TIDMGHT
RNS Number : 1156A
Gresham Technologies PLC
28 May 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE
RELEASE.
NEITHER THIS ANNOUNCEMENT, NOR ANY COPY OF IT, MAY BE TAKEN OR
TRANSMITTED, PUBLISHED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA,
JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA OR TO ANY
PERSONS IN ANY OF THOSE JURISDICTIONS OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
SECURITIES LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT IS FOR
INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY
INVITATION, SOLICITATION, RECOMMATION, OFFER OR ADVICE TO ANY
PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY
SECURITIES IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE
FACT OF ITS DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON
IN CONNECTION WITH, ANY INVESTMENT DECISION IN RESPECT OF GRESHAM
TECHNOLOGIES PLC. PLEASE SEE THE IMPORTANT NOTICES AT THE OF THIS
ANNOUNCEMENT. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE
PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (REGULATION
(EU) 596/2014) (AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMED)
28 May 2021
Gresham Technologies plc
Proposed Acquisition of Electra Information Systems, Inc.,
Proposed Placing and Retail Offer
Gresham Technologies plc (LSE: "GHT", "Gresham", "Company"), the
leading software and services company that specialises in providing
solutions for data integrity and control, banking integration,
payments and cash management, announces that the Company and its
wholly-owned subsidiary, Gresham Enterprise Storage, Inc., have
entered into a conditional agreement (the "Stock Purchase
Agreement") with the stockholders (the "Vendors") of Electra
Information Systems, Inc. ("Electra"), a US-based provider of
post-trade processing software solutions and services, to purchase
the entirety of the issued and outstanding shares of common stock
of Electra (the "Acquisition") on a debt free, cash free basis for
a total cash consideration of up to US$38.6 million (GBP 27.2
million) (the "Total Consideration"), comprising US$28.95 million
(GBP 20.4 million) in upfront consideration (the "Initial
Consideration") and up to US$9.65 million (GBP 6.8 million)
(figures based on an exchange rate of GBP GBP1.00 = US$1.419) in
deferred consideration (subject to the achievement of performance
criteria).
The Initial Consideration is proposed to be funded using
Gresham's existing cash resources and out of the net proceeds of a
proposed placing of up to 12,500,000 new ordinary shares of 5 pence
each ("Ordinary Shares") in the capital of the Company (the
"Placing Shares"), principally to institutional investors (the
"Placing") and an offer to be made on behalf of the Company by
PrimaryBid Limited on its online PrimaryBid platform (the "Retail
Offer") for up to 625,000 new Ordinary Shares (the "Retail Offer
Shares", the Placing Shares and Retail Offer Shares together being,
the "New Ordinary Shares").
Transaction highlights
-- The Acquisition represents a transformative opportunity to
combine two complementary and high-quality businesses to drive
meaningful earnings accretion and accelerate Gresham's earnings
growth and quality of revenues.
-- Electra, established over 20 years ago, is a leading provider
of innovative solutions and services developed to improve
efficiency and mitigate risk in post-trade processing,
predominantly within the US financial services industry.
-- Electra has high levels of recurring revenue, representing
approximately 97% of its total revenue in the financial year to 31
December 2020 ("FY2020").
-- In FY2020, Electra generated revenues, adjusted EBITDA and
adjusted cash EBITDA of GBP10.1m, GBP2.4m and GBP0.9m respectively,
representing a CAGR% between 2018 and 2020 of 4%, 19% and 50%
respectively.
-- The Acquisition is expected to be immediately significantly
accretive to earnings (when adjusted for one-off exceptional
charges, acquired amortisation, IFRS 16 lease charges and
share-based payments), in the first part financial year of
ownership (year ending 31 December 2021), and further accretive to
earnings, on an adjusted basis, in the first full year of ownership
(year ending 31 December 2022).
-- The Acquisition will help the Company secure a leading
position in the buy-side market segment and strengthen its US
market presence.
-- The total cash consideration is up to US$38.6 million
(upfront consideration of US$28.95 million and up to US$9.65
million of deferred consideration, payable in two instalments
subject to the achievement of performance criteria).
-- The Acquisition is proposed to be funded out of Gresham's
existing cash resources and through a placing of up to 12,500,000
New Ordinary Shares at a price of 160 pence per share with new and
existing Shareholders to raise gross proceeds of GBP20 million and
a retail offer of up to 625,000 New Ordinary Shares at a price of
160 pence per share to raise gross proceeds of up to GBP1
million.
