RNS Number:1681B
Brian Kingham
31 July 2007
Not for release, publication or distribution, in whole or in part, in, into or
from the United States, Canada, Australia, Japan or any other jurisdiction where
to do so would constitute a violation of the relevant laws of such jurisdiction.
ANNOUNCEMENT
For immediate release
31 July 2007
RECOMMENDED CASH OFFER FOR RELIANCE SECURITY GROUP PLC BY RELIANCE EXECUTIVE
LIMITED
Summary of the Offer
* The Board of Reliance Executive and the Independent Reliance Directors are
delighted to announce that they have reached agreement on the terms of a
recommended offer to be made by Reliance Executive for the entire issued and
to be issued share capital of Reliance, other than an aggregate of 15,108,564
Reliance Shares (representing approximately 70 per cent. of the entire
existing issued share capital of Reliance) held by Brian Kingham and the
Brian Kingham Settlements.
* Independent Reliance Shareholders who accept the Offer, which will be made
wholly in cash, will be entitled to receive 916 pence for each Reliance
Share. The Offer values the entire existing issued share capital of Reliance
at approximately #197 million.
* The Offer represents a premium of approximately 28 per cent. to the Closing
Price of 715 pence for each Reliance Share on 16 April 2007, being the last
business day prior to the commencement of the Offer Period.
* The consideration payable under the Offer will be financed through facilities
made available by Barclays and RBS.
* Reliance Executive (an indirect and wholly-owned subsidiary of Reliance
Corporation Group) is a recently incorporated private limited company
established for the purposes of making the Offer. The ordinary share capital
of Reliance Corporation is held 100 per cent. by Brian Kingham.
* The directors of Reliance Executive are Brian Kingham and Neil French. It is
intended that following the Offer becoming or being declared unconditional in
all respects, the Management Team (comprising Julian Nicholls, Mark Harrison
and Jeremy Simon) will remain in their present positions and participate in
various incentive arrangements of the Reliance Corporation Group. JPMorgan
Cazenove considers the terms of the arrangements between the Management Team
and Reliance Corporation Group to be fair and reasonable so far as
Independent Reliance Shareholders are concerned.
* Reliance Executive has received an irrevocable undertaking from Artemis
Investment Management Limited to accept the Offer and vote in favour of
Resolution 2 to be proposed at the EGM in respect of its entire holding of
Reliance Shares (representing approximately 4.8 per cent. of the entire
existing issued share capital of Reliance and approximately 16 per cent. of
the Reliance Shares to which the Offer relates).
* The conditions to and certain terms of the Offer are set out in the attached
Announcement, together with certain information on Reliance and on Reliance
Executive.
* This summary should be read in conjunction with, and is subject to, the full
text of the following Announcement. Appendix I to the Announcement contains
the conditions to, and certain further terms of, the Offer. Appendix II to
the Announcement contains the bases and sources of certain information used
in this summary and in the following Announcement. Appendix III to the
Announcement contains details of the irrevocable undertakings received by
Reliance Executive. Appendix IV to the Announcement contains details of
interests in certain Reliance Shares. Appendix V to the Announcement contains
definitions of the terms used in this summary and the following Announcement.
Commenting on the Offer, Brian Kingham, Chairman of Reliance Executive, said:
"I am delighted to have reached agreement with the Independent Reliance
Directors on the terms of an offer for the Reliance Shares held by the
Independent Reliance Shareholders. I look forward to working with the Management
Team in the private arena to realise the full potential of the business over the
long-term. The Offer has been unanimously recommended by the Independent
Reliance Directors and represents an attractive opportunity for the Independent
Reliance Shareholders to whom it is extended to realise their investment".
Commenting on the Offer, Nigel Stapleton, Chairman of the Independent Reliance
Directors committee, said:
"The Independent Reliance Directors have given careful consideration to the
proposal received from Brian Kingham. We believe the Offer is full and fair and
pitched at an attractive premium to the company's share price. Taking also into
account Mr Kingham's clear long-term commitment to owning and running Reliance
and his commitment to respect the employment rights, including pension rights,
of all Reliance employees, we are happy to recommend the Offer to shareholders".
Enquiries:
Reliance Executive Tel: + 44 (0) 207 730 9901
Brian Kingham
Neil French
Hawkpoint Tel: + 44 (0) 207 665 4500
Paul Baines
Chris Robinson
Joseph Ayala
Reliance Tel: + 44 (0) 1895 205 000
Nigel Stapleton
JPMorgan Cazenove Tel: + 44 (0) 207 588 2828
Malcolm Moir
Julian Cazalet
The Offer Document, the Form of Acceptance and the Form of Proxy will be posted
to Independent Reliance Shareholders as soon as practicable and, in any event,
within 28 days of this Announcement, other than to Independent Reliance
Shareholders resident in a Restricted Jurisdiction.
The Reliance Executive Directors accept responsibility for the information
contained in this Announcement other than: (i) the information relating to the
Reliance Group, the Reliance Directors and their immediate families, related
trusts and connected persons; (ii) the recommendations and opinions of the
Independent Reliance Directors relating to the Offer; (iii) the information
relating to the Management Team, their immediate families, related trusts and
connected persons; and (iv) the information relating to Brian Kingham his
immediate family, related trusts, connected persons and the Brian Kingham
Settlements. To the best of the knowledge and belief of the Reliance Executive
Directors (who have taken all reasonable care to ensure that such is the case),
the information contained in this Announcement for which they are responsible is
in accordance with the facts and does not omit anything likely to affect the
import of such information.
The Reliance Directors accept responsibility for the information contained in
this Announcement relating to the Reliance Group, the Reliance Directors, their
immediate families, related trusts and connected persons (other than the
recommendation(s) and opinions of the Independent Reliance Directors relating to
the Offer, for which only the Independent Reliance Directors accept
responsibility as set out below and other than the information contained in this
Announcement relating to the Management Team, their immediate families, related
trusts and connected persons for which only the Management Team accept
responsibility as set out below and other than the information relating to Brian
Kingham, his immediate family, related trusts, connected persons and the Brian
Kingham Settlements for which only Brian Kingham accepts responsibility as set
out below). To the best of the knowledge and belief of the Reliance Directors
(who have taken all reasonable care to ensure that such is the case), the
information contained in this Announcement for which they are responsible is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
The Independent Reliance Directors accept responsibility for the recommendation
and opinions of the Independent Reliance Directors relating to the Offer. To the
best of the knowledge and belief of the Independent Reliance Directors (who have
taken all reasonable care to ensure that such is the case), the information
contained in this Announcement for which they are responsible is in accordance
with the facts and does not omit anything likely to affect the import of such
information.
The members of the Management Team accept responsibility for the information
contained in this Announcement relating to the Management Team, their immediate
families, related trusts and connected persons. To the best of the knowledge and
belief of the Management Team (who have taken all reasonable care to ensure that
such is the case), the information contained in this Announcement for which they
are responsible is in accordance with the facts and does not omit anything
likely to affect the import of such information.
Brian Kingham accepts responsibility for the information contained in this
Announcement relating to himself, his immediate family, related trusts,
connected persons and the Brian Kingham Settlements. To the best of the
knowledge and belief of Brian Kingham (who has taken all reasonable care to
ensure that this is the case) the information contained in this Announcement for
which he is responsible is in accordance with the facts and does not omit
anything likely to affect the import of such information.
Hawkpoint, which is authorised and regulated in the United Kingdom by the
Financial Services Authority is acting for Reliance Executive and no one else in
connection with the Offer and will not be responsible to anyone other than
Reliance Executive for providing the protections afforded to clients of
Hawkpoint or for providing advice in connection with the Offer.
JPMorgan Cazenove, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Reliance and no one
else in connection with the Offer and will not be responsible to anyone other
than Reliance for providing the protections afforded to clients of JPMorgan
Cazenove nor for providing advice in relation to the Offer.
This Announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities. The Offer will be made solely by means of the
Offer Document which will contain the full terms and conditions of the Offer and
details of how the Offer may be accepted, the Form of Acceptance (in respect of
certificated Reliance Shares) and a notice to be published in the London
Gazette.
Unless otherwise determined by Reliance Executive and permitted by applicable
law and regulation, the Offer will not be made, directly or indirectly, in or
into, or by the use of the mails or by any means or instrumentality (including,
without limitation, telephonically or electronically) of interstate or foreign
commerce, or any facility of a national securities exchange, of a Restricted
Jurisdiction (including the United States, Canada, Australia or Japan) and the
Offer will not be capable of acceptance by any such use, means, instrumentality
or facility or from within a Restricted Jurisdiction. Accordingly, copies of
this Announcement are not being, and must not be, directly or indirectly, mailed
or otherwise forwarded, distributed or sent in or into or from a Restricted
Jurisdiction and persons receiving this Announcement (including, without
limitation, custodians, nominees and trustees) must not mail or otherwise
forward, distribute or send it in or into or from a Restricted Jurisdiction.
