Press Release: Carnival Corporation
January 15, 2002
LONDON -- Carnival yesterday issued a statement to P&O Princess Shareholders in order to clarify certain points
raised by P&O Princess in its announcement, dated 10 January 2002, of the posting of its circular to shareholders.
* Carnival finds it astonishing that the board of P&O Princess can assert
that Carnival's Offer is clearly not "as favourable financially as the
proposed combination with Royal Caribbean." Carnival's Offer of
450 pence per P&O Princess Share is financially superior to, and as
deliverable as, the Royal Caribbean Proposal, and represents a 31
per cent. premium to the look through value of 343 pence per
P&O Princess Share.
* Carnival believes that there remains significant uncertainty and
misunderstanding regarding the exit and termination provisions of the
Joint Venture agreement which, based on the analysis in our
announcement of 8 January 2002, could result in a cost of up to
$484 million, prior to the impact of any financial guarantee(s).
Carnival believes that should it receive acceptable clarification of
these critical issues, it will be better able to provide P&O Princess
Shareholders with both additional value and reduced conditionality in
any revised offer.
* P&O Princess continues to state that a merger of the number two and
three cruise operators has more chance of regulatory approval than a
merger of the number one and three operators. This statement is
unsupportable and disingenuous. P&O Princess, Royal Caribbean and
Carnival have all publicly stated that the appropriate market in which
to evaluate the competitive effects of either transaction is the wider
vacation market. Carnival has been advised that in that market, as in
the narrower cruise market, both proposals are similarly situated and
raise the same antitrust issues.
* Carnival has consistently advocated that it is in the best interests of
P&O Princess Shareholders for the two proposals to run side by side
until the antitrust review process for both has been completed. Whilst
the board of P&O Princess is unwilling to adjourn the EGM, an
adjournment can still be achieved if P&O Princess Shareholders propose
and vote for such an adjournment at the EGM on 14 February 2002.
Carnival has been advised that this course of action will not enable
Royal Caribbean to walk away from the proposed DLC combination.
* Carnival encourages P&O Princess Shareholders to demand definitive
clarification from its board on the arrangements with Royal Caribbean,
particularly with regard to the Joint Venture agreement. P&O Princess
Shareholders will be best served by proposing and passing a resolution
to adjourn the EGM until after the outcome of the regulatory process
for both proposals is known.
Micky Arison, Chairman and CEO of Carnival, commented, ``We still cannot understand why, if their proposal is
so attractive, they needed to protect it with such unprecedented poison pills. Given the continuing intransigence
of the board of P&O Princess, it is up to shareholders to demand definitive clarification of the arrangements
with Royal Caribbean, to enable Carnival to improve its already superior offer.
``Our offer is already at a 31 per cent. premium to the Royal Caribbean proposal, but we believe that P&O Princess
shareholders should have the choice of running both proposals side by side until after the regulatory process is
complete. Shareholders can ensure that this happens by adjourning the EGM on 14 February 2002, and we strongly
encourage them to do so. Shareholders have everything to gain and nothing to lose by adjourning the EGM.''
This summary should be read in conjunction with the full text of this announcement.
Carnival Corporation Response to P&O Princess Circular
Introduction
Carnival has completed its review of the P&O Princess announcement, dated 10 January 2002, of the posting of
its circular to shareholders (the ``Shareholder Circular'') and believes that a number of the points raised require
either clarification or correction.
In publicly responding to these issues below, Carnival hopes that the P&O Princess board will, in the interests
of its shareholders, abandon its current refusal to speak with Carnival, in order that a sufficiently clear understanding
of the poison pill arrangements entered into with Royal Caribbean can be obtained. This would then allow Carnival
to decide whether to make an improved, and less conditional, proposal to P&O Princess Shareholders.
Carnival and its advisors consider the P&O Princess board's refusal to meet with Carnival as nothing less than
a deliberate attempt to prevent its shareholders, the owners of the company, from receiving a further enhanced
proposal from Carnival, and urges shareholders to lobby the board to meet with Carnival as a matter of urgency.