-- The proposed Placing is to be conducted by way of an
accelerated bookbuild process undertaken on behalf of the Company
by Nplus1 Singer Capital Markets Limited (together with its
affiliate entities) ("N+1 Singer") which will be launched
immediately following this announcement in accordance with the
Terms and Conditions set out herein (the "Bookbuild") . The
Bookbuild is open with immediate effect.
-- All of the directors of the Company (the "D irectors " ) have
indicated their intention to subscribe for Ordinary Shares in the
Placing. Further details will be provided in the announcement of
the results of the Placing and Retail Offer.
-- A US$15 million multicurrency revolving credit and US$10
million accordion loan facility has been entered into with Bank of
Ireland and may be drawn down upon to satisfy any payments of the
deferred consideration to be made pursuant to the Stock Purchase
Agreement.
-- The Acquisition is a Class 1 transaction under the Listing
Rules of the Financial Conduct Authority (the " Listing Rules ") .
Accordingly, the Acquisition and the Placing are each conditional
on the approval of Shareholders in general meeting. The Retail
Offer is also conditional, inter alia, upon completion of the
Placing.
The Total Consideration will be satisfied through the payment on
the closing of the Acquisition ("Completion") of the Initial
Consideration of US$28.95 million (GBP20.4 million) and up to
US$9.65 million (GBP 6.8 million) in deferred consideration,
payable in two equal instalments, subject to the achievement of
performance criteria referable to the recurring revenues of
Electra, after the first and second anniversaries of
Completion.
The Company proposes to fund the Initial Consideration and its
associated costs through its existing cash resources, a proposed
placing of the Placing Shares to institutional investors and the
Directors and an offer of the Retail Offer Shares to be made on
behalf of the Company on the online PrimaryBid.com platform.
The Placing will be conducted through the Bookbuild which will
be launched immediately following this announcement. A separate
announcement regarding the Retail Offer and its terms will be made
shortly.
The Company intends to raise up to GBP21.0 million, before
expenses, through the Placing and the Retail Offer. The total
number of New Ordinary Shares to be issued under the Placing and
the Retail Offer will not exceed 13,125,000 New Ordinary Shares,
representing approximately 18.7 % of the Company's existing issued
share capital.
The Placing Shares and Retail Offer Shares will be issued at a
price of 160 pence per share (the "Issue Price"), which does not
represent any discount to the closing mid-market price of the
Ordinary Shares of 160 pence on 27 May 2021, being the latest
practicable date prior to this announcement.
The Placing is subject to the terms and conditions set out in
the Appendix to this announcement (which forms part of this
announcement, such announcement and the Appendix together being
this "Announcement"). The Retail Offer will not be made subject to
the terms and conditions set out in the Appendix but will instead
be made on the terms outlined in the separate announcement to be
made shortly.
Nplus1 Singer Capital Markets Limited is acting as sole
bookrunner (the "Bookrunner") in respect of the Placing.
Prior to launch of the Placing, the Company consulted with a
number of its institutional Shareholders to gauge their feedback as
to the terms of the Acquisition, the Placing and the Retail Offer.
Feedback from this consultation was supportive and, as a result,
the Board has chosen to proceed with the Placing and the Retail
Offer to finance the Initial Consideration through an equity raise
and using its existing cash resources without first offering
Ordinary Shares to existing Shareholders. The Directors believe
that the additional costs that would have been incurred, both
financially and in terms of management time, if the Company were to
have offered all Shareholders the opportunity to acquire Ordinary
Shares (for example, via an open offer or a rights issue), are such
that a non-pre-emptive share issue to a limited number of
institutional and other investors is a more appropriate method of
raising finance for the purposes of the Acquisition. The Placing is
therefore being structured as an accelerated bookbuild to minimise
execution and market risk and has not (as is also the case with the
Retail Offer) been underwritten.
The Acquisition, which is expected to be immediately
significantly earnings accretive, constitutes a Class 1 transaction
under the Listing Rules. Accordingly, the Acquisition and the
Placing are each subject , inter alia, to the approval of the
Company's shareholders, which is to be sought at a general meeting
to be held prior to Completion (the "General Meeting"). The Retail
Offer will itself also be conditional upon completion of the
Placing. A circular setting out full details of the Acquisition,
Placing and Retail Offer (the "Shareholder Circular") and also
containing a Notice of the General Meeting will be sent to
Shareholders in due course.
