RNS Number:0933K
Ashley (Laura) Hldgs PLC
16 April 2003
For publication in the United Kingdom only. Not for release, publication or
distribution, directly or indirectly, in any other jurisdiction, including The
United States, Australia, Canada, Japan, New Zealand, The Republic of Ireland or
South Africa or their respective territories or possessions.
Laura Ashley Holdings plc
Underwritten Rights Issue of 149,207,073 New Shares at 6 pence per New Share.
Laura Ashley ("the Company") today announces its fully underwritten Rights Issue
to raise approximately #8.2 million, after expenses;
* 149,207,073 new shares are being issued on the basis of one new share
for every four Existing Shares held.
* The Rights Issue has been fully underwritten, partly by Bonham (an
existing significant shareholder owned and controlled by the Company's
Chairman) and partly by The Bank of East Asia, Limited ("BEA") a large
independent bank in Hong Kong. The proceeds of the Rights Issue will be
used to recapitalise a number of the Group's subsidiaries in
Continental Europe and thereby to fund the previously announced future
closure programme of most of the Group's stores in Continental Europe
and to provide additional working capital.
* The Directors estimate that for the year ended 25 January 2003, the
Group's loss before tax and exceptional items was #4.9 million (#14.1
million after exceptional items).
* The Group's like-for-like sales for the eight weeks ended 22 March 2003
were encouraging. Overall like-for-like sales in the UK for the eleven
weeks ended 12 April 2003 were down by 1.4% but the corresponding
period last year is not directly comparable as a result of the
traditionally busy Easter period occurring in the last two weeks of
March in 2002 and the timing of various promotions.
Ng Kwan Cheong, Chief Executive Officer of Laura Ashley said:
"The closure or disposal of our loss - making operations in Continental Europe
will enable us to sharpen our focus on our other operations, particularly in the
UK. Completion of the Rights Issue allows us to complete the closure programme
and provides us with additional working capital".
The Nil Paid Rights, Fully Paid Rights and New Shares and the Provisional
Allotment Letters have not been and will not be registered under the United
States Securities Act of 1933 (as amended) or under the securities laws of any
state of the United States. Accordingly, subject to certain exceptions, the New
Shares and the Provisional Allotment Letters may not be, directly or indirectly,
offered, sold, taken up, delivered, renounced or transferred in or into the
United States or any Overseas Territory. This document does not constitute an
offer to sell or issue or the solicitation of an offer to buy or subscribe for
Ordinary Shares or New Shares, in any jurisdiction in which such offers or
solicitations are unlawful.
This announcement has been approved for the purposes of Section 21 of the
Financial Services and Markets Act 2000 by Numis Securities Limited, which is
authorised by the Financial Services Authority Limited to act for Laura Ashley
Holdings plc in connection with the Rights Issue and will not be responsible to
anyone other than Laura Ashley Holdings plc for providing the protections
afforded to customers of Numis Securities Limited, or for providing advice in
relation to the Rights Issue.
The Directors of Laura Ashley Holdings plc are the persons responsible for the
information contained in this document. To the best of the knowledge and belief
of the Directors (who have taken all reasonable care to ensure that such is the
case) the information contained in this document is in accordance with the facts
and does not omit anything likely to affect the import of such information.
This summary should be read in conjunction with the full text of the following
announcement which follows.
ENQUIRIES:
Laura Ashley Holdings plc Tel: 020 7880 5100
David Cook
Brunswick Group Limited Tel: 020 7404 5959
Tom Buchanan
Numis Securities Limited Tel: 020 7776 1500
Charles Crick
For publication in the United Kingdom only. Not for release, publication or
distribution, directly or indirectly, in any other jurisdiction, including the
United States, Australia, Canada, Japan, New Zealand, the Republic of Ireland or
South Africa or their respective territories or possessions. Please refer to
the definitions at the end of this document.
