that it is experienced in investing
in securities of this nature in this sector and is aware that it may be
required to bear, and is able to bear, the economic risk of participating in,
and is able to sustain a complete loss in connection with, the Placing. It
further confirms that it relied on its own examination and due diligence of
the Company and its associates taken as a whole, and the terms of the Placing,
including the merits and risks involved, and not upon any view expressed or
information provided by or on behalf of any of the Joint Bookrunners; 
 
(aa)          that in connection with the Placing, a Joint Bookrunner and any
of its affiliates acting as an investor for its own account may take up
Placing Shares in the Company and in that capacity may take up, retain,
purchase or sell for its own account such Ordinary Shares in the Company and
any securities of the Company or related investments and may offer or sell
such securities or other investments otherwise than in connection with the
Placing. None of the Joint Bookrunners intends to disclose the extent of any
such investment or transactions otherwise than in accordance with any legal or
regulatory obligation to do so; 
 
(bb)          that its commitment to take up Placing Shares on the terms set
out in this Announcement will continue notwithstanding any amendment that may
or in the future be made to the terms and conditions of the Placing and that
Placees will have no right to be consulted or require that their consent be
obtained with respect to the Company's or the Joint Bookrunners' conduct of
the Placing; 
 
(cc)           that these terms and conditions and any agreements entered into
by it pursuant to these terms and conditions and any non-contractual
obligations arising out of or in connection with such agreements shall be
governed by and construed in accordance with the laws of England and Wales and
it submits (on behalf of itself and on behalf of any person on whose behalf it
is acting) to the exclusive jurisdiction of the English courts as regards any
claim, dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make payment for the
Placing Shares (together with any interest chargeable thereon) may be taken by
the Company or any of the Joint Bookrunners in any jurisdiction in which the
relevant Placee is incorporated or in which any of its securities have a
quotation on a recognised stock exchange; 
 
(dd)          that the Company, each of the Joint Bookrunners and their
respective affiliates and others will rely upon the truth and accuracy of the
representations, warranties and acknowledgements set forth herein and which
are given to each Joint Bookrunner on its own behalf and on behalf of the
Company and are irrevocable and it irrevocably authorises the Company and each
of the Joint Bookrunners to produce this Announcement, pursuant to, in
connection with, or as may be required by any applicable law or regulation,
administrative or legal proceeding or official inquiry with respect to the
matters set forth herein; 
 
(ee)          that none of the Company or either of the Joint Bookrunners owes
any fiduciary or other duties to any Placee in respect of any representations,
warranties, undertakings or indemnities in the Placing Agreement; 
 
(ff)             that it will indemnify on an after-tax basis and hold the
Company, each of the Joint Bookrunners and their respective affiliates
harmless from any and all costs, claims, liabilities and expenses (including
legal fees and expenses) including any VAT thereon arising out of or in
connection with any breach of the representations, warranties,
acknowledgements, agreements and undertakings in this Appendix and further
agrees that the provisions of this Appendix shall survive after completion of
the Placing; 
 
(gg)          that it has neither received nor relied on any inside
information concerning the Company in accepting the invitation to participate
in the Placing; and 
 
(hh)          if it is a pension fund or investment company, its acquisition
of Placing Shares is in full compliance with applicable laws and regulations. 
 
The foregoing representations, warranties and confirmations are given for the
benefit of the Company and the Joint Bookrunners and are irrevocable. 
 
The agreement to allot and issue Placing Shares to Placees (or the persons for
whom Placees are contracting as agent) free of stamp duty and stamp duty
reserve tax relates only to their allotment and issue to Placees, or such
persons as they nominate as their agents, direct from the Company for the
Placing Shares in question. Such agreement also assumes that the Placing
Shares are not being taken up in connection with arrangements to issue
depositary receipts or to issue or transfer the Placing Shares into a
clearance service. If there are any such arrangements, or the settlement
relates to any other dealing in the Placing Shares, stamp duty or stamp duty
reserve tax or other similar taxes may be payable, for which none of the
Company or any of the Joint Bookrunners will be responsible and the Placees
shall indemnify the Company and each of the Joint Bookrunners on an after-tax
basis for any stamp duty or stamp duty reserve tax paid by them in respect of
any such arrangements or dealings. If this is the case, each Placee should
seek its own advice and notify the Joint Bookrunners accordingly. 
 