Carnival believes that the 18 January 2002 ``deadline'' is wholly artificial and that forcing P&O Princess
Shareholders to make a decision at the EGM on 14 February 2002, before antitrust authorities have completed their
review of each proposal, is clearly not in the best interests of P&O Princess Shareholders.
Commercial Joint Venture or Poison Pill?
When P&O Princess announced the Royal Caribbean Proposal on 20 November 2001, the Joint Venture was presented
as a purely commercial venture, although no credible reason has ever been advanced by either party as to why a
Joint Venture was needed, given that the companies are proposing to combine. By contrast, in its ``clarifying''
Shareholder Circular, P&O Princess has belatedly admitted that the Joint Venture agreement, with its extraordinary
penalties, was necessary in order to obtain Royal Caribbean's commitment to the proposed transaction.
This admission confirms that the Joint Venture was put in place solely to prevent any other party from offering
an alternative proposal to P&O Princess Shareholders and to push shareholders into approving the Royal Caribbean
Proposal without being able to consider any alternative proposal on a level playing field. Despite the Joint Venture
being an integral part of the Royal Caribbean Proposal, P&O Princess Shareholders were denied the opportunity
to vote on its implementation. These arrangements were clearly designed to thwart a Carnival proposal.
Carnival believes that there remains significant uncertainty and misunderstanding regarding the exit and termination
provisions of the Joint Venture agreement which, based on the analysis in our announcement of 8 January 2002, could
result in a cost of up to $484 million, prior to the impact of any financial guarantee(s). In response to Carnival's
letter of 6 January 2002, P&O Princess issued its Shareholder Circular purporting to clarify certain elements
of the Joint Venture. Regrettably, in two critical areas, the board of P&O Princess has failed to provide definitive
clarification in any of its public documents, despite being asked specifically to do so in our letter of 6 January
2002.
1) The board of P&O Princess has stated that the Joint Venture poison
pill arrangements can "unilaterally" be eliminated if P&O Princess
fails to meet the January or April 2003 benchmark commercial targets.
However, key questions remain:
* Can the board of P&O Princess confirm that it can deliberately ensure
that these benchmark commercial targets are not achieved?
* If P&O Princess deliberately tries to ensure that the January or
April benchmark commercial targets are not achieved, does Royal
Caribbean have any legal redress under New York law, or otherwise?
* What is Royal Caribbean's position on these points?
* What are the full details of the January and April benchmark
commercial targets, as contained in the undisclosed Initial Business
Plan, and how easy or difficult are they to achieve?
2) If the put or call mechanisms are exercised following a change of
control of P&O Princess, is there any ongoing obligation for P&O
Princess to finance the Joint Venture company or guarantee its then
existing or future debt? Is there an upper limit to any such
commitment?
Carnival believes that should it receive acceptable clarification of these critical issues, it will be better
able to improve its already superior Offer by providing P&O Princess Shareholders with both additional value
and reduced conditionality.
It is therefore clearly in P&O Princess Shareholders' interests that P&O Princess provides a full response
to these questions, so that P&O Princess Shareholders can then decide what action to take on 14 February 2002,
from a position of detailed, full and not misleading information.
Carnival's Offer Compared to the Royal Caribbean Proposal
Carnival continues to believe that its Offer is superior to the Royal Caribbean Proposal and that the proposed
transaction with Royal Caribbean is, by comparison, financially disadvantageous for P&O Princess Shareholders.
Carnival's Superior Value Proposition
Carnival believes that its Offer is already a financially superior proposal to the nil-premium Royal Caribbean
Proposal. Yet, despite having repeatedly confirmed its willingness to increase its Offer further still, the board
of P&O Princess refuses to meet with Carnival to facilitate such a proposal.
Carnival's Offer currently values P&O Princess at 450 pence per share and represents:
* a 42 per cent. premium to the P&O Princess Share price immediately
before the announcement of the "nil-premium" Royal Caribbean Proposal;
* a 22 per cent. premium to the P&O Princess Share price immediately
after the announcement of the "nil-premium" Royal Caribbean Proposal;
and
* a 31 per cent. premium to the look through P&O Princess Share price of
343 pence implied by the "nil-premium" Royal Caribbean Proposal.