LAURA ASHLEY HOLDINGS PLC
Rights Issue on a 1 for 4 basis
Of 149,207,073 New Shares
At 6 pence per New Share
Introduction
Following the announcement on 23 January 2003, the Board today announces the
issue, by way of rights, of 149,207,073 new Ordinary Shares at a price of 6
pence per new Ordinary Share, made on the basis of 1 new Ordinary Share for
every 4 Existing Shares held by Qualifying Shareholders on the Record date.
Bonham (a significant Shareholder in the Company) has irrevocably undertaken to
take up its rights under the Rights Issue and Bonham and BEA have together
agreed to underwrite the balance of the Rights Issue. Provisional Allotment
Letters for each Qualifying Non-CREST Shareholder will be dispatched on 16 April
2003, detailing the aggregate number of New Shares which such Qualifying
Non-CREST Shareholder has been provisionally allotted under the Rights Issue.
Qualifying CREST Shareholders (who will not receive a Provisional Allotment
Letter) will receive a credit to their appropriate stock accounts in CREST in
respect of their Nil Paid Rights on 17 April 2003.
Background to and reasons for the Rights Issue
In September 2002, the Company reported its interim results for the 26 weeks to
27 July 2002. These showed a Group loss before tax of #0.2 million for the six
month period, as against a #2.4 million profit before tax for the corresponding
period in 2001. At that time, the Group was expecting a stronger second half
performance than that achieved in the second half of the previous financial
year. However, following trading below expectations over the Christmas period
and, in January 2003, further weakness in Continental Europe and year end
adjustments, the Group is now anticipating a substantially lower result.
As announced in September 2002, over the first half, total like-for-like retail
sales in Continental Europe declined by 10 per cent. The Company undertook a
strategic review to determine the best way of addressing the problems in
Continental Europe. As part of its review, the Company announced in November
2002 that it was to close 5 stores in France and 6 stores in Germany.
In its trading update for the 23 week period ended 4 January 2003, the Company
reported that trading at its operations in Continental Europe had worsened and
that it had been necessary to discount stocks in those stores which had already
been scheduled to close. Total sales in Continental Europe over the period were
down by 7 per cent and margins were down significantly.
Following a disappointing Christmas trading period, the Company announced on 23
January 2003 that it intended to close a further 35 stores across Continental
Europe, including all of the stores in Germany. If these closures are
implemented, the Company will have 19 stores in Continental Europe, in the
Netherlands, Belgium, Luxembourg, Switzerland, Italy, France and Austria. The
Directors estimate that the 46 stores announced as subject to closure made a
loss before tax and before exceptional items in the year ended 25 January 2003
of #6.2 million.
Of the 46 stores identified for closure, 16 stores have now been closed
(including two stores in France) and a further 8 French stores are in the
process of being closed. The leases attaching to certain of the French stores
have been disposed of for an aggregate consideration of approximately Euro1.5
million (c.#0.9 million). This leaves a further 22 stores to be closed under the
proposed closure programme.
On the basis of the planned closure programme, the net proceeds of the Rights
Issue (approximately #8.2 million) will be used to recapitalise certain of the
Group's subsidiaries in Continental Europe in order to reverse net asset
deficits arising, inter alia, from provisions relating to the closure programme,
thereby enabling the subsidiaries to continue trading. Out of these proceeds, it
is expected that approximately #4.9 million will be expended in costs arising
from the closures, comprising rent payments (#2.6 million), notice and
redundancy payments (#1.7 million) and other costs (#0.6 million). The Directors
anticipate that the balance of the net proceeds will be repatriated over time to
the United Kingdom and will be available as additional working capital.
To the extent that the Rights Issue proceeds are not required in order to
facilitate the closure of the remaining identified stores, they will be used to
fund the working capital requirements of the Group.
Result estimate
For the year ended 25 January 2003, the Directors estimate that the Group will
report an approximate loss before tax and before exceptional items of #4.9
million and a loss before tax and after exceptional items of #14.1 million. The
estimated result before exceptional items is in line with the Company's
statement dated 13 March 2003 in which the Company indicated that it expected to
make a loss for the full year of #5 million before tax and exceptional items.
