TIDMDNLM
RNS Number : 6947E
Dunelm Group plc
12 February 2015
12 February 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR THE
REPUBLIC OF SOUTH AFRICA.
DUNELM GROUP PLC
("Dunelm" or the "Company")
POSTING OF CIRCULAR RELATING TO PROPOSED RETURN OF CAPITAL
INCLUDING NOTICE OF GENERAL MEETING ON 2 MARCH 2015
Dunelm announces today the posting of a circular (the
"Circular") to Shareholders containing details of the return of
capital of 70 pence per Ordinary Share by way of a B/C share
scheme, which was announced at the time of the Company's interim
results on 11 February 2015. The total value of the return of
capital will equate to approximately GBP142 million and will be
paid to shareholders on the register at 6.00 pm on 2 March 2015.
The return of capital is in addition to an interim dividend of 5.5
pence per share to be paid to shareholders on the register at 6.00
pm on 13 March 2015. The Circular includes notice of a General
Meeting to approve the resolution necessary to implement the
proposed return of capital, which will be held at the Dunelm Store
Support Centre, Watermead Business Park, Syston Leicestershire, LE7
1AD at 10.00 am on 2 March 2015.
Copies of the Circular will be available for inspection during
normal business hours on any weekday (public holidays excepted) at
the offices of Allen & Overy LLP, One Bishops Square, London E1
6AD and at the registered office of Dunelm from the date of the
Circular up to and including the date of the General Meeting and
will also be available for inspection for at least 15 minutes
before and during the General Meeting. A copy of the Circular will
also shortly be available on the Company's website at:
www.dunelm.com. A copy of the Circular has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at: www.Hemscott.com/nsm.do.
It should be noted that no prospectus is required, in accordance
with the prospectus directive (Directive 2003/71/EC), to be
published in connection with the proposed issue of B and C
Shares.
GENERAL MEETING AND RETURN OF CAPITAL - EXPECTED TIMETABLE OF
PRINCIPAL EVENTS
Latest time and date for 10.00 am 26 February 2015
receipt of Form of Proxy
or CREST Proxy Instruction
for General Meeting
----------------------------- --------------------------
General Meeting 10.00 am 2 March 2015
----------------------------- --------------------------
Ordinary Share Record 6.00 pm 2 March 2015
Date for participation
in the Return of Capital
----------------------------- --------------------------
Latest time for receipt 4.30 pm 9 March 2015
of Election Forms from
certificated Shareholders
and TTE Instructions from
CREST holders in relation
to the Share Alternatives
----------------------------- --------------------------
B Share Dividend declared by 10 March 2015
and conversion of B Shares
in respect of which the
B Share Dividend is payable
into Deferred Shares
----------------------------- --------------------------
Purchase Offer made By 11 March 2015
----------------------------- --------------------------
Dispatch of cheques or By 24 March 2015
mandated bank accounts
or CREST accounts credited
(as appropriate) in respect
of the B Share Dividend
and the proceeds under
the Capital Option
----------------------------- --------------------------
INTERIM DIVIDEND- EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Interim (ordinary) dividend 13 March 2015
record date
---------------------------- -----------------
Dispatch of cheques or by 10 April 2015
mandated bank accounts
credited (as appropriate)
in respect of the interim
ordinary dividend
---------------------------- -----------------
All times referred to are London times unless otherwise
stated.
Proposed Return of Capital to Shareholders of 70 pence per
Ordinary Share
1. Introduction
As announced on 11 February 2015 the Board is proposing to
return approximately GBP142 million of capital to Shareholders
(equivalent to 70 pence per Ordinary Share). The background to and
reasons for the Return of Capital are detailed in paragraph 2
below.
If the Return of Capital is approved at the General Meeting,
Shareholders on the register at the close of business on 2 March
2015 will be sent a payment of 70 pence per Ordinary Share by 24
March 2015.
The precise aggregate amount of the Return of Capital will
depend on the number of Ordinary Shares in issue at 6.00 pm on 2
March 2015. However, based on the number of Ordinary Shares in
issue on 11 February 2015 (202,432,085, not including 401,846
Ordinary Shares held by the Company in treasury, which will not
participate), the Return of Capital would amount to approximately
GBP142 million in total.
The purpose of this announcement is to provide you with
information relating to the Return of Capital and to explain the
reasons for it and why the Board considers it to be in the best
interests of Dunelm and Shareholders as a whole.
