FIRSTGROUP PLC
PROPOSED TENDER OFFER
- Proposed tender offer to return up to £500 million to
shareholders at 105 pence per
share
- Premium of 9.2 per cent. to the closing price on 26
October
- Tender Offer subject to shareholder approval; circular to be
published today
- Irrevocable undertaking from Coast Capital Management to
support the resolutions and tender its full holdings
- Tender proceeds expected to be despatched to Shareholders in
December
FirstGroup plc (“FirstGroup” or the “Company”) announces the
proposed return of up to £500 million to its shareholders (the
“Shareholders”) by way of a tender offer at 105 pence per share (the “Tender Offer”, which is
summarised below).
On 22 July 2021, FirstGroup
completed the disposal of its First Student and First Transit
businesses to EQT Infrastructure (the “Transaction”) for net
disposal proceeds of $3,123 million
(the “Net Disposal Proceeds”). On the same date, FirstGroup
announced its intention to increase the proposed return of value to
£500 million from £365 million previously (the “Return of
Value”).
Following consultation with Shareholders, the Board has decided
that the appropriate first step is to conduct the Return of Value
by way of the Tender Offer. Shareholders are therefore being
invited to tender some or all of their Ordinary Shares for purchase
on the terms and subject to the Conditions set out in the Circular
to be published today.
Shareholders may decide not to participate fully or partially in
the Tender Offer for a number of reasons, including their view of
the potential for the value of the Company to increase in the
future. If the full £500 million is not returned to Shareholders
through the Tender Offer, the Board intends to undertake a second
phase of the Return of Value to return any remaining surplus cash
following completion of the Tender Offer to Shareholders. If
required, it is expected that this second phase would take place by
way of a share buyback of up to approximately £50 million, with any
meaningful surplus above this amount being returned by way of a
special dividend (with accompanying consolidation and sub-division
of the Company’s share capital (the “Share Consolidation”)).
In addition to the Return of Value, the Board reiterates its
commitment to keeping the balance sheet position of the Group under
review and will consider the prospects for making further
additional distributions to Shareholders in due course, following
crystallisation of the First Transit Earnout of up to $240 million (fair valued in the Group’s recent
full year results at $140 million
(£102 million) for accounting purposes), realisation of value from
the sale of the properties retained and consideration deferred in
the recent sale of Greyhound Lines Inc. to FlixMobility GmbH, and
the potential release of monies from pension escrow (of up to £117
million). The Board also notes the capacity to increase gearing
over time, as end market conditions and hence business performance
improves.
Commenting, David Martin,
FirstGroup Executive Chairman said:
"I am very pleased to announce the launch of the proposed Tender
Offer. This marks the culmination of our portfolio rationalisation
strategy, as announced in December
2019, which has refocused the Group on its leading UK public
transport businesses. In doing so, we have created a cash
generative company with a well-capitalised balance sheet, a focused
strategy and attractive growth prospects in our markets. The policy
backdrop in the UK has never been more supportive and public
transport has a critical role to play in helping communities and
economies build back better and more sustainably. The premium for
the Tender Offer reflects our confidence in our future prospects,
as well as the substantial further sums expected to be realised by
the Group over time from the disposals completed this year."
Key elements of the Tender Offer
- £500 million is available to be returned to Qualifying
Shareholders via the purchase of up to 476,190,476 Ordinary Shares
(representing up to approximately 38.9 per cent. of the Issued
Ordinary Share Capital).
- The Tender Price will be 105
pence per Ordinary Share, a premium of 9.2 per cent. to the
closing price of 96.15 pence per
Ordinary Share on 26 October
2021.
- The Tender Offer is conditional on, among other things, the
approval of Shareholders, which will be sought at a general meeting
of the Company to be held at 11 a.m.
on 18 November 2021 (the "General
Meeting").
- The Company will also seek authority to undertake the second
phase of the Return of Value at the General Meeting.
- The Tender Offer will open on 28 October
2021 and will close at 1.00
p.m. on 29 November 2021.
- Proceeds are expected to be despatched to Shareholders who
successfully tender Ordinary Shares in December 2021.
Coast Capital Management participation in the Tender
Offer
Coast Capital Management currently controls, in aggregate,
156,749,809 Ordinary Shares, representing approximately 12.82 per
cent. of the Issued Ordinary Share Capital as at the Latest
Practicable Date. Coast Capital Management will participate in the
Tender Offer in full, and has irrevocably undertaken to vote in
favour of the Resolutions and to tender, in aggregate, 156,749,809
Ordinary Shares under the Tender Offer at the Tender Price.
Benefits of the Tender Offer
The benefits of the Tender Offer for Shareholders as a whole are
that:
- it is available to all Qualifying Shareholders regardless of
the size of their holdings;
- it means Qualifying Shareholders who participate will receive,
for Ordinary Shares successfully tendered, a Tender Price that
represents a premium of 9.2 per cent. to the closing price of
96.15 pence per Ordinary Share on
26 October 2021;
- it provides Qualifying Shareholders who wish to reduce their
holdings of Ordinary Shares with an opportunity to do so at a
market-driven price with an appropriate premium; and
- it permits Shareholders who wish to retain their current
investment in FirstGroup and their Ordinary Shares to do so and no
Shareholder is required to participate in the Tender Offer.
The Company intends to cancel all of the Ordinary Shares
acquired in connection with the Tender Offer. As a result, the
Tender Offer should have a positive impact on the Group’s earnings
per share (assuming earnings stay the same).
Current trading update
On 21 October 2021, FirstGroup
announced the sale of Greyhound Lines, Inc. (the US Greyhound
operating business) to a wholly-owned subsidiary of FlixMobility
GmbH ("FlixMobility"), completing the Company’s stated strategy to
focus on its leading UK public transport businesses. The sale was
not subject to any closing conditions and completed on the same
day. The announcement noted that the sale resulted in cash
consideration to the Group of $172m
(comprising $140m paid initially,
with $32m in unconditional deferred
consideration to be paid in instalments over eighteen months from
the sale), that certain Greyhound properties have been retained by
FirstGroup (initially being leased back to Greyhound at market
rates but expected to be sold over the next three to five years)
and that FirstGroup retains certain legacy Greyhound net
liabilities (including pension, self-insurance, finance leases
settled at closing of the sale, grant receivables, liability buyout
premia and certain other items).