None of the Company or either of the Joint Bookrunners are liable to bear any
transfer taxes that arise on a sale of Placing Shares subsequent to their
acquisition by Placees or for transfer taxes arising otherwise than under the
laws of the United Kingdom. Each Placee should, therefore, take its own advice
as to whether any such transfer tax liability arises and notify the Joint
Bookrunners accordingly. Furthermore, each Placee agrees to indemnify on an
after-tax basis and hold each Joint Bookrunner and/or the Company and their
respective affiliates harmless from any and all interest, fines or penalties
in relation to stamp duty, stamp duty reserve tax and all other similar duties
or taxes to the extent that such interest, fines or penalties arise from the
unreasonable default or delay of that Placee or its agent. 
 
Each Placee and any person acting on behalf of each Placee acknowledges and
agrees that the Joint Bookrunners or any of their respective affiliates may,
at their absolute discretion, agree to become a Placee in respect of some or
all of the Placing Shares. 
 
When a Placee or person acting on behalf of the Placee is dealing with the
Joint Bookrunners, any money held in an account with any Joint Bookrunner on
behalf of the Placee and/or any person acting on behalf of the Placee will not
be treated as client money within the meaning of the rules and regulations of
the FCA made under FSMA. The Placee acknowledges that the money will not be
subject to the protections conferred by the client money rules; as a
consequence, this money will not be segregated from such Joint Bookrunner's
money in accordance with the client money rules and will be used by that Joint
Bookrunner in the course of its own business; and the Placee will rank only as
a general creditor of that Joint Bookrunner. 
 
All times and dates in this Announcement may be subject to amendment by the
Joint Bookrunners (in their absolute discretion). The Joint Bookrunners shall
notify the Placees and any person acting on behalf of the Placees of any
changes. 
 
APPENDIX 2: RISK FACTORS 
 
RISKS RELATING TO THE ACQUISITION 
 
Trinity Mirror may sustain losses in excess of the limitations on the Sellers'
liability under the Share Purchase Agreement and/or the Sellers may not be in
a financial position to satisfy any claims 
 
Under the terms of the Share Purchase Agreement, the Sellers have given
certain representations, warranties, indemnities and covenants in favour of
Trinity Mirror.  In addition, Trinity Mirror has taken out W&I Insurance to
provide (subject to customary exceptions) financial recourse in respect of
certain of the representations, warranties, indemnities and covenants of the
Sellers in the Share Purchase Agreement in the event that the financial
limitations of the Sellers in the Share Purchase Agreement are exceeded.  The
liabilities of the Sellers under the Share Purchase Agreement and of the
insurers under the W&I Insurance policy are both subject to limitations and in
any event limited in amount and Trinity Mirror may therefore sustain losses in
excess of any such limitations. The Sellers' liability is subject to a de
minimis of £100,000 per relevant claim (being, for the purposes of the de
minimis and basket, a breach of the Share Purchase Agreement other than a tax
covenant claim, a tax claim or a claim under the locked box or expenses
indemnities) and a threshold of £1,250,000, above which threshold the Sellers
are liable for the whole amount of the claim and not only the excess. The
Sellers' liability under both relevant claims and tax covenant claims is
capped at the £10 million retention sum.  Each Seller is only liable pro rata
to its respective proportion of the consideration. The Sellers' liability is
also limited in time; claims must be brought within two years of Completion
with the exception of tax claims, which must be brought within 4 years from
the end of the accounting period in which Completion occurs. 
 
The Acquisition is conditional and the conditions may not be satisfied 
 
Completion is conditional upon satisfaction of various Conditions, including
the passing of the Acquisition Resolution and Admission of the Consideration
Shares, prior to the Long Stop Date (or such later date as the parties may
agree). 
 
In the event that the General Meeting resolves not to approve the Acquisition
Resolution or the Conditions are not satisfied by the Long Stop Date (or such
later date as the parties may agree), the Share Purchase Agreement will
automatically terminate. 
 
If the Conditions are not satisfied Trinity Mirror would nonetheless be
required to pay significant fees and other costs incurred in connection with
the Acquisition (including financing, financial advisory, legal and accounting
fees and expenses). 
 