The Return of Capital requires the approval of Shareholders
which will be sought at the General Meeting to be held on 2 March
2015.
2. Background to and reasons for the Return of
Capital
Dunelm has consistently generated significant
cashflow and has built up material cash balances
in recent years. Dunelm returned GBP42.2 million
of surplus cash to its shareholders in 2010, GBP65.8
million in 2012 and GBP50.7 million in 2013, and
has continued to generate further cash balances
since then in the ordinary course of its trading
activities. In the financial year ended 28 June
2014, the Group's average net cash position was
GBP48.3 million, with net cleared funds at the
end of the period being GBP46.8 million. During
the half year ended 27 December 2014, daily average
cleared funds across the half year amounted to
GBP49.4m, with net cleared funds at the end of
the half year of GBP61.4 million. In the absence
of the proposed Return of Capital the Board would
expect the Group's positive cash position to continue
to increase further.
The Board has also reviewed its policy on capital
structure and dividends. The original policy was
established at the time of the floatation of the
Company and in the Board's opinion has ceased
to reflect the scale of the business and its consistent
track record of cash generation over many years.
Accordingly, the Board has determined that, henceforward,
the Group will operate with a modest amount of
leverage such that net debt, measured as daily
average liquid funds over the most recent six
month period, should fall within the range of
0.25 to 0.75 times last 12 months EBITDA. Furthermore,
the Board intends that ordinary dividend cover
should in future be between 2.0 and 2.5 times
on a full year basis. The Board currently anticipates
holding cover towards the middle of this range.
In order to fund the intended ongoing debt, the
Group has entered into an arrangement with a syndicate
of three major banks for the provision of a GBP150
million revolving credit facility, expiring on
9 February 2020.
Reflecting these policies the Company will pay
an interim dividend of 5.5 pence per share (a
10 per cent. increase year on year) payable on
10 April 2015 to Shareholders on the register
at 13 March 2015, and the Board proposes, subject
to Shareholder approval, to make a Return of Capital
to Shareholders on the terms set out in the Circular.
3. Summary of the proposals
The Board is mindful of the fact that it has a
range of institutional, corporate and individual
shareholders and, as such, proposes a flexible
mechanism by which the capital is returned. As
with the return of capital in 2012, and having
considered the available options, the Board is
proposing that the Return of Capital is effected
via a B/C share scheme under which Shareholders
will receive a bonus issue of a newly created
class of shares, either B Shares or C Shares,
pro-rata to their holding of Ordinary Shares.
This method of return has been chosen as it allows
Shareholders (save for certain Overseas Shareholders)
to be treated equally irrespective of the size
of their investment in Dunelm and gives each such
Shareholder flexibility to elect to receive all
or part of the Return of Capital in a dividend
form, if preferred. Whichever alternative is chosen,
the Return of Capital will amount to 70 pence
per Ordinary Share and, based upon the number
of Ordinary Shares in issue (excluding any Ordinary
Shares held by Dunelm in treasury, which will
not participate in the Return of Capital), the
Return of Capital will total approximately GBP142
million.
4. Return of Capital
4.1 B Shares/C Shares
Under the Return of Capital, Shareholders will
receive a bonus issue of:
One B Share or One C Share for each Ordinary Share
held on the Ordinary Share Record Date.
At the closing middle-market price of 929.5 pence
per Ordinary Share on 11 February 2015 (being
the latest practicable date prior to the publication
of the Circular), the proposed Return of Capital
to Shareholders represents approximately 7.55
per cent. of Dunelm's market capitalisation at
that date and 70 pence per Ordinary Share.
4.2 Share Alternatives
Under the B/C Share Scheme, Shareholders (other
than certain Overseas Shareholders) will have
the following alternatives. The two alternatives
will each have different UK tax consequences.
Shareholders who are in any doubt as to their
tax position should consult an appropriate professional
adviser.
In the event that a Shareholder fails to make
a valid election for one or more of the alternatives,
such Shareholder will be deemed (unless the Company
determines otherwise) to have elected for the
Income Option in respect of his entire holding.
Except in the case of an Overseas Shareholder
in a Restricted Territory, a Shareholder may elect
to receive any one of, or a combination of, the
two Share Alternatives set out below. The Capital
Option is not available to Overseas Shareholders
in Restricted Territories who are only entitled
to elect for the Income Option.
