TIDMQPP
RNS Number : 9446E
Quindell PLC
09 November 2015
9 November 2015
Quindell Plc
("Quindell" or the "Company")
PROPOSED REDUCTION OF CAPITAL, RETURN OF CAPITAL, CONSOLIDATION
OF ORDINARY SHARES, CHANGE OF NAME AND NOTICE OF GENERAL
MEETING
Further to its announcement on 2 November 2015, Quindell
(AIM:QPP.L) announces today that it is posting an explanatory
circular ("Circular") to shareholders of the Company (and, for
information only, to holders of share options in the Company)
convening a General Meeting (defined below) and inviting
shareholders to approve resolutions to authorise a proposed
reduction of the Company's share capital ("Reduction of Capital")
and a proposed return of capital to shareholders ("Return of
Capital"). Subject to the Reduction of Capital and Return of
Capital being approved, shareholders will also be invited to
approve a resolution to authorise a proposed consolidation of the
Company's ordinary shares ("Consolidation"). In addition,
shareholders will also be invited to approve a resolution to change
the Company name to Watchstone Group plc. The Circular contains
details of the formal notice of the General Meeting to be held at
Park Plaza Westminster Bridge, 200 Westminster Bridge Road, London,
SE1 7UT at 10:00 a.m. on 26 November 2015 (the "General
Meeting").
The Circular, together with the notice of the General Meeting
will be made available on the Company's website at
www.quindell.com.
The Circular provides shareholders with information about the
background to, and reasons for, each of the Reduction of Capital,
Return of Capital and Consolidation and explains why the Directors
of the Company ("Board") consider these to be in the best interests
of the Shareholders and the Company as a whole and why the Board
unanimously recommend that shareholders vote in favour of the
requisite resolutions at the General Meeting, as they intend to do
in respect of their beneficial holdings. The Circular also contains
details of the requisite Court approval process pertaining timings
to the Reduction of Capital.
HIGHLIGHTS
-- The proposed Return of Capital to shareholders in December
2015 will be of approximately GBP414 million in aggregate.
-- The effect of the proposed Reduction of Capital and Return of
Capital will be that for every fully paid ordinary share of 15
pence each held at the Record Date (as defined in the Circular), a
shareholder will receive 90 pence in cash.
-- Trading in Ordinary Shares ex-entitlement to Capital Return
is expected to be on 18 December 2015 with the expected dispatch of
cheques to Shareholders or crediting of Shareholders' CREST
accounts (as appropriate) in respect of Return of Capital
entitlements, on or around 31 December 2015.
-- Conditional on the approval of the Reduction of Capital and
the Return of Capital at the General Meeting and by the Court, the
Consolidation would consolidate the Company's ordinary shares so
that every 10 ordinary shares with a nominal value of 1 penny
(after the Reduction in Capital) would become 1 ordinary share of
10 pence (such shares having the same rights and being subject to
the same restrictions (save as to nominal value) of the existing
ordinary shares).
-- Conditional on the approval of shareholders, the Company's
name will be changed to Watchstone Group plc.
-- Following the Return of Capital, in addition to its operating
businesses, the Company expects to retain approximately GBP90
million in cash. The Group has a further GBP55 million held in
escrow accounts relating to the Disposal and the Company retains
rights to contingent consideration estimated to have a current
value of approximately GBP39.6 million.
Expected Timetable of Events
Latest time and date for receipt 10:00 a.m. on
of Forms of Proxy Tuesday 24 November
2015
General Meeting 10:00 a.m. on
Thursday 26 November
2015
Court Hearing 10:00 a.m. on
Wednesday 16
December 2015
Record Date 6:00 p.m. on
Thursday 17 December
2015
Ordinary Shares commence trading 8:00 a.m. on
ex-entitlement to Return of Capital Friday 18 December
2015
Registration of Court Order and Friday 18 December
Effective Date of Return of Capital 2015
Consolidation Record Date 6:00 p.m. on
Friday 18 December
2015
Share Consolidation Effective 8:00 a.m. on
and Consolidated Ordinary Shares Monday 21 December
commence trading 2015
Dispatch of cheques to Shareholders On or around
or Shareholders' CREST accounts 31 December 2015
credited (as appropriate) in respect
of Return of Capital entitlements
Notes
These dates (except those of the receipt of Forms of Proxy and
of the General Meeting) are estimates only, being subject to
agreement of hearing dates with the Court. The timetable assumes
that the General Meeting is not adjourned as a result of there
being no quorum, or for any other reason. If there is an
adjournment, all subsequent dates are likely to be later than those
shown. Any changes will be notified to Shareholders by an
announcement on the Regulatory News Services of the London Stock
Exchange.