If the Acquisition Resolution is approved at the General Meeting and each of
the other Conditions is satisfied prior to the Long Stop Date (or such later
date as the parties may agree), Trinity Mirror will be contractually obliged
to proceed to Completion unless the Share Purchase Agreement is otherwise
terminated in accordance with its terms. 
 
There can be no assurance that the Conditions will be fulfilled or that the
Acquisition will be completed. 
 
Local World may not perform in line with expectations 
 
If the financial results and cash flows generated by Local World and its
future prospects are not in line with Trinity Mirror's expectations, a
write-down may be required against the carrying value of Trinity Mirror's
investment in Local World and/or accounting goodwill and other intangible
assets generated upon acquisition.  Such a write-down may affect Trinity
Mirror's (and, following completion of the Acquisition, the Enlarged Group's)
business and may also reduce Trinity Mirror's ability to generate
distributable reserves by the extent of the write-down and consequently affect
its ability to pay dividends. 
 
The Enlarged Group may experience difficulties in integrating Local World with
the existing businesses carried on by Trinity Mirror and the Enlarged Group
may not realise, or it might take the Enlarged Group longer than expected to
realise, certain or all of the anticipated benefits of the Acquisition 
 
Trinity Mirror and Local World currently operate and, until Completion, will
continue to operate as two separate and independent businesses. The
Acquisition will require the integration of Local World with the existing
businesses carried on by Trinity Mirror and the success of the Enlarged Group
will depend, in part, on the effectiveness of the integration process and the
ability of the Enlarged Group to realise the anticipated benefits and
synergies from combining the respective businesses. 
 
The integration of Local World may involve particular challenges, some of
which may not be known until after Completion.  The process of integrating
Local World with the existing businesses carried on by Trinity Mirror could
potentially lead to operational interruption or a loss of key personnel,
either or both of which could have an adverse effect on the business,
financial condition and results of operations of the Enlarged Group.  Any
delays or difficulties encountered in connection with the integration of
Trinity Mirror's and Local World's businesses could also lead to reputational
damage to the Enlarged Group.  Trinity Mirror's and Local World's management
teams will be required to devote significant attention and resources to
integrating their respective business practices and operations.  There is a
risk that the challenges associated with managing the integration of Trinity
Mirror's and Local World's respective businesses will result in management
distraction and that, consequently, the underlying businesses will not perform
in line with expectations. 
 
Trinity Mirror and Local World expect to incur a number of costs in relation
to the Acquisition, including integration and post-Completion costs, which
could exceed amounts estimated.  There may also be further additional and
unforeseen expenses incurred in connection with the Acquisition. These costs
could have an adverse effect on the operating results, business, financial
condition and prospects of the Enlarged Group. 
 
Trinity Mirror can offer no assurance that the Enlarged Group will realise the
potential benefits of the Acquisition, including synergies, to the extent and
within the timeframe contemplated or at all.  If Trinity Mirror is unable to
successfully integrate the Acquired Business, this could have a negative
impact on the business, results of operations, financial condition and/or
prospects of the Enlarged Group. 
 
The Enlarged Group may not realise the desired synergy benefits from the
Acquisition 
 
Trinity Mirror is targeting synergies from the Acquisition, and the financial
planning for the Enlarged Group is based in part on realising these synergies,
which include expected cost savings of, in aggregate, £12 million per annum
before tax (assuming the Proposed On-Sale does not complete, or £10 million
per annum if it does), to be realised from the second full year following
Completion. 
 
Realisation of these synergies will depend partly on the rapid and efficient
management and co-ordination of the activities of the Enlarged Group's
businesses.  There is a risk that synergy benefits from the Acquisition may
fail to materialise, or they may be materially lower than has been estimated. 
In addition, the cost of achieving these synergies may exceed the £11 million
expectation.  Such eventualities could have an adverse effect on the operating
results, business, financial condition and prospects of the Enlarged Group. 
 