Doing so may render invalid any purported acceptance of the Offer. The
availability of the Offer to persons who are not resident in the United Kingdom
may be affected by the laws of the relevant jurisdictions. Persons who are not
resident in the United Kingdom should inform themselves about, and, observe any
applicable requirements.
Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
"interested" (directly or indirectly) in 1% or more of any class of "relevant
securities" of Reliance, all "dealings" in any "relevant securities" of Reliance
(including by means of an option in respect of, or a derivative referenced to,
any such "relevant securities") must be publicly disclosed by no later than 3.30
p.m. on the business day following the date of the relevant transaction. This
requirement will continue until the date on which the Offer becomes, or is
declared, unconditional as to acceptances, lapses or is otherwise withdrawn or
on which the "offer period" otherwise ends. If two or more persons act together
pursuant to an agreement or understanding, whether formal or informal, to
acquire an "interest" in "relevant securities" of Reliance, they will be deemed
to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant
securities" of Reliance by Reliance Executive or by any its "associates", must
be disclosed by no later than 12.00 p.m. on the business day following the date
of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any agreement
to purchase, option in respect of, or derivative referenced to, securities.
Terms in quotations marks are defined in the Code, which can also be found on
the Panel's website. If you are in any doubt as to the application of Rule 8 of
the Code to you, please contact an independent financial adviser authorised
under the Financial Services and Markets Act 2000 (as amended), consult the
Panel's website or contact the Panel on telephone number +44 (0) 20 7382 9026 or
fax +44 (0) 20 7638 1554. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.
If you are in any doubt about the action you should take, you are recommended to
seek your own personal financial advice immediately from your stockbroker, bank
manager, solicitor, accountant or independent financial adviser authorised under
the Financial Services and Market Act 2000 (as amended) if you are resident in
the United Kingdom or, if not, from another appropriately authorised independent
financial adviser.
Copies of this Announcement can be found at Reliance's website at
www.reliancesecurity.co.uk.
Not for release, publication or distribution, in whole or in part, in, into or
from the United States, Canada, Australia, Japan or any other jurisdiction where
to do so would constitute a violation of the relevant laws of such jurisdiction.
ANNOUNCEMENT
For immediate release
31 July 2007
RECOMMENDED CASH OFFER FOR RELIANCE SECURITY GROUP PLC BY RELIANCE EXECUTIVE
LIMITED
1. Introduction
On 17 April 2007, Brian Kingham, the Chairman of Reliance, announced that
he was at a very preliminary stage of considering the possibility of making
an offer for the issued share capital of Reliance.
The Board of Reliance Executive (an indirect and wholly-owned subsidiary of
Reliance Corporation), which has been advised by Hawkpoint, announces today
that it has reached agreement with the Independent Reliance Directors on
the terms of a recommended cash offer to be made by Reliance Executive for
the entire issued and to be issued ordinary share capital of Reliance,
other than an aggregate of 15,108,564 Reliance Shares (representing
approximately 70 per cent. of the entire existing issued share capital of
Reliance) held by Brian Kingham and the Brian Kingham Settlements.
Independent Reliance Shareholders who accept the Offer, which will be made
wholly in cash, will be entitled to receive 916 pence for each Reliance
Share. The Offer values the entire existing issued share capital of
Reliance at approximately #197 million.
The formal Offer will be set out in the Offer Document, which is expected
to be dispatched to Independent Reliance Shareholders as soon as is
practicable following the release of this Announcement.
2. The Offer
Under the Offer, Reliance Executive will offer to acquire all of the
Reliance Shares to which the Offer relates, on the terms and subject to the
conditions set out or referred to in Appendix I to this Announcement, on
the following basis:
for each Reliance Share 916 pence in cash
The Offer represents:
- a premium of approximately 28.0 per cent. to the Closing Price of 715 pence
for each Reliance Share on 16 April 2007, being the last business day prior
to the commencement of the Offer Period; and
- a premium of approximately 8.8 per cent. to the Closing Price of 842 pence
for each Reliance Share on 30 July 2007, being the last business day prior
to the date of this Announcement.
Full acceptance of the Offer (on the bases and sources set out in Appendix II to
this Announcement) will result in a cash payment of approximately #60.5 million.
This payment will be funded from new facilities being made available by Barclays
and RBS to Reliance Corporation Group, details of which are set out in paragraph
11 of this Announcement.
Details of certain further terms of, and the conditions to, the Offer are set
out below and in Appendix I to this Announcement, and will be set out in the
Offer Document.
3. Background to and reasons for the Offer
As founder and controlling shareholder of Reliance, Brian Kingham strongly
believes that, in order to maximise the long-term profitable growth of the
business, it is essential that the Management Team be exclusively focused
on the growth of the business and, accordingly, significantly incentivised
to achieve this aim. Mr Kingham also believes that private ownership will
afford the executive management team more flexibility in managing the
challenges between short and long-term commercial opportunities.
As Chairman of Reliance, Mr Kingham believes that the Board of Reliance is
highly unlikely to seek to raise capital from equity markets or to need to
use Reliance Shares as currency for potential acquisitions in the
foreseeable future. Mr Kingham has therefore conceived the Offer as a means
to eliminate the distractions associated with the media and the stock
market, to put in place a highly motivational management incentivisation
scheme and to avoid the costs and administrative burden of maintaining an
unnecessary stock market quotation.
Finally, Brian Kingham has confirmed in writing to the Independent Reliance
Directors that he does not have any current intention, nor does he
anticipate having any intention in the foreseeable future, of disposing or
seeking to dispose of his Reliance Shares (representing approximately 32
per cent. of the entire existing issued share capital of Reliance) other
than to the Reliance Corporation Group. The trustees of the Brian Kingham
Settlements hold an aggregate of 8,278,155 Reliance Shares (representing
approximately 39 per cent. of the entire existing issued share capital of
Reliance) in their capacity as trustees of the Brian Kingham Settlements.
Brian Kingham has also confirmed that he is not aware of any intention of
the trustees of the Brian Kingham Settlements to dispose of or seek to
dispose of any Reliance Shares, either now or in the foreseeable future
other than to the Reliance Corporation Group, and he does not have any
current intention (nor does he anticipate doing so in the foreseeable
future) of persuading or encouraging the trustees to do the same.
It is the view of the Independent Reliance Directors that the prospects of
a sale of all or a majority of the Reliance Shares to a third party, either
currently or in the foreseeable future, are highly unlikely.
4. Irrevocable Undertakings
Reliance Executive has received an irrevocable undertaking from Artemis
Investment Management Limited to accept the Offer and vote in favour of
Resolution 2 to be proposed at the EGM in respect of its entire holding of
Reliance Shares (representing approximately 4.8 per cent. of the entire
existing issued share capital of Reliance and approximately 16 per cent. of
the Reliance Shares to which the Offer relates).
None of the Reliance Directors (other than Brian Kingham) hold Reliance
Shares; however, each of Julian Nicholls and Mark Harrison who hold
Reliance Options, have entered into irrevocable undertakings to exercise in
full their Reliance Options and accept the Offer (following the proposals
being made to Reliance Optionholders). These irrevocable undertakings
remain binding, even in the event of a higher competing offer for Reliance,
unless the Offer lapses or is withdrawn.
Further details of these irrevocable undertakings are set out in Appendix
III to this Announcement.
5. Information on the Reliance Corporation Group
Reliance Executive (an indirect and wholly-owned subsidiary of Reliance
Corporation) is a recently incorporated private limited company established
for the purposes of making the Offer, the directors of which are Brian
Kingham and Neil French.
Pursuant to the Share Exchange Agreements, Reliance Executive has agreed to
acquire:
- 6,830,409 Reliance Shares held by Brian Kingham (being all of the
Reliance Shares held by Brian Kingham) conditional, inter alia, upon
the Offer becoming or being declared unconditional in all respects;
and
- 8,278,155 Reliance Shares held by the Brian Kingham Settlements (being
all of the Reliance Shares held by the Brian Kingham Settlements)
conditional, inter alia, upon the Offer becoming or being declared
unconditional in all respects and valid acceptances having been
received in respect of not less than two-thirds of the Reliance Shares
to which the Offer relates.
The Reliance Shares held by Brian Kingham and the Brian Kingham Settlements
represent approximately 70 per cent. of the entire existing issued share
capital of Reliance.
Following the Offer becoming or being declared unconditional in all
respects, the ordinary shares in the capital of Reliance Corporation will
continue to be held 100 per cent. by Brian Kingham. The Brian Kingham
Settlements will exchange 8,278,155 Reliance Shares, ultimately, for
unsecured loan notes to be issued by Reliance Corporation, further details
of which will be set out in the Offer Document.
The ultimate holding company of the Reliance Corporation Group is Reliance
Corporation which owns the entire issued share capital of Reliance
Enablement. Reliance Enablement, in turn, owns the entire issued share
capital of Reliance Executive. The Reliance Corporation Group is initially
being financed by approximately #100,000 of ordinary shares and preference
shares in Reliance Corporation to be subscribed for by Brian Kingham and
Barclays. Approximately #80 million will be provided under term loan and
revolving credit facilities made available by Barclays and RBS to Reliance
Enablement. To date, no member of the Reliance Corporation Group has traded
or engaged in any activities, other than those incidental to its
incorporation and the making of the Offer.