On 21 October 2021, the Group also
stated that "trading in the Group's continuing businesses year to
date has been in line and there is no change to management's
expectations” for the continuing Group for the current financial
year, and that following the Greyhound transaction "and with
certain First Bus capital expenditure payments now falling after
the period end and better than expected working capital flows, the
Group estimates that adjusted net debt1 at the end of
the current financial year will be c.£ 80-90m lower than previously expected, in the range
of £10-20m."
There has been no significant change to the current trading of
the Group since these announcements were made.
Further information
A shareholder circular (the "Circular") containing the full terms
and conditions of the Tender Offer and instructions to Qualifying
Shareholders on how to tender their Ordinary Shares should they
wish to do so, and convening the General Meeting, is expected to be
published today. The Circular will be available on the Company's
website at www.firstgroupplc.com/tenderoffer and copies of the
Circular will also be submitted to the National Storage Mechanism
and be available for inspection at www.morningstar.co.uk/nsm.
This summary should be read in conjunction with the full text of
this announcement and the Circular.
Contacts at FirstGroup:
Faisal Tabbah, Head of Investor
Relations
Stuart Butchers, Group Head of Communications
Tel: +44 (0) 20 7725 3354
corporate.comms@firstgroup.co.uk
Contacts at Brunswick PR:
Andrew Porter / Simone Selzer, Tel: +44 (0) 20 7404 5959
Advisers:
Goldman Sachs International
Eduard van Wyk, Bertie Whitehead, Anna
Reynolds
J.P. Morgan Cazenove
Charles Harman, Richard Perelman, Poppy
Barrett-Fish
Notes
1 'Adjusted net debt' excludes First Rail ring-fenced
cash and IFRS 16 lease liabilities from net debt, as defined in the
FY21 results.
Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93.
Classification as per DTR 6 Annex 1R: 2.2. This announcement
contains inside information. The person responsible for arranging
the release of this announcement on behalf of FirstGroup is
David Isenegger, Group General
Counsel and Company Secretary.
FirstGroup plc (LSE: FGP.L) is a leading private sector provider
of public transport services. With £4.3 billion in revenue and
around 30,000 employees, our UK divisions transported nearly
700,000 passengers a day in the 52 weeks to 27 March 2021. First Bus is the second largest
regional bus operator in the UK, serving two-thirds of the UK’s 15
largest conurbations with a fleet of c.5,000 buses. First Rail is
the UK’s largest rail operator, with many years of experience
running long-distance, commuter, regional and sleeper rail
services. We operate a fleet of c.3,750 rail vehicles on four
contracted operations (Avanti, GWR, SWR, TPE) and two open access
routes (Hull Trains and Lumo, our new East Coast service launching
later in 2021). We create solutions that reduce complexity, making
travel smoother and life easier. Our businesses are at the heart of
our communities and the essential services we provide are critical
to delivering wider economic, social and environmental goals. We
are formally committed to operating a zero-emission First Bus fleet
by 2035 and to cease purchasing further diesel buses after 2022;
and First Rail will help support the UK Government’s goal to remove
all diesel-only trains from service by 2040. Visit our website at
www.firstgroupplc.com and follow us @firstgroupplc on Twitter.
FIRSTGROUP PLC
PROPOSED TENDER OFFER TO RETURN UP TO £500 MILLION TO
SHAREHOLDERS
FirstGroup PLC (“FirstGroup” or the “Company”)
announces the proposed return of up to £500 million to its
shareholders (the “Shareholders”) by way of a tender
offer.
1. BACKGROUND TO AND BENEFITS OF THE
TENDER OFFER
Background to the Tender Offer
On 21 July 2021, FirstGroup
completed the disposal of First Student and First Transit to EQT
Infrastructure (the “Transaction”). As announced on
22 July 2021, the net disposal
proceeds from the Transaction were $3,123
million (the “Net Disposal Proceeds”), an increase of
$58 million over the base amount
previously announced by the Company due to the final adjustments
for working capital and debt and debt-like items as described in
the circular in relation to the Transaction published by the
Company on 10 May 2021 (the
“Transaction Circular”). On the same date, FirstGroup
announced its intention to increase the proposed return of value to
£500 million (equivalent to approximately 41
pence per share at the time of announcement) from £365
million (the “Return of Value”). Such increase is due to the
increase in Net Disposal Proceeds (as set out above), the increased
clarity for First Rail resulting from agreement of South Western
Railway and TransPennine Express National Rail Contracts and
final rail franchise termination sums, and a more positive cashflow
outlook for the Group than had been previously anticipated.
As well as enabling the Return of Value, the Transaction allows
the Group to make a £337 million contribution to the UK DB Pension
Schemes (of which up to £117 million will be held in escrow and may
be released back to the Group on conclusion of subsequent triennial
valuations from 2024 onwards, depending on scheme performance) and
to address other longstanding liabilities including those relating
to the Greyhound business (“Greyhound”)) while ensuring the
business is appropriately capitalised to continue investing for the
future.
Following consultation with Shareholders, the Board has decided
that the appropriate first step is to conduct the Return of Value
by way of a Tender Offer. Shareholders are therefore being invited
to tender some or all of their Ordinary Shares for purchase on the
terms and subject to the Conditions set out in the
Circular.
Shareholders may decide not to participate fully or partially in
the Tender Offer for a number of reasons, including their view of
the potential for the value of the Company to increase in the
future. If the full £500 million is not returned to Shareholders
through the Tender Offer, the Board intends to undertake a second
phase of the Return of Value to return any remaining surplus cash
following completion of the Tender to Shareholders. This second
phase of the Return of Value will be influenced by the size of any
amount that has not been returned via the Tender Offer. In
such circumstances, if there is sufficient surplus, the Board
intends to return approximately £50 million of it by way of a share
buyback, with any meaningful surplus above this amount being
returned by way of a Special Dividend (with accompanying Share
Consolidation). The role of the Share Consolidation is to seek to
ensure that the price per Ordinary Share remains materially
unaffected by any Special Dividend, all other things being
considered.