Prior to Completion, Local World, and following Completion, the Enlarged
Group, may fail to retain key personnel and other employees 
 
The calibre and performance of management personnel and other employees, taken
together, is important to the success of both Local World, prior to
Completion, and to the Enlarged Group, following Completion, and, while plans
are, or will be, put in place for the retention of management personnel and
other key employees following Completion, there can be no assurance that,
prior to Completion, Local World will not lose key personnel (or a significant
number of personnel) or that the Acquisition will not result in the departure
of management personnel and/or employees from the Enlarged Group.  The
departure of key or of a significant number of management personnel or
employees could adversely affect Trinity Mirror's abilities to realise the
benefits and synergies of the Acquisition.  Such departures could also
adversely affect both the Enlarged Group's ability to conduct its businesses
(through an inability to execute business operations and strategies
effectively) and the value of those businesses, which could have an adverse
effect on the operating results, business, financial condition and prospects
of the Enlarged Group. 
 
Prior to Completion, Local World, and following Completion, the Enlarged
Group, may not be able to protect intellectual property rights upon which
their businesses rely and, if they lose intellectual property protection,
their assets may lose value and their business may be adversely affected 
 
A significant proportion of the value of Local World relates to its
intellectual property rights, in particular its valuable brands and
proprietary trademarks, content, services and internally-developed technology.
The business of Local World depends (and, following Completion, the Enlarged
Group will depend) on this intellectual property. The Directors believe that,
following Completion, the ability of the Enlarged Group to protect its
intellectual property rights would be important to the continued success and
competitive position of the Enlarged Group. 
 
The Enlarged Group may not be able to protect intellectual property rights
upon which its business relies and, if it loses intellectual property
protection, its assets may lose value and its business may be adversely
affected. Unauthorised parties may attempt to copy or otherwise obtain the
content, services, technology and other intellectual property of Local World
(or, following Completion, the Enlarged Group), and it cannot be certain that
the steps that have been taken to protect such proprietary rights will prevent
any misappropriation or confusion among consumers and merchants, or
unauthorised use of such rights. Advancements in technology have exacerbated
the risk by making it easier to duplicate and disseminate content. 
 
If Local World (or, following Completion, the Enlarged Group) has to litigate
(in the United Kingdom or elsewhere) to enforce its intellectual property
rights or determine the validity and scope of the proprietary rights of
others, such litigation may be costly and divert the attention of the
management of Local World (or, following Completion, the Enlarged Group). 
 
If Local World (or, following Completion, the Enlarged Group) is unable to
procure, protect and enforce its intellectual property rights, it may not
realise the full value of these assets, and its business may be adversely
affected. These occurrences could have a material adverse effect on the
business, financial condition, operational results and/or prospects of Local
World (or, following Completion, the Enlarged Group). 
 
Third parties may terminate or alter existing contracts with Local World as a
result of the Acquisition 
 
Certain of the contracts which Local World has entered into contain "change of
control" or similar clauses that allow the counterparty to terminate or change
the terms of their contract upon Completion, or may otherwise allow the
counterparty to exert leverage to renegotiate the terms of the existing
contract upon Completion. Trinity Mirror and Local World will seek to obtain
consents from certain of these counterparties to the continuance of the
contract after the change of control, and may renegotiate terms with others.
There can be no assurance that the Enlarged Group will be able to contract on
the same terms as Local World does prior to Completion.  If third party
consents cannot be obtained, or terms that are renegotiated are unfavourable
when compared with the current contracts, there may be an adverse effect on
the operating results, business, financial condition and prospects of the
Enlarged Group. 
 
Following Completion Trinity Mirror may not be able to achieve optimal value
in respect of the Proposed On-Sale 
 
In connection with the Acquisition, Trinity Mirror has signed heads of terms
with Edward Richard Iliffe ("ERI") in relation to the Proposed On-Sale. As
with any disposal, there  is a risk that Trinity Mirror  may not be able to
achieve optimal value for the Proposed On-Sale for reasons including, for
example, the unsuccessful separation of the assets and businesses to be sold
and the management of any related costs and/or the failure to realise the
anticipated benefits of any such disposal. 
 
The Enlarged Group may face increased costs when it seeks to refinance its
debt as a result of its increased level of debt following the Acquisition 
 
The Acquisition will be funded in part by the New Debt Facility. The costs and
terms on which the Enlarged Group is able to refinance the New Debt Facility
and other longer-term indebtedness will depend in part on market conditions. 
Unfavourable market conditions may arise which could impact the cost at, and
terms on which, the Enlarged Group is able to access capital markets to
refinance its indebtedness which may among other things increase its cost of
capital. 
 