Brian Kingham, the Brian Kingham Settlements, the Management Team and the
members of the Reliance Corporation Group are deemed to be acting in
concert for the purposes of the Code.
6. Information on Reliance
Reliance is an established market leader in the provision of contract
security, facilities management, support services and business process
outsourcing. Reliance employs over 12,000 people from a network of offices
throughout the UK.
In the year ended 27 April 2007, revenues (including share of joint
ventures) were up 8.8 per cent. to #345.5 million (2006: #317.5 million).
Profit on ordinary activities before taxation and exceptional items was
#13.6 million (2006: #13.1 million). Diluted earnings per share before
exceptional items amounted to 46.2 pence (2006: 41.9 pence).
7. Directors, management, employees and location
The Reliance Executive Board has given assurances to the Independent
Reliance Directors that, following the Offer becoming or being declared
unconditional in all respects, the existing employment rights, including
pension rights, of all Reliance Group employees will be fully safeguarded.
Reliance Executive confirms that it has no plans to alter existing
arrangements with employees or to change the locations of the Company's
places of business.
8. Reliance Share Option Schemes
The Offer will extend to any Reliance Shares which are issued or
unconditionally allotted and fully paid (or credited as fully paid) before
the date on which the Offer closes (or, subject to the Code, by such
earlier date as Reliance Executive may decide), including Reliance Shares
issued pursuant to the exercise of Reliance Options granted under the
Reliance Share Option Schemes or otherwise.
Appropriate proposals will be made to Reliance Optionholders. The proposals
will invite Reliance Optionholders to exercise their Reliance Options
immediately prior to the Offer becoming or being declared unconditional in
all respects and to accept the Offer for the Reliance Shares so acquired.
The Remuneration Committee has resolved that, subject to the Offer becoming
or being declared unconditional in all respects, the performance conditions
in respect of the Reliance 1996 Share Option Scheme and in respect of the
Reliance Options granted in 2004 under the Reliance Long Term Incentive
Plan be waived. Performance conditions in respect of the Reliance Options
granted under the Reliance Long Term Incentive Plan in 2005 and 2006 will
be reviewed prior to the Offer becoming or being declared unconditional.
The Reliance Shadow Share Option Scheme, which is a cash scheme, will pay
cash to the relevant Reliance Optionholders within 30 days of the Offer
becoming or being declared unconditional in all respects.
9. Management Arrangements
The Management Team comprises Julian Nicholls, Mark Harrison and Jeremy
Simon (Reliance Group Company Secretary and legal counsel). It is intended
that, following the Offer becoming or being declared unconditional in all
respects, the Management Team will participate in the following incentive
arrangements to be established by Reliance Corporation:
(a) LTIP
In order to ensure that the Management Team is fully incentivised, it is
proposed that, following the Offer becoming or being declared unconditional
in all respects, the directors of Reliance Corporation will seek to
implement a long term management incentive scheme (the "LTIP") for the
benefit of the Management Team. Participation in the LTIP may also be
offered to a limited number of Reliance Corporation senior executives.
It is proposed that the LTIP will permit participants to choose as to
whether to be awarded a specific number of deferred purchase shares ("
Deferred Shares") in the capital of Reliance Corporation, a number of
phantom share awards ("Phantom Shares") based on the value of shares in the
capital of Reliance Corporation, or a proportion of each. The value of these
Deferred Shares and Phantom Shares (together the "Shares") will be
determined over a four year performance period (the "Performance Period") in
accordance with a pre-determined valuation methodology referenced to an
increase in the value of Reliance Corporation shares over the Performance
Period. The Phantom Shares will entitle the participant to an amount of cash
based on the value of the shares. As such, awards under the LTIP will only
be realised at the full value of the shares after the expiry of the
Performance Period or, if earlier, in the event of a change of control of
Reliance Corporation or upon the participant leaving the Reliance
Corporation Group in certain limited circumstances to the extent that a
performance condition based on the value of the shares in the capital of
Reliance Corporation is met.
To the extent that the performance condition has been satisfied, the
participants may retain some or all of their Shares for up to two years
following the expiry of the Performance Period. Thereafter, Reliance
Corporation will have an agreed period of time to call for the sale of the
Deferred Shares and pay cash to satisfy the Phantom Shares.
The LTIP awards will vest in full if the average annual increase in the
value of Reliance Corporation ordinary shares over the Performance Period is
not less than 40 per cent. In the event of a 40 per cent. increase, it is
projected that the value of such awards (before tax) payable to the
Management Team and the limited number of Reliance Corporation senior
executives referred to above will be an aggregate of #17 million. The
Management Team's share of this total would be approximately #8 million, of
which #4 million would be payable to Julian Nicholls (in his capacity as
Reliance Group Managing Director) but no other individual award would be
higher than #2 million. To the extent that the increase in the value of
Reliance Corporation ordinary shares is less than 40 per cent., awards will
vest only to a reduced extent determined by reference to a pre-agreed
sliding scale. To the extent that the increase in the value of Reliance
Corporation ordinary shares is more than 40 per cent, awards will vest in
full and the value of the awards would increase above #17 million to reflect
out-performance.
(b) Management subscription of shares
It is proposed that following the Offer becoming or being declared
unconditional in all respects, the Management Team and a limited number of
Reliance Corporation senior executives will be given a limited opportunity
to subscribe for shares ("Subscribed Shares") in the capital of Reliance
Corporation for consideration equal to the value of Reliance Corporation
shares implied by the Offer. It is anticipated that the aggregate value of
the Subscribed Shares at the date of subscription will not exceed #1.4
million.
Provided that the Subscribed Shares are held by the participant for a four
year period and that the participant remains a Reliance Corporation senior
executive for the whole of that period, one Phantom Share will be delivered
to the participant for every two Subscribed Shares held. There will be no
other performance conditions attaching to these Phantom Shares.
(c) Long Term Cash Bonus Scheme
It is intended that certain other senior executives who will not participate
in the LTIP, as set out in paragraph 9(a) above, will participate in a
separate, cash-based long-term incentive scheme.
(d) Annual Cash Bonus Scheme
In addition to the LTIP, as set out in paragraph 9(a) above, it is also
proposed that the Management Team will be entitled to participate in a
Reliance Corporation Group annual cash bonus scheme which will operate on a
basis similar to the existing arrangements in place for the Reliance Group.
JPMorgan Cazenove considers the terms of the Management Arrangements to be fair
and reasonable so far as the Independent Reliance Shareholders are concerned.
10. Extraordinary General Meeting
Rule 16 of the Code states that, "except with the Panel's consent, an
offeror or persons acting in concert with it may not make any arrangements
with shareholders and may not deal or enter into arrangements to deal in
shares of the offeree company or enter into arrangements which involve
acceptance of an offer, either during an offer period or when an offer is
reasonably in contemplation, if there are favourable conditions attached
which are not being extended to all shareholders." In light of the
provisions of Rule 16, the Panel has reviewed the Management Arrangements
and has agreed, subject to Independent Reliance Shareholders' approval on
a poll vote at the EGM, inter alia, to allow the Offer to be made.
Accordingly, an EGM, notice of which will be set out in the Offer
Document, will be convened. Resolution 1 set out in the notice of EGM to
be contained in the Offer Document will be proposed, pursuant to the Code,
to approve the Management Arrangements. In order to comply with the
requirements of the Panel and Rule 16 of the Code, the vote on Resolution
1 will be taken on a poll and only the Independent Reliance Shareholders
will be entitled to vote thereon. The Offer is conditional, inter alia,
upon the passing of Resolution 1.
JPMorgan Cazenove considers the terms of the Management Arrangements to be
fair and reasonable as far as the Independent Reliance Shareholders are
concerned. The Independent Reliance Directors will unanimously recommend
the Independent Reliance Shareholders to vote in favour of Resolution 1 to
be proposed at the EGM.
Two further resolutions will be proposed at the EGM to approve, inter
alia, the making of an application cancelling the admission of the
Reliance Shares to trading on AIM and the re-registration of Reliance as a
private limited company under section 53 of the Act.
11. Financing of the Offer
The consideration payable under the Offer will be financed through
committed cash resources, further details of which are set out below,
which will be made available to Reliance Executive and the Reliance
Corporation Group by Barclays and RBS.
- The Reliance Corporation Group will initially be financed using a
combination of equity and debt. Approximately #100,000 will by
provided by Brian Kingham and Barclays for an equity subscription for
ordinary and preference shares in Reliance Corporation.
- Pursuant to a term and revolving agreement (the "Facility Agreement")
Barclays and RBS will make available to Reliance Enablement a new
sterling term loan and revolving facility of approximately #80
million.
- The Offer is not being made to Brian Kingham and the Brian Kingham
Settlements in respect of their Reliance Shares. Brian Kingham has
agreed, conditional upon the Offer becoming or being declared
unconditional in all respects, to sell 6,830,409 of his Reliance
Shares to Reliance Executive in exchange for the issue of Reliance
Executive loan notes.