Carnival's Offer contains a significant element of certain value in that it offers 200 pence in cash per P&O
Princess Share and provides the flexibility of the Mix and Match Election.
The Shareholder Circular suggests that P&O Princess Shareholders should be grateful that, under the Royal Caribbean
Proposal, the board of P&O Princess was able to strike a deal whereby they received 50.7 per cent. of the combined
group, given that under an analysis of historic market capitalisation P&O Princess Shareholders would only
have been entitled to 44.2 per cent.
Carnival firmly disagrees with this assertion and believes that P&O Princess Shareholders will be far more
concerned with the future earnings contribution of each party, as this is clearly the most relevant valuation metric
in a nil-premium merger. Analysts' average forecasts for future net income contribution demonstrate that P&O
Princess Shareholders should be entitled, under the Royal Caribbean Proposal, to at least 59.2 per cent. of the
combined group, and not the 50.7 per cent. which their board seems only too happy to have accepted.
In its Shareholder Circular, the board of P&O Princess highlights the positive reaction of the P&O Princess
Share price following announcement of the Royal Caribbean Proposal. Carnival accepts that this initial rise was
in part due to the market's assessment of the expected value created by the Royal Caribbean Proposal, but believes
that it was substantially driven by expectations that Carnival would make a premium counter offer for P&O Princess.
Subsequently, on announcement of Carnival's Offer, the P&O Princess Share price rose even further, clearly
demonstrating the market's view that Carnival's generous Offer is superior in value to the Royal Caribbean Proposal.
Accordingly, Carnival finds it astonishing that the board of P&O Princess can assert that Carnival's Offer
is not ``as favourable financially as the proposed combination with Royal Caribbean''.
Carnival Is a Stronger Financial Partner
Carnival's board also believes that Carnival is a stronger financial partner for P&O Princess. Royal Caribbean
has a significantly higher gearing level than Carnival, and this is reflected in its sub-investment grade credit
rating, which is in marked contrast to Carnival's investment grade ``A'' credit rating.
Both Royal Caribbean and P&O Princess have made significant capital commitments, and given the uncertain times,
prudent management practice dictates that a strong and flexible capital structure should be maintained. Instead,
P&O Princess' credit rating has already been downgraded in anticipation of its merger with Royal Caribbean,
whilst, as part of the Royal Caribbean Proposal, P&O Princess will be required to remove existing provisions
in its Articles of Association which were designed to protect P&O Princess against an over leveraged capital
structure.
As the analysis below sets out, it is indisputable that Carnival has significantly greater balance sheet strength
and flexibility than Royal Caribbean and is therefore a demonstrably stronger financial partner for P&O Princess.
Net debt at year end/EBITDA (1) Carnival Royal Caribbean
Last Twelve Months(2) 1.0x 5.6x
2000 1.7x 4.0x
1995 - 2000 average 1.4x 4.0x
EBITDA/cash interest expense (1) Carnival Royal Caribbean
Last Twelve Months(2) 10.4x 2.8x
2000 15.4x 4.0x
1995 - 2000 average 11.6x 3.7x
(1) Source: Public filings
(2) Last twelve months ended 31 August 2001 for Carnival and 30 September
2001 for Royal Caribbean
Credit ratings Carnival (1) Royal
Caribbean(2)
Investment grade Non-investment
grade
S&P A BB+
Outlook Negative Negative
Moody's A2 Ba2
Outlook Negative Stable
(1) Current
(2) Prior to the announcement of the Royal Caribbean Proposal
Ongoing Participation
P&O Princess has again stated that it believes that P&O Princess Shareholders may wish to continue to own
a share listed in the UK and included in the FTSE indices. As the board of P&O Princess knows only too well,
it is not possible for Carnival to offer P&O Princess Shareholders a DLC structure, in order to address this
perceived issue, on a unilateral basis. If P&O Princess genuinely believes that this is an important consideration
for its shareholders, and if the board of P&O Princess were serious in evaluating both proposals on an even-handed
basis, it can only be in the best interests of P&O Princess Shareholders for their board to meet with Carnival
as soon as possible to explore such alternatives. Carnival has repeatedly offered to discuss such alternative structures
with P&O Princess but has been consistently rebuffed.
