Under the terms of the debt-for-equity exchange, #297 million of its financing
facilities and related obligations and certain contingent obligations (the "
Exchanged Debt") will be exchanged into new ordinary shares in the Company
ranking pari passu with its existing ordinary shares representing 95 per cent.
of the enlarged ordinary share capital of Jarvis plc. 4.75 per cent. of the
enlarged ordinary share capital would be retained by existing shareholders and
0.25 per cent. made available to existing warrant holders.
The Company has also agreed to use all reasonable endeavours to explore two
alternative structures to implement the transaction by way of a scheme of
arrangement under section 425 of the Companies Act 1985. Under the first,
certain businesses and assets would be transferred to a new company ("newco")
together with the Exchanged Debt which would be exchanged for 95 per cent. of
the share capital of newco. Existing shareholders and warrant holders would
receive the remaining five per cent. of newco's share capital and retain all the
existing share capital of Jarvis plc. The second structure would only apply if
existing shareholders did not approve resolutions proposed in connection with
the implementation of the debt-for-equity exchange. In that case, certain or
all of the business and assets of the Company would be transferred to a newco
wholly owned by the lenders of the Exchanged Debt. Either of the alternative
structures may also include a proposal to delist the ordinary shares of the
Company.
New equity raising
The proposed placing and open offer of #50 million to shareholders is planned to
be made on completion of the debt-for-equity exchange, with part of the net
proceeds being used to repay the #22.7 million Deutsche Bank revolving credit
facility. The open offer will be made to holders of the ordinary share capital
of the Company as enlarged by the debt-for-equity exchange. The subscribing
participants will hold 95% of the issued ordinary share capital of the Company
as further enlarged by the placing and open offer.
A cash out alternative will be made available by the underwriter to those
shareholders who do not wish to participate in the open offer, under which they
will receive 25p for each #1 of their equity subscription entitlement under the
open offer.
The Company has agreed extra costs and fees for implementation of the
restructuring, including a grant of warrants to Deutsche Bank entitling them to
subscribe for ordinary shares in the Company at the placing and open offer
strike price for three years from issue, and which will represent 15% of the
company's enlarged issued ordinary share capital following the placing and open
offer. Application will be made to list the warrants. Deutsche Bank will also
be granted an eighteen month right of first refusal to arrange any future debt
or equity raising for the Group.
THERE HAS BEENB CONSIDERABLE DEBATE ABOUT INTERPRETATION OF THE ABOVE BUT AS I SEE IT:-
-Dilution to 4.75%
-Then a £50M Placing/Open Offer with with preemption rights to the new shareholder base (including the converted banks) increasing the No. of shares 20 fold again. The price is 1.6p IN TOTAL for each existing share hold, and holders not wishing to participate will be offered 0.4p in lieu.
-We end up with a 'debt free' business with doubtful current trading 95.25% owned by the Banks, with further 15% dilution in respect of warrants issued to Deutsche Bank
Existing holders seem, to me, heavily disadvantaged if they don't participate, and the residual position, with Stock overhang from converted banks leave me unattracted personally but there are plenty who disagree.
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