The Company and its subsidiary, Gresham Technologies
(International) Limited ( " Gresham International " ) , have also
entered into a new US$15 million multicurrency revolving credit and
US$10 million accordion loan facility with Bank of Ireland (the
"New Loan Facility"). Amounts borrowed under the New Loan Facility
may, conditional on completion of the Placing, be used to finance
the consideration payable in respect of the Acquisition, for any
associated fees, costs, taxes and expenses, for the refinancing of
certain financial indebtedness incurred in relation to other
acquisitions permitted under the terms of the facility and for the
general corporate and working capital purposes of the Group or (as
the case may be) the Enlarged Group. The New Loan Facility may be
used to finance any deferred consideration which becomes payable to
the Vendors under the Stock Purchase Agreement. Drawdown of any
advances under the New Loan Facility will be subject to the
satisfaction of certain conditions precedent which are standard for
an acquisition facility but which include (among others) the entry
into certain security documents and confirmation that the Company
has received, or is contractually entitled to receive, net proceeds
of at least GBP18 million from the Placing. The maturity date of
the New Loan Facility is its third anniversary but the facility
also contains two extension options under which the Company may
give notice to Bank of Ireland that it wishes (at the lender's
discretion) to extend the maturity date of the New Loan Facility by
additional periods, each of one year.
A further announcement will be made on the closing of the
Placing and the Retail Offer, which is expected to occur later
today.
This Announcement should be read in its entirety. In particular,
your attention is drawn to (i) the section headed 'Risk Factors'
below and (ii) the detailed terms and conditions of the Placing and
further information relating to the Placing and any participation
in the Placing that is described in the Appendix.
By choosing to participate in the Placing, and by making an oral
and legally binding offer to acquire Placing Shares, investors will
be deemed to have read and understood this Announcement in its
entirety (including the Appendix), and to be making such offer on
the terms and subject to the conditions of the Placing contained
herein, and to be providing the representations, warranties and
acknowledgements contained in the Appendix.
The person responsible for making this Announcement on behalf of
the Company is Jonathan Cathie, Company Secretary.
Enquiries
+44 (0) 207 653
Gresham Technologies plc 0200
Ian Manocha
Tom Mullan
+44 (0) 207 496
N+1 Singer (Financial Adviser and Broker) 3000
Shaun Dobson / Tom Salvesen/ Jen Boorer / Iqra
Amin
Note to editors
Gresham Technologies plc is a leading software and services
company that specialises in providing real-time solutions for data
integrity and control, banking integration, payments and cash
management. Listed on the main market of the London Stock Exchange
(GHT.L) and headquartered in the City of London, its customers
include some of the world's largest financial institutions and
corporates, all of whom are served locally from offices located in
the UK, Europe, North America and Asia Pacific.
Gresham's award-winning Clareti software platform is a highly
flexible and scalable platform, available on-site or in the cloud,
designed to address today's most challenging financial control,
risk management, data governance and regulatory compliance
problems. Learn more at www.greshamtech.com .
Expected Timetable of Events
2021
Announcements of the Placing, Retail Offer and 28 May
Acquisition
Publication and posting of the Shareholder Circular, 1 June
the Notice of General Meeting and the Form of
Proxy to Shareholders
Latest time and date for receipt of proxy votes 10:00 a.m. on
and CREST Proxy Instructions 17 June
General Meeting 10:00 a.m. on
21 June
Expected date of completion of the Acquisition 22 June
(subject to the conditions thereto being satisfied
or (where permitted) waived)
Expected date of Admission and commencement of 8:00 a.m. on
dealings in the Placing Shares and Retail Offer 22 June
Shares
CREST accounts credited with Placing Shares and 22 June
Retail Offer Shares
Expected date by which any definitive share certificates 29 June
for the Placing Shares and Retail Offer Shares
are to be despatched
IMPORTANT NOTICES FOR INVITED PLACEES ONLY REGARDING THE PLACING
SHARES
Neither this Announcement (including the Appendix and the
information contained in it), nor any copy of it, may be taken or
transmitted, published or distributed, directly or indirectly, in
whole or in part, in or into the United States, Australia, Canada,
Japan, New Zealand or the Republic of South Africa or to any
persons in any of those jurisdictions or any other jurisdiction
where to do so would constitute a violation of the relevant
securities laws of such jurisdiction (each, a "Restricted
Jurisdiction"). This Announcement is for information purposes only
and neither it, nor the information contained in it, shall
constitute an offer to sell or issue, or the solicitation of an
offer to buy, acquire or subscribe for any shares in the capital of
the Company in the United States, Australia, Canada, Japan, New
Zealand or the Republic of South Africa or any other state or
jurisdiction in which such offer or solicitation is not authorised
or to any person to whom it is unlawful to make such offer or
solicitation. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such
jurisdictions.