RISKS RELATING TO TRINITY MIRROR, LOCAL WORLD AND THE ENLARGED GROUP FOLLOWING
THE ACQUISITION 
 
The increasing popularity of digital media may result in decreased print
advertising and newspaper sales revenues which may affect the larger regional
business of the Enlarged Group 
 
The Acquisition will significantly increase the scale of Trinity Mirror
Group's regional newspapers business. Revenue in the regional newspaper
industry is (and therefore Trinity Mirror's and Local World's regional
business operations are and, following Completion, the Enlarged Group's
regional business operations will be) dependent upon advertising and, to a
lesser extent, newspaper sales revenue.  Competition for advertising and
newspaper sales revenue comes from national, local and regional free and
paid-for newspapers, radio, broadcast and cable television, direct mail,
classified directories, internet and other communications and advertising
media that operate in the same markets as Trinity Mirror and Local World (and,
following Completion, the Enlarged Group).  Websites and applications for
mobile devices distributing news and other content continue to gain
popularity, with relatively low barriers to entry for certain web-based
businesses bringing new entrants to the markets of Trinity Mirror and Local
World (and, following Completion, the Enlarged Group).  As a result, audience
attention and advertising spending is now spread across a more fragmented
media landscape. The fragmentation of media has intensified competition for
advertising and has contributed, and may continue to contribute, to a decline
in print advertising and newspaper sales revenue for Trinity Mirror and Local
World (and, following Completion, the Enlarged Group).  Should significant
numbers of customers choose to receive content using these alternative
delivery sources (rather than the newspapers of Trinity Mirror or Local World
(or, following Completion, the Enlarged Group)), and if Trinity Mirror or
Local World (or, following Completion, the Enlarged Group) is not successfully
able to migrate customers onto its digital distribution channels (and/or is
not able to generate equivalent revenue through such channels), the Enlarged
Group may suffer decreases in advertising revenue or face a long-term decline
in circulation, which is likely to have a material adverse effect on its
business, operational results, financial condition and/or prospects. The
increased scale of the Trinity Mirror Group's regional businesses may lead to
increased exposure to declines in  print advertising revenue and newspaper
sales revenue. 
 
Pension deficits may grow at such a rate so that annual cash funding consumes
a disproportionate level of operating cash flow 
 
Trinity Mirror operates a number of occupational pension schemes. Trinity
Mirror pays contributions to its defined benefit pension schemes to make good
the past service deficits on terms agreed with the trustees of those schemes.
The accounting pension deficit fell during the first half of 2015 by £10.4
million from £301.2 million (£241.0 million net of deferred tax) to £290.8
million (£232.6 million net of deferred tax) reflecting the impact of an
increase in assets of £6.0 million and a fall in liabilities of £4.4 million.
The change in the accounting deficit does not impact Trinity Mirror's current
funding commitments. 
 
During 2013 the funding valuations of all schemes were aligned to 31 December
2013 and valuations were completed in December 2014. The revised recovery plan
agreed with the pension scheme trustees in these valuations was annual
payments of £36.2 million per annum for 2015, 2016 and 2017. In addition,
Trinity Mirror has agreed that in respect of dividend payments additional
contributions would be paid at 50 per cent. of the excess if dividends in 2015
were above five pence per share. For 2016 and 2017 the threshold increases in
line with increases in dividends capped at 10 per cent. per annum. Trinity
Mirror pre-paid £16.5 million of the 2015 contributions and £0.5 million of
the 2016 contributions in December 2014. Therefore, deficit funding payments
in 2015 will be £19.7 million, payments in 2016 will be £35.7 million and
payments in 2017 will be £36.2 million. 
 
The funding position of defined benefit pension schemes on both the IAS19 and
other bases can fluctuate depending on market conditions and actuarial
assumptions (including long-term discount rates and mortality assumptions).
These fluctuations can impact on the contributions payable by Trinity Mirror
(and, following Completion, the Enlarged Group) to the schemes and pension
deficits may grow at such a rate so that annual cash funding consumes a
disproportionate level of operating cash flow of Trinity Mirror (and,
following Completion, the Enlarged Group). 
 