Why is FirstGroup pursuing the Tender
Offer?
In line with the Company’s announcements of its intention to
return up to £500 million of cash to Shareholders, the Board has
considered the different ways of returning these funds, and has
consulted with Shareholders on the different methods which are
typically used to do so. Following that consideration and
consultation, the Board concluded that a Tender Offer made at an
appropriate premium to the price per share of Ordinary Shares, is
the best way to return a significant amount of capital to
Shareholders in a short space of time, taking account of the
relative costs, complexity and timeframes of the various possible
methods, as well as the likely tax treatment for Shareholders. The
Board recognises that the Tender Offer may not return the full £500
million so has set out a clear route to effectively return any
amount not returned via the Tender Offer.
Benefits of the Tender Offer for
Shareholders
The benefits of the Tender Offer for Shareholders as a whole are
that:
- it is available to all Qualifying Shareholders regardless of
the size of their holdings;
- it means Qualifying Shareholders who participate will receive,
for Ordinary Shares successfully tendered, a Tender Price that
represents a premium of 12.4 per cent. to the closing price of
93.4 pence per Ordinary Share on the
Latest Practicable Date (being 25 October
2021) and a premium of 16.9 per cent. to the volume weighted
average price per Ordinary Share over the one month to the Latest
Practicable Date;
- it provides Qualifying Shareholders who wish to reduce their
holdings of Ordinary Shares with an opportunity to do so at a
market-driven price with an appropriate premium; and
- it permits Shareholders who wish to retain their current
investment in FirstGroup and their Ordinary Shares to do so and no
Shareholder is required to participate in the Tender Offer.
The Tender Offer will reduce the number of Ordinary Shares in
issue, and so should, assuming earnings stay the same, have a
positive impact on the Group’s earnings per share (as the Company
intends to cancel all of the Ordinary Shares acquired in connection
with the Tender Offer).
Coast Capital Management currently controls, in aggregate,
156,749,809 Ordinary Shares, representing approximately 12.82 per
cent. of the Issued Ordinary Share Capital as at the Latest
Practicable Date. Coast Capital Management intends to participate
in the Tender Offer in full, and has irrevocably undertaken to vote
in favour of the Resolutions and to tender, in aggregate,
156,749,809 Ordinary Shares under the Tender Offer at the Tender
Price. Further details of this irrevocable undertaking are set out
in the Circular.
General Meeting to approve the Tender
Offer and the potential further phase of the Return of Value
The Tender Offer will require the approval of Shareholders at a
general meeting of the Company, which will be held at Queen
Elizabeth II Centre, Broad Sanctuary, Westminster, London, SW1P 3EE on 18
November 2021 at 11:00am.
There is no guarantee that the Tender Offer will return the full
sum of £500 million to Qualifying Shareholders. If the full
£500 million is not returned through the Tender Offer, if there is
sufficient surplus, the Board intends to return approximately £50
million of the surplus by way of a share buyback, with any
meaningful surplus above this amount being returned by way of a
special dividend (the “Special Dividend”) (with accompanying
Share Consolidation). The Company is therefore also taking the
opportunity at the General Meeting to consider certain matters in
addition to the Tender Offer Resolution which would require
Shareholder approval if, to complete the Return of Value, the New
Buyback Authority were to be used or a Special Dividend were to be
paid, including:
- a resolution authorising the Company to purchase up to a
maximum of 122,281,244 Ordinary Shares, representing approximately
10 per cent. of the Issued Ordinary Share Capital as at the Latest
Practicable Date, which would be used to return to Shareholders
approximately £50 million of the Net Disposal Proceeds not returned
through the Tender Offer (the “New Buyback Authority”). This
New Buyback Authority would replace the Existing Buyback Authority
which was approved at the Company’s AGM on 13 September 2021; and
- a resolution authorising the Board to effect a consolidation
and sub-division of the Company’s share capital (the “Share
Consolidation”), which may be appropriate if a Special Dividend
is paid to ensure that the market price per New Ordinary Share
immediately after the payment of the Special Dividend would be
approximately equal to the market price per Ordinary Share
immediately before such payment.
By requesting these authorities now, the Board is seeking to
ensure that the Company will be able to act quickly and without the
delay and cost of convening a further general meeting if the Board
does subsequently decide to return a portion of the £500 million
not returned by the Tender Offer by way of a repurchase of Ordinary
Shares and, if applicable, payment of a Special Dividend (with
accompanying Share Consolidation). Further information about the
New Buyback Authority and the Share Consolidation is set out in the
Circular.
It is noted that there is no guarantee that, if the full £500
million is not returned through the Tender Offer, any repurchase of
Ordinary Shares or Special Dividend for any surplus not returned
will be paid, as such matters will be subject to the determination
of the Board at the relevant time, including an assessment of
prevailing equity market conditions, the capital needs of the
Group, the sufficiency of distributable reserves and other factors,
and the Board reserves the right to pursue alternative uses of the
available funds, including for alternative share buybacks or
dividends, or investment purposes.
2. THE TENDER OFFER
Overview of the Tender Offer
It is proposed that up to 476,190,476 Ordinary Shares
(representing approximately 38.9 per cent. of the Issued Ordinary
Share Capital as at the Latest Practicable Date) be purchased under
the Tender Offer, for a maximum aggregate cash consideration of
£500 million.
Full details of the Tender Offer, including the terms and
conditions on which it is made, are set out in Part IV (Details
of the Tender Offer) of the Circular and in the Tender Form.
Shareholders do not have to tender any Ordinary Shares.
All Qualifying Shareholders who are on the Register at
6.00 p.m. on 29 November 2021 are entitled, but not required,
to tender some or all of their Ordinary Shares for purchase by
Goldman Sachs, acting as principal, pursuant to the requirements
set out in the Circular.
Tenders will only be accepted at the Tender Price. The Tender
Price represents a premium of 12.4 per cent. to the closing price
of 93.4 pence per Ordinary Share on
the Latest Practicable Date and represents a premium of 16.9 per
cent. to the volume weighted average price per Ordinary Share over
the one month to the Latest Practicable Date.
