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Filed by the Board of Trade of the City of Chicago, Inc.(CBOT)
Subject Company - Board of Trade of the City of
Chicago Pursuant to Rule 425 under the Securities Act of
1933 File No. 132-01854
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The following press release was distributed after business hours on August 31,
2000 and is currently available on the CBOT's Internet site and Intranet sites,
MemberNet and OnBoard.
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FOR IMMEDIATE RELEASE Contact: David P. Prosperi
312-435-3456
[email protected]
CBOT BOARD OF DIRECTORS REVISES RESTRUCTURING STRATEGY
Chicago, August 31, 2000 - The Board of Directors of the Chicago Board of Trade
(CBOT) today unanimously adopted a revised restructuring strategy that involves
moving forward as soon as possible with the demutualization of the CBOT and the
reorganization of its electronic trading business as a wholly-owned subsidiary,
named "Electronic Chicago Board of Trade" or "eCBOT." Under the revised
strategy, eCBOT will remain a wholly owned subsidiary of the open outcry
company, and will not be separated as was previously contemplated.
Citing increasing competitive pressures within the industry, CBOT Chairman David
P. Brennan said, "This revised strategy will enable us to move forward more
quickly with becoming a for-profit company and modernizing our governance
structure and, as a result, becoming more competitive. Although it will be a
CBOT subsidiary, we plan to operate eCBOT on an independent and competitive
basis with significant autonomy for eCBOT's management."
Under the revised strategy, the CBOT would amend its charter to convert into a
for-profit company and, upon completion of the conversion, CBOT members would
receive shares of stock in the new for-profit CBOT. In contrast to the original
strategy, however, CBOT members would not receive stock in eCBOT as part of the
transaction. The new for-profit CBOT will continue to operate eCBOT as a
subsidiary, but would have the flexibility in the future to decide to separate
the company from the new CBOT and/or conduct an initial public offering of
eCBOT. Completion of the revised restructuring plan is subject to membership
approval and receipt of various regulatory clearances, including from the
Securities and Exchange Commission, Commodity Futures Trading Commission and the
Internal Revenue Service.
The CBOT urges its members and membership interest holders to read the
Registration Statement on Form S-4, including the proxy statement/prospectus
combined within the Registration Statement, regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free
copy of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www.sec.gov, or from
the CBOT by directing such request in writing or by telephone to: Board of Trade
of the City of Chicago, Inc., 141 W. Jackson Blvd., Chicago, Illinois
60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605,
Facsimile: (312) 347-3827. This communication shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
securities in any state in which offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state. No offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of 1933, as
amended.
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The following letter was distributed to CBOT members and membership interest
holders on September 1, 2000 and is currently available on the CBOT's Internet
site and Intranet sites, MemberNet and OnBoard.
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September 1, 2000
Dear Fellow Members:
Over a period of months we have met with representatives of the Chicago Board
Options Exchange to effect a merger of our two institutions that would benefit
not only our members and market users, but also the global financial services
industry as well as the City of Chicago. During these meetings, the CBOT
negotiated every aspect of a potential merger in order to accomplish this goal.
However, yesterday I was informed by the CBOE that they have no interest in
pursuing a merger and they have no desire to pursue any additional merger
negotiations. I am very disappointed that the CBOE closed the door on a merger
between two of the world's leading financial institutions. Such a merger would
have strengthened both exchanges, provided our joint members, member firms and
customers with additional business opportunities, and solidified Chicago's
position as a world financial center.
We will continue moving forward with our restructuring strategy in order to
position the Chicago Board of Trade to compete and win in the global
marketplace. You will be receiving an update on that matter shortly.
As always, contact me at [email protected] if you have any questions.
Sincerely,
/s/ David P. Brennan
David P. Brennan
The CBOT urges its members and membership interest holders to read the
Registration Statement on Form S-4, including the proxy statement/prospectus
combined with the Registration Statement, regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free
copy of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www.sec.gov, or from
the CBOT by directing such request in writing or by telephone to : Board of
Trade of the City of Chicago, Inc., 141 W. Jackson Blvd., Chicago, Illinois
60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605,
Facsimile: (312) 347-3827. This communication shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
securities in any state in which offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state. No offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of 1933, as
amended.