Trinity Mirror continues (and, following Completion, the Enlarged Group will
continue) to monitor its pension exposures through regular reviews with
trustees. However, certain material factors are outside the control of Trinity
Mirror (and will, following Completion, be outside the control of the Enlarged
Group): interest rates, inflation rates, mortality and regulatory change. Any
adverse impact from these factors, together with the slowdown in the global
economy and its impact on Trinity Mirror's (or, following Completion, the
Enlarged Group's) business and investment returns, could have material
implications for future pension scheme funding and could adversely impact
Trinity Mirror (or, following Completion, the Enlarged Group) and its ability
to fund past service provision. This may result in an adverse impact on the
business, operational results, financial condition and/or prospects of Trinity
Mirror (or, following Completion, the Enlarged Group). 
 
Trinity Mirror is subject to legal claims for misuse of private information
and, following Completion, the Enlarged Group may be subject to further legal
claims that if determined adversely could negatively affect its reputation,
business, operational results, financial condition and/or prospects 
 
Trinity Mirror and Local World (and, following Completion, the Enlarged Group)
may be subject to legal claims, including actual or alleged libel, misuse of
private information, infringement of copyright and breach of the Data
Protection Act, that arise in the course of the business of Trinity Mirror or
Local World (or, following Completion, the Enlarged Group) in connection with
the content of their publications, websites and advertisements. The damages
that may be claimed in future legal proceedings could be substantial,
including in certain cases claims for aggravated and/or exemplary damages as
well as injunctions. In addition, Trinity Mirror and Local World (and,
following Completion, the Enlarged Group) may incur significant costs in
defending future legal actions brought against them which may not be fully
recoverable, irrespective of whether it is successful in defending any claims,
and it may be subject to adverse publicity or reputational harm as a result of
such claims or actions. Furthermore, conditional fee arrangements, and the
fact that claimants are not themselves responsible for paying costs in
relation to such arrangements, may encourage the pursuit of legal action and
may lead to an increase in the number of claims made against Trinity Mirror or
Local World (or, following Completion, the Enlarged Group). 
 
In addition, Trinity Mirror and Local World are (and, following Completion,
the Enlarged Group will be) liable for the content of their publications,
websites and advertisements.  If legal proceedings against Trinity Mirror or
Local World (or, following Completion, the Enlarged Group) are successful, it
could increase their expenses and harm their reputations and relationships
with customers. Trinity Mirror and Local World (and, following Completion, the
Enlarged Group) may also be liable to third parties if the content of their
publications, websites or advertisements violates intellectual property rights
of third parties. If the outcome of any legal proceedings brought against
Trinity Mirror or Local World (or, following Completion, the Enlarged Group)
are not favourable, it could have a material adverse effect on their
reputations, business, operational results, financial condition and/or
prospects. 
 
By way of example, Trinity Mirror continues to cooperate with the Metropolitan
Police Service ("MPS") in respect of Operation Elveden (the investigation
relating to alleged inappropriate payments to public officials) and Operation
Golding (the investigation into alleged phone hacking).  In September 2013
Trinity Mirror announced that its subsidiary, MGN Limited ("MGN"), had been
notified by the MPS that the MPS were at a very early stage in investigating
whether MGN was criminally liable in relation to phone hacking. MGN currently
faces a significant number of civil claims for misuse of private information.
In July 2014, after Trinity Mirror's ongoing investigations revealed that
phone hacking had taken place at MGN, a provision of £4.0 million was made to
cover the cost of dealing with and resolving civil claims from individuals. In
the second half of the 2014 financial year, a number of claims were settled
and MGN admitted liability to a number of individuals who had sued for
interception of their voicemails many years ago. As Trinity Mirror progressed
with dealing with the civil claims, it became evident that the cost of
resolving these claims would be higher than previously envisaged.  Therefore,
the provision of £4.0 million at the 2014 half year for resolving phone
hacking claims was increased by a further £8.0 million. In May 2015, following
the release of the judgment and conclusion of the civil trial for assessment
of damages for eight representative claimants arising from phone hacking,
Trinity Mirror made a further provision of £16.0 million to cover the costs of
dealing with and resolving the historical legal issues in relation to phone
hacking.  This judgment was the subject of an appeal to the Court of Appeal by
MGN which was heard on 20 and 21 October 2015 and in respect of which the
judgment is awaited. There can be no assurance that MGN will be successful in
its appeal. Civil claims continue to be advanced against MGN and it remains
uncertain as to how these matters will progress, whether further allegations
or claims will be made and their financial impact.  MGN continues to resolve
civil claims but there is potential for further and/or increased liabilities
to arise from the outcome or resolution of the ongoing historical legal
issues, including as a result of the judgment of the Court of Appeal, which
may require Trinity Mirror to reassess the sufficiency of, and potentially
increase, its current provision. Due to the present uncertainty in respect of
the nature, timing or measurement of any such liabilities it is too soon to be
able to reliably estimate how these matters will proceed and their financial
impact. 
 