- The trustees of the 1986 Settlement have agreed, conditional, inter
alia, upon the Offer being declared unconditional in all respects, to
sell 3,201,231 Reliance Shares to Reliance Executive for a cash
consideration of #29,323,275, which will be invested in loan notes in
Reliance Corporation. The trustees of the 1998 Settlement have also
agreed, conditional, inter alia, upon the Offer becoming or being
declared unconditional in all respects, to sell 5,076,924 Reliance
Shares to Reliance Executive in exchange for #46,504,623 nominal of
loan notes in Reliance Corporation.
- Reliance Corporation will loan certain of the monies received by way
of subscription for the loan notes to Reliance Enablement, which will
in turn loan these monies (together with funds received from Barclays
and RBS pursuant to the new term loan and revolving facilities
agreement) to Reliance Executive to enable it to fund the Offer and
associated costs.
Under the terms of the Facility Agreement, the consent of Barclays and RBS
is required by Reliance Executive if and to the extent it wishes to waive
or amend or treat as satisfied any condition of the Offer where such
waiver or consent would be materially prejudicial to the interests of
Barclays and RBS (unless required by the Code).
Further details of the financing of the Offer will be set out in the Offer
Document.
Hawkpoint has confirmed that it is satisfied that the necessary financial
resources are available to Reliance Executive to enable it to satisfy in
full the consideration payable by Reliance Executive as a result of full
acceptance of the Offer.
12. Inducement fee
Reliance Executive has entered into an inducement fee arrangement with
Reliance and before the inducement fee was agreed, Brian Kingham confirmed
to the Independent Reliance Directors that Reliance Executive would not
make the Offer without entering into the inducement fee arrangement with
Reliance.
The inducement fee agreement was entered into between Reliance and
Reliance Executive on 30 July 2007, pursuant to which Reliance has agreed
to pay a fee of approximately #1.97 million (being 1 per cent. of the
value of the entire existing issued share capital of Reliance at 916 pence
per Reliance Share) to Reliance Executive (inclusive of any irrecoverable
VAT) in the following circumstances:
(a) where a third party makes an offer to acquire the Reliance Shares
before the Offer lapses or is withdrawn and such third party offer
becomes or is declared unconditional in all respects or is completed;
or
(b) where the Independent Reliance Directors subsequently withdraw or
adversely modify their recommendation of the Offer, or recommend a
third party offer.
13. Disclosure of interests in Reliance
Save as disclosed in Appendix IV to this Announcement, neither Reliance
Executive nor, so far as the Reliance Executive Directors are aware, any
person acting in concert with it, has any interest in or right to
subscribe for Reliance Shares or has any short position (including any
short positions under a derivative, any agreement to sell or any delivery
obligation or right to require another person to take delivery) in
Reliance Shares, has borrowed or lent any Reliance Shares (save for any
borrowed shares which have been either on-lent or sold) or has any
arrangement in relation to Reliance Shares. For these purposes,
"arrangement" includes any agreement to sell or any delivery obligation or
right to require another person to purchase or take delivery and borrowing
or lending of Reliance Shares. An "arrangement" also includes any
indemnity or option arrangement, any agreement or understanding, formal or
informal, of whatever nature relating to Reliance Shares which may be an
inducement to deal or refrain from dealing in such securities. "Interest"
includes any long economic exposure, whether conditional or absolute, to
changes in the price of securities and a person is treated as having an
"interest" by virtue of the ownership or control of securities, or by
virtue of any option in respect of, or derivative referenced to,
securities.
14. Further details of the Offer
The Reliance Shares to be acquired by Reliance Executive pursuant to the
Offer will be acquired fully paid and free from all liens, equities,
charges, encumbrances, rights of pre-emption and other third party rights
and interests of any nature whatsoever and together with all rights now or
hereafter attaching thereto, including the right to receive and retain all
dividends and other distributions (if any) declared, paid or made on or
after 30 July 2007.
Save as disclosed in paragraph 11 above, there are no agreements or
arrangements to which Reliance Executive is a party which relate to the
circumstances in which it may or may not invoke or seek to invoke a
condition of the Offer.
15. Overseas Shareholders
Unless otherwise determined by Reliance Executive and permitted by
applicable law and regulation, the Offer will not be made, directly or
indirectly, in or into, or by the use of the mails or by any means or
instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce, or any facility of a
national securities exchange, of a Restricted Jurisdiction and the Offer
is not capable of acceptance by any such use, means, instrumentality or
facility or from within a Restricted Jurisdiction. Accordingly, copies of
the Offer Document and any related document are not being, and must not
be, directly or indirectly, mailed or otherwise forwarded, distributed or
sent in or into or from a Restricted Jurisdiction and persons receiving
the Offer Document and any related document (including, without
limitation, custodians, nominees and trustees) must not mail or otherwise
forward, distribute or send them in or into or from a Restricted
Jurisdiction. Doing so may render invalid any purported acceptance of the
Offer. The availability of the Offer to persons who are not resident in
the United Kingdom may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the United Kingdom should
inform themselves about and observe any applicable requirements.
16. Compulsory acquisition, cancellation of admission of Reliance Shares to
trading on AIM and re-registration
If Reliance Executive receives acceptances under the Offer in respect of,
and/or otherwise acquires, 90 per cent. or more of the Reliance Shares to
which the Offer relates and the Offer becomes or is declared unconditional
in all respects, Reliance Executive intends to exercise its rights
pursuant to the provisions of sections 974 to 991 (inclusive) of the
Companies Act 2006 to acquire compulsorily any outstanding Reliance Shares
not acquired or agreed to be acquired pursuant to the Offer or otherwise.
Subject to the passing of Resolution 2 set out in the notice of EGM to be
contained in the Offer Document, Reliance Executive intends to procure the
making of an application cancelling the admission of the Reliance Shares
to trading on AIM. It is anticipated that such cancellation to trading
will take effect 20 business days following the passing of Resolution 2.
The cancellation of the trading of the Reliance Shares will significantly
reduce the liquidity and marketability of any Reliance Shares not assented
to the Offer and their value may be affected in consequence.
Subject to the passing of Resolution 3 set out in the notice of EGM to be
contained in the Offer Document and to the Offer becoming or being
declared unconditional in all respects, it is also intended that Reliance
will seek to be re-registered as a private company under section 53 of the
Act.
17. Reasons for recommending the Offer
In reaching the decision to recommend the Offer to Independent Reliance
Shareholders, the Independent Reliance Directors have taken into account,
inter alia, the following factors:
- Price - the Offer Price represents a premium of approximately 28 per
cent. to the Closing Price on 16 April 2007 (being the last business
day prior to the commencement of the Offer Period) and of
approximately 8.8 per cent. to the Closing Price on 30 July 2007
(being the last business day prior to the publication of this
Announcement).
- Prospects for the sale of Reliance to a third party - no proposals
from any third party to make an offer for Reliance have been received
by the Independent Reliance Directors. It is the view of the
Independent Reliance Directors that the prospects of a sale of all or
a majority of the Reliance Shares to a third party, either currently
or in the foreseeable future, are highly unlikely.
Accordingly, the Independent Reliance Directors consider that the Offer
represents the best opportunity available to the Independent Reliance
Shareholders to realise their investment in Reliance.
The Independent Reliance Directors, having been so advised by JPMorgan
Cazenove, consider the terms of the Offer to be fair and reasonable. In
providing advice to the Independent Reliance Directors, JPMorgan Cazenove
has taken into account the commercial assessments made by the Independent
Reliance Directors.
Accordingly, the Independent Reliance Directors will unanimously recommend
Independent Reliance Shareholders to accept the Offer and to vote in
favour of Resolution 1 to be proposed at the EGM.
18. General
The Offer Document, the Form of Acceptance and Form of Proxy will be
posted to Independent Reliance Shareholders as soon as practicable and in
any event within 28 days of this Announcement, other than in relation to
Independent Reliance Shareholders resident in a Restricted Jurisdiction.
Appendix I to this Announcement contains conditions and further terms of
the Offer. Appendix II contains the bases and sources of certain
information used in this Announcement. Appendix III contains details of
irrevocable undertakings received by Reliance Executive. Appendix IV
contains details of interests in certain Reliance Shares. Appendix V
contains definitions of certain terms used in this Announcement.
Reliance Executive Tel: + 44 (0) 207 730 9901
Brian Kingham
Neil French
Hawkpoint Tel: + 44 (0) 207 665 4500
Paul Baines
Chris Robinson
Joseph Ayala
Reliance Tel: + 44 (0) 1895 205 000
Nigel Stapleton
JPMorgan Cazenove Tel: + 44 (0) 207 588 2828
Malcolm Moir
Julian Cazalet
The Offer Document, the Form of Acceptance and the Form of Proxy will be posted
to Independent Reliance Shareholders as soon as practicable and, in any event,
within 28 days of this Announcement, other than to Independent Reliance
Shareholders resident in a Restricted Jurisdiction.