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The following letter was distributed to CBOT members and membership interest
holders on September 1, 2000 and is currently available on the CBOT's Internet
site and Intranet sites, MemberNet and OnBoard.
* * * *
September 1, 2000
Dear Fellow Members:
Your Board of Directors yesterday adopted a revised restructuring strategy which
involves moving forward as soon as possible with the demutualization of the CBOT
and the reorganization of our electronic trading business as a wholly owned
subsidiary, named "Electronic Chicago Board of Trade" or "eCBOT." Under the
revised strategy, eCBOT will remain a wholly owned subsidiary of the open outcry
company, and will not be separate as was originally contemplated by the Board of
Directors.
As you know, our Exchange and the entire U.S. futures industry is experiencing
increased competitive pressures. The Board of Directors believes this revised
strategy will enable us to move forward more quickly with becoming a for-profit
company and modernizing our governance structure and, as a result, allow us to
become more competitive. Although it will be a CBOT subsidiary, the Board of
Directors plans to operate eCBOT on an independent and competitive basis with
significant autonomy for eCBOT's management.
Under this revised strategy, the CBOT would amend its charter to convert into a
for-profit company and, upon completion of the conversion, you would receive
shares of stock in the new for-profit CBOT. In contrast to the original
strategy, however, CBOT members would not receive stock in eCBOT as part of the
transaction at this time. The new for-profit CBOT will continue to operate eCBOT
as a subsidiary, but would have the flexibility in the future to decide to
separate the company from the new CBOT and/or conduct an initial public offering
of eCBOT. Completion of our revised restructuring strategy is subject to
membership approval and receipt of various regulatory clearances, including from
the Securities and Exchange Commission, the Commodity Futures Trading
Commission, and the Internal Revenue Service.
We anticipate filing a registration statement with the SEC in the fourth quarter
of this year, which will include a combined proxy statement/prospectus necessary
to solicit your approval of the demutualization. Upon effectiveness of the
registration statement, the proxy statement/prospectus will be distributed to
you and voting members will be asked to approve the transaction necessary to
implement the demutualization shortly thereafter.
As I have said on numerous occasions, this is an historic time for the CBOT.
Restructuring is a necessary step in our ongoing business strategy to expand
upon our position of leadership in this increasingly global and technologically
advanced marketplace. As we did during our August 16 meeting, I look forward to
talking with you further about these developments.
Sincerely,
/s/ David P. Brennan
David P. Brennan
The CBOT urges its members and membership interest holders to read the
Registration Statement on Form S-4, including the proxy statement/prospectus
combined within the Registration Statement, regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free
copy of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www.sec.gov, or from
the CBOT by directing such request in writing or by telephone to: Board of Trade
of the City of Chicago, Inc., 141 W. Jackson Blvd., Chicago, Illinois 60604-
2994, Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile:
(312) 347-3827. This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities in
any state in which offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state. No
offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
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The following letter was sent on September 1, 2000.
September 1, 2000
William J. Brodsky, Chairman
Thomas A. Bond, Vice Chairman
Chicago Board Options Exchange
440 S. LaSalle Street
Chicago, IL
Dear Bill and Tom:
Today the Chicago Board of Trade filed an amended complaint in our lawsuit to
enforce the provisions of our 1992 Agreement with the Chicago Board Options
Exchange. A copy of the amended complaint is attached. As we have discussed,
the CBOE's actions have made the amended complaint necessary to ensure the
continued preservation of all CBOT Full Members' legal rights to become CBOE
members under the 1992 Agreement and Article Fifth(b) of CBOE's Articles of
Incorporation (Exercise Right).
On June 20, 2000, the CBOE asserted in a letter to its membership that the
CBOT's Full Members would lose their Exercise Rights upon implementation of the
restructuring strategy adopted by the CBOT's Board of Directors.