The Placing Shares have not been and will not be registered
under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), or with any securities regulatory authority or under any
securities laws of any state or other jurisdiction of the United
States and may not be offered, sold, resold, pledged, transferred
or delivered, directly or indirectly, in or into the United States
except pursuant to an applicable exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and in compliance with the securities laws of any
state or other jurisdiction of the United States.
No action has been taken by the Company, N+1 Capital Markets
and/or N+1 Advisory or any of their respective directors, officers,
partners, agents, employees, affiliates, advisors, consultants or,
in the case of N+1 Singer, persons connected with them as defined
in the Financial Services and Markets Act 2000, as amended ("FSMA")
(together, "Affiliates") that would permit an offer of the Placing
Shares or possession or distribution of this Announcement or any
other publicity material relating to such Placing Shares in any
jurisdiction where any action for that purpose is required. Persons
receiving this Announcement are required to inform themselves about
and to observe any restrictions contained in this Announcement.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Announcement should seek appropriate advice before taking
any such action.
This Announcement has not been approved by the Financial Conduct
Authority ("FCA") or the London Stock Exchange.
Members of the public are not eligible to take part in the
Placing. No offering document or prospectus will be made available
in connection with the matters contained or referred to in this
Announcement and no such offering document or prospectus is
required to be published, in accordance with Regulation (EU)
2017/1129 (the "Prospectus Regulation") or Regulation (EU)
2017/1129, as amended and retained in UK law on 31 December 2020 by
the European Union (Withdrawal) Act 2018 (the "EUWA") (the "UK
Prospectus Regulation").
This Announcement is not being distributed by, nor has it been
approved for the purposes of section 21 of FSMA by, a person
authorised under FSMA. This Announcement is being distributed and
communicated to persons in the United Kingdom only in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person.
This Announcement has been issued by, and is the sole
responsibility of, the Company. No responsibility or liability is
or will be accepted by, and no undertaking, representation or
warranty or other assurance, express or implied, is or will be made
or given by either of N+1 Capital Markets and/or N+1 Advisory, or
by any of their respective Affiliates as to, or in relation to, the
accuracy, fairness or completeness of the information or opinions
contained in this Announcement or any other written or oral
information made available to or publicly available to any
interested person or its advisers, and any liability therefor is
expressly disclaimed. The information in this Announcement is
subject to change.
None of the information in this Announcement has been
independently verified or approved by either of N+1 Capital
Markets, N+1 Advisory or any of their Affiliates. Save for any
responsibilities or liabilities, if any, imposed on N+1 Capital
Markets and/or N+1 Advisory by FSMA or by the regulatory regime
established under it, no responsibility or liability whatsoever
whether arising in tort, contract or otherwise, is accepted by
either of N+1 Capital Markets or N+1 Advisory or any of their
respective Affiliates whatsoever for the contents of the
information contained in this Announcement (including, but not
limited to, any errors, omissions or inaccuracies in the
information or any opinions) or for any other statement made or
purported to be made by or on behalf of N+1 Capital Markets and/or
N+1 Advisory or any of their respective Affiliates in connection
with the Company, the Placing Shares or the Placing or for any
loss, cost or damage suffered or incurred howsoever arising,
directly or indirectly, from any use of this Announcement or its
contents or otherwise in connection with this Announcement or from
any acts or omissions of the Company in relation to the Placing.
Each of N+1 Capital Markets and N+1 Advisory and their respective
Affiliates accordingly disclaim all and any responsibility and
liability whatsoever, whether arising in tort, contract or
otherwise (save as referred to above) in respect of any statements
or other information contained in this Announcement and no
representation or warranty, express or implied, is made by either
of N+1 Capital Markets, N+1 Advisory or any of their respective
Affiliates as to the accuracy, completeness or sufficiency of the
information contained in this Announcement.
N+1 Singer, which is authorised and regulated in the United
Kingdom by the FCA, is acting solely for the Company and no-one
else in connection with the Placing and the transactions and
arrangements described in this Announcement and will not regard any
other person (whether or not a recipient of this Announcement) as a
client in relation to the Placing or the transactions and
arrangements described in this Announcement. N+1 Singer is not
responsible to anyone other than the Company for providing the
protections afforded to clients of N+1 Singer or for providing
advice in connection with the contents of this Announcement, the
Placing or the transactions and arrangements described herein.
