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NYSE delisting FAQ
On June 16, 2017, Luxottica Group ADRs were delisted from the New York Stock Exchange and converted from Level III ADRs to Level I ADRs. Level I ADRs are traded in the U.S. over-the-counter market and are not listed on any U.S. securities exchange.
Updated: September 14, 2017
QUESTIONS & ANSWERS
What is the impact of delisting from the New York Stock Exchange (NYSE) on ADR holders? Where are Luxottica ADRs traded?
As a result of the delisting, Luxottica ADRs are no longer traded on the NYSE or any other stock exchange in the U.S. This does not mean, however, that Luxottica’s ADR facility has been terminated. Instead, Luxottica has converted its Level III ADR program into a Level I ADR program. This means that investors are still able to trade Luxottica ADRs, except that trading now occurs in the over-the-counter market.
What were the reasons for delisting from the NYSE?
The Group’s decision to delist from the NYSE was based on the following factors: (i) the trading of the Group’s shares has shifted significantly to the Italian market. For the twelve months ended May 1, 2017, trading in the United States represented only 3.7% of Luxottica’s worldwide average daily trading volume; (ii) maintaining a listing and registration in the United States entails significant administrative costs; and (iii) the delisting will also be efficient in light of the combination with Essilor.
What are the consequences of delisting for U.S. investors and Luxottica’s U.S. business?
Luxottica decided to convert its Level III ADR program into a Level I ADR program to give existing ADR holders the option to continue to hold ADRs. Level I ADRs are traded in the U.S. overthecounter market.
The decision to delist does not affect in any way Luxottica’s strategic vision for the United States, which represents its core market. In the 2016 fiscal year, sales in North America accounted for approximately 59% of worldwide sales, while approximately 51% of Luxottica’s employees worked in North America. Furthermore, Luxottica operates more than 4,700 stores and manufactures nearly 10% of its frames in North America. Luxottica remains fully committed to its U.S. shareholders, as the Company’s ordinary shares will continue to be traded on the Borsa Italiana, providing liquidity for all its investors, without affecting the Group’s access to capital.
Luxottica reiterates its commitment to maintaining its high standards of corporate governance and transparency with respect to financial reporting, as well as its internal control system. Luxottica will remain subject to the market rules of the Borsa Italiana and all laws and regulations applicable to listed companies in Italy.
Following the deregistration, Luxottica understands that Essilor does not intend to file a registration statement on Form F-4 with the SEC in connection with the exchange offer that Essilor expects to conduct for Luxottica’s remaining outstanding shares as part of the pending combination. Accordingly, the exchange offer will only be conducted in the United States pursuant to an exemption from the registration requirements of the U.S. Securities Act of 1933. As part of any “squeeze-out” or “sell-out” which may be conducted by Essilor under Italian law following the exchange offer, it is expected that those U.S. shareholders who were not eligible to participate in the exchange offer under the applicable exemption would be eligible to receive cash in an amount calculated in accordance with Italian law.
When was the delisting completed?
Luxottica filed a Form 25 with the U.S. Securities and Exchange Commission (SEC) on June 6, 2017 to initiate the delisting. The delisting of the ADRs became effective 10 days later on June 16, 2017. Following the effectiveness of the delisting from the NYSE, Luxottica filed with the SEC a Form 15F to deregister its shares with the SEC and terminate all its reporting obligations under the Securities Exchange Act. Luxottica’s obligation to file reports with the SEC were suspended immediately upon the filing of the Form 15F, while the deregistration of its shares became effective on September 14, 2017.
Will Luxottica remain Sarbanes-Oxley Act (SOX) compliant?
Following the deregistration, Luxottica is no longer required to comply with SOX. However, Luxottica intends to maintain a robust system of internal controls by leveraging the procedures and controls previously implemented by the Group for SOX purposes.
Does delisting from the NYSE impact the voting and dividend rights of ADR holders?
The delisting does not impact voting and dividend rights. ADR holders will continue to have the right to vote and receive dividends (if any) in U.S. dollars.
What are the differences between Level I and Level III ADRs?
ADRs are negotiable equity instruments issued by a depositary bank, which represent ownership of underlying ordinary shares outside of their domestic market. ADRs can be categorized into three “levels,” depending on the extent to which the relevant issuer has accessed the U.S. markets. Levels I and II relate to shares already outstanding and may not be used to raise capital, while Level III relates to a new offering of shares. Each level involves registration requirements of varying complexity, while Levels II and III subject the relevant issuer to ongoing SEC reporting requirements. Level I, however, allows for an exemption under Rule 12g3-2(b) from the SEC’s reporting requirements, so long as certain information is made available on the issuer’s website and various other requirements are met. Level I ADRs can only be traded in the over-the-counter market, not on a U.S. stock exchange. A foreign private issuer that chooses to issue its shares in the United States through a sponsored ADR program enters into a deposit agreement with the depositary, which governs the creation and maintenance of the deposit facility. Pursuant to the depositary arrangement, a holder of underlying ordinary shares can deposit those shares with the depositary (by delivery to the custodian) against issuance by the depositary of ADRs. ADRs may also be “unbundled” and ordinary shares delivered to holders, upon request.
As an ADR holder, what should I do following your announcement?
As an ADR holder, you do not need to take any action in connection with our delisting. You are still able to trade Luxottica ADRs, except that trading now occurs in the over-the-counter market, instead of through the facilities of the NYSE or another U.S. national securities exchange. Should you not be interested in holding Level I ADRs, please contact your broker or Deutsche Bank Shareholder Services if you are a registered ADR holder for further details.
As an ADR holder, will I incur any costs solely as a result of the delisting?
The conversion from a Level III to a Level I ADR program has been completed at no cost to ADR holders. Should you not be interested in holding Level I ADRs, please contact your broker or Deutsche Bank Shareholder Services if you are a registered ADR holder for further details. Should you wish to cancel your Level I ADRs at any point, standard cancellation fees may apply.
If you are a holder of our ADRs and require further assistance regarding any matter related to the delisting, please contact your broker. If you are a registered ADR holder, please contact Deutsche Bank Shareholder Services:
Telephone: +1 718 921-8137
Toll free number: +1 800 749-1873
TTY (Hearing Impaired): +1 718 921-8386
This document includes forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the proposed business combination between Essilor and Luxottica (including the benefits, results, effects and timing of a transaction), all statements regarding Luxottica’s (and Essilor’s and Luxottica’s combined) expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, and statements containing the words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “may,” “potential,” “upside,” and other similar expressions. Statements in this document concerning the business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth of Luxottica (and the combined businesses of Essilor and Luxottica), together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of Luxottica based upon currently available information.
Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from Luxottica’s expectations as a result of a variety of factors. Such forward-looking statements are based upon management’s current expectations and are subject to a significant business, economic and competitive risks, uncertainties and contingencies, many of which are unknown and many of which Luxottica is unable to predict or control. Such factors may cause Luxottica’s actual results, performance or plans, or results, performance or plans with respect to the combined Essilor and Luxottica group, to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risk factors discussed or identified in public filings that have been, or will be, made by Essilor or Luxottica from time to time. Luxottica cautions investors that any forward-looking statements made by Luxottica are not guarantees of future performance. Luxottica disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.
This document does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or any other jurisdiction. Securities may not be offered or sold in the United States unless they have been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or are exempt from registration. The securities that may be offered in any transaction have not been and will not be registered under the Securities Act and it is not intended that any public offering of any such securities will be made in the United States.
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The securities which are referred to herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.