Notwithstanding the CBOE's limited judicial admission on August 3rd that it
would take no action to extinguish the Exercise Right solely on the basis of the
CBOT's reincorporation in Delaware, such admission offers no protection from
actions that the CBOE claims it could take in response to the implementation of
the remaining aspects of the CBOT's restructuring strategy adopted by our Board
of Directors yesterday. Further, since the CBOE, to date, has refused to abide
by the 1992 Agreement and state that it would take no action to attempt to
extinguish the Exercise Right as a result of the CBOT's restructuring, the CBOT
has no choice but to continue to pursue judicial enforcement of the 1992
Agreement, as that contract itself contemplated.
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September 1, 2000
Page 2
Our Board of Directors has determined that restructuring the CBOT's operations
is essential to our business future, and that preserving our members' Exercise
Right is an essential component of our restructuring. We regret that our
pursuit of those vital objectives has led to conflict between our two
institutions. I was disappointed to hear that the CBOE will not pursue any
additional merger negotiations with the CBOT. It is unfortunate that this
decision has created a missed opportunity for both our institutions. As I
expressed to our membership today, such a merger would have strengthened both
exchanges, provided our joint members, member firms and customers with
additional business opportunities, and solidified Chicago's position as a world
financial center. Should you reconsider the possibility of a merger or
consolidation of our two great exchanges, I will be more than willing to resume
our discussions.
Sincerely,
/s/ David P. Brennan
David P. Brennan
The CBOT urges its members and membership interest holders to read the
Registration Statement on Form S-4, including the proxy statement/prospectus
contained within the Registration Statement, regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free
copy of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www. sec.gov, or
from the CBOT by directing such request in writing or by telephone to: Board of
Trade of the City of Chicago, Inc., 141 W. Jackson Blvd., Chicago, Illinois
60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605,
Facsimile: (312) 347-3827. This communication shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
securities in any state in which offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state. No offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of 1933, as
amended.
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The following press release and attachment thereto were distributed on September
1, 2000 and the attachment was distributed to CBOT members and membership
interest holders on the same date and is currently available on the CBOT's
Internet site and IntraNet sites, MemberNet and OnBoard.
For Immediate Release: Contact: David Prosperi
September 1, 2000 312-435-3456
[email protected]
The attached letter from CBOT Chairman David Brennan to the membership was
distributed today
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September 1, 2000
Dear Fellow Member:
Today the Chicago Board of Trade filed an amended complaint in our lawsuit to
enforce the provisions of our 1992 Agreement with the Chicago Board Options
Exchange. A copy of the amended complaint is available to you by contacting the
General Counsel's Office. The CBOE's actions have made the amended complaint
necessary to ensure that all CBOT Full Members' legal rights to become CBOE
members under the 1992 Agreement and Article Fifth(b) of CBOE's Articles of
Incorporation (Exercise Right) will be preserved under the revised restructuring
strategy announced today by your Board of Directors.
On June 20, 2000, the CBOE asserted in a letter to its membership that the
CBOT's Full Members would lose their Exercise Rights upon implementation of the
restructuring strategy adopted by our Board of Directors. Notwithstanding the
CBOE's limited judicial admission on August 3rd that it would take no action to
extinguish the Exercise Right solely on the basis of the CBOT's reincorporation
in Delaware, such admission offers no protection from actions that the CBOE
claims it could take in response to the implementation of the remaining aspects
of our restructuring strategy. Further, since the CBOE, to date, has refused to
abide by the 1992 Agreement and state that it would take no action to attempt to
extinguish the Exercise Right as a result of our planned restructuring, the CBOT
has no choice but to continue to pursue judicial enforcement of the 1992
Agreement, as that contract itself contemplated.
Your Board of Directors has determined that restructuring the CBOT's operations
is essential to our business future, and that preserving our members' Exercise
Right must be an essential component of our restructuring. I will keep you
informed of any developments in this matter. Please contact me at
[email protected] if you have any questions.