Subject to satisfaction of the Conditions to the Tender Offer,
Ordinary Shares which are successfully tendered under the Tender
Offer will be purchased at a price of 105
pence per Ordinary Share.
The Issued Ordinary Share Capital on the Latest Practicable Date
was 1,222,969,677. If the Tender Offer is implemented in full, this
will result in the purchase of 476,190,476 Ordinary Shares
(representing approximately 38.9 per cent. of the Issued Ordinary
Share Capital of FirstGroup on the Latest Practicable Date). The
Issued Ordinary Share Capital of FirstGroup following the
cancellation of the Ordinary Shares (after FirstGroup has acquired
all validly tendered and purchased Ordinary Shares from Goldman
Sachs) will be 746,621,972, assuming no further options are
exercised for newly issued shares in the interim. Shareholders
should note that the Issued Ordinary Share Capital numbers referred
to in this paragraph take no account of any further dilution which
may be caused by the Share Plans, which is explained in further
detail in the Circular.
The Tender Offer is to be effected by Goldman Sachs (acting as
principal and not as agent, nominee or trustee) purchasing Ordinary
Shares from Shareholders. Goldman Sachs, in turn, has the right to
require the Company to purchase from it, and can be required by the
Company to sell to it, such Ordinary Shares at the Tender Price
under an option agreement (the “Option Agreement”), details
of which are set out in the Circular. All Ordinary Shares
purchased by the Company from Goldman Sachs pursuant to the Option
Agreement will be cancelled.
Options available to Shareholders in respect of the
Tender Offer
Qualifying Shareholders are not obliged to tender any Ordinary
Shares if they do not wish to do so. If no action is taken by
Qualifying Shareholders, there will be no change to the number of
Ordinary Shares that they hold and they will receive no cash as a
result of the Tender Offer.
Each Qualifying Shareholder who wishes to participate in the
Tender Offer is entitled to submit a tender to sell some or all of
their Ordinary Shares.
The total number of Ordinary Shares tendered by any Qualifying
Shareholder should not exceed the total number of Ordinary Shares
registered in the name of that Qualifying Shareholder at the Record
Date. For example, a Qualifying Shareholder may decide to
tender 50 per cent. of their Ordinary Shares, but if a Qualifying
Shareholder returned a tender purporting to offer for sale more
than 100 per cent. of their Ordinary Shares, they would be deemed
to have tendered only the number of Ordinary Shares actually owned
by that Shareholder on the Record Date, with the tender in respect
of any additional shares being deemed invalid.
Once made, any tender of Ordinary Shares will be
irrevocable.
The Tender Offer will open on 28 October
2021 (unless such date is altered by the Company in
accordance with the Tender Offer). The Tender Offer will close at
1.00 p.m. on 29 November 2021 and tenders received after that
time will not be accepted (unless the Closing Date is extended by
the Company in accordance with the Tender Offer).
Shareholders should note that the Tender Offer is conditional
on, among other things, the passing at the General Meeting of the
Tender Offer Resolution as set out in the Notice of General
Meeting.
Number of Ordinary Shares that will be
purchased pursuant to the Tender Offer
All Shareholders who tender Ordinary Shares will receive the
Tender Price, subject, where applicable, to the scaling-down
arrangements set out in the Circular. Accordingly, where
scaling-down applies there is no guarantee that all of the Ordinary
Shares which are tendered by Qualifying Shareholders will be
accepted for purchase.
If more than 476,190,476 Ordinary Shares are validly tendered by
Shareholders, acceptances of validly tendered Ordinary Shares will
be scaled-down to determine the extent to which individual tenders
are accepted.
These scaling-down arrangements are set out in full in the
Circular and should be read in full.
Guaranteed Entitlement
The Guaranteed Entitlement is only relevant if the Tender Offer
is oversubscribed. Tenders in respect of approximately 38.9 per
cent. of each holding of Ordinary Shares of every Qualifying
Shareholder on the Record Date will be accepted in full at the
Tender Price and will not be scaled down. This percentage is known
as the “Guaranteed Entitlement”. Qualifying Shareholders may
tender Ordinary Shares in excess of their Guaranteed Entitlement.
However, if the Tender Offer is oversubscribed, the tender of such
excess Ordinary Shares will only be successful to the extent that
other Shareholders have tendered less than their Guaranteed
Entitlement.
These Guaranteed Entitlement arrangements are set out in full in
the Circular and should be read in full.
Circumstances in which the Tender
Offer may not proceed
There is no guarantee that the Tender Offer will take
place. The Tender Offer is conditional on the passing of the
Tender Offer Resolution set out in the Notice of General
Meeting. The Tender Offer is also conditional on other
matters, including:
- receipt of valid tenders in respect of at least 12,228,124
Ordinary Shares (representing approximately 1 per cent. of the
Issued Ordinary Share Capital as at the Latest Practicable Date) by
1.00 p.m. on the Closing Date and
there continuing to be valid tenders in respect of at least such
number of Ordinary Shares; and
- the Tender Offer not having been terminated in accordance with
its terms and the Company having confirmed to Goldman Sachs that it
will not exercise its right to require Goldman Sachs not to proceed
with the Tender Offer.
The Board has reserved the right, at any time prior to the
Tender Offer becoming unconditional, to require Goldman Sachs not
to proceed with the Tender Offer if the Board concludes that the
implementation of the Tender Offer is no longer in the best
interests of the Company and/or Shareholders as a whole. The Board
has also reserved the right, at any time prior to the announcement
of the results of the Tender Offer, with the prior consent of
Goldman Sachs, to revise the aggregate value of the Tender Offer,
or to extend the period during which the Tender Offer is open,
based on market conditions and/or other factors, subject to
compliance with applicable legal and regulatory requirements.
If the Tender Offer does not occur, the Group will have on its
balance sheet the £500 million of cash that is proposed to be
returned pursuant to the Return of Value. Holding this amount of
cash means that the Group is likely to receive a reduced return on
capital while the Board considers how best to deploy or return
these funds to Shareholders. The Board is of the opinion
that, subject to any value-creating alternatives, this cash is
surplus to the requirements of the Group and that it would be in
the best interests of the Company and Shareholders as a whole not
to retain this cash on the Group’s balance sheet but to return it
to Shareholders by other means, such as a special dividend, for
example.
