SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported)
June 26, 2001CHICAGO MERCANTILE EXCHANGE INC.
(Exact Name of Registrant as Specified in Charter)
---------- ---------- ---------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
30 South Wacker Drive, Chicago, Illinois60606
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (312) 930-1000
(Former Name or Former Address, if Changed Since Last Report)
ITEM 9. Regulation FD Disclosure
On June 26, 2001, Chicago Mercantile Exchange Inc. issued a press
release with an attached letter to shareholders announcing the approval by
its board of directors of the formation of a holding company structure.
A copy of the press release, dated June 26, 2001, is attached
hereto as Exhibit 99.1.
99.1 Press Release dated June 26, 2001.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CHICAGO MERCANTILE EXCHANGE INC.
Date: June 26, 2001 By: /S/ David Gomach
Managing Director and
Chief Financial Officer
EXHIBIT 99.1 June 26, 2001
To Media Covering Chicago Mercantile Exchange Inc.
For your information, please see the attached letter to shareholders
disseminated this morning.
Ellen G. Resnick
Director, Corporate Communications
Associate Director, Corporate Communications
In connection with the proposed formation of a holding company and related
transactions, CME will file with the Securities and Exchange Commission, as
soon as reasonably practicable, a registration statement on SEC Form S-4.
The registration statement will contain a joint proxy statement/prospectus,
which describes the proposed terms and conditions of the holding company
formation. Shareholders are encouraged to read the registration statement
after it is filed, and the joint proxy statement/prospectus contained in
the registration statement, because these documents will contain important
information about the holding company formation. The registration
statement, including the joint proxy statement/prospectus, will be
available for free, both on the SEC's Web site (www.sec.gov) and on the
Investor Information section of CME's Web site at www.cme.com. Final
materials will be mailed to all shareholders.
June 26, 2001
To All Shareholders:
On March 13, 2001, we announced that the Board of Directors authorized
preparations for a possible initial public offering of Class A shares in
Chicago Mercantile Exchange Inc. These steps included an examination of our
corporate structure, our charter and our bylaws to ensure that CME is well
positioned for the future. Upon the advice and recommendations of our
financial and legal advisors, the Board of Directors approved the formation
of a new holding company structure that will enable us to address a number
of important issues relating to our business and corporate structure. This
holding company proposal will be submitted for shareholder approval. We
intend to file a registration/proxy statement shortly with the Securities
and Exchange Commission.
o Implementation of Transfer Restrictions. In connection with our
review, it has come to our attention that the recent charter
amendment extending the transfer restrictions on Class A shares to
all shareholders is not valid under Delaware law. Consequently,
the original transfer restrictions put in place in connection with
our November 13 demutualization are in effect. This means that 25
percent of your Class A shares can be transferred separately from
the related Series B share.
Our financial advisors have counseled us that the extended
transfer restrictions contained in the recent charter amendment
are critical to the success of an initial public offering. The
formation of a holding company will enable us to address this
issue. It is the only practical way to implement the extended
transfer restrictions for all shareholders. Subject to shareholder
approval, we will establish the holding company through the merger
of CME into a newly formed subsidiary. In doing so, we will
effectively implement the extended transfer restrictions that we
asked you to support at the April 18 annual shareholders' meeting.
Following the merger, these restrictions will bind all CME
shareholders. We continue to believe that CME and its shareholders
will benefit from effectively implementing the extended transfer
o Strategic and Business Flexibility. Other public companies,
including exchanges, have reorganized as holding companies to
prepare for public offerings. A holding company will provide us
with greater strategic flexibility and business opportunities,
allowing us to separate our regulated derivatives exchange
business from other businesses that we may pursue. The Boards of
the holding company and CME will be the same. In the merger, the
shareholders of CME will receive equivalent equity in the new
holding company, with trading privileges remaining at the Exchange
subsidiary. The "core rights" of Class B shareholders, including
the right to elect a specified number of directors, will be
o Separate the Value of the "Class A Share Equivalents." At the time
of demutualization, we adopted a capital structure consisting of
Class A common stock, representing "pure" equity in Chicago
Mercantile Exchange Inc. We also exchanged CME, IMM, IOM and GEM
memberships and fractions for different series of Class B shares,
representing trading privileges and membership rights, as well as
allocations of equity rights in the form of "Class A share
equivalents," which were embedded in the Class B shares. The
decision to embed equity in the Class B shares was made in order
to help ensure a tax-free transaction for our shareholders. Since
the completion of our demutualization transaction, many
shareholders have inquired about whether an opportunity exists for
them to achieve the direct benefit of the Class A share equity
component of their Class B shares. One important advantage of the
formation of the holding company is that we will extract the Class
A equity component of each series of Class B shares by issuing to
each Class B shareholder additional Class A shares equal to that
equity component. On the basis of both the tax ruling we received
and the advice of our tax counsel, we believe that this separation
can be done on a tax-free basis. We are seeking a supplemental
ruling from the Internal Revenue Service to that end. The Board
believes that shareholders will benefit from the ability to
realize the existing equity value of their Class B shares, if they
so choose, by selling the newly issued Class A shares when
Please be advised that, in order to ensure that this significant
information is widely distributed to our shareholders, the share market
conducted in the Shareholder Relations and Membership Services Department
will not open until 12:00 noon (Chicago time) today, Tuesday, June 26,2001.
Note that we will hold informational meetings at 2:15 and 3:30 p.m. on
Tuesday, July 17, in the Auditorium to address shareholder questions. In
the interim, questions regarding the foregoing should be directed to: Ms.
Ann Cresce, Director and Corporate Secretary, at (312) 930-3488, or Mr. Jim
Falvey, Director and Associate General Counsel, at (312) 930-3046.
Scott Gordon Jim McNulty
Chairman President and Chief Executive Officer
In connection with the proposed formation of the holding company and
related transactions, we will file with the Securities and Exchange
Commission, as soon as reasonably practicable, a registration statement on
SEC Form S-4. The registration statement will contain a joint proxy
statement/prospectus, which describes the proposed terms and conditions of
the holding company formation. Shareholders are encouraged to read the
registration statement after it is filed, and the joint proxy
statement/prospectus contained in the registration statement, because these
documents will contain important information about the holding company
formation. The registration statement, including the joint proxy
statement/prospectus, will be available for free, both on the SEC's Web
site (www.sec.gov) and on the Investor Information section of our Web site
at www.cme.com. Final materials will be mailed to all shareholders.
Dates Referenced Herein and Documents Incorporated by Reference