Certain statements in this Announcement are forward-looking
statements, which include all statements other than statements of
historical fact and which are based on the Company's expectations,
intentions and projections regarding its future performance,
anticipated events or trends and other matters that are not
historical facts. These forward-looking statements may use words
such as "aim", "anticipate", "believe", "could", "may", "intend",
"estimate", "expect" and words of similar meaning. By their nature,
all forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances which are beyond the
control of the Company, including amongst other things, United
Kingdom domestic and global economic business conditions,
market-related risks such as fluctuations in interest rates and
exchange rates, the policies and actions of governmental and
regulatory authorities, the effect of competition, inflation,
deflation, the timing effect and other uncertainties of future
acquisitions or combinations within relevant industries, the effect
of tax and other legislation and other regulations in the
jurisdictions in which the Company and its affiliates operate, the
effect of volatility in the equity, capital and credit markets on
the Company's profitability and its ability to access capital and
credit, a decline in the Company's credit rating, the effect of
operational risks and the loss of key personnel. As a result, the
actual results of operations, financial condition and performance
of the Company may differ materially from the plans, goals and
expectations set forth in any forward-looking statements. These
statements are not guarantees of future performance and, given the
risks and uncertainties, prospective investors are cautioned not to
place undue reliance on forward-looking statements. Forward-looking
statements speak only as of the date of such statements and, except
as required by the FCA, the London Stock Exchange or applicable
law, the Company, N+1 Capital Markets, N+1 Advisory and their
respective Affiliates undertake no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
No statement in this Announcement is intended to be a profit
forecast and no statement in this Announcement should be
interpreted to mean that the earnings per share of the Company for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of the
Company.
This Announcement does not identify or suggest, or purport to
identify or suggest, the risks (direct or indirect) that may be
associated with an investment in the Placing Shares. Any investment
decision to buy Placing Shares in the Placing must be made solely
on the basis of publicly available information, which has not been
independently verified by N+1 Capital Markets or N+1 Advisory. This
Announcement is not intended to provide the basis for any decision
in respect of the Company or other evaluation of any securities of
the Company or any other entity and should not be considered as a
recommendation that any investor should subscribe for, purchase,
otherwise acquire, sell or otherwise dispose of any such
securities. Recipients of this Announcement who are considering
acquiring Placing Shares pursuant to the Placing are reminded that
they should conduct their own investigation, evaluation and
analysis of the information contained in this Announcement. Any
indication in this Announcement of the price at which the Company's
shares have been bought or sold in the past cannot be relied upon
as a guide to future performance. The price and value of securities
can go down as well as up.
The contents of this Announcement are not to be construed as
legal, business, financial or tax advice. Each Shareholder or
prospective investor should consult with his or her or its own
legal adviser, business adviser, financial adviser or tax adviser
for legal, financial, business or tax advice.
In connection with the Placing, N+1 Capital Markets and/or N+1
Advisory and any of their respective Affiliates, acting as
investors for their own account, may take up a portion of the
Placing Shares in the Placing as a principal position and in that
capacity may retain, purchase, sell, offer to sell for their own
account or otherwise deal for their own account in such Placing
Shares and other securities of the Company or related investments
in connection with the Placing or otherwise. Accordingly,
references to Placing Shares being offered, acquired, placed or
otherwise dealt in should be read as including any issue or offer
to, or acquisition, placing or dealing by, N+1 Singer and any of
their respective Affiliates acting in such capacity. In addition,
N+1 Capital Markets and/or N+1 Advisory and any of their respective
Affiliates may enter into financing arrangements (including swaps,
warrants or contracts for difference) with investors in connection
with which N+1 Capital Markets and/or N+1 Advisory and any of their
respective Affiliates may from time to time acquire, hold or
dispose of shares. N+1 Singer do not intend to disclose the extent
of any such investment or transaction otherwise than in accordance
with any legal or regulatory obligations to do so.
The Placing Shares to be issued pursuant to the Placing will not
be admitted to trading on any stock exchange other than the Main
Market of the London Stock Exchange in accordance with the Listing
Rules.
The Appendix to this Announcement sets out the terms and
conditions of the Placing. Persons participating in the Placing, by
making an oral or written offer to subscribe for Placing Shares,
will be deemed to have read and understood this Announcement in its
entirety and to be making such offer to acquire Placing Shares on
the terms and subject to the conditions set out in this
Announcement and to be providing the representations, warranties,
undertakings and acknowledgements contained in the Appendix.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this Announcement.