All references to time in this announcement are to London
time.
Peel Hunt LLP which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting as nominated
adviser to the Company in relation to the transaction referred to
in this announcement. The responsibilities of Peel Hunt LLP as the
Company's nominated adviser under the AIM Rules for Nominated
Advisers are owed solely to the London Stock Exchange and are not
owed to the Company or to any Director or to any other person.
Persons reading this announcement should note that Peel Hunt LLP
will not be responsible to anyone other than the Company for
providing the protections afforded to its clients or for advising
any other person on the arrangements described in this
announcement. Peel Hunt LLP has not authorised the contents of, or
any part of, this announcement and no liability whatsoever is
accepted by it for the accuracy of any information or opinion
contained in this announcement or for the omission of any
information.
For further information:
Quindell Plc Tel: 01489 864
200
Richard Rose, Non-executive
Chairman
Indro Mukerjee, Group Chief
Executive Officer
Stephen Joseph, Head of Investor
Relations
Tulchan Communications Tel: 020 7353 4200
Susanna Voyle
Charlotte Church
Peel Hunt LLP, Nominated Adviser Tel: 020 7418 8900
and broker
Dan Webster
1. Introduction
The Board today announces the process and anticipated timetable
for the repayment of approximately GBP414 million in aggregate
(assuming the exercise of in-the-money Options over 6,065,341
Ordinary Shares (or equivalent one off payments as described in
section 4 of Part 1 of this announcement) and that 884,770 Ordinary
Shares are issued as deferred consideration shares and settlement
shares prior to the Record Date) to Shareholders by way of a Return
of Capital.
This announcement explains the background to the Proposals and
how the Return of Capital is proposed to be effected. The effect of
the proposed Reduction of Capital and Return of Capital will be
that for every fully paid Ordinary Share held at the Record Date, a
Shareholder will receive 90 pence in cash. The expected date for
the Return of Capital through dispatch of cheques to Shareholders
of crediting of Shareholders' CREST accounts (as appropriate) is on
or around 31 December 2015. In addition, the Board announces a
proposed consolidation of Ordinary Shares, conditional on the
approval of the Reduction of Capital and the Return of Capital at
the General Meeting and by the Court.
The purpose of this announcement is to provide information about
the background to, and reasons for, the Reduction of Capital and
the Return of Capital, to explain why the Board considers the
Reduction of Capital and the Return of Capital are likely to
promote the success of the Company for the benefit of the
Shareholders as a whole and why the Board unanimously recommends
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting. Shareholders should note that, unless the
Resolutions are approved at the General Meeting (and the Court
approves the Reduction of Capital), the Reduction of Capital and
the Return of Capital will not take place. In addition, this
announcement contains details of a proposed consolidation of
Ordinary Shares, conditional on the approval of the Reduction of
Capital and the Return of Capital at the General Meeting and by the
Court and a proposed change of the Company name.
2. Background to and reasons for the Reduction of Capital and the Return of Capital
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:01 ET (07:01 GMT)
On 30 March 2015, the Company announced the proposed sale of its
Professional Services Division to Slater & Gordon (the
"Disposal") for an initial cash consideration of GBP637 million and
further contingent cash consideration to follow completion of the
sale ("Completion"). Following requisite approval from
shareholders, the Solicitors Regulation Authority and the Financial
Conduct Authority, Completion occurred on 29 May 2015.
As previously announced, the Company proposes to use part of the
proceeds of the Disposal to fund the Return of Capital to
Shareholders. The Company believes that the working capital to be
retained by the Company following the Return of Capital will be
sufficient to develop its business and fund future capital
expenditure. Further, and as detailed in Part 3 of this
announcement, the Company notes that the proposed Return of Capital
involves a legal process to be undertaken which ensures
Shareholders and creditors of the Company are adequately
protected.
The proposed Reduction of Capital will enable the Company to
make a Return of Capital to Shareholders of approximately GBP414
million in aggregate.
Following the Return of Capital, in addition to its operating
businesses, the Company expects to retain approximately GBP90
million in cash which the Company will hold in UK regulated banks
holding either AAA or AA credit ratings. The Group has a further
GBP55 million held in escrow accounts and, as previously detailed,
the Company retains the rights to contingent consideration in
relation to future receipts arising on noise induced hearing loss
("NIHL") cases which were current on the Disposal date. The Group
will receive 50% of the net after tax receipts (after allowing for
administrative costs) collected on these NIHL cases. The Company
has performed a valuation exercise and has determined that a
prudent estimate of the current value of the contingent
consideration is approximately GBP39.6 million.