Results announcement and Unconditional
Date
As set out in the timetable below, it is expected that the
results of the Tender Offer will be announced on 2 December 2021, at which time the Tender Offer
is expected to become unconditional subject to the Conditions
described in the Circular having been satisfied. Until such time as
the Tender Offer becomes unconditional, the Tender Offer will be
subject to the Conditions described in the Circular. Settlement is
then expected to take place as set out in the timetable below.
Full terms and conditions of the
Tender Offer
Full details of the Tender Offer, including the terms and
conditions on which it is made and some questions and answers
related to the Return of Value are set out in the Circular.
3. EXPECTED TIMETABLE
Tender Offer opens |
28 October 2021 |
Latest time and date for receipt of
Forms of Proxy for the General Meeting |
11:00 a.m. on 16 November 2021 |
General Meeting |
11:00a.m. on 18 November 2021 |
Latest time and date for receipt of
Tender Forms and share certificates or other documents of title for
tendered certificated Ordinary Shares (i.e. close of the Tender
Offer) |
1.00 p.m. on 29 November 2021 |
Latest time and date for settlement
of TTE Instructions for tendered uncertificated Ordinary Shares
(i.e. close of the Tender Offer) |
1.00 p.m. on 29 November 2021 |
Record Date for the Tender
Offer |
6.00 p.m. on 29 November 2021 |
Announcement of the results of the
Tender Offer |
2 December 2021 |
Unconditional Date for the Tender
Offer and purchase of Ordinary Shares under the Tender Offer |
2 December 2021 |
CREST accounts credited for revised
uncertificated shareholdings of Ordinary Shares (or, in the case of
unsuccessful tenders, for entire holdings of Ordinary Shares) |
7 December 2021 |
CREST accounts credited in respect
of Tender Offer proceeds for uncertificated Ordinary Shares |
7 December 2021 |
Cheques despatched in respect of
Tender Offer proceeds for certificated Ordinary Shares |
16 December 2021 |
Return of share certificates in
respect of unsuccessful tenders of certificated Ordinary
Shares |
16 December 2021 |
Despatch of balance share
certificates in respect of unsold Ordinary Shares in certificated
form |
16 December 2021 |
Each of the times and dates in the table set out above is
indicative only and may be subject to change by FirstGroup, in
which event details of the new times and dates will be notified to
Shareholders by announcement through a Regulatory Information
Service.
All references to times in the timetable above are to
London times.
4. DIVIDENDS
It is not expected that the Tender Offer will have any impact on
FirstGroup’s intention in respect of dividends as stated in the
financial policy framework set out in the Transaction Circular and
in the results announcement of 27 July
2021, which is to commence payment of a regular dividend
during the financial year ending March
2023. The Group is targeting the annual dividend amount to
be around three times covered by a new Rail-adjusted Profit After
Tax measure, assuming normalisation of trading conditions
post-pandemic.
In addition to the Return of Value, the Board reiterates its
commitment to keeping the balance sheet position of the ongoing
Group under review and will consider the prospects for making
further additional distributions to Shareholders in due course,
following crystallisation of the First Transit Earnout (as defined
in the Transaction Circular and fair valued in the Group’s recent
full year results at $140 million for
accounting purposes), realisation of value from the sale of the
properties retained and consideration deferred in the recent sale
of Greyhound Lines Inc. to FlixMobility GmbH, and the potential
release of monies from pension escrow (of up to £117 million). The
Board also notes the capacity to increase gearing over time, as end
market conditions and hence business performance improves.
5. IRREVOCABLE UNDERTAKING
The Company has received an irrevocable undertaking from Coast
Capital Management, in its capacity as a controller of Ordinary
Shares in the Company and, as such, a major shareholder in the
Company, to support the Tender Offer. Pursuant to that irrevocable
undertaking Coast Capital Management has committed to validly
tender, or to procure the valid tender of, 156,749,809 Ordinary
Shares (representing approximately 12.82 per cent of the total
issued share capital of the Company) in accordance with the
procedure specified in the Circular. The Ordinary Shares which are
the subject of the undertaking will be tendered as soon as possible
and in any event within ten days of the publication of the
Circular. Coast Capital Management has also undertaken to vote in
favour of the Resolutions and not to sell, or otherwise dispose of,
the Ordinary Shares which are the subject of the undertaking or to
acquire any additional Ordinary Shares or interest in the
Company.
6. TAKEOVER CODE
Rule 9 of the Takeover Code applies to any person who acquires
an interest in shares which, when taken together with shares in
which persons acting in concert with him are interested, carry 30
per cent. or more of the voting rights of a company which is
subject to the Takeover Code. Any such person is required to make a
general offer to all shareholders of that company to acquire their
shares in cash at not less than the highest price paid by such
person, or by any person acting in concert with him, for any
interest in shares within the 12 months prior to the offer. Such an
offer under Rule 9 of the Takeover Code must also be made where any
person who, together with persons acting in concert with him, holds
not less than 30 per cent. but not more than 50 per cent. of the
voting rights in the company and such person, or any person acting
in concert with him, acquires an interest in any other shares which
increase the percentage of shares carrying voting rights in which
he is interested.
When a company purchases its own voting shares, any resulting
increase in the percentage of voting rights held by a shareholder,
or group of shareholders acting in concert, will be treated as an
acquisition for the purpose of Rule 9.
Goldman Sachs may purchase, as principal and not as agent,
nominee or trustee, Ordinary Shares under the Tender Offer, which
could result in Goldman Sachs owning 30 per cent. or more of the
Issued Ordinary Share Capital. It is also possible that entities
within the group of which Goldman Sachs is part hold or come to
hold other interests in the Issued Ordinary Share Capital and that,
in certain cases, those interests could be subject to aggregation
with any Ordinary Shares acquired under the Tender Offer for the
purposes of Rule 9 of the Takeover Code. As such, it is
possible that the aggregated holdings of Goldman Sachs and persons
in concert with it could result in a requirement to make a general
offer under Rule 9.
Goldman Sachs has indicated its intention that, shortly after
the purchase of Ordinary Shares under the Tender Offer, it will
sell all those Ordinary Shares to the Company for cancellation.