The exceptional items which total #9.2 million are broadly consistent with the
Company's previously published statements of expected charges of #8.7 million
resulting from the closure of the 46 stores in Continental Europe referred to
above.
Disposal proposals
Since announcing the closure programme, the Company has received proposals for
the disposal of all the 41 remaining stores in Continental Europe. This includes
the 19 stores which are not scheduled for closure. These proposals are at an
early stage and are subject to a number of detailed terms and conditions.
Accordingly, it is not possible to predict now whether any of these proposals
will materialise. However, the Board expects that if these disposals proceed,
the stores which would remain open would continue to trade under the Laura
Ashley franchise. If, instead of the closure programme, the Group proceeds with
these disposals, the Directors expect that the cash costs which the Group would
otherwise incur under the closure programme would be reduced by approximately
#2.5 million. In this event, the Directors consider it likely that the Group
would incur additional exceptional provisions of up to #1 million. However, the
Directors expect that these additional provisions would be more than offset by
premiums which the Group anticipates it would receive on disposal of certain of
the Group's premises in Continental Europe.
Current trading and Group prospects
The current financial year started on 26 January 2003. Movements in
like-for-like turnover and margins for the 8 week period from this date to 22
March 2003, as extracted without material adjustment from the Group's accounting
records, are set out below:
UK Continental Europe TOTAL
Fashion Home Total Fashion Home Total Fashion Home Total
Sales 6.8% 7.2% 7.1% -10.3% -17.6% -15.3% 4.0% 3.6% 3.7%
Margins 0.9% 10.0% 7.4% -38.2% -23.1% -27.2% -4.8% 4.8% 2.1%
Despite continuing difficult trading conditions, like-for-like performance,
which is measured by, inter alia, reference to orders received, for the 8 weeks
ended 22 March 2003 has been promising in the UK. Fashion sales in the UK have
been bolstered by a larger order book from the mail order business in addition
to stronger underlying sales to customers using the Laura Ashley account card.
Home furnishing sales in the UK also started slowly but have strengthened in
recent weeks, contributing to increased like-for-like growth in both sales and
margins in the 8 week period.
Movements in like-for-like turnover and margins for the 11 week period from 26
January 2003 to 12 April 2003 (being the latest practicable date for which
figures are available), as extracted without material adjustment from the
Group's accounting records, are also set out below. It is to be noted that the
figures for this period are not directly comparable with the results of the
corresponding period in 2002 because these included trading over the
traditionally busy Easter period occurring in the last two weeks of March last
year and because of the timing of various promotions.
UK Continental Europe TOTAL
Fashion Home Total Fashion Home Total Fashion Home Total
Sales 4.6% 0.6% 1.8% -18.9% -21.7% -20.7% 0.9% -2.5% -1.4%
Margins 2.1% 5.0% 4.1% -40.4% -26.6% -30.8% -4.4% 0.3% -1.2%
The Company identified in its announcement dated 23 January 2003 that conditions
in Europe had been poor and that as a result a further 35 stores in Continental
Europe would be closed. Conditions since this announcement have continued to be
difficult and, indeed, the uncertainty surrounding the future of the Group's
operations in Continental Europe has further impacted on like-for-like sales and
margins in the 11 week period to 12 April 2003. The Directors have also decided
to introduce a cost-savings initiative which will be implemented immediately and
will include savings in capital expenditure and general overheads. The Company
is confident that the closure and/or disposal of the European stores and the
cost savings will put the Company in a stronger position going forward as
efforts are concentrated on the remaining more profitable operations in the UK
and (to the extent remaining) in Continental Europe.