Trinity Mirror and Local World depend (and, following Completion, the Enlarged
Group will depend) on key personnel and their ability to attract, retain and
motivate other qualified employees 
 
Trinity Mirror and Local World depend (and, following Completion, the Enlarged
Group will depend) on their key personnel and their ability to attract, retain
and hire other qualified and experienced employees. In particular, competition
in the media industry for experienced senior management personnel is intense
and Trinity Mirror and Local World (and, following Completion, the Enlarged
Group) may not be able to retain their personnel. The loss of any key
personnel would require the remaining key personnel to divert immediate and
substantial attention to seeking a replacement.  An inability to find suitable
replacements for departing key personnel could adversely affect the ability of
Trinity Mirror or Local World (or, following Completion, the Enlarged Group)
to grow their businesses. Production and distribution of the publications of
Trinity Mirror and Local World (and, following Completion, the Enlarged Group)
and the generation of advertising revenue also require skilled and experienced
employees. A shortage of such employees, or the inability of Trinity Mirror or
Local World (or, following Completion, the Enlarged Group) to retain such
employees, could have an adverse impact on the productivity and costs of
Trinity Mirror or Local World (or, following Completion, the Enlarged Group),
its ability to expand, develop and distribute new products, generate
advertising sales and its entry into new markets. The cost of retaining or
hiring such employees could exceed the resources of Trinity Mirror or Local
World (or, following Completion, the Enlarged Group). 
 
If Trinity Mirror or Local World (or, following Completion, the Enlarged
Group) fails to retain essential senior management and other key personnel it
may be unable to operate or grow its business in accordance with its strategy
which could have a material adverse impact on its business, operational
results, financial condition and/or prospects. 
 
A deterioration in the relationship of Trinity Mirror or Local World (or,
following Completion, the Enlarged Group) with its employees resulting in
industrial action may affect operational and financial performance 
 
Trinity Mirror and Local World operate (and, following Completion, the
Enlarged Group will operate) in a unionised industry. Trinity Mirror and Local
World have, in general, good relations with their employees and unions.
However, there can be no assurance that their operations will not be affected
by related problems in the future such as industrial action. There can be no
assurance that strikes, work stoppages, industrial action or other
labour-related developments (including the introduction of new labour
regulations in the United Kingdom) will not adversely affect the business,
operational results, financial condition and/or prospects of Trinity Mirror or
Local World (or, following Completion, the Enlarged Group) as a consequence of
the Acquisition and integration of Local World. 
 
The Acquisition may be reviewed under merger control legislation 
 
The Acquisition is not conditional on the receipt of merger control approval
from the CMA.  The Acquisition may however be reviewed by the CMA.  The CMA
has the power to impose on Trinity Mirror an order, such as a "hold separate"
order (which would, amongst other things delay the integration of Local World
with Trinity Mirror and prevent Trinity Mirror from doing anything which might
impair the ability of the Local World business to compete independently in any
markets affected by the Acquisition), pending any decision being made by the
CMA and the power to require remedies as a consequence of the Acquisition,
such as the divestment by the Enlarged Group of certain assets or businesses
and/or the imposition of restrictions on the conduct of the businesses of the
Enlarged Group and/or other behavioural remedies. 
 
The Acquisition satisfies the conditions for the notification of media mergers
to the Competition and Consumer Protection Commission and to the Minister for
Communications, Energy and Natural Resources in the Republic of Ireland.  This
is because Trinity Mirror carries on a media business in the Republic of
Ireland and Local World carries on a media business elsewhere.  The
Acquisition must be notified in the Republic of Ireland.  The Acquisition will
therefore be notified to the Competition and Consumer Protection Commission
and to the Minister for Communications, Energy and Natural Resources in the
Republic of Ireland.  Similarly to the CMA, the Irish authorities have the
power to impose remedies as a consequence of the Acquisition. 
 