Deliverability
Carnival continues to believe, as set out below, that its Offer is at least as deliverable as the Royal Caribbean
Proposal.
Regulatory Risk
P&O Princess has questioned the deliverability of Carnival's Offer due to the regulatory clearances it requires.
In its Shareholder Circular, P&O Princess claims that the Royal Caribbean Proposal bears less regulatory risk
than Carnival's Offer. Carnival firmly believes, and has been so advised, that there is no material difference
between the regulatory clearances attaching to its Offer and that of the Royal Caribbean Proposal.
P&O Princess, Royal Caribbean and Carnival have all publicly stated that the appropriate market in which to
evaluate the competitive effects of either transaction is the wider vacation market. As cruising represents less
than five per cent. of the overall leisure travel market in the US and Europe, it must follow, and Carnival has
been so advised, that both Carnival's Offer and the Royal Caribbean Proposal face the same antitrust issues. Similarly,
in a narrower cruise market, the positions of Carnival/P&O Princess and Royal Caribbean/P&O Princess are
sufficiently similar that both transactions will face the same antitrust issues.
Carnival believes that P&O Princess' statement that a combination of the number one and the number three cruise
operator must bear more risk than a combination of the number two and number three cruise operator is irrelevant
and incorrect. Carnival has been advised that on this issue, Heinz/Beechnut is the most relevant decision of the
US Federal Trade Commission (the ``FTC'') and disproves this assertion as, in this case, both the FTC and the US
courts rejected the arguments being advanced by P&O Princess and Royal Caribbean.
Both the Carnival Offer and the Royal Caribbean Proposal are now under review at the FTC at the same time, on the
same schedule and by the same lawyers and economists, who will apply the same legal standards and analysis to both
proposals based on the same information. Richard Fain, Chairman and Chief Executive Officer of Royal Caribbean,
has acknowledged that the FTC review of Royal Caribbean/P&O Princess will probably take between four and six
months. Carnival has also been advised that there will be no adverse impact on the regulatory outcome as a result
of the two proposals being reviewed simultaneously.
Carnival has already commenced substantive discussions with the European Commission. Based on the aforementioned
market definition, Carnival's advisors consider that the Offer is unlikely to raise regulatory difficulties in
the European Union.
Carnival believes that P&O Princess' claim that the Royal Caribbean proposal faces less risk is both unsupportable
and disingenuous. Rather than having effectively to choose between the two proposals at this premature stage, Carnival
continues to believe that it is in the best interests of P&O Princess Shareholders to be able to judge the
two proposals side by side, once the regulatory review of both proposals has been completed.
Carnival's Commitment to Acquire P&O Princess
Carnival completely refutes the claims of P&O Princess that it is not a serious offeror and is merely trying
to ``spoil'' the Royal Caribbean Proposal.
Carnival has had a number of discussions over several years regarding a potential combination of the two groups.
When Howard Frank, Carnival's Vice Chairman and Chief Operating Officer, spoke with Peter Ratcliffe, Chief Executive
Officer of P&O Princess, on 24 September 2001 to discuss a potential combination, the conversation was at a
sufficient level of detail to include not only a discussion of the commercial rationale for such a deal, but also
the future management roles for members of the P&O Princess board.
P&O Princess must explain why, if Carnival's approach were deemed to be nothing more than a ``brief telephone
inquiry'', it shortly thereafter signed a confidentiality and exclusivity letter and began the process that led
to the $62.5 million Break Fee and the extraordinary Joint Venture poison pill arrangements. Furthermore, Carnival
believes P&O Princess agreed to the Break Fee and the Joint Venture poison pill arrangements because, knowing
of Carnival's serious interest, it wanted to deter any future approach.
P&O Princess Shareholders will be aware that Carnival's Offer, unlike the Royal Caribbean Proposal, is being
made under the rules of the UK Takeover Code. Carnival was only able to launch its pre-conditional Offer, with
permission from the Panel, once Carnival and its advisors had every reason to believe that Carnival could and will
be able to implement the Offer, once these pre-conditions have been satisfied. It would have been permissible under
the Takeover Code for Carnival to have reserved the right not to proceed with its Offer once these pre-conditions
had been satisfied, but Carnival has deliberately not reserved this right, in order to provide as much certainty
as possible to P&O Princess Shareholders.