Working Capital
The Directors are of the opinion that, taking into account the proceeds of the
Rights Issue and available bank facilities and shareholder loan facilities (from
MUI Asia and Bonham), the working capital available to the Group is sufficient
for the Group's present requirements, that is for at least the next 12 months
from the date of publication of the prospectus. Without the Rights Issue the
Group would have required the continued support of its bankers and further
funding to carry on its business as currently conducted
Details of the agreements relating to the Rights Issue
Bonham and BEA have, between them, agreed to underwrite the proposed Rights
Issue (other than in respect of Bonham's own rights which it has agreed to take
up in full) and Laura Ashley has entered into separate Underwriting Agreements
with Bonham and BEA. The Underwriting Agreements are conditional on the
admission of the New Shares to the Official List of the London Stock Exchange
becoming effective not later than 9.00 am on 17 April 2003 or such later date as
Bonham and BEA agree. Under its Underwriting Agreement, BEA has agreed to
underwrite all the rights in respect of MUI Asia's shareholding in the Company
(42.9 per cent approximately) to the extent that these rights are not taken up.
Under its Underwriting Agreement, Bonham has agreed to underwrite the balance of
the Rights Issue excluding its own entitlement. Each of Bonham and BEA has
confirmed to Laura Ashley that it intends to finance its underwriting of the
Rights Issue from its own resources and has also represented and warranted to
Laura Ashley that it has the necessary non-contingent sterling funds to effect
its underwriting.
BEA is a large independent bank in Hong Kong, with total assets of HK$185
billion (US$23.7 billion) as of 31 December 2002. BEA is listed on the Stock
Exchange of Hong Kong and is one of the constituent stocks of the Hang Seng
Index. Dr Khoo Kay Peng (the Company's Chairman) is a non-executive director of
BEA.
Background on Bonham, MUI Asia and BEA
Bonham, an investment holding company incorporated in the British Virgin
Islands, is indirectly owned and controlled by Dr Khoo Kay Peng. Bonham
currently holds 72,356,867 Ordinary Shares, representing approximately 12.1 per
cent of the Company's current issued share capital.
Dr Khoo Kay Peng also holds an indirect interest in 13.6 per cent of the issued
share capital of MUI, the holding company of MUI Asia. MUI Asia subscribed in
May 1998 for 159,154,212 Ordinary Shares at a price of 28 pence each, which gave
it a 40% stake in the enlarged issued share capital of the Company.
As a result of the rights issue approved by shareholders in May 1999, which was
underwritten by MUI Asia and Bonham, and following subsequent share sales, MUI
Asia's current shareholding is 255,938,185 Ordinary Shares representing
approximately 42.9 per cent of the Company.
Implications of the Rights Issue
As a result of its underwriting commitment under the Underwriting Agreement, if
any Shareholder (other than MUI Asia) does not take up his rights, Bonham will
take up these rights and will increase its stake further.
If no other Shareholders (other than Bonham and the Directors) take up their
rights, Bonham will own approximately 21.07% of the enlarged issued share
capital of the Company.
Under the authorities granted to them on 13 June 2002 at the Company's last
annual general meeting, the Directors are empowered to allot Ordinary Shares
under the Rights Issue. After the issue of the New Shares under the Rights
Issue, the Company's authorised but unissued share capital which is not reserved
for issue under the Company's share option schemes will amount to #2,159,034
representing approximately 5.8 per cent of the Company's enlarged issued share
capital.
Laura Ashley Retirement Benefit Scheme
A full actuarial valuation of the Scheme was carried out at 25 January 2003 by a
qualified independent actuary. On the basis of this valuation, the funding level
of the Scheme as at 25 January 2003 was 107 per cent of the minimum funding
requirement. On an on-going valuation basis, however, the scheme has a shortfall
of #10.2million. The employer's contribution rate remains at 15.9 per cent of
salaries which the Directors believe is sufficient to continue to meet the
minimum funding requirement.
