- Maintains up to A$4.81 per share
consideration
- Offers greater value more quickly and with certainty of
execution compared to other options available to Link Group
shareholders
TORONTO, Sept. 18,
2022 /CNW/ - Dye & Durham Limited (TSX: DND)
("Dye & Durham" or the "Company"), a leading provider of
cloud-based, efficient workflow software for legal and business
professionals, announced today that it has made a revised proposal
to Link Administration Holdings Limited (ASX: LNK) ("Link Group")
with respect to Dye & Durham's proposed acquisition of Link
Group.
The revised proposal maintains consideration of up to
A$4.81 per Link Group share, on which
the Company and Link Group agreed in July. Of the total, Dye &
Durham has proposed to pay A$3.81 per
share upon the successful implementation of the acquisition's
scheme (the "closing"). Up to A$1.00
per share, being the remaining portion of the purchase price, would
be payable upon a final and binding conclusion of the UK Financial
Conduct Authority's ("FCA") active enforcement investigation into
Link Fund Solutions Ltd. ("LFS") within 24 months of the
closing.
"Our revised proposal ensures Link Group shareholders receive
the same economic value as our earlier offer, while taking into
account the impact of the potential Woodford Fund liability," said
Matthew Proud, CEO 0f Dye &
Durham. "In fact, our proposal caps the amount of that liability
for Link Group shareholders and helps Link Group avoid what could
be years of costly litigation with an unknown outcome and
significant and ongoing reputational damage. Based on our due
diligence, we firmly believe that consummating this transaction
under the existing scheme implementation deed will create more
value with greater speed and certainty of execution than any
alternative."
The FCA's enforcement investigation relates to LFS's management
of the collapsed LF Woodford Equity and Income Fund ("Woodford
Fund"). Earlier this month, the FCA notified Dye & Durham it
will not approve its proposed acquisition of Link Group unless Dye
& Durham undertakes to cover any shortfall in the value of
the assets of LFS, up to a maximum of £306 million in relation to
any restitution and/or redress payments that the FCA may levy on
LFS in the Woodford Fund case. FCA approval is a condition
precedent to the proposed acquisition's scheme implementation
deed.
Under Dye & Durham's revised proposal, if LFS is not found
liable by the FCA for restitution or redress payments related to
the Woodford Fund – which the Company understands Link Group
management believes to be possible – then Link Group shareholders
would receive the full remaining A$1.00 per share from Dye & Durham. If the
FCA rules that LFS is in fact liable for redress, and that amount
is less than £306 million, Dye & Durham would make a cash
payment per Link Group share based on the difference between £306
million and the actual redress amount.
Dye & Durham believes its new proposal is the best outcome
for Link Group for a number of key reasons:
- It delivers a premium to the current share price and
certainty of an outcome. Link has been "in play" for an
extended timeframe, with multiple parties conducting due diligence
and assessing the potential value of the company, with no other
alternatives having surfaced which delivers the value and certainty
of closing versus Dye & Durham's proposal.
- The prior proposal at A$4.81
per share was recommended by Link Group's Board of Directors and
overwhelmingly voted in favour by Link's shareholders – Dye
& Durham's new proposal maintains the possibility of
providing A$4.81 to Link's
shareholders and, appropriately, adjusts dollar for dollar to
the extent restitution and/or redress payments are levied on LFS.
If Link Group is in fact found liable by the FCA for restitution or
redress payments related to the Woodford Fund, Link Group
shareholders are no worse off, as the liability is an existing one
that impacts every Link Group shareholder.
- The fair value for Link, published in the Supplementary
Explanatory Booklet and calculated by the independent expert,
resulted in a range of A$4.34 -
A$5.51, before adjusting for any
potential redress payment – where £306 million equates to an
approximate A$1.00 per share loss.
Dye & Durham's new proposal delivers A$3.81 on closing, up to A$1.00 depending on a final and binding
conclusion from the FCA and up to an additional A$0.13 from the proceeds from any sale of Link
Group's Banking and Credit Management Business.
- Dye & Durham believes Link Group will achieve more value
for its shareholders by accepting its revised proposal versus a
"status quo" or other breakup strategies, which carry
significant execution risk over a long period of time and where
asset values are offset by tax leakage, stranded shared services
costs, outstanding debt and likely restrictions imposed by the FCA.