Accordingly, Carnival absolutely rejects any suggestion from P&O Princess that it is merely indulging in spoiling
tactics -- the only spoiling tactics being adopted are those of the board of P&O Princess, as demonstrated
by the Break Fee and Joint Venture poison pill arrangements and its continued refusal to enter into discussions
with Carnival.
P&O Princess Shareholders Have the Option to Adjourn the EGM on
14 February 2002
Carnival believes that ambiguous, and potentially misleading, information has been given to P&O Princess Shareholders
regarding the outcome of their actions at the upcoming EGM. The board of P&O Princess has clearly indicated
in the Shareholder Circular that it does not intend to adjourn the EGM. However, Carnival and its advisors have
reviewed the public documents and see no reason why P&O Princess Shareholders cannot adjourn the EGM until
such later date when the regulatory outcome for both proposals is known. Such an adjournment would then enable
P&O Princess Shareholders to judge both proposals on their economic and strategic merits, knowing the outcome
of the regulatory review process.
Carnival believes that if P&O Princess Shareholders propose and pass a resolution to adjourn the EGM, neither
Royal Caribbean, nor its major shareholders, who have provided irrevocable commitments to vote in favour of the
Royal Caribbean Proposal at their shareholder meeting, are able to terminate their commitments under the Royal
Caribbean Proposal.
Carnival recognises that, when deciding on the adjournment of the forthcoming EGM, P&O Princess Shareholders
will have regard to the 16 November 2002 deadline, before which time the Royal Caribbean Proposal must have been
approved or it will terminate. Carnival has been advised that the regulatory review of both proposals will almost
certainly be completed in sufficient time so as to enable P&O Princess Shareholders to decide whether to accept
the Royal Caribbean Proposal in advance of the 16 November 2002 deadline.
It is essential for P&O Princess Shareholders to understand that Carnival is not suggesting that they should
vote down the Royal Caribbean Proposal at the EGM on 14 February 2002, unless the resolution to adjourn is not
passed, as Carnival fully appreciates that P&O Princess Shareholders may want to keep their options open and
ultimately vote for whichever proposal they consider to be more attractive.
P&O Princess Shareholders must appreciate that acceptance of the Royal Caribbean Proposal at the EGM on 14
February 2002 will terminate Carnival's Offer, without any opportunity thereafter to reconsider.
Next Steps
Carnival and its advisors will continue to request a meeting with the P&O Princess board in order to clarify
the effect of the arrangements it has entered into with Royal Caribbean. P&O Princess Shareholders are strongly
encouraged to urge their board to break this stalemate and provide the clarification sought by Carnival and P&O
Princess Shareholders, in order that it may provide P&O Princess Shareholders with both additional value and
reduced conditionality in any revised offer.
Terms used in this announcement have the same meaning as in the Announcement dated 16 December 2001.
The directors of Carnival accept responsibility for the information contained in this announcement. To the best
of the knowledge and belief of the directors of Carnival (who have taken all reasonable care to ensure such is
the case), the information contained herein for which they accept responsibility is in accordance with the facts
and does not omit anything likely to affect the import of such information.
Merrill Lynch International and UBS Warburg Ltd., a subsidiary of UBS AG, are acting as joint financial advisors
and joint corporate brokers exclusively to Carnival and no-one else in connection with the Offer and will not be
responsible to anyone other than Carnival for providing the protections afforded to clients respectively of Merrill
Lynch International and UBS Warburg Ltd. as the case may be or for providing advice in relation to the Offer.
SHAREHOLDER DISCLOSURE OBLIGATIONS
Any person who, alone or acting together with any other person(s) pursuant to an agreement or understanding (whether
formal or informal) to acquire or control securities of P&O Princess or Carnival, owns or controls, or become
the owner or controller, directly or indirectly of one per cent. or more of any class of securities of P&O
Princess or Carnival is generally required under the provision of Rule 8 of the City Code to notify the London
Stock Exchange and the Panel of every dealing in such securities during the period from the date of the Announcement
until the first closing date of the Offer or, if later, the date on which the Offer becomes, or is declared, unconditional
as to acceptances or lapses.