If a Shareholder does not properly complete and
return the Election Form or if they are a CREST
holder and do not send a valid TTE Instruction,
unless the Company determines otherwise, they
will be deemed to have elected for the Income
Option in respect of all of their entitlement.
Alternative 1: Income Option
Shareholders who choose this alternative (or are
deemed to have chosen this alternative) will receive
one B Share for each corresponding Ordinary Share
held at the Ordinary Share Record Date. Shareholders
will receive a single dividend of 70 pence per
B Share in respect of those B Shares. A Shareholder's
aggregate entitlement will be rounded down to
the nearest penny. It is expected that this will
be declared by 10 March 2015. Following the declaration
of the B Share Dividend, the B Shares will be
automatically converted into Deferred Shares.
The Deferred Shares will not be listed, and will
carry extremely limited rights as Shareholders
will have already received a cash pay-out in relation
to those shares. It is intended that the Deferred
Shares will be purchased by UBS under the Purchase
Offer and subsequently purchased from UBS by the
Company, in each case for an aggregate sum of
1 penny, and cancelled.
It is expected that the B Share Dividend will
be treated as income for United Kingdom tax purposes.
It is also expected that Shareholders who choose
(or are deemed to have chosen) this alternative
will have their cheques dispatched or mandated
bank accounts credited (as appropriate) by 24
March 2015.
Alternative 2: Capital Option
Shareholders who choose this alternative will
receive one C Share for each corresponding Ordinary
Share held at the Ordinary Share Record Date.
It is intended that such C Shares will be purchased
by UBS as principal under the Purchase Offer by
11 March 2015 for 70 pence per C Share, free and
clear from all dealing expenses and commissions,
with the proceeds of such sale being sent to relevant
Shareholders by 24 March 2015 and it is intended
that any such C Shares purchased by UBS would
in turn be purchased from UBS by the Company and
then cancelled.
It is expected that the proceeds from this sale
will be treated as capital for United Kingdom
tax purposes.
The making of the Purchase Offer is subject to
certain conditions and Shareholders' attention
is drawn to paragraph 2 of Part 10 of the Circular,
where the Purchase Offer Deed is summarised.
It is also expected that Shareholders who choose
this alternative will have their cheques dispatched
or CREST accounts credited (as appropriate) by
24 March 2015.
4.3 Information Relating to the B Shares, C Shares
and Deferred Shares
None of the B Shares, C Shares or Deferred Shares
will be admitted to the Official List or to trading
on the London Stock Exchange's main market for
listed securities, nor will the B Shares, C Shares
or Deferred Shares be listed or admitted to trading
on any other recognised investment exchange.
The B Shares, C Shares and Deferred Shares will
have limited rights. The rights and restrictions
attached to the B Shares, C Shares and Deferred
Shares are set out more fully in Parts 5, 6 and
7 of the Circular respectively.
5. General Meeting
Shareholder approval is being sought for the proposed
Return of Capital.
A General Meeting has been convened for 10.00
am on 2 March 2015 for this purpose, notice of
which, together with a Form of Proxy to be used
in connection with the General Meeting, will be
sent out with the Circular.
The General Meeting is being convened on not less
than 14 days' clear notice, in accordance with
the Company's articles of association and the
authority granted by the Shareholders at the Company's
last annual general meeting, to ensure that the
Return of Capital is effected as soon as possible.
6. Summary explanation of the Resolution to be
put to the General Meeting
The Return of Capital is conditional upon the
Resolution being passed. The Resolution is a special
resolution and will be passed if at least 75 per
cent. of the votes cast are in favour.
The Resolution proposes to:
* authorise the Directors to:
(i) capitalise a sum not exceeding GBP2,028.34
standing to the credit of the Company's share
premium account to pay up in full the B Shares
and C Shares; and
(ii) allot and issue B Shares and C Shares up
to an aggregate nominal amount of GBP2,028.34
to Shareholders on the basis of one B Share or
one C Share for each Ordinary Share held at 6.00
pm on 2 March 2015. The authority granted to the
Directors will expire on the earlier of the conclusion
of the next annual general meeting of the Company
after the passing of this Resolution and 31 December
2015; and
(iii) carry out any other act necessary in relation
to the Return of Capital; and
* approve the terms of the Option Agreement to be
entered into between the Company and UBS described in
paragraph 2 of Part 10 of the Circular; and
* adopt new articles of association that incorporate
the terms of the B Shares and C Shares and the
Deferred Shares.