The Reliance Executive Directors accept responsibility for the information
contained in this Announcement other than: (i) the information relating to the
Reliance Group, the Reliance Directors and their immediate families, related
trusts and connected persons; (ii) the recommendations and opinions of the
Independent Reliance Directors relating to the Offer; (iii) the information
relating to the Management Team, their immediate families, related trusts and
connected persons; and (iv) the information relating to Brian Kingham his
immediate family, related trusts, connected persons and the Brian Kingham
Settlements. To the best of the knowledge and belief of the Reliance Executive
Directors (who have taken all reasonable care to ensure that such is the case),
the information contained in this Announcement for which they are responsible is
in accordance with the facts and does not omit anything likely to affect the
import of such information.
The Reliance Directors accept responsibility for the information contained in
this Announcement relating to the Reliance Group, the Reliance Directors, their
immediate families, related trusts and connected persons (other than the
recommendation(s) and opinions of the Independent Reliance Directors relating to
the Offer, for which only the Independent Reliance Directors accept
responsibility as set out below and other than the information contained in this
Announcement relating to the Management Team, their immediate families, related
trusts and connected persons for which only the Management Team accept
responsibility as set out below and other than the information relating to Brian
Kingham, his immediate family, related trusts, connected persons and the Brian
Kingham Settlements for which only Brian Kingham accepts responsibility as set
out below). To the best of the knowledge and belief of the Reliance Directors
(who have taken all reasonable care to ensure that such is the case), the
information contained in this Announcement for which they are responsible is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
The Independent Reliance Directors accept responsibility for the recommendation
and opinions of the Independent Reliance Directors relating to the Offer. To the
best of the knowledge and belief of the Independent Reliance Directors (who have
taken all reasonable care to ensure that such is the case), the information
contained in this Announcement for which they are responsible is in accordance
with the facts and does not omit anything likely to affect the import of such
information.
The members of the Management Team accept responsibility for the information
contained in this Announcement relating to the Management Team, their immediate
families, related trusts and connected persons. To the best of the knowledge and
belief of the Management Team (who have taken all reasonable care to ensure that
such is the case), the information contained in this Announcement for which they
are responsible is in accordance with the facts and does not omit anything
likely to affect the import of such information.
Brian Kingham accepts responsibility for the information contained in this
Announcement relating to himself, his immediate family, related trusts,
connected persons and the Brian Kingham Settlements. To the best of the
knowledge and belief of Brian Kingham (who has taken all reasonable care to
ensure that this is the case) the information contained in this Announcement for
which he is responsible is in accordance with the facts and does not omit
anything likely to affect the import of such information.
Hawkpoint, which is authorised and regulated in the United Kingdom by the
Financial Services Authority is acting for Reliance Executive and no one else in
connection with the Offer and will not be responsible to anyone other than
Reliance Executive for providing the protections afforded to clients of
Hawkpoint or for providing advice in connection with the Offer.
JPMorgan Cazenove, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Reliance and no one
else in connection with the Offer and will not be responsible to anyone other
than Reliance for providing the protections afforded to clients of JPMorgan
Cazenove nor for providing advice in relation to the Offer.
This Announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities. The Offer will be made solely by means of the
Offer Document which will contain the full terms and conditions of the Offer and
details of how the Offer may be accepted, the Form of Acceptance (in respect of
certificated Reliance Shares), and a notice to be published in the London
Gazette.
Unless otherwise determined by Reliance Executive and permitted by applicable
law and regulation, the Offer will not be made, directly or indirectly, in or
into, or by the use of the mails or by any means or instrumentality (including,
without limitation, telephonically or electronically) of interstate or foreign
commerce, or any facility of a national securities exchange, of a Restricted and
the Offer will not be capable of acceptance by any such use, means,
instrumentality or facility or from within a Restricted Jurisdiction.
Accordingly, copies of this Announcement are not being, and must not be,
directly or indirectly, mailed or otherwise forwarded, distributed or sent in or
into or from a Restricted Jurisdiction and persons receiving this Announcement
(including, without limitation, custodians, nominees and trustees) must not mail
or otherwise forward, distribute or send it in or into or from a Restricted
Jurisdiction. Doing so may render invalid any purported acceptance of the Offer.
The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the United Kingdom should inform themselves about, and,
observe any applicable requirements.
Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
"interested" (directly or indirectly) in 1% or more of any class of "relevant
securities" of Reliance, all "dealings" in any "relevant securities" of Reliance
(including by means of an option in respect of, or a derivative referenced to,
any such "relevant securities") must be publicly disclosed by no later than 3.30
p.m. on the business day following the date of the relevant transaction. This
requirement will continue until the date on which the Offer becomes, or is
declared, unconditional as to acceptances, lapses or is otherwise withdrawn or
on which the "offer period" otherwise ends. If two or more persons act together
pursuant to an agreement or understanding, whether formal or informal, to
acquire an "interest" in "relevant securities" of Reliance, they will be deemed
to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant
securities" of Reliance by Reliance Executive, or by any of its "associates",
must be disclosed by no later than 12.00 p.m. on the business day following the
date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any agreement
to purchase, option in respect of, or derivative referenced to, securities.
Terms in quotations marks are defined in the Code, which can also be found on
the Panel's website. If you are in any doubt as to the application of Rule 8 of
the Code to you, please contact an independent financial adviser authorised
under the Financial Services and Markets Act 2000 (as amended), consult the
Panel's website or contact the Panel on telephone number +44 (0)20 7382 9026 or
fax +44 (0)20 7638 1554. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.
If you are in any doubt about the action you should take, you are recommended to
seek your own personal financial advice immediately from your stockbroker, bank
manager, solicitor, accountant or independent financial adviser authorised under
the Financial Services and Market Act 2000 (as amended) if you are resident in
the United Kingdom or, if not, from another appropriately authorised independent
financial adviser.
Copies of this Announcement can be found at Reliance's website at
www.reliancesecurity.co.uk
APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
The Offer, which will comply with the applicable rules and regulations of the
London Stock Exchange and the Code and will be governed by English law and
subject to the jurisdiction of the courts of England, will be subject to the
terms and conditions set out below, in the Offer Document and (in respect of
certificated Reliance Shares) in the Form of Acceptance.
The Offer will be subject to the following conditions:
(a) valid acceptances of the Offer being received (and not, where permitted,
withdrawn) by not later than 3.00 p.m. on the first closing date of the
Offer or such later time(s) and/or date(s) as Reliance Executive may, with
the consent of the Panel or subject to the Code, decide in respect of not
less than 90 per cent. (or such lower percentage as Reliance Executive may
decide) in nominal value of the Reliance Shares to which the Offer relates
and not less than 90 per cent. (or such lower percentage as Reliance
Executive may decide) of the voting rights carried by the Reliance Shares to
which the Offer relates. For the purpose of this condition:
(i) the expression "Reliance Shares to which the Offer relates'' shall be
construed in accordance with sections 974 to 991 (inclusive) of the
Companies Act 2006; and
(ii) Reliance Shares which have been unconditionally allotted but not
issued shall be deemed to carry the voting rights which they will
carry on issue;
(iii) valid acceptance shall be treated as having been received in respect
of any Reliance Shares that are, pursuant to section 979(8) and, if
applicable, section 979(9) of the Companies Act 2006, treated as
having acquired or unconditionally contracted to acquire by Reliance
Executive by virtue of acceptances of the Offer;
(b) the passing at the EGM of Resolution 1 in the notice of such EGM (without
amendment);
(c) no central bank government, governmental, quasi-governmental, supranational,
statutory, administrative, regulatory body, or any court, institution,
investigative body, association, trade agency or professional or
environmental body or any other similar person or body in any jurisdiction
(each, a "Relevant Authority'') having decided to take, institute, implement
or threaten any action, proceeding, suit, investigation, enquiry or
reference or enacted, made or proposed any statute, regulation, decision or
order or having taken any other step or done anything and there not
continuing to be outstanding any statute, regulation, decision or order
which would or might reasonably be expected to:
(i) restrict or restrain, prohibit or delay to a material extent, impose
additional adverse conditions or obligations with respect to, or