Directors' intentions
David Walton Masters, Sally Cheong Siew Mooi and Lillian Tan Lian Tee have
irrevocably undertaken to take up their rights under the Rights Issue. Their
holdings when aggregated with the Chairman's held through Bonham represent
approximately 12.4 per cent of the Company's issued share capital.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record date for the Rights Issue 10 April 2003
Nil Paid Rights credited to stock accounts in CREST of Qualifying 17 April 2003
CREST Shareholders and enabled
Admission of, and commencement of dealings in, New Shares, nil paid 17 April 2003
Recommended latest time for requesting withdrawal of Nil Paid Rights 4.30 pm on 30 April 2003
from CREST
Recommended latest time for depositing renounced Provisional 3.00 pm on 1 May 2003
Allotment Letters into CREST or for dematerializing nil Paid Rights
or Fully Paid Rights into a CREST Stock Account
Latest time for splitting Provisional Allotment Letters, nil or 3.00 pm on 2 May 2003
fully paid
Latest time and date for acceptance, payment in full and 10.30 am on 7 May 2003
registration of renunciation
Latest time and date for settlement of transfers of Fully Paid 10.30 am on 7 May 2003
Rights in CREST
Commencement of dealings in New Shares, fully paid 8.00 am on 8 May 2003
New Shares in uncertificated form credited to stock accounts in 8 May 2003
CREST
Despatch of definitive certificates for New Shares by 14 May 2003
DEFINITIONS
The following definitions apply throughout this document unless the context
otherwise requires:
"1985 Share Option Scheme" the Laura Ashley Share Option Scheme 1985
"1995 Share Option Scheme" the Laura Ashley 1995 Executive Share Option Scheme
"the Act" the Companies Act 1985, as amended
"Admission" the admission of the New Shares, in nil paid form, to the
Official List becoming effective in accordance with the Listing
Rules and to trading on the London Stock Exchange's market for
listed securities in accordance with the Admission and Disclosure
Standards issued by the London Stock Exchange
"BDO" BDO Stoy Hayward
"BEA" The Bank of East Asia Limited
"Board" the board of directors of Laura Ashley
"Bonham" Bonham Industries Limited of Offshore Incorporations Centre, P.O.
Box 957, Road Town, Tortola, British Virgin Islands, an
investment company indirectly owned and controlled by Dr Khoo Kay
Peng
"Business Day" any day (excluding Saturdays and Sundays) on which banks are open
in London for normal banking business
"Cert Day" 14 May 2003
"certificated" or "in certificated a share or other security which is not in uncertificated form
form"
"City Code" the City Code on Takeovers and Mergers
"Communications Host" the Network providers' Communications Host (as defined in the
Glossary to the CREST Manual)
"CREST" the relevant system for the paperless settlement of trades in
securities and the holding of uncertificated securities operated
by CRESTCo Limited in accordance with the Regulations
"CRESTCo" CRESTCo Limited
"CREST member" a person who has been admitted by CRESTCo as a system member (as
defined in the Regulations)
"CREST participant" a person who is, in relation to CREST, a system participant (as
defined in the Regulations)
"CREST sponsor" a CREST participant admitted to CREST as a CREST sponsor
"CREST sponsored member" A CREST member admitted to CREST as a sponsored member (which
includes all CREST personal members)
"CREST Stock Account" a Qualifying Shareholder's CREST Stock Account
"Directors" the directors of Laura Ashley
"Existing Shares" the existing issued Ordinary Shares on the Record Date
"Fully Paid Rights" fully paid rights to acquire New Shares
"Independent Directors" Nick Ashley, Motoya Okada, David Walton Masters and John
Thornton, (and/or their replacements) being, for this purpose,
directors of Laura Ashley who are not related to Bonham, MUI or
MUI Asia
"Laura Ashley" or the "Company" Laura Ashley Holdings plc
"Laura Ashley Group" or "Group" Laura Ashley and its subsidiaries
"Listing Rules" the rules and regulations made by the UK Listing Authority under
Part VI of the Financial Services and Markets Act 2000
"London Stock Exchange" London Stock Exchange plc
"member account ID" the identification code or number attached to any member account
in CREST
"MUI" Malayan United Industries Berhad of 14th Floor, MUI Plaza, Jalan
P. Ramlee, 50250 Kuala Lumpur, Malaysia
"MUI Asia" MUI Asia Limited of 14th Floor, National Mutual Centre, 151
Gloucester Road, Wanchai, Hong Kong, an investment holding
company incorporated in Hong Kong and a wholly owned subsidiary
of MUI
"MUI Group" MUI, its subsidiaries and associated companies
"New Shares" the 149,207,073 new Ordinary Shares to be issued pursuant to the
Rights Issue