If the Resolution is not passed at the General
Meeting, the Return of Capital will not proceed
and any Election Forms received by Equiniti will
lapse and shall have no effect.
The Return of Capital will have no effect on the
number of Ordinary Shares held by any Shareholder
and accordingly on the voting share capital of
the Company. As a result, the provisions of Rule
9 of the Takeover Code do not apply to the Return
of Capital and no approval is being sought from
Shareholders for a waiver of these provisions
in the context of the Return of Capital.
7. United Kingdom taxation in relation to the
Return of Capital
A tax liability may arise for Shareholders resident
in the UK (for tax purposes) in respect of the
capital and/or income received under the Return
of Capital depending upon a Shareholder's individual
circumstances. A guide to certain UK tax consequences
of the Return of Capital under current UK law
for United Kingdom Shareholders is set out in
the Circular.
8. Overseas Shareholders
The attention of those Shareholders who are not
resident in the United Kingdom or who are citizens,
residents or nationals of other countries is drawn
to the information set out in paragraph 6 of Part
3 of the Circular.
In particular, Overseas Shareholders should note
that, by making a valid election for the Capital
Option, such Shareholders will be deemed to represent,
warrant, undertake and/or agree (as applicable)
in the terms set out in paragraph 6 of Part 3
of the Circular. Furthermore, Overseas Shareholders
with a registered address in a Restricted Territory
will be deemed to have elected for the Income
Option in respect of all of their B/C Share Entitlement.
The tax consequences of the B/C Share Scheme may
vary for Overseas Shareholders and, accordingly,
Overseas Shareholders should consult their own
independent professional adviser without delay.
9. Share Option Schemes
Holders of options under the Share Option Schemes
are not the beneficial owners of Ordinary Shares
and so will not be entitled to participate in
the Return of Capital.
In previous returns of capital, no adjustments
have been made to options. However, in view of
the size of the Return of Capital on this occasion
it is intended that appropriate adjustments will
be made to options outstanding under the Share
Option Schemes in accordance with the rules of
the relevant scheme, in order to maintain the
holders' economic position following the completion
of the Return of Capital. Details of the adjustments
will be sent to holders of options under the Share
Option Schemes in due course.
10. Interim announcement and no significant change For information purposes, Shareholders' attention
is drawn to the announcement of the interim results
of the Company for the period to 27 December
2014 which was published on 11 February 2015
and which can be found at www.dunelm.com.
The Directors are not aware of any significant
change in the financial or trading position of
the Group since the date of the announcement
of the interim results
11. Action to be taken
General meeting
A Form of Proxy for use at the General Meeting
will be sent to Shareholders with the Circular.
Whether or not the Shareholder intends to be present
at the meeting, they are requested to complete,
sign and return the Form of Proxy to Equiniti
Limited, Aspect House, Spencer Road, Lancing,
West Sussex BN99 6DA, as soon as possible but
in any event so as to be received no later than
10.00 am on 26 February 2015.
Shareholders who hold their Ordinary Shares in
CREST may appoint a proxy by completing and transmitting
a CREST Proxy Instruction to Equiniti so that
it is received no later than 10.00 am on 26 February
2015.
Completion and return of the Form of Proxy or
the transmission of a CREST Proxy Instruction
will not preclude Shareholders from attending
and voting in person at the General Meeting should
they so wish.
B/C Share Scheme
The Circular contains instructions on the completion
of the Election Form sent to Shareholders with
the Circular if their shares are in certificated
form, or if their shares are held in uncertificated
form (that is in CREST), how to make their election
through CREST. The Election Form must be received
or the TTE Instruction must be sent through CREST
as soon as possible but in any event so as to
be received no later than 4.30pm on Monday 9 March
2015.
13. Recommendation
In the opinion of the Board, which has received
financial advice from UBS, the Return of Capital
and the Resolution to be proposed at the General
Meeting are in the best interests of Shareholders
as a whole. In providing advice to the Directors,
UBS has relied upon the Directors' commercial
assessment of the Return of Capital.
Accordingly the Board unanimously recommends that
you vote in favour of the Resolution to be proposed
at the General Meeting as the Directors intend
to do in respect of their beneficial holdings
amounting to 63,005,738 Ordinary Shares in aggregate,
representing approximately 31.1 per cent. of the
current voting share capital of Dunelm.