Sincerely,
/s/ David P. Brennan
David P. Brennan
The CBOT urges its members and membership interest holders to read the
Registration Statement on Form S-4, including the proxy statement/prospectus
contained within the Registration Statement, regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free
copy of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www. sec.gov, or
from the CBOT by directing such request in writing or by telephone to: Board of
Trade of the City of Chicago, Inc., 141 W. Jackson Blvd., Chicago, Illinois
60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605,
Facsimile: (312) 347-3827. This communication shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
securities in any state in which offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state. No offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of 1933, as
amended.
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The following memorandum was distributed to CBOT employees on September 1, 2000
and is currently available on the CBOT's Intranet site, OnBoard.
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September 1, 2000
TO: All Employees
FR: Dennis Dutterer
RE: An Update
As we close on the first week of trading on our new a/c/e electronic trading
system, I want to thank everyone involved in the successful launch of this new
strategic initiative for his or her dedication and hard work. Based on the
growing volume we have seen every day this week on the new system, going from an
estimated volume of 22,000 contracts traded on Monday to an estimated volume of
137,500 contracts traded yesterday, I am confident that we are on course with
our business strategy of providing our customers and all market users with the
best open outcry and electronic markets. We have a lot of work yet to do, but
we will have 60-80 additional firms signed up to trade on a/c/e by the end of
the year, which in turn should bring even more business to a/c/e and to the
Chicago Board of Trade. We are working with our partners at Eurex to increase
the hours when the system is accessible for all market users.
The Board of Director's decision yesterday to revise our restructuring strategy,
as outlined in the press release we issued last night and which is available on
our web site, was done to get our for-profit entity into the marketplace as soon
as possible. Under the revised strategy, we would reorganize our electronic
trading business as a wholly-owned subsidiary named "Electronic Chicago Board of
Trade" or "eCBOT." CBOT members still would receive shares of stock in the new,
for-profit CBOT under this strategy, but would not receive stock in eCBOT.
While the new for-profit CBOT would operate eCBOT as a subsidiary, there is
flexibility in our revised strategy as to if, when and how we might separate the
company from the new CBOT and/or conduct an initial public offering of eCBOT.
We continue to work on the business plans for the new entities.
By now, you have read the press reports that the CBOE has called off merger
talks with the CBOT. Chairman Brennan was informed yesterday of this decision,
and I must say he is very disappointed in the CBOE's decision to close the door
on a merger between two of the world's leading financial institutions.
However, we are not going to allow this to deter our efforts to restructure.
The Board of Directors yesterday approved filing an amended complaint in our
lawsuit to enforce the provisions of our 1992 Agreement with the CBOE, and that
was done this morning. Preserving our members exercise right with the CBOE is
an essential component of our restructuring strategy, and as the CBOE, to date,
has refused to abide by the Agreement and state that it would take no action to
attempt to extinguish this right as a result of our
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restructuring, we have no choice but to continue to pursue judicial enforcement
of the Agreement.
I am very appreciative of all of the work being done by every member of our
staff team. Whether you are responsible for making sure our open outcry markets
are functioning, or you are involved in any way with a/c/e, you are making a
significant contribution to the Chicago Board of Trade. I ask you to keep
performing at this level, and I thank you for a job well done.
Next week I will be in Burgenstock, Switzerland for the Swiss Commodities
Futures Options Association Conference, which also will include meetings with
our partners from Eurex and with representatives from other exchanges. I wish
you and your families a safe and happy Labor Day holiday weekend.
The CBOT urges its members and membership interest holders to read the
Registration Statement on Form S-4, including the proxy statement/prospectus
contained within the Registration Statement, regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free
copy of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www.sec.gov, or from
the CBOT by directing such request in writing or by telephone to: Board of Trade
of the City of Chicago, 141 W. Jackson Blvd., Chicago, Illinois 60604-2994,
Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile: (312)
347-3827. This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities in
any state in which offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state. No
offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
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