A potential "break-up" scenario value, if one can be executed, is
illustrated in the following table:
|
|
|
In A$
Millions
|
|
A$ Per
Share
|
|
|
Source
|
|
Low
|
High
|
|
Low
|
High
|
|
RSS
|
Experts Report
Valuation
|
|
$1,215
|
$1,450
|
|
$2.33
|
$2.78
|
|
CM - Regulated by
FCA
|
Experts Report
Valuation
|
|
$765
|
$900
|
|
$1.47
|
$1.73
|
|
FS - Regulated by
FCA
|
Experts Report
Valuation
|
|
$285
|
$368
|
|
$0.55
|
$0.71
|
|
BCM - Regulated by
FCA
|
Experts Report
Valuation
|
|
$65
|
$75
|
|
$0.12
|
$0.14
|
|
Corporate
|
Experts Report
Valuation
|
|
($227)
|
($201)
|
|
($0.44)
|
($0.39)
|
|
Core Business
EV
|
|
|
$2,103
|
$2,592
|
|
$4.03
|
$4.97
|
|
|
|
|
|
|
|
|
|
|
Interest in
Pexa
|
Current Market
Value
|
|
$1,073
|
$1,073
|
|
$2.06
|
$2.06
|
|
Other Assets /
(Liabilities)
|
Experts
Report
|
|
$111
|
$111
|
|
$0.21
|
$0.21
|
|
Net Cash /
(Debt)
|
Experts
Report
|
|
($1,134)
|
($1,125)
|
|
($2.17)
|
($2.16)
|
|
Less: FCA Redress
(£306MM)
|
FCA
Notice
|
|
($523)
|
($523)
|
|
($1.00)
|
($1.00)
|
|
Equity
Value
|
|
|
$1,630
|
$2,128
|
|
$3.13
|
$4.08
|
|
|
|
|
|
|
|
|
|
|
Less: Minority
Interests
|
Experts
Report
|
|
($1)
|
($1)
|
|
($0.00)
|
($0.00)
|
|
Equity Value - Link
Interest Standalone
|
|
$1,629
|
$2,127
|
|
$3.12
|
$4.08
|
|
|
|
|
|
|
|
|
|
|
Less: Breakup Tax
Leakage
|
Footnote
1
|
|
($338)
|
($447)
|
|
($0.65)
|
($0.86)
|
|
Equity Value - Link
Interest Breakup
|
|
$1,291
|
$1,680
|
|
$2.48
|
$3.22
|
|
|
|
|
|
|
|
|
|
|
Dye & Durham
Proposal
|
|
|
|
|
|
|
|
|
Upfront
Consideration
|
|
|
$1,987
|
$1,987
|
|
$3.81
|
$3.81
|
|
Plus: BCM Deferred
Consideration
|
|
|
$68
|
$68
|
|
$0.13
|
$0.13
|
|
Total (Pre-FCA
Contingent Consideration)
|
|
$2,055
|
$2,055
|
|
$3.94
|
$3.94
|
|
Premium to Breakup
Value
|
|
|
59 %
|
22 %
|
|
59 %
|
22 %
|
|
Note: Experts Report
Valuation based on the Independent Expert Report as published by
Link in the Supplementary Explanatory Booklet.
|
1. Assumes 30% tax paid
on the RSS and CM high and low asset valuations less their
estimated cost base.
|
- The FCA regulates not only LFS but also Link Group's Corporate
Markets and Banking and Credit Management businesses. Given this,
Dye & Durham believes that Link Group would have difficulty
distributing any sale proceeds from any of its businesses to Link
Group shareholders until after the Woodford liability is
addressed.
Dye & Durham has advised Link Group it is ready to implement
this proposal on an expedited basis within the current scheme
implementation deed, as amended, subject only to Court, Link Group
and Link Group shareholder approval. The Company anticipates that
completion could occur by the end of calendar 2022.
The revised proposal is subject to the negotiation of
satisfactory documentation between the Company and Link Group and
subject to agreement from Dye & Durham's financiers.
About Dye & Durham
Dye & Durham Limited is a leading provider of cloud–based
software and technology solutions designed to improve efficiency
and increase productivity for legal and business professionals. Dye
& Durham provides critical information services and workflows,
which clients use to manage their process, information and
regulatory requirements. The Company has operations in Canada, the United
Kingdom, Ireland and
Australia, and has a strong
blue-chip customer base that includes law firms, financial service
institutions, and government organizations.
Additional information can be found at www.dyedurham.com
Forward-looking Statements
This press release may contain forward-looking information
within the meaning of applicable securities laws, which reflects
the Company's current expectations regarding future events,
including statements relating to the Company's planned acquisition
of Link Group, the amendment of terms thereof, the approvals of
such amended terms and the closing of the planned acquisition. In
some cases, but not necessarily in all cases, forward-looking
statements can be identified by the use of forward looking
terminology such as "plans", "targets", "expects" or "does not
expect", "is expected", "an opportunity exists", "is positioned",
"estimates", "intends", "assumes", "anticipates" or "does not
anticipate" or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might", "will" or "will be taken", "occur" or "be
achieved". In addition, any statements that refer to expectations,
projections or other characterizations of future events or
circumstances contain forward-looking statements. Forward-looking
statements are not historical facts, nor guarantees or assurances
of future performance but instead represent management's current
beliefs, expectations, estimates and projections regarding future
events and operating performance.
Such forward-looking information is necessarily based on a
number of opinions, estimates and assumptions. Forward-looking
information is also subject to a number of risks and uncertainties,
many of which are beyond the Company's control, which could cause
actual results and events to differ materially from those that are
disclosed in or implied by such forward-looking information. Such
risks and uncertainties include, but are not limited to, the risk
associated with the Company's and Link Group's ability to obtain
the approvals that are required to amend the terms of the proposed
acquisition and consummate itand the timing of the closing of the
proposed transaction, including the risk that amended terms are not
approved, the conditions to the transaction are not satisfied on a
timely basis or at all and the failure of the transaction to close
for any other reason; the risk that a consent or authorization that
may be required for the proposed amendment and the transaction
itself is not obtained or is obtained subject to conditions that
are not anticipated; the outcome of any legal proceedings that may
be instituted against the parties and others related to the
acquisition agreement; unanticipated difficulties or expenditures
relating to the transaction, the response of business partners and
retention as a result of the announcement and pendency of the
proposed amendment or the transaction itself; the Company being
unable to realize expected synergies; and the diversion of
management time on transaction-related issues, as well as the
factors discussed under "Risk Factors" in the Company's most recent
annual information form. If any of these risks or uncertainties
materialize, or if the opinions, estimates or assumptions
underlying the forward-looking information prove incorrect, actual
results or future events might vary materially from those
anticipated in the forward-looking information. Accordingly,
investors should not place undue reliance on forward-looking
information, which speaks only as of the date made. The
forward-looking information contained in this news release
represents the Company's expectations as of the date of this news
release, and are subject to change after such date. The Company
disclaims any intention or obligation or undertaking to update or
revise any forward-looking information whether as a result of new
information, future events or otherwise, except as expressly
required under applicable law.
SOURCE Dye & Durham Limited