Disclosure should be made on an appropriate form before 12 noon (London time) on the business day following the
date of the dealing transaction. These disclosures should be sent to the Company Announcements Office of the London
Stock Exchange (fax number: +44 20 7588 6057) and to the Panel (fax number: +44 20 7256 9386).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this announcement constitute ``forward-looking statements'' within the meaning of the US
Private Securities Litigation Reform Act of 1995. Carnival has tried, wherever possible, to identify such statements
by using words such as ``anticipate,'' ``assume,'' ``believe,'' ``expect,'' ``intend,'' ``plan'' and words and
terms of similar substance in connection with any discussion of future operating or financial performance. These
forward-looking statements, including those which may impact the forecasting of Carnival's net revenue yields,
booking levels, price, occupancy or business prospects, involve known and unknown risks, uncertainties and other
factors, which may cause Carnival's actual results, performances or achievements to be materially different from
any future results, performances or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business conditions which may impact levels
of disposable income of consumers and the net revenue yields for Carnival's cruise products; consumer demand for
cruises and other vacation options; other vacation industry competition; effects on consumer demand of armed conflicts,
political instability, terrorism, the availability of air service and adverse media publicity; increases in cruise
industry and vacation industry capacity; continued availability of attractive port destinations; changes in tax
laws and regulations; Carnival's ability to implement its shipbuilding program and to continue to expand its business
outside the North American market; Carnival's ability to attract and retain shipboard crew; changes in foreign
currency rates, security expenses, food, fuel, insurance and commodity prices and interest rates; delivery of new
ships on schedule and at the contracted prices; weather patterns; unscheduled ship repairs and dry-docking; incidents
involving cruise ships; impact of pending or threatened litigation; and changes in laws and regulations applicable
to Carnival.
Carnival cautions the reader that these risks may not be exhaustive. Carnival operates in a continually changing
business environment, and new risks emerge from time to time. Carnival cannot predict such risks nor can it assess
the impact, if any, of such risks on its business or the extent to which any risk, or combination of risks may
cause actual results to differ from those projected in any forward-looking statements. Accordingly, forward-looking
statements should not be relied upon as a prediction of actual results. Carnival undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CARNIVAL PLANS TO FILE A REGISTRATION STATEMENT ON FORM S-4 AND A STATEMENT ON SCHEDULE TO WITH THE US SECURITIES
AND EXCHANGE COMMISSION IN CONNECTION WITH COMMENCEMENT OF THE OFFER. THE FORM S-4 WILL CONTAIN A PROSPECTUS AND
OTHER DOCUMENTS RELATING TO THE OFFER. CARNIVAL PLANS TO MAIL THE PROSPECTUS CONTAINED IN THE FORM S-4 TO SHAREHOLDERS
OF P&O PRINCESS WHEN THE FORM S-4 IS FILED WITH THE SEC. THE FORM S-4, THE PROSPECTUS AND THE SCHEDULE TO WILL
CONTAIN IMPORTANT INFORMATION ABOUT CARNIVAL, P&O PRINCESS, THE OFFER AND RELATED MATTERS. INVESTORS AND STOCKHOLDERS
SHOULD READ THE FORM S-4, THE PROSPECTUS, THE SCHEDULE TO AND THE OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION
WITH THE OFFER CAREFULLY BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE OFFER. THE FORM S-4, THE PROSPECTUS,
THE SCHEDULE TO AND ALL OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE OFFER WILL BE AVAILABLE WHEN
FILED FREE OF CHARGE AT THE SEC'S WEB SITE, AT WWW.SEC.GOV . IN ADDITION, THE PROSPECTUS AND ALL OTHER DOCUMENTS
FILED WITH THE SEC IN CONNECTION WITH THE OFFER WILL BE MADE AVAILABLE TO INVESTORS FREE OF CHARGE BY WRITING TO
TIM GALLAGHER AT CARNIVAL CORPORATION, CARNIVAL PLACE, 3655 N.W. 87 AVENUE, MIAMI, FLORIDA, 33178-2428, US.