otherwise interfere with the implementation of, the Offer or the
acquisition of any Reliance Shares by Reliance Executive or any
matters arising therefrom;
(ii) result in a material delay in the ability of Reliance Executive, or
render Reliance Executive unable, to acquire some or all of the
Reliance Shares;
(iii) require, prevent or materially delay the divestiture (or alter the
terms envisaged for such divestiture) by any member of the wider
Reliance Corporation Group or any member of the wider Reliance Group
of all or any portion of their respective businesses, assets or
properties or impose any limitation on the ability of any of them to
conduct their businesses or own their respective assets or properties
or any part thereof (in any such case to an extent which is material
in the context of the wider Reliance Group or the wider Reliance
Corporation Group);
(iv) impose any material limitation on, or result in a material delay in,
the ability of any member of the wider Reliance Corporation Group to
acquire or hold or exercise effectively, directly or indirectly, all
or any rights of ownership of shares or other securities of any
member of the wider Reliance Group or on the ability of any member of
the wider Reliance Group to hold or exercise effectively, directly or
indirectly, all or any rights of ownership of shares or other
securities or to exercise management control over any other member of
the wider Reliance Group;
(v) except pursuant to Part 28 of the Companies Act 2006, require any
member of the wider Reliance Corporation Group or the wider Reliance
Group to offer to acquire any shares or other securities or rights
thereover in any member of the wider Reliance Group owned by any
third party;
(vi) make the Offer or its implementation or the proposed acquisition by
Reliance Executive of any shares or other securities in Reliance or
the acquisition or control of Reliance or any member of the wider
Reliance Group, illegal, void or unenforceable in or under the laws
of any jurisdiction or directly or indirectly materially restrict or
delay, prohibit or otherwise interfere with the implementation of, or
impose additional conditions or obligations with respect to, or
otherwise challenge, the Offer or the acquisition of any shares in
Reliance, or control of Reliance, by Reliance Executive;
(vii) result in any member of the wider Reliance Group ceasing to be able
to carry on business under any name under which it presently does so,
the consequences of which would be material in the context of the
wider Reliance Group or the wider Reliance Corporation Group taken as
a whole;
(viii) impose any limitation on the ability of any member of the wider
Reliance Corporation Group or the wider Reliance Group to conduct or
co-ordinate or integrate its business, or any part of it, with the
business of any other member of the wider Reliance Corporation Group
or the wider Reliance Group; or
(ix) otherwise adversely affect the business, assets, prospects or profits
of any member of the wider Reliance Corporation Group to a material
extent or the wider Reliance Group to a material extent,
and all applicable waiting and other time periods during which any such
Relevant Authority could decide to take, institute, implement or threaten
any such action, proceeding, suit, investigation, enquiry or reference or
otherwise intervene under the laws of any relevant jurisdiction having
expired, lapsed or been terminated;
(d) all authorisations, orders, grants, recognitions, consents, confirmations,
clearances, licences, permissions and approvals ("authorisations'') required
by law in any jurisdiction for or in respect of the Offer and the proposed
acquisition of any shares or securities, directly or indirectly, in, or
control of, Reliance or any member of the wider Reliance Group by any member
of the wider Reliance Corporation Group having been obtained in terms and/or
form reasonably satisfactory to Reliance Executive from all appropriate
Relevant Authorities or (without prejudice to the generality of the
foregoing) from any persons or bodies with whom any member of the wider
Reliance Group has entered into contractual arrangements and such
authorisations together with all authorisations necessary for any member of
the wider Reliance Group to carry on its business remaining in full force
and effect and there being no notice or intimation of any intention to
revoke, suspend, materially modify or not to renew the same and all
necessary filings having been made, all appropriate waiting and other time
periods (including extensions thereto) under any applicable legislation and
regulations in any jurisdiction having expired, lapsed or been terminated
and all necessary statutory or regulatory obligations in any jurisdiction in
respect of the Offer or the proposed acquisition of Reliance by Reliance
Executive or of any Reliance Shares or any matters arising therefrom having
been complied with;
(e) save as Disclosed, there being no provision of any agreement, permit, lease,
licence or other instrument to which any member of the wider Reliance Group
is a party or by or to which it or any of its assets may be bound or subject
which, as a consequence of the making or implementation of the Offer or the
acquisition by Reliance Executive directly or indirectly of Reliance or
because of a change in the control or management of Reliance or any member
of the wider Reliance Group, could or might reasonably be expected to result
in (in any such case which is or would be material in the context of the
wider Reliance Group taken as a whole):
(i) any monies borrowed by, or other indebtedness (actual or contingent)
of, or grant available to, any member of the wider Reliance Group
becoming repayable or capable of being declared repayable immediately
or earlier than the stated maturity or repayment date or the ability
of any member of the wider Reliance Group to borrow moneys or incur
indebtedness being or becoming capable of being withdrawn or
inhibited;
(ii) any such agreement, arrangement, permit, lease, licence or other
instrument or any right, interest, liability or obligation of any
member of the wider Reliance Group therein, being terminated or
adversely modified or affected or any adverse action being taken or
any onerous obligation or liability arising thereunder;
(iii) any mortgage, charge or other security interest being created over
the whole or any part of the business, property or assets of any
member of the wider Reliance Group or any such security (whenever
arising) becoming enforceable;
(iv) the value of any member of the wider Reliance Group or its financial
or trading position or prospects being prejudiced or adversely
affected;
(v) any assets or interests of any member of the wider Reliance Group
being or falling to be charged or disposed of or any right arising
under which any such asset or interest could be required to be
disposed of or charged otherwise than in the ordinary course of
business;
(vi) the rights, liabilities, obligations or interests or business of any
member of the wider Reliance Group in or with any other person, firm
or company (or any arrangement relating to such interest or business)
being terminated or adversely modified or affected;
(vii) any member of the wider Reliance Group ceasing to be able to carry on
business under any name under which it currently does so; or
(viii) the creation of any liability, actual or contingent, by any member of
the wider Reliance Group;
(f) since 27 April 2007, save as Disclosed, no member of the Reliance Group
having:
(i) (save for Reliance Shares issued pursuant to the exercise of options
granted under the Reliance Share Option Schemes or as between
Reliance and wholly-owned subsidiaries of Reliance ("Intra-Reliance
Group Transactions")) issued or agreed to issue or authorised or
proposed the issue of additional shares of any class or securities
convertible into or rights, warrants or options to subscribe for or
acquire any such shares or convertible securities;
(ii) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any dividend, bonus or other distribution
(whether payable in cash or otherwise) other than dividends lawfully
paid to Reliance or wholly-owned subsidiaries of Reliance;
(iii) merged or demerged with or acquired any body corporate, partnership
or business;
(iv) save for Intra-Reliance Group Transactions, (other than for
acquisition or disposals in the ordinary course of business) acquired
or disposed of, transferred, mortgaged or charged or created any
security interest over any asset or any right, title or interest in
any asset (including shares and trade investments) or authorised,
proposed or announced any intention to do so which, in any such case,
is material in the context of the wider Reliance Group taken as a
whole;
(v) save for Intra-Reliance Group Transactions, issued or authorised or
proposed the issue of any debentures or incurred or increased any
indebtedness or contingent liability or made, authorised, proposed or
announced an intention to propose any change in its share or loan
capital which (other than in the case of Reliance) is material in the
context of the wider Reliance Group taken as a whole;
(vi) entered into or varied or announced its intention to enter into or
vary any contract, transaction, commitment or arrangement (whether in
respect of capital expenditure or otherwise) which is of a long term
or unusual nature or which involves or could involve an obligation of
a nature or magnitude which, in any such case, is material in the
context of the Reliance Group taken as a whole or which is or is
likely to be restrictive in any material respect on the business of
any member of the wider Reliance Group or the wider Reliance
Corporation Group;
(vii) entered into, implemented, authorised or proposed any reconstruction,
amalgamation, scheme of arrangement or other transaction or
arrangement otherwise than in the ordinary course of business or
announced any intention to do so;
(viii) entered into, or varied in any material respect the terms of, any
contract or agreement with any of the directors or senior executives
of Reliance or any of its subsidiaries;
(ix) taken or proposed any corporate action or had any legal proceedings
started or threatened against it or had any petition presented for
its winding-up (voluntary or otherwise), dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any of
its material assets and/or revenues or any analogous proceedings in
any jurisdiction;
(x) waived or compromised any claim other than in the ordinary course of