3. The Reduction of Capital
Under the Companies Act 2006, a company may, with the sanction
of a special resolution and the confirmation of the Court, reduce
or cancel its existing share capital. It may apply the sums
resulting from such reduction in repaying holders of the relevant
shares the amounts paid up on the share capital which is reduced or
cancelled. This is the mechanism by which Shareholders holding
fully paid Ordinary Shares will receive 90 pence for each Ordinary
Share which they hold upon the Return of Capital taking place.
In seeking the Court's approval of the Reduction of Capital and
the Return of Capital, the Court will need to be satisfied that the
interests of the creditors (including contingent creditors) of the
Company, whose debts remain outstanding on the date on which the
Court Order is registered, will not be prejudiced by the proposed
Reduction of Capital. The Company will put in place such
arrangements as the Court considers appropriate to satisfy the
Court in this regard.
Shareholders should note that if, for any reason, the Court
declines to approve the Reduction of Capital, then the Return of
Capital will not take place.
Further details of the proposed Reduction of Capital can be
found in Part 3 of this announcement.
4. Share Option Plan
Should the Proposals be completed, the number of shares under,
and the exercise price of, Options under the Share Option Plan will
be adjusted to take account of the implementation of the Proposals.
It is intended that Optionholders will continue to hold Options
after implementation of the Proposals, which will (subject to the
paragraphs below) have a comparable commercial position to the
Options that they currently hold in terms of the option price and
the percentages of the revised issued share capital that is subject
to the Options.
Optionholders holding vested options will be invited to exercise
their Options prior to the Record Date. Shares acquired on the
exercise of Options prior to the Record Date will be subject to the
Proposals.
Should the Proposals be completed, following the Record Date,
the exercise price of Options under the Company Share Option Plan
will be reduced to take account of the Return of Capital as
follows:
-- Options with an exercise price of 33 pence shall have their
exercise price reduced by 32 pence, to 1 penny, being the new
nominal value following the Reduction of Capital and Return of
Capital. In addition, those Optionholders holding Options with an
exercise price of 33 pence will receive a one-off payment in cash
of 58 pence per share under Option (representing the difference
between 90 pence and 32 pence). Such payment will be subject to the
deduction of applicable tax and paid at the same time as the Return
of Capital;
-- Options with an exercise price of 68.65 pence shall have
their exercise price reduced by 67.65 pence, to 1 penny, being the
new nominal value following the Capital Reduction and Capital
Return. In addition, those Optionholders holding Options with an
exercise price of 68.65 pence will receive a one-off payment of
22.35 pence per share under Option (representing the difference
between 90 pence and 67.65 pence). Such payment will be subject to
the deduction of applicable tax and paid at the same time as the
Return of Capital;
-- Options with an exercise price of 240 pence shall have their
exercise price reduced by 90 pence, being the quantum of the Return
of Capital, to 150 pence; and
-- Options with an exercise price of 600 pence shall have their
exercise price reduced by 90 pence, being the quantum of the Return
of Capital, to 510 pence.
Following the Consolidation, Options will be further adjusted
such that the exercise price per share is increased by a factor of
10 and the number of shares subject to each Option will be reduced
by a factor of 10, each to reflect the 10 for 1 consolidation.
5. Share Consolidation
Conditional upon the approval of the Reduction of Capital and
the Return of Capital at the General Meeting and by the Court, the
Company proposes to consolidate its issued share capital so that
every 10 Existing Ordinary Shares with a nominal value of 1 penny
(after the effect of the Reduction of Capital) become 1 ordinary
share of 10 pence (the process being the "Consolidation" and the
shares being the "Consolidated Ordinary Share"). The Board
considers that the current issued share capital of the Company is
considerably higher than similar sized companies on AIM and
believes that this negatively affects investors' perception of the
Company. Accordingly, the Consolidation is being proposed in order
to reduce the number of ordinary shares that are in issue to a
level more in line with comparable AIM listed companies. The
Directors believe that the Consolidation may improve the liquidity
and marketability of the ordinary shares in the Company.
6. Change of Name
It is proposed that the name of the Company be changed to
Watchstone Group plc.
7. Taxation
For information regarding the tax position of the Proposals and
the Consolidation, please see Part 4 of this announcement.