Any divestments, restrictions or remedies could impose sustained additional
costs for the Enlarged Group and/or materially reduce the anticipated benefits
(including synergy benefits) of the Acquisition (or affect the timeframe
within which such benefits are realised) or result in an adverse effect on the
operating results, business, financial condition and prospects of the Enlarged
Group. 
 
Trinity Mirror's (and, following Completion, the Enlarged Group's) commercial
freedom could be restricted if it is found to be dominant in local markets 
 
There are a number of local markets across the United Kingdom where Trinity
Mirror's newspaper titles have (and, following Completion, the Enlarged
Group's newspaper titles will have) a high share of local newspaper
circulation.  The United Kingdom competition authorities have previously
determined that local newspaper markets should be defined narrowly (both
geographically and as regards the alternative advertising products included,
such as the internet), and that may mean that Trinity Mirror (or, following
Completion, the Enlarged Group) is considered by the regulators to be dominant
in areas where it has a particularly high share of circulation of local
titles.  Whilst there is nothing to prohibit companies from being dominant,
the applicable legislation in the United Kingdom prohibits conduct by dominant
companies which may be categorised as an abuse of their dominant position. 
Case law of the European Courts indicates that dominant companies may have a
special responsibility not to allow their conduct to impede competition.  This
may restrict Trinity Mirror's (or, following Completion, the Enlarged Group's)
freedom to act in these local areas, for example as regards pricing below cost
and granting discounts or rebates that are loyalty-inducing.  In addition,
Trinity Mirror (and, following Completion, the Enlarged Group) may need to
ensure compliance with this additional set of responsibilities, to which end
Trinity Mirror has (and, following Completion, the Enlarged Group will have) a
group-wide compliance programme in place. 
 
However, if Trinity Mirror (or, following Completion, the Enlarged Group) is
determined by the relevant authorities not to be in compliance with applicable
competition law in a material way (and as a consequence is forced to take
correction action and/or pay fines), or if applicable competition law
materially restricts Trinity Mirror's (or, following Completion, the Enlarged
Group's) ability to conduct its operations and develop its business in the way
that it wishes to, then this could have an adverse impact on the business,
operational results, financial condition and/or prospects of Trinity Mirror
(or, following Completion, the Enlarged Group). 
 
The availability, cost and terms of debt finance may have an adverse impact on
Trinity Mirror (or, following Completion, the Enlarged Group) 
 
Trinity Mirror's and Local World's profitability and development are not
currently impacted by the availability or cost of debt finance. However,
Trinity Mirror's or Local World's (or, following Completion, the Enlarged
Group's) ability to access liquidity to fund its business in the longer term
may be affected during periods of tight credit conditions or the absence of
funds at a reasonable cost. The availability and cost of debt finance may
influence Trinity Mirror's or Local World's (or, following Completion, the
Enlarged Group's) profitability and Trinity Mirror's or Local World's (or,
following Completion, the Enlarged Group's) ability to participate in
development opportunities. 
 
In addition, Trinity Mirror's existing financings contain customary financial
and other covenants - all of which Trinity Mirror operates within - requiring
it to maintain certain financial ratios and thresholds that could in the
future restrict its (or, following Completion, the Enlarged Group's)
flexibility in planning for, and reacting to, competitive pressures and
changes in its business, industry and general economic conditions and limit
its ability to undertake organic development opportunities, make strategic
acquisitions, refinance debt and capitalise on business opportunities. 
 
In addition, if Trinity Mirror (or, following Completion, the Enlarged Group)
fails to pay any amount when due under, or otherwise fails to comply in any
material respect with the terms of, any of its existing (and any future)
financings this may ultimately lead to an event of default under the terms of
such financing which could lead to acceleration and enforcement proceedings
being brought against it by its creditors. 
 
An inability to obtain future funding on reasonable terms, restrictions on its
operational flexibility contained in its financing agreements and/or a
material failure to comply with the terms of its existing or future
financings, could have a material adverse effect on Trinity Mirror's (or,
following Completion, the Enlarged Group's) business, financial condition or
results of operations. 
 
This information is provided by RNS
The company news service from the London Stock Exchange