IN ADDITION TO THE FORM S-4, PROSPECTUS, THE SCHEDULE TO AND THE OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION
WITH THE OFFER, CARNIVAL IS OBLIGATED TO FILE ANNUAL, QUARTERLY AND CURRENT REPORTS, PROXY STATEMENTS AND OTHER
INFORMATION WITH THE SEC. PERSONS MAY READ AND COPY ANY REPORTS, STATEMENTS AND OTHER INFORMATION FILED WITH THE
SEC AT THE SEC'S PUBLIC REFERENCE ROOM AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549. PLEASE CALL THE SEC AT
1-800-SEC-0330 FOR FURTHER INFORMATION ON THE PUBLIC REFERENCE ROOM. FILINGS WITH THE SEC ALSO ARE AVAILABLE TO
THE PUBLIC FROM COMMERCIAL DOCUMENT-RETRIEVAL SERVICES AND AT THE WEB SITE MAINTAINED BY THE SEC AT WWW.SEC.GOV
.
APPENDIX
BASES AND SOURCES OF INFORMATION
General
Unless otherwise stated:
(i) Information relating to Carnival has been extracted from the
relevant published audited SEC filings of Carnival;
(ii) Information relating to P&O Princess has been extracted from the
relevant financial reports and accounts of P&O Princess;
(iii) Information relating to Royal Caribbean has been extracted from the
relevant SEC filings of Royal Caribbean;
(iv) Information relating to the Royal Caribbean Proposal is based upon
the information contained in the DLC Announcement and related
documents;
(v) Share prices for P&O Princess, Carnival and Royal Caribbean are
taken from Bloomberg; and
(vi) The 1 British pounds sterling:$1.4486 exchange rate used throughout
this announcement is taken from Bloomberg.
CARNIVAL'S SUPERIOR VALUE PROPOSITION
In this section:
(i) P&O Princess net income contribution to a combined P&O
Princess/Royal Caribbean group is based on the average of the net
income estimates for P&O Princess and Royal Caribbean for the
2003 financial year contained in the following analyst reports:
Bear Stearns, 21 November 2001 and 27 December 2001
CSFB, 20 November 2001
Deutsche Bank, 11 December 2001 and 17 December 2001
JP Morgan, 21 November 2001
Lazard, 18 December 2001
Lehman Brothers, 21 November 2001 and 31 October 2001
Merrill Lynch, 5 December 2001
Morgan Stanley, 18 December 2001 and 4 January 2002
Schroder Salomon Smith Barney, 29 November 2001
UBS Warburg, 5 December 2001
P&O Princess net income contribution is calculated as P&O Princess's net income divided by the sum of P&O
Princess's net income and Royal Caribbean's net income for the 2003 financial year. In the case of the Bear Stearns
projections, net income has been calculated by multiplying the stated earnings per share by the stated number of
shares outstanding;
(ii) Based on a New York Stock Exchange closing price of a Carnival
share on 11 January 2002 of $26.63 and an exchange rate of
1 pounds:$1.4486, the Offer values each P&O Princess Share at
450 pence; and
(iii) Based on a New York Stock Exchange closing price of a Royal
Caribbean share on 11 January 2002 of $17.22 and an exchange rate
of 1 pounds:$1.4486, and an exchange ratio of 1 Royal Caribbean
Share per 3.46386 P&O Princess Shares, the Royal Caribbean Proposal
values each P&O Princess Share at 343 pence.
CARNIVAL IS A STRONGER FINANCIAL PARTNER
In the table in this section:
(i) EBITDA is unadjusted operating profit plus depreciation and
amortisation;
(ii) Net debt is long term debt and current portion of long term debt
less cash and cash equivalents;
(iii) Net debt at year end/EBITDA is calculated by dividing the net debt
at the end of each financial year by the EBITDA for that financial
year; and
(iv) EBITDA/cash interest expense is calculated by dividing EBITDA by
the sum of net interest expense and capitalised interest.
SOURCE: Carnival Corporation