14. Shareholders' elections
The Board makes no recommendation to Shareholders
in relation to elections for the B/C Share Scheme
itself. Shareholders need to take their own decision
in this regard and are recommended to consult
their own independent professional adviser.
Terms used in this announcement shall have the
meanings given to them in the Circular and are
incorporated into this announcement by reference.
For further information, please contact:
Dunelm Group plc
Will Adderley, Chief
Executive
David Stead, Finance
Director 0116 2644 356
MHP Communications
John Olsen
Simon Hockridge
Naomi Lane 020 3128 8100
Equiniti Shareholder 0871 384 2919 (from inside
helpline the UK)
+44 121 415 0263 (from outside
the UK)
Shareholder helpline available between the hours
of 8.30 am and 5.30 pm Monday to Friday (except
UK public holidays). Please note that calls to
the helpline may be recorded or monitored. Calls
to 0871 384 2919 cost 8 pence per minute (excluding
VAT) plus network extras. Different charges may
apply to calls from mobile telephone. Calls from
outside the UK will be charged at applicable
international rates.
Please note that for legal reasons the Shareholder
helpline will only be able to provide information
contained in this announcement, the Circular
and the Election Form and will be unable to give
advice on the merits of the B/C Share Scheme,
the Share Alternatives or to provide financial,
legal or tax advice.
This announcement does not constitute an offer
to sell or the solicitation of an offer to buy
any security, nor the solicitation of any vote
or approval in any jurisdiction, nor shall there
be any sale, issuance or transfer of the securities
referred to in any jurisdiction in contravention
of applicable law.
No application will be made to the UK Listing
Authority or to the London Stock Exchange for
any of the B Shares, C Shares or Deferred Shares
to be admitted to the Official List or to trading
on the London Stock Exchange's main market for
listed securities, nor will the B Shares or the
C Shares or the Deferred Shares be admitted to
trading on any other recognised investment exchange.
None of the B Shares, the C Shares or the Deferred
Shares have been or will be registered under
the US Securities Act or the state securities
laws of the United States and none of them may
be offered or sold in the United States unless
pursuant to a transaction which has been registered
under the US Securities Act and/or relevant state
securities laws or which is not subject to the
registration requirements of the US Securities
Act or such laws, either because of an exemption
therefrom or otherwise.
None of the B Shares, the C Shares or the Deferred
Shares or this announcement or the Circular has
been approved, disapproved or otherwise recommended
by any US federal or state securities commission
or other regulatory authority or any non-US securities
commission or regulatory authority nor have any
such authorities confirmed the accuracy or determined
the adequacy of this announcement or the Circular.
Any representation to the contrary is a criminal
offence in the United States.
This announcement includes forward-looking statements
concerning the Group. Forward-looking statements
are based on current expectations and projections
about future events. These forward-looking statements
are subject to risks, uncertainties and assumptions
about the Group. The Group undertakes no obligation
to update publicly or revise any forward-looking
statements, whether as a result of new information,
future events or otherwise save to the extent
required in accordance with the Company's continuing
obligations under the Listing Rules, the Disclosure
and Transparency Rules, applicable laws and regulations.
UBS Limited is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority
and is acting as financial adviser to Dunelm
in connection with the Return of Capital and
for no one else and will not be responsible to
anyone other than Dunelm (whether or not a recipient
of this announcement or the Circular) for providing
the protections afforded to clients of UBS Limited
nor for providing advice in relation to the proposals
described in this announcement or the Circular
or any other matter referred to in this announcement
or the Circular. Persons other than Dunelm are
recommended to seek their own financial and professional
advice.
Apart from the responsibilities and liabilities,
if any, which may be imposed on UBS Limited by
the FSMA or the regulatory regime established
thereunder, UBS Limited accepts no responsibility
or liability whatsoever for the contents of this
announcement or the Circular or for any other
statement made or purported to be made in connection
with the Company, the proposed Return of Capital
or the Resolutions. UBS Limited accordingly disclaims
all and any responsibility or liability whether
arising in tort, contract or otherwise (save
as referred to above) which it might otherwise
have in respect of this announcement, the Circular
or any such statement.
This announcement has been issued by, and is the sole
responsibility of, the Company.
Name of authorised Company official responsible for making this
notification:
Dawn Durrant, Company Secretary
This information is provided by RNS
The company news service from the London Stock Exchange
END
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