"Nil Paid Rights" the New Shares in nil paid form provisionally allotted to
Qualifying Shareholders pursuant to the Rights Issue
"Numis Securities" Numis Securities Limited
"Official List" the Official List of the UKListing Authority
"Option Holders" holders of options under the 1985 Share Option Scheme and the
1995 Share Option Scheme
"Ordinary Shares" ordinary shares of 5 pence each in the capital of Laura Ashley
"Overseas Shareholders" holders of Ordinary Shares with registered addresses outside the
United Kingdom and who have not given the Company an address for
service of notices within the United Kingdom
"Overseas Territory" any territory outside the United Kingdom
"participant ID" the identification code or membership number used in CREST to
identify a particular CREST member or other CREST participant
"Placing Letter" the letter dated 16 April 2003 from the Company to Numis
Securities relating to the sale of fractional entitlements and
rights of certain Overseas Shareholders and rights in respect of
New Shares not taken up pursuant to the Rights Issue
"Provisional Allotment Letter" the renounceable provisional allotment letter enclosed with this
document to Qualifying Non-CREST Shareholders (other than certain
Overseas Shareholders) in connection with the Rights Issue
"Qualifying CREST Shareholders" Qualifying Shareholders whose Ordinary Shares are in
uncertificated form
"Qualifying Non-CREST Shareholders" Qualifying Shareholders whose Ordinary Shares are in certificated
form
"Qualifying Shareholders" Shareholders whose names are on the register of members of the
Company at the close of business on the Record date
"Record date" close of business on 10 April 2003
"Registrars" Computershare Investor Services PLC
"Regulations" the Uncertificated Securities Regulations 2001 (SI2001/3755) as
amended
"Rights Issue" the proposed issue of 149,207,073 Ordinary Shares by way of
rights as described in this document
"Rights Issue Price" the price of 6 pence at which the New Shares are being offered
pursuant to the Rights Issue
"Shareholders" the holders of Ordinary Shares
"Stock account" an account within a member account in CREST to which a holding of
a particular share or other security in CREST is credited
"Underwriting Agreements" the two agreements respectively between the Company and Bonham
and the Company and BEA relating to the Rights Issue
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority" the Financial Services Authority acting in its capacity as the
competent authority for the purposes of Part VI of the Financial
Services and Markets Act 2000.
The Nil Paid Rights, Fully Paid Rights and New Shares and the Provisional
Allotment Letters have not been and will not be registered under the United
States Securities Act of 1933 (as amended) or under the securities laws of any
state of the United States. Accordingly, subject to certain exceptions, the New
Shares and the Provisional Allotment Letters may not be, directly or indirectly,
offered, sold, taken up, delivered, renounced or transferred in or into the
United States or any Overseas Territory. This document does not constitute an
offer to sell or issue or the solicitation of an offer to buy or subscribe for
Ordinary Shares or New Shares, in any jurisdiction in which such offers or
solicitations are unlawful.
This announcement has been approved for the purposes of Section 21 of the
Financial Services and Markets Act 2000 by Numis Securities Limited, which is
authorised by the Financial Services Authority Limited to act for Laura Ashley
Holdings plc in connection with the Rights Issue and will not be responsible to
anyone other than Laura Ashley Holdings plc for providing the protections
afforded to customers of Numis Securities Limited, or for providing advice in
relation to the Rights Issue.
The Directors of Laura Ashley Holdings plc are the persons responsible for the
information contained in this document. To the best of the knowledge and belief
of the Directors (who have taken all reasonable care to ensure that such is the
case) the information contained in this document is in accordance with the facts
and does not omit anything likely to affect the import of such information. The
summary should be read in conjunction with the full text of this announcement.
For publication in the United Kingdom only. Not for release, publication or
distribution, directly or indirectly, in any other jurisdiction, including the
United States, Australia, Canada, Japan, New Zealand, the Republic of Ireland or
South Africa or their respective territories or possessions. Please refer to
the definitions at the end of this document.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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