Merger Implementation Deed Signed

Brisbane, Australia, November 22, 2006 – Flight Centre Limited (ASX: FLT) today announced that the formal Merger Implementation Deed (“Deed”) for the privatisation proposal had been signed and lodged with the Australian Stock Exchange.

On 25 October Flight Centre announced that it had entered into binding exclusivity arrangements with a bidding consortium comprising the Flight Centre founders and funds advised by Pacific Equity Partners (“PEP”) (together, the “Consortium”), in relation to a potential privatisation of Flight Centre by scheme of arrangement. Execution of formal agreements was subject to certain conditions being met, including the grant of ASIC relief to the Consortium. The  Consortium has received the necessary ASIC relief and accordingly Flight Centre and the Consortium have formally  documented their agreement by entering into the Deed. A copy of the Deed has been lodged with the ASX.

The proposed transaction has the unanimous support of Flight Centre’s independent directors, who intend to recommend that shareholders vote in favour of the proposed transaction in the absence of a superior alternative proposal, subject to receiving advice from the independent expert.

Flight Centre intends to pay a special dividend of $0.20 per share in place of the payment of an interim dividend (previously scheduled for late March 2007) so that shareholders receive the special dividend before the scheme of arrangement becomes effective.

Minority shareholders at the time the special dividend is paid who remain shareholders until the scheme is implemented will receive a total of $17.20 per share, comprising $17.00 cash under the scheme and the $0.20 fully franked special dividend.

The total amount payable under the proposal to minorities represents a premium of:

  • 39.1 per cent above the volume weighted average share price of Flight Centre over the three months prior to Flight Centre’s 25 October announcement.
  • 50.6 per cent above the volume weighted average share price of Flight Centre over the six months prior to Flight Centre’s 25 October announcement.

The Deed details:

  • Key conditions of the Consortium’s proposal including the requirement for FIRB approval and entry into funding arrangements.
  • Further exclusivity arrangements between Flight Centre and the Consortium.
  • A break fee of approximately 0.6% of Flight Centre’s market capitalisation at the offer price, payable to the Consortium under certain prescribed circumstances.
  • The timetable proposed for implementation of the scheme of arrangement.

Under the proposed transaction, the Flight Centre Founders will receive $13.80 per share cash for the portion of their holdings being sold into the scheme, allowing minority shareholders to enjoy a significant premium to the cash price being paid to the Founders.

The Founders will also participate in the special dividend.

Flight Centre independent chairman Bruce Brown said, “We are very pleased to have entered into formal arrangements with the Consortium, and look forward to implementing this proposal, which the independent directors believe is in the best interests of minority Flight Centre investors at this time”.

Flight Centre and the Consortium announced on 25 October that they would use their best endeavours in good faith to explore the potential implementation of an off-market buyback structure as part of the proposed transaction to enhance value for Flight Centre shareholders.

An application for a ruling in relation to the potential buyback will shortly be lodged with the Australian Taxation Office and a further update will be provided as part of the scheme documentation.

The scheme documentation will also contain further details in relation to the Flight Centre Board’s recommendation to shareholders, information on Flight Centre and the Consortium’s proposal, and an independent expert’s report. The timetable contained in the Deed calls for scheme documentation to be sent to Flight Centre shareholders in January.

ABN AMRO Morgans Corporate and Allens Arthur Robinson are advising Flight Centre’s independent directors. Caliburn Partnership, Gilbert + Tobin, Freehills and PriceWaterhouseCoopers are advising the Consortium.

Contact Details

For further information, please contact:

Flight Centre
Haydn Long
0418 750 454

Consortium
Ron Malek / Jamie Garis
Caliburn Partnership
0411 422 885 / 0412 581 917

Tim Crommelin / Anthony Kirk
ABN AMRO Morgans Corporate
07 3334 4889 / 07 3334 4898

Third Person Communications
Chris Lacy / Ross Thornton
0408 784 998