8. Non-United Kingdom Shareholders
Shareholders who are not resident in the United Kingdom or who
are citizens, residents or nationals of other countries should
consult their professional advisers to ascertain whether the
Proposals or Consolidation will be subject to any restrictions or
require compliance with any formalities imposed by the laws or
regulations of, or any body or authority located in, the
jurisdiction in which they are resident or to which they are
subject. In particular, it is the responsibility of any Shareholder
not resident in the United Kingdom or a citizen, resident or
national of another country to satisfy himself as to full
observance of the laws of each relevant jurisdiction in connection
with the Proposals or Consolidation, including the obtaining of any
government, exchange control or other consent which may be
required, or the compliance with other necessary formalities
needing to be observed and the payment of any issue, transfer or
other taxes or duties in such jurisdiction.
The distribution of this announcement in certain jurisdictions
may be restricted by law. Persons into whose possession this
announcement comes should inform themselves about and observe any
such restrictions.
Shareholders who are not resident in the United Kingdom should
note that they should satisfy themselves that they have fully
observed any applicable legal requirements under the laws of their
relevant jurisdiction in relation to the Reduction of Capital,
Return of Capital or the Consolidation.
9. General Meeting
The Reduction of Capital, Return of Capital and Consolidation is
conditional upon, amongst other things, Shareholder approval being
obtained at the General Meeting. The General Meeting is to be held
at Park Plaza Westminster Bridge, 200 Westminster Bridge Road,
London, SE1 7UT at 10.00 a.m. on 26 November 2015, at which the
Resolutions will be proposed. Resolutions 1 and 2 are special
resolutions, meaning that for them to be passed 75% or more of
votes cast must be in favour. Resolution 3 is an ordinary
resolution, meaning that for it to be passed, members representing
a simple majority of the total voting rights of members must vote
in favour.
10. Recommendation
The Directors consider the Reduction of Capital, Return of
Capital, Consolidation and the proposed change of the Company name,
are likely to promote the success of the Company for the benefits
of the Shareholders as a whole. Accordingly, the Board unanimously
recommend that Shareholders vote in favour of the Resolutions, as
the Directors intend to do in respect of their beneficial
holdings.
Part 2
DEFINITIONS
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:01 ET (07:01 GMT)
The following definitions and technical terms apply throughout
this announcement, unless the context otherwise requires:
"AIM" the AIM market, being a market
of that name and operated by
the London Stock Exchange;
"Board" or "Directors" the board of directors of the
Company;
"CGT" taxation of chargeable gains;
"Chapter 1 ITA 2007" Chapter 1 of Part 13 of the
Income Tax Act 2007;
"Completion" completion of the disposal
of the Professional Services
Division
"Consolidation" the consolidation of the issued
share capital of the Company
so that every 10 ordinary shares
with a nominal value of 1 penny
(after the effect of the Reduction
of Capital) become 1 ordinary
share of 10 pence;
"Consolidated Ordinary ordinary shares of 10 pence
Share " each in the capital of the
Company as defined in Resolution
3 of the Notice;
"Consolidation Record 6.00pm on 18 December 2015;
Date"
"Court" the High Court of England and
Wales;
"Court Hearing" the hearing of the Company's
claim for the confirmation
by the Court of the Reduction
of Capital and the Return of
Capital;
"CTA 2010" the Corporation Tax Act 2010;
"Disposal" the sale of the Company's Professional
Services Division to Slater
& Gordon;
"Existing Ordinary as defined in Resolution 3
Shares" of the Notice;
"FCA" the Financial Conduct Authority;
"Form of Proxy" the form of proxy enclosed
with the Notice;
"FRC" the Financial Reporting Council;
"General Meeting" the general meeting of the
Company to be held at Park
Plaza Westminster Bridge, 200
Westminster Bridge Road, London,
SE1 7UT at 10:00 a.m. on 26
November 2015;
"Group" the Company and its subsidiaries
and subsidiary undertakings;
"HMRC" Her Majesty's Revenue and Customs;
"Notice" the notice set out at the end
of this document convening
the General Meeting;
"Notice of Intended a letter described as a "Notice
Claim" of Intended Claim" from a law
firm acting for a claimant
group suggesting that it intends
to commence an action against
the Company under the Financial
Services and Markets Act 2000;
"Optionholders" holders of Options;
"Options" options granted under the Company's
Share Option Plan as adopted
in December 2012;
"Ordinary Shares" ordinary shares of 15 pence
each in the capital of the
Company;
"Proposals" the Reduction of Capital and
the Return of Capital;
"Quindell" or "Company" Quindell Plc;
"Record Date" record date in relation to
the Reduction of Capital, being
6.00pm on the 17 December 2015;
"Reduction of Capital" the proposed reduction of the
Company's share premium account
by GBP349,707,542 and reduction
of the nominal value of the
Ordinary Shares from 15 pence
to 1 penny;
"Resolutions" the resolutions to approve
the Reduction of Capital, the
Return of Capital, the change
of the Company name and Consolidation,
to be proposed at the General
Meeting;
"Return of Capital" the proposed payment of capital
to Shareholders following the
proposed Reduction of Capital;
"SFO" the Serious Fraud Office;
"SFO Investigation" an investigation by the SFO
opened in August 2015 relating
to past business and accounting
practices at the Company;
"Shareholders" holders of Ordinary Shares;
"Share Option Plan" the Quindell Company Share
Option Plan; and
"Slater & Gordon" Slater & Gordon (UK) 1 Limited.