Accordingly, a waiver has been obtained from the Panel on Takeovers
and Mergers in respect of the application of Rule 9 to the purchase
by Goldman Sachs of Ordinary Shares under the Tender Offer.
7. FINANCIAL ADVICE
The Board has received financial advice from Goldman Sachs and
J.P. Morgan in relation to the Return of Value. In providing
their financial advice, Goldman Sachs and J.P. Morgan have relied
upon the Board’s commercial assessments of the Return of
Value.
8. RECOMMENDATION
The Board considers the Return of Value and the Resolutions to
be in the best interests of Shareholders as a whole.
Accordingly, the Board recommends that Shareholders vote in favour
of the Resolutions to be proposed at the General Meeting, as the
Directors intend to do for their respective individual beneficial
holdings of, in aggregate, 751,483 Ordinary Shares, representing
approximately 0.06 per cent. of the Issued Ordinary Share Capital
as at the Latest Practicable Date.
The Board makes no recommendation to Shareholders in relation to
participation in the Tender Offer itself. Whether or not
Shareholders decide to tender all or any of their Ordinary Shares
will depend on, among other things, their view of FirstGroup’s
prospects and their own individual circumstances, including their
tax position. Shareholders need to take their own decision
and are recommended to consult their duly authorised independent
advisers.
9. DIRECTORS’ INTENTIONS
Each of the Directors has confirmed that they do not intend to
tender through the Tender Offer any of their current individual
beneficial holding of Ordinary Shares.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise:
AGM |
annual general meeting; |
Board or
Directors |
the board of directors of
FirstGroup; |
Business Day |
a day other than a Saturday or
Sunday or public holiday in England and Wales on which banks are
open in London for general commercial business; |
certificated or in
certificated form |
recorded on the Register as being
held in certificated form (that is, not in CREST); |
CERTS |
the US Department of the Treasury’s
Coronavirus Economic Relief for Transportation Services
scheme; |
Closing Date |
the latest time and date at which
the Tender Offer shall close; |
Coast Capital Management |
Coast Capital Management LP; |
Company or
FirstGroup |
FirstGroup PLC, a public limited
company incorporated in Scotland with registered number SC157176,
whose registered office is at 395 King Street, Aberdeen, AB24
5RP; |
Conditions |
has the meaning given to that term
in paragraph 2.1 of Part IV (Details of the Tender Offer) of
the Circular; |
CREST |
the paperless settlement procedure
operated by Euroclear enabling system securities to be evidenced
otherwise than by certificates and transferred otherwise than by
written instrument; |
CREST Manual |
the rules governing the operation of
CREST as published by Euroclear and as amended from time to
time; |
CREST Member |
a person who has been admitted by
Euroclear as a system-member (as defined in the CREST
Regulations); |
CREST Participant |
a person who is, in relation to
CREST, a system participant (as defined in the CREST
Regulations); |
CREST Regulations |
the Uncertificated Securities
Regulations 2001 (SI 2001/3755), as amended from time to time; |
Disclosure Guidance and
Transparency Rules |
the disclosure guidance and
transparency rules made under Part VI of FSMA (and contained in the
FCA’s publication of the same name), as amended from time to
time; |
Equiniti |
Equiniti Limited, a limited company
incorporated in England and Wales with registered number 6226088,
whose registered office is at Aspect House, Spencer Road, Lancing,
West Sussex, BN99 6DA; |
Euroclear |
Euroclear UK & Ireland Limited,
the operator of CREST; |
Existing Buyback
Authority |
the general authority to buy back up
to a maximum of 122,246,788 Ordinary Shares, representing
approximately 10 per cent. of the Issued Ordinary Share Capital,
that was approved by Shareholders at the Company’s AGM held on 13
September 2021; |
Financial Advisers |
J.P. Morgan and Goldman Sachs
together; |
Form of Proxy |
the form of proxy enclosed with the
Circular (where applicable) for use by Shareholders in connection
with the General Meeting; |
FSMA |
Financial Services and Markets Act
2000, as amended from time to time; |
General Meeting |
the General Meeting of the Company
to be held at Queen Elizabeth II Centre, Broad Sanctuary,
Westminster, London, SW1P 3EE on 18 November 2021 at 11:00am; |
Goldman Sachs |
Goldman Sachs International; |
Group |
FirstGroup together with its
subsidiaries and subsidiary undertakings; |
Guaranteed Entitlement |
has the meaning given to that term
under “Guaranteed Entitlement” at section 2 (The Tender
Offer) of this announcement; |
Issued Ordinary Share
Capital |
the Company’s issued ordinary share
capital, excluding any treasury shares from time to time; |
J.P. Morgan or J.P. Morgan
Cazenove |
J.P. Morgan Securities plc; |
Latest Practicable Date |
25 October 2021, being the latest
practicable date prior to the publication of the Circular; |
Listing Rules |
the listing rules made under Part VI
of FSMA (and contained in the FCA’s publication of the same name),
as amended from time to time; |
London Stock Exchange |
London Stock Exchange plc; |
Main Market |
the main market for listed
securities maintained by the London Stock Exchange; |
Market Abuse Regulation |
Regulation (EU) No. 596/2014 of the
European Parliament and of the Council of 16 April 2014 on market
abuse, and any implementing legislation, in each case as it forms
part of retained EU law as defined in the European Union
(Withdrawal) Act 2018; |
Member Account ID |
the identification code or number
attached to any member account in CREST; |
Net Disposal Proceeds |
has the meaning given to that term
under “Background to the Offer” in section 1 (Background to And
Benefits Of The Tender Offer) of this announcement; |
New Buyback Authority |
the authority to buy back up to a
maximum of 122,281,244 Ordinary Shares, representing approximately
10 per cent. of the Issued Ordinary Share Capital as at the Latest
Practicable Date, for which approval will be sought for at the
General Meeting; |
New Ordinary Shares |
Ordinary Shares owned by
Shareholders following any Share Consolidation, such Shareholders
owning the same proportion of the Company as they did immediately
prior to the Share Consolidation taking effect (subject to the
treatment of fractional entitlements) but holding a smaller number
of new Ordinary Shares than the number of Ordinary Shares held
immediately prior to the Share Consolidation; |
Notice of General
Meeting |
the notice of the General Meeting
which is set out at the end of the Circular; |
Option Agreement |
has the meaning given to that term
under “Options available to Shareholders in respect of the Tender
Offer” at section 2 (The Tender Offer) of this announcement,
details of which are set out at paragraph 6 of Part VII
(Additional Information) of the Circular; |
Ordinary Shares |
ordinary shares with a nominal value