business which is material in the context of the wider Reliance Group
taken as a whole;
(xi) (save as disclosed in any registers available to the public) made any
material amendment to its memorandum or articles of association;
(xii) purchased, redeemed or repaid or proposed the purchase, redemption or
repayment of any of its own shares or other securities or reduced or
made any other change to any part of its share capital which (other
than in the case of Reliance) is material in the context of the wider
Reliance Group taken as a whole;
(xiii) been unable or admitted in writing that it is unable to pay its debts
or having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business, in any case,
with a material adverse effect on the wider Reliance Group taken as a
whole;
(xiv) made or agreed or consented to any significant change to the terms of
the trust deeds constituting the pension schemes established for its
directors, employees or their dependants or to the benefits which
accrue; or to the pensions which are payable, thereunder, or to the
basis on which qualification for, or accrual or entitlement to; such
benefits or pensions are calculated or determined or to the basis
upon which the liabilities (including pensions) of such pension
schemes are funded or made, or agreed or consented to any change to
the trustees including the appointment of a trust corporation; or
(xv) entered into, varied or modified any contract, commitment or
agreement with respect to any of the transactions, matters or events
referred to in this condition (h) or announced an intention to do so
which is material in the context of the wider Reliance Group taken as
a whole;
(g) since 27 April 2007, save as Disclosed:
(i) no litigation, arbitration, prosecution or other legal proceedings
having been instituted, announced or threatened or become pending or
remaining outstanding by or against any member of the wider Reliance
Group or to which any member of the wider Reliance Group is or may
become a party (whether as claimant, respondent or otherwise) and no
enquiry or investigation by or complaint or reference to any Relevant
Authority or other investigative body having been threatened,
announced, implemented or instituted or remaining outstanding against
or in respect of any member of the wider Reliance Group which, in any
such case, would or might reasonably be expected adversely to affect
any member of the wider Reliance Group to an extent which is material
in the context of the Reliance Group taken as a whole;
(ii) no material adverse change having occurred in the business, assets,
financial or trading position, profits or prospects of any member of
the wider Reliance Group which in any case would have a material
adverse effect on the wider Reliance Group taken as a whole;
(iii) no contingent or other liability having arisen which in any case is
material in the context of the wider Reliance Group taken as a whole;
(iv) no investigation by any Relevant Authority having been threatened,
announced, implemented or instituted or remaining outstanding which in
any case which in any case is material in the context of the Reliance
Group taken as a whole;
(h) save as Disclosed, Reliance Executive not having discovered that:
(i) any business, financial or other information concerning any member of
the wider Reliance Group publicly disclosed or disclosed to Reliance
Executive or to any of the advisers or otherwise at any time by or on
behalf of any member of the Reliance Group is misleading in any
material respect, contains a misrepresentation of fact or omits to
state a fact necessary to make the information contained therein not
misleading in any material respect and which was not subsequently
corrected before the date of the Offer Document by disclosure either
publicly or otherwise to Reliance Executive which, in any such case,
is material in the context of the wider Reliance Group taken as a
whole;
(ii) any member of the wider Reliance Group is subject to any liability,
actual or contingent, which is material in the context of the wider
Reliance Group taken as a whole;
(iii) any past or present member of the wider Reliance Group has not
complied with all applicable legislation or regulations of any
jurisdiction with regard to the storage, disposal, discharge,
spillage, leak or emission of any waste or hazardous substance or any
substance likely to impair the environment or to harm human health or
otherwise relating to environmental matters (which non-compliance
might give rise to any liability (whether actual or contingent) on the
part of any member of the wider Reliance Group which is material in
the context of the Reliance Group taken as a whole) or that there has
otherwise been any such disposal, discharge, spillage, leak or
emission (whether or not the same constituted a non-compliance by any
person with any such legislation or regulations and wherever the same
may have taken place) which in any such case might give rise to any
liability (whether actual or contingent) on the part of any member of
the wider Reliance Group which is material in the context of the wider
Reliance Group taken as a whole;
(iv) there is, or is likely to be, any liability (whether actual or
contingent) to make good, repair, reinstate or clean up any property
now or previously owned, occupied or made use of by any past or
present member of the wider Reliance Group or any controlled waters
under any environmental legislation, regulation, notice, circular or
order of any Relevant Authority or otherwise and which is material in
the context of the wider Reliance Group taken as a whole; or
(v) circumstances exist (whether as a result of the making of the Offer or
otherwise) which would be likely to lead to any Relevant Authority
instituting, or whereby any member of the wider Reliance Group or the
wider Reliance Corporation Group would be likely to be required to
institute, an environmental audit or take any other steps which in any
such case would be likely to result in any actual or contingent
liability on the part of any member of the wider Reliance Group or the
wider Reliance Corporation Group to improve or install new plant or
equipment or make good, repair, re-instate or clean up any land or
other asset now or previously owned, occupied or made use of by any
member of the wider Reliance Group which liability is or is likely to
be material in the context of the wider Reliance Group taken as a
whole.
Subject to the requirements of the Panel, Reliance Executive reserves the right
to waive all or any of conditions (c) to (h) (inclusive) above, in whole or in
part. Conditions (c) to (h) (inclusive) must be fulfilled, be determined by
Reliance Executive to be or remain satisfied, or be waived by midnight on the
21st day after the later of the first closing date of the Offer and the date on
which condition (a) is fulfilled (or such later date as Reliance Executive may,
with the consent of the Panel, decide), failing which the Offer will lapse.
Reliance Executive shall be under no obligation to waive or treat as fulfilled
any of conditions (c) to (h) (inclusive) by a date earlier than the latest date
specified above for the fulfilment thereof notwithstanding that the other
conditions of the Offer may at such earlier date have been waived or fulfilled
and that there are at such earlier date no circumstances indicating that any of
such conditions may not be capable of fulfilment.
Except with the consent of the Panel, Reliance Executive will not invoke any of
the above conditions (except condition (a) or condition (b)) so as to cause the
Offer not to proceed, or lapse or to be withdrawn unless the circumstances that
give rise to the right to invoke the relevant condition are of material
significance to Reliance Executive in the context of the Offer.
If Reliance Executive is required by the Panel to make an offer for Reliance
Shares under the provisions of Rule 9 of the Code, Reliance Executive may make
such alterations to the conditions as are necessary to comply with the
provisions of that Rule.
The Offer will lapse if, before 3.00 p.m. on the first closing date of the Offer
or the date on which the Offer becomes or is declared unconditional as to
acceptances (whichever is later), (i) the Offer or any part of it is referred to
the Competition Commission; or (ii) following a request to the European
Commission under Article 22(3) of Council Regulation 139/2004/EC (the
"Regulation") in relation to the Offer or any part of it, which request is
accepted by the European Commission, the European Commission initiates
proceedings under Article 6(1)(c) of the Regulation.
If the Offer lapses, it will cease to be capable of further acceptance. Reliance
Shareholders who have already accepted the Offer shall then cease to be bound by
acceptances delivered on or before the date on which the Offer lapses.
APPENDIX II
BASES AND SOURCES
Unless otherwise stated in this Announcement:
(a) financial information relating to Reliance has been extracted from the
audited accounts of Reliance for the years ended 29 April 2005, 28 April
2006 and 27 April 2007;
(b) references to the value of Reliance and the Offer Price are based upon
21,512,855 ordinary Reliance Shares being in issue on 30 July 2007, such
number of shares excluding the 400,000 Reliance Shares held in treasury
which do not form part of the Reliance Shares to which the Offer relates;
and
(c) all prices quoted for Reliance Shares are Closing Prices.
APPENDIX III
IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings to accept, or to procure the acceptance of, the Offer have
been received by Reliance Executive from the following persons in respect of
following interests in Reliance Shares:
Independent Reliance Shareholders
Name Number of Reliance Shares Percentage of existing
irrevocably committed issued share capital (%)
Artemis
Investment 1,028,037 4.8
Management Limited(1)
Reliance Optionholders
Julian
Nicholls (1),(2) 135,117 nil
Mark
Harrison (1),(2) 36,862 nil
Notes:
(1).This irrevocable undertaking to accept the Offer remains binding,
even if a higher competing offer is announced by a third party,
unless the Offer lapses or is withdrawn.
(2).The irrevocable undertakings entered into by certain of the Reliance
Directors only cover options over Reliance Shares granted under
Reliance Share Option Schemes. Pursuant to such undertakings, the
Reliance Directors have irrevocably agreed to either (i) accept, when
made, the proposals to Reliance Optionholders; or (ii) exercise in
full the relevant option and accept the Offer in full in respect of
all Reliance Shares resulting therefrom.