Part 3
Further Details of the proposed Return of capital
The Reduction of Capital
As discussed in section 3 of Part 1 of this announcement, in
seeking the Court's approval of the Reduction of Capital, the Court
is required to consider the protection of creditors (including
contingent creditors) of the Company, whose debts remain
outstanding on the date that the Reduction of Capital becomes
effective, to ensure that they are protected. Any such creditor
protection may include seeking the consent of the Company's
creditors to the Reduction of Capital or the provision by the
Company to the Court of an undertaking to deposit a sum of money
into a blocked account created for the purpose of discharging the
non-consenting creditors of the Company.
In addition, the Court is likely to consider the potential
shareholder claims and the SFO Investigation to which the Company
is subject when considering whether to approve the Reduction of
Capital. Details on the potential shareholder claims and the SFO
Investigation are set out below.
In view of the Court's considerations in giving its approval and
in consultation with professional advisors, the Board has
undertaken a thorough and extensive review of the Company's
liabilities (including contingent liabilities) and the potential
liabilities of the Company under the potential shareholder claims
and the SFO Investigation. The Board considers that the Company
will be able to satisfy the Court that, as at the date on which the
Court Order relating to the Reduction of Capital becomes effective,
the Company's creditors will be sufficiently protected.
The Company intends that an application will be made for the
Court to approve the Reduction of Capital promptly after the
General Meeting provided that the Resolutions have been passed. It
is anticipated that the initial directions hearing in relation to
the Reduction of Capital will take place on 4 December 2015, with
the final Court Hearing taking place on 16 December 2015 and the
Reduction of Capital becoming effective on 18 December 2015,
following the necessary registration of the Court Order at
Companies House. It is anticipated that Shareholders will be sent
cheques (or have Shareholders' CREST accounts credited (as
appropriate)) for the proceeds of the Return of Capital on or
around 31 December 2015.
SFO Investigation and potential shareholder claims
On 20 March 2014, the FRC launched a review of the 2012 report
and accounts of the Company. On 30 September 2014, the FRC extended
the scope of its review into certain aspects of the 2011 report and
accounts. On 24 June 2015, the Company announced that the FCA had
commenced an investigation in relation to the public statements
made regarding the financial accounts of the Company during 2013
and 2014. On 5 August 2015, the SFO informed the Company that it
had opened an investigation relating to business and accounting
practices at the Company. On the same date, the FRC advised the
Company that, in light of the positive actions taken by the
Directors in correcting the identified errors, amending accounting
policies and providing their undertakings, the FRC had closed its
review of the 2011 and 2012 report and accounts. On 18 August 2015,
the FCA announced that, in light of the above investigation by the
SFO it had decided to discontinue its own investigation with
immediate effect. Accordingly, the Company continues to co-operate
fully with the SFO Investigation which is now the only ongoing
investigation to which the Company is subject. Since the specific
focus of the SFO Investigation is currently unclear to the
Directors, it is not possible to determine whether the SFO will, in
due course, seek to pursue a prosecution of the Company and/or any
individuals, or whether the SFO will seek a resolution of its
investigation which does not involve a prosecution. Further, it is
not possible to determine whether any such prosecution (if pursued)
would be successful, or what the quantum of any fine or
confiscation imposed as a result of a successful prosecution might
be. However, the Company expects that it would have sufficient
assets to pay any fine that it considers to be reasonable (and
satisfy any ancillary orders) imposed on the Company by a court in
the event of a successful prosecution by the SFO.
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:01 ET (07:01 GMT)
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