of 5 pence each in the capital of FirstGroup (or, where the context
requires, with such other nominal value as an ordinary share in the
Company may have following any Share Consolidation); |
Overseas Shareholder |
a Shareholder who is resident in, or
a citizen of, a jurisdiction 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; |
Qualifying Shareholders |
Shareholders other than those with a
registered address in any of the Restricted Jurisdictions; |
Record Date |
6.00 p.m. on 29 November 2021 or
such other time and date as may be determined by the Company in its
sole discretion in the event that the Closing Date is altered in
accordance with paragraph 2.22 of Part IV (Details of the
Tender Offer) of the Circular; |
Register |
the register of members of
FirstGroup; |
Regulatory Information
Service or RIS |
one of the regulatory information
services authorised by the FCA to receive, process and disseminate
regulatory information from listed companies; |
Resolutions |
the resolutions to be proposed at
the General Meeting, as set out in the Notice of General
Meeting; |
Restricted Jurisdictions |
Australia and New Zealand; |
Return of Value |
has the meaning given to that term
under “Background to the Offer” in section 1 (Background To And
Benefits Of The Tender Offer) of this announcement; |
Share Consolidation |
has the meaning given to that term
under “General Meeting to approve the Tender Offer and the
potential further phase of the Return of Value” in section 1
(Background To And Benefits Of The Tender Offer) of this
announcement; |
Shareholders |
holders of Ordinary Shares from time
to time; |
Special Dividend |
has the meaning given to that term
under “General Meeting to approve the Tender Offer and the
potential further phase of the Return of Value” in section 1
(Background To And Benefits Of The Tender Offer) of this
announcement; |
subsidiary |
has the meaning given to that term
in section 1159 of the Companies Act 2006; |
subsidiary undertaking |
has the meaning given to that term
in section 1162 of the Companies Act 2006; |
Takeover Code |
the City Code on Takeovers and
Mergers; |
Tender Form |
the tender form issued with the
Circular to Qualifying Shareholders who hold their Ordinary Shares
in certificated form; |
Tender Offer |
the invitation by Goldman Sachs to
Shareholders to tender Ordinary Shares for purchase by Goldman
Sachs on the terms and subject to the conditions set out in the
Circular and also, in the case of certificated Ordinary Shares
only, the Tender Form (and, where the context so requires, the
associated repurchase of such Ordinary Shares by the Company from
Goldman Sachs); |
Tender Offer Resolution |
the resolution which seeks
shareholder approval for the Tender Offer under the requirements of
the Listing Rules; |
Tender Price |
105 pence, being the price per
Ordinary Share at which Ordinary Shares will be purchased pursuant
to the Tender Offer; |
Transaction |
has the meaning given to that term
under “Background to the Offer” in section 1 (Background To And
Benefits Of The Tender Offer) of this announcement; |
Transaction Circular |
has the meaning given to that term
under “Background to the Offer” in section 1 (Background To And
Benefits Of The Tender Offer) of this announcement; |
TTE Instruction |
a transfer to escrow instruction (as
defined by the CREST Manual); |
UK DB Pension Schemes |
the First UK Bus Pension Scheme and
the FirstGroup Pension Scheme; |
UK or United Kingdom |
the United Kingdom of Great Britain
and Northern Ireland; |
uncertificated or in
uncertificated form |
recorded on the Register as being
held in uncertificated form in CREST and title to which, by virtue
of the CREST Regulations, may be transferred by means of
CREST; |
Unconditional Date |
the date on and time at which the
Tender Offer becomes unconditional, which is expected to be on 2
December 2021; |
US or United States |
the United States of America, its
territories and possessions, any state of the United States of
America, the District of Columbia and all other areas subject to
its jurisdiction; |
US Exchange Act |
the US Securities Exchange Act of
1934, as amended from time to time; and |
US Shareholder |
a Shareholder who, for US federal
income tax purposes, is a beneficial owner of Ordinary Shares and
who is: (i) an individual that is a citizen or resident of the
United States, (ii) a corporation, or other entity taxable as a
corporation, created or organized in or under the laws of the
United States, any state therein or the District of Columbia, or
(iii) an estate or trust the income of which is subject to US
federal income taxation regardless of its source. |
|
|
IMPORTANT
STATEMENT
This announcement does not constitute or form part of an offer
or invitation, or a solicitation of any offer or invitation, to
purchase any Ordinary Shares or other securities.
The full terms and conditions of the Tender Offer will be set
out in the Circular, which Shareholders are advised to read in
full. Any response to the Tender Offer should be made only on the
basis of the information in the Circular.
J.P. Morgan Securities plc (which conducts its U.K. investment
banking activities as J.P. Morgan Cazenove) (“J.P. Morgan”),
which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United
Kingdom, is acting as lead joint sponsor, joint financial
adviser and joint corporate broker exclusively for FirstGroup and
for no one else in connection with the Return of Value and will not
be responsible to anyone other than FirstGroup for providing the
protections afforded to clients of J.P. Morgan or for providing
advice in relation to the matters described in this
announcement.
Goldman Sachs International (“Goldman Sachs”), which is
authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom,
is acting as joint sponsor, joint financial adviser and joint
corporate broker exclusively for FirstGroup and for no one else in
connection with the Return of Value and will not be responsible to
anyone other than FirstGroup for providing the protections afforded
to clients of Goldman Sachs or for providing advice in relation to
the matters described in this announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on J.P. Morgan and Goldman Sachs (the "Financial
Advisers") under FSMA or the regulatory regime established
thereunder: (i) neither of the Financial Advisers or any persons
associated or affiliated with either of them accepts any
responsibility whatsoever or makes any warranty or representation,
express or implied, in relation to the contents of this
announcement, including its accuracy, completeness or verification
or for any other statement made or purported to be made by, or on
behalf of it, FirstGroup or the Directors, in connection with
FirstGroup and/or the Tender Offer; and (ii) each of the Financial
Advisers accordingly disclaims, to the fullest extent permitted by
law, all and any liability whatsoever, whether arising in tort,
contract or otherwise (save as referred to above) which they might
otherwise be found to have in respect of this announcement or any
such statement.