UK Product Governance Requirements
Solely for the purposes of the product governance requirements
contained within the FCA Handbook Product Intervention and Product
Governance Sourcebook (the "UK Product Governance Rules"), and
disclaiming all and any liability, whether arising in tort,
contract or otherwise, which any 'manufacturer' (for the purposes
of the UK Product Governance Rules) may otherwise have with respect
thereto, the Placing Shares have been subject to a product approval
process, which has determined that the Placing Shares are: (i)
compatible with an end target market of (a) retail clients, as
defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as
it forms part of domestic law by virtue of the EUWA, (b) investors
who meet the criteria of professional clients as defined in
Regulation (EU) No 600/2014 as it forms part of domestic law by
virtue of the EUWA and (c) eligible counterparties, each as defined
in chapter 3 of the FCA Handbook Conduct of Business Sourcebook
("COBS"); and (ii) eligible for distribution through all
distribution channels as are permitted by Directive 2014/65/EU (the
"UK Target Market Assessment"). Notwithstanding the UK Target
Market Assessment, distributors should note that: the price of the
Placing Shares may decline and investors could lose all or part of
their investment; the Placing Shares offer no guaranteed income and
no capital protection; and an investment in the
Placing Shares is compatible only with investors who do not need
a guaranteed income or capital protection, who (either alone or in
conjunction with an appropriate financial or other adviser) are
capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses
that may result therefrom. The UK Target Market Assessment is
without prejudice to the requirements of any contractual, legal or
regulatory selling restrictions in relation to the Placing.
Furthermore, it is noted that, notwithstanding the UK Target Market
Assessment, the Bookrunner will only procure investors who meet the
criteria of professional clients and eligible counterparties. For
the avoidance of doubt, the UK Target Market Assessment does not
constitute: (a) an assessment of suitability or appropriateness for
the purposes of COBS; or (b) a recommendation to any investor or
group of investors to invest in, or purchase, or take any other
action whatsoever with respect to the Placing Shares. Each
distributor is responsible for undertaking its own target market
assessment in respect of the Placing Shares and determining
appropriate distribution channels.
EU Product Governance Requirements
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II"); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the "MiFID
II Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any 'manufacturer' (for the purposes of the MiFID II Product
Governance Requirements) may otherwise have with respect thereto,
the Placing Shares have been subject to a product approval process,
which has determined that the Placing Shares are: (i) compatible
with an end target market of retail clients and investors who meet
the criteria of professional clients and eligible counterparties,
each as defined in MiFID II; and (ii) eligible for distribution
through all distribution channels as are permitted by MiFID II (the
"EU Target Market Assessment"). Notwithstanding the EU Target
Market Assessment, distributors should note that: the price of the
Placing Shares may decline and investors could lose all or part of
their investment; the Placing Shares offer no guaranteed income and
no capital protection; and an investment in the Placing Shares is
compatible only with investors who do not need a guaranteed income
or capital protection, who (either alone or in conjunction with an
appropriate financial or other adviser) are capable of evaluating
the merits and risks of such an investment and who have sufficient
resources to be able to bear any losses that may result therefrom.
The EU Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling
restrictions in relation to the Placing. Furthermore, it is noted
that, notwithstanding the EU Target Market Assessment, the
Bookrunner will only procure investors who meet the criteria of
professional clients and eligible counterparties.
For the avoidance of doubt, the EU Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase or take
any other action whatsoever with respect to the Placing Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Placing Shares and determining
appropriate distribution channels.
1. Background to and reasons for the Acquisition
1.1 Information on Gresham
Gresham is a leading software and services company that
specialises in providing real-time solutions for reconciliation,
data integrity and control, regulatory reporting and cash
management and payments. Listed on the Main Market of the London
Stock Exchange (GHT.L) and headquartered in the City of London, its
customers include some of the world's largest financial
institutions and corporates, all of whom are served locally from
offices located in the UK, Europe, North America and Asia
Pacific.
Gresham has over 120 customers and over 150 employees worldwide.
In the last five years, Gresham has completed three acquisitions
comprising C24 Technologies in 2016, B2 Group in 2018 and Inforalgo
Information Technology ( " Inforalgo " ) in 2020, all of which have
been successfully integrated and absorbed into Gresham's global
technology and operating model.
The Group is organised for internal management purposes into the
three following reporting segments:
-- Clareti Solutions - this addresses the supply of solutions
predominantly to the finance and banking markets across