APPENDIX IV
INTERESTS IN SHARES
As at the close of business on 30 July 2007 (being the last practicable date
prior to the date of this Announcement), the interests (as defined in section
820 of the Companies Act 2006) of the Concert Party and their immediate families
and connected persons, all of which are beneficial unless otherwise stated, in
the share capital of Reliance were as follows:
Name Number of Reliance Shares Percentage of existing issued
share capital (%)
Brian Kingham 6,830,409 31.8
1986 Settlement 3,201,231 14.9
1998 Settlement 5,076,924 23.6
Julian Nicholls nil nil
Mark Harrison nil nil
Jeremy Simon nil nil
TOTAL 15,108,564 70.2
As at the close of business on 30 July 2007 (being the last practicable date prior to
the date of this Announcement) the following options in respect of Reliance Shares
had been granted to the following members of the Concert Party, for nominal
consideration and remained outstanding under the Reliance Share Option Schemes:
Name Type Date of Numbe Exercise Price Exercisable Expiry date
grant of from
Relianc
Shares
under
option
Julian LTIP 04.07.2005 50,980 #1 (in 04.07.2009 03.07.2015
aggregate)
Nicholls
LTIP 06.07.2006 64,137 #1 (in 06.07.2010 05.07.2016
aggregate)
LTIP 08.12.2006 20,000 #1 (in 08.12.2010 07.12.2016
aggregate)
Mark LTIP 10.10.2006 26,862 #1 (in 10.10.2010 09.10.2016
aggregate)
Harrison
LTIP 08.12.2006 10,000 #1 (in 08.12.2010 07.12.2016
aggregate)
Jeremy ESOP 29.01.2002 14,705 680p 29.01.2006 28.01.2012
Simon
ESOP 02.07.2003 16,250 800p 02.07.2007 01.07.2013
LTIP 04.08.2004 5,909 #1 (in 04.08.2008 03.08.2014
aggregate)
LTIP 04.07.2005 27,450 #1 (in 04.07.2009 03.07.2015
aggregate)
LTIP 06.07.2006 14,232 #1 (in 06.07.2010 05.07.2016
aggregate)
LTIP 08.12.2006 10,000 #1 (in 08.12.2010 07.12.2016
aggregate)
APPENDIX V
DEFINITIONS
The following definitions apply throughout this Announcement unless the context
otherwise requires:
"1986 Settlement" the B. Kingham 1986 Settlement dated 18 March 1986 and
resident in Guernsey
"1998 Settlement" the B. Kingham Settlement No.1 dated 31 March 1998 and
resident in England and Wales
"Act'' the Companies Act 1985 (as amended)
"AIM'' AIM, the market of that name operated by the London Stock
Exchange
"Announcement" this announcement being made pursuant to Rule 2.5 of the
Code
"Australia" the Commonwealth of Australia, its states, territories or
possessions and all areas subject to its jurisdiction and
any political subdivision thereof
"Barclays" Barclays Capital the investment banking division of Barclays
Bank PLC of 5 The North Colonnade, Canary Wharf, London E14
4BB
"Brian Kingham the 1986 Settlement and the 1998 Settlement
Settlements"
"business day" a day (not being a Saturday, a Sunday or a public holiday)
on which clearing banks in the City of London are open for
the transaction of general commercial business
"Canada" Canada, its possessions, provinces and territories and all
areas subject to its jurisdiction or any political
subdivision thereof
"certificated'' or in relation to a share or other security, not in
uncertificated form (that is, not in CREST)
"in certificated
form''
"Closing Price" the closing middle market quotation of a share as derived
from the AIM Appendix of the Daily Official List save that
quotations for 30 July 2007 have been derived from the
website of the London Stock Exchange
"Code'' the City Code on Takeovers and Mergers
"Companies Act the Companies Act 2006
2006"
"Concert Party" each of Brian Kingham, the Brian Kingham Settlements, the
Management Team and each member of the Reliance Corporation
Group
"connected person" has the meaning given to that term in section 346 of the Act
"CREST'' the relevant system (as defined in the Regulations) in
respect of which Euroclear UK and Ireland Limited is the
operator
"Daily Official the Daily Official List of the London Stock Exchange
List''
"Disclosed" means (i) as disclosed in Reliance's report and accounts for
the year ended 27 April 2007; (ii) as publicly announced by
Reliance (by the delivery of an announcement to an
authorised Regulatory Information Service on or prior to 30
July 2007); (iii) as disclosed in this Announcement; or (iv)
as otherwise disclosed in writing, or in the documentation
or written information provided, to Reliance Executive or
its advisers by or on behalf of Reliance prior to 30 July
2007 in the context of the Offer
"EGM" the extraordinary general meeting of Reliance to be held to
approve the Resolutions, and any adjournment thereof, notice
of which will be set out in the notice of EGM at the end of
the Offer Document
"Form of the form of acceptance and authority relating to the Offer
Acceptance'' in respect of certificated Reliance Shares
"Hawkpoint" Hawkpoint Partners Limited of 41 Lothbury, London EC2R 7AE
"Independent the Reliance Directors other than Brian Kingham, Julian
Reliance Nicholls and Mark Harrison
Directors''
"Independent the Reliance Shareholders other than the members of the
Reliance Concert Party and their connected persons
Shareholders"
"Japan" Japan, its cities, prefectures, territories and possessions
"JPMorgan JPMorgan Cazenove Limited of 20 Moorgate, London EC2R 6DA
Cazenove''
"London Stock London Stock Exchange PLC
Exchange''
"Management the management arrangements, details of which are set out in
Arrangements" paragraph 9 of this Announcement
"Management Team" Julian Nicholls, Mark Harrison and Jeremy Simon
"Offer'' the recommended cash offer by Reliance Executive, on the
terms and subject to the conditions set out in Appendix I of
this Announcement, the Offer Document and the Form of
Acceptance (in respect of certificated Reliance Shares), to
acquire all of the Reliance Shares held by the Independent
Reliance Shareholders (including, where the context
requires, any subsequent revision, variation, extension or
renewal of such offer)
"Offer Period'' the period commencing on 17 April 2007 and ending on the
later of (i) 1.00 p.m. on the first closing date of the
Offer; (ii) the time and date on which the Offer becomes or
is declared unconditional as to acceptances; and (iii) the
time and date on which the Offer lapses or is withdrawn
"Offer Price" 916 pence for every Reliance Share held by Independent
Reliance Shareholders
"Panel'' the Panel on Takeovers and Mergers
"pounds", "#" or the lawful currency of the United Kingdom
"pence"
"RBS" The Royal Bank of Scotland PLC of 280 Bishopsgate, London,
EC2M 4RB
"Regulatory any channel recognised as a channel for the dissemination of
Information regulatory information by listed companies as defined in the
Service" Listing Rules published by the Financial Services Authority
"Reliance'' Reliance Security Group PLC, a public limited company
incorporated in England and Wales with company number
01473721
"Reliance Reliance Corporation Limited, a private limited company
Corporation" incorporated in England and Wales with company number
06036746
"Reliance Reliance Corporation and its existing subsidiary
Corporation Group'' undertakings
"Reliance the directors of Reliance at the date of this Announcement
Directors'' or
"Board of Reliance"
"Reliance Reliance Enablement Limited, a private limited company
Enablement" incorporated in England and Wales with company number
06302549
"Reliance Employee The Reliance Security Group PLC Employee Trust, Pritchards
Benefit Trust" Trustees Limited, PO Box 119, Martello Court, Admiral Trust,
St Peter Port, Guernsey GY1 3H
"Reliance Reliance Executive Limited, a private limited company
Executive'' incorporated in England and Wales with company number
06302567
"Reliance Executive the directors of Reliance Executive as at the date of this
Directors'' or Announcement
"Reliance Executive
Board"
"Reliance Group'' Reliance and its existing subsidiary undertakings
"Reliance Options" options or other rights to acquire Reliance Shares under the
Reliance Share Option Schemes or otherwise
"Reliance holders of Reliance Options
Optionholders"
"Reliance Share the Reliance Long Term Incentive Plan, the Reliance Approved
Option Schemes'' Executive Share Option Scheme (1994), the Reliance Shadow
Share Option Scheme and the Reliance 1996 Company Share
Option Scheme
"Reliance holders of Reliance Shares
Shareholders''
"Reliance Shares'' the issued fully paid ordinary shares of 5 pence each in the
capital of Reliance and any further such shares which are
unconditionally allotted or issued and fully paid or
credited as fully paid before the date on which the Offer
closes (or such earlier date, not being earlier than the
date on which the Offer becomes or is declared unconditional
as to acceptances, as Reliance Executive may, subject to the
Code and the Panel, decide)
"Remuneration the remuneration committee of the Board of Reliance
Committee" consisting of Nigel Stapleton, David Walter and Roger Wood
"Resolutions" the resolutions to be proposed at the EGM and set out in the
notice of EGM at the end of the Offer Document (and
"Resolution 1", "Resolution 2" and "Resolution 3" shall be
construed accordingly)
"Restricted the United States, Canada, Australia or Japan or any other
Jurisdiction" jurisdiction where extension or acceptance of the Offer
would violate the law of that jurisdiction
"Securities Act" the United States Securities Act 1933, as amended
"Share Exchange means the share exchange agreements between (1) each of
Agreements" Brian Kingham and the Brian Kingham Settlements and (2)
Reliance Executive, further details of which will be set out
in the Offer Document
"uncertificated'' in relation to a share or other security, recorded on the
or "in relevant register in uncertificated form in CREST and title
uncertificated to which, by virtue of the Regulations, may be transferred
form'' by means of CREST
"United Kingdom'' the United Kingdom of Great Britain and Northern Ireland
or "UK''
"US" or "United the United States of America, its territories and
States" possessions, any state of the United States of America (and
the District of Columbia) and all other areas subject to its
jurisdiction
"wider Reliance means Reliance, its subsidiaries, subsidiary undertakings
Group'' and associated undertakings and any other body corporate,
partnership, joint venture or person in which Reliance and
such undertakings (aggregating their interests) have an
interest (direct or indirect) in 20 per cent. or more of the
voting or equity capital (or the equivalent)
"wider Reliance means Reliance Corporation, Reliance Enablement, Reliance
Corporation Group'' Executive, its subsidiaries, subsidiary undertakings and
associated undertakings and any other body corporate,
partnership, joint venture or person in which Reliance
Executive and such undertakings (aggregating their
interests) have an interest (direct or indirect) in 20 per
cent. or more of the voting or equity capital (or the
equivalent)
Save where otherwise stated, for the purpose of this Announcement,
"subsidiary'', "subsidiary undertaking'', "associated undertaking'' and
"undertaking'' shall be construed in accordance with the Act (but for this
purpose ignoring paragraph 20(1)(b) of Schedule 4A of the Act).
In this Announcement, the singular includes the plural and vice versa, unless
the context otherwise requires.
All references in this Announcement to time are to London time.
All references to legislation in this Announcement are to English legislation
unless the contrary is stated. Any references to any provision of any
legislation shall include any amendment, re-enactment or extension thereof.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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