Cautionary
statement regarding forward-looking statements
This announcement includes statements that are, or may be deemed
to be, forward-looking statements. These forward-looking statements
can be identified by the use of forward-looking terminology,
including the terms anticipates, believes, could, estimates,
expects, intends, may, plans, projects, should or will, or, in each
case, their negative or other variations or comparable terminology,
or by discussions of strategy, plans, objectives, goals, future
events or intentions. By their nature, forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances. Forward-looking statements may, and often do,
differ materially from actual results. Any forward-looking
statements in this announcement reflect FirstGroup’s current view
with respect to future events and are subject to risks relating to
future events and other risks, uncertainties and assumptions
relating to the Group and its operations, results of operations and
growth strategy. Other than in accordance with its legal or
regulatory obligations (including under the Listing Rules, the
Disclosure Guidance and Transparency Rules, the Market Abuse
Regulation and the rules of the London Stock Exchange), FirstGroup
is not under any obligation and FirstGroup expressly disclaims any
intention or obligation (to the maximum extent permitted by law) to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Overseas
Shareholders
The availability of the Tender Offer to Shareholders who are not
resident in the United Kingdom may
be affected by the laws of the relevant jurisdiction in which they
are located. Shareholders who are not resident in the United Kingdom should read paragraph 6 of Part
IV (Details of the Tender Offer) of the Circular and should inform
themselves about, and observe, any applicable legal or regulatory
requirements. In addition, the attention of Shareholders who
are resident in the United States
is drawn to the section for US Shareholders below.
The Tender Offer is not being made, directly or indirectly, in
or into, or by use of the mails of, or by any means or
instrumentality (including, without limitation, facsimile
transmission, telex, telephone and e-mail) of interstate or foreign
commerce of, or any facilities of a national securities exchange
of, any Restricted Jurisdiction and the Tender Offer cannot be
accepted by any such use, means, instrumentality or facility or
from within any Restricted Jurisdiction. Accordingly, unless
otherwise determined by the Company and permitted by applicable law
and regulation, neither the Circular nor the Tender Form nor any
related document is being, nor may it be, directly or indirectly,
mailed, transmitted or otherwise forwarded, distributed, or sent
in, into or from any Restricted Jurisdiction, and persons receiving
the Circular, the Tender Form and/or any related document
(including, without limitation, trustees, nominees or custodians)
must not mail or otherwise forward, distribute or send it in, into
or from such Restricted Jurisdiction, as to do so may invalidate
any purported acceptance of the Tender Offer. Any person
(including, without limitation, trustees, nominees or custodians)
who would or otherwise intends to, or who may have a contractual or
legal obligation to, forward the Circular, the Tender Form and/or
any related document to any jurisdiction outside the United Kingdom, should seek appropriate advice
before taking any action.
U.S.
Shareholders
The Tender Offer is not subject to the disclosure and other
procedural requirements of Rule 13e-4 or Regulation 14D under the
US Securities Exchange Act of 1934 (the “US Exchange Act”).
The Tender Offer will be made in the US in accordance with the
requirements of Regulation 14E under the US Exchange Act to the
extent applicable. Certain provisions of Regulation 14E under the
US Exchange Act are not applicable to the Tender Offer by virtue of
Rule 14d-1(d) under the US Exchange Act. Goldman Sachs will act as
US dealer manager with respect to the Tender Offer in the United States to the extent required. US
Shareholders should note that the Ordinary Shares are not listed on
a US securities exchange and the Company is not subject to the
periodic reporting requirements of the US Exchange Act and is not
required to, and does not, file any reports with the US Securities
and Exchange Commission thereunder.
It may be difficult for US Shareholders to enforce certain
rights and claims arising in connection with the Tender Offer under
US federal securities laws since the Company is located outside the
US and most of its officers and directors may reside outside the
US. It may not be possible to sue a non-US company or its officers
or directors in a non-US court for violations of US federal
securities laws. It also may not be possible to compel a non-US
company or its affiliates to subject themselves to a US court’s
judgment.
The receipt of cash pursuant to the Tender Offer by a
Shareholder who is a US person will be a taxable transaction for US
federal income tax purposes. The Circular sets out a guide to
certain US tax consequences of the Tender Offer for Shareholders
under current US law. However, each such Shareholder should consult
and seek individual advice from an appropriate professional
adviser.
To the extent permitted by applicable law and in accordance with
normal UK practice, the Company, Goldman Sachs or any of their
respective affiliates, may make certain purchases of, or
arrangements to purchase, Ordinary Shares outside the United States during the period in which
the Tender Offer remains open for participation, including sales
and purchases of Ordinary Shares effected by Goldman Sachs acting
as market maker in the Ordinary Shares. These purchases, or
other arrangements, may occur outside the
United States either in the open market at prevailing prices
or in private transactions at negotiated prices. In order to be
excepted from the requirements of Rule 14e-5 under the US Exchange
Act by virtue of Rule 14e-5(b)(12) thereunder, such purchases, or
arrangements to purchase, must comply with applicable English law
and regulation, including the Listing Rules, and the relevant
provisions of the US Exchange Act. Any information about such
purchases will be disclosed as required in the UK and the US and,
if required, will be reported via a Regulatory Information Service
and will be available on the London Stock Exchange website at
http://www.londonstockexchange.com.
While the Tender Offer is being made available to Shareholders
in the US, the right to tender Ordinary Shares is not being made
available in any jurisdiction in the US in which the making of the
Tender Offer or the right to tender such Ordinary Shares would not
be in compliance with the laws of such jurisdiction.
This announcement has not been approved, disapproved or
otherwise recommended by the US Securities and Exchange Commission
or any US state securities commission and such authorities have not
confirmed the accuracy or determined the adequacy of this
announcement. Any representation to the contrary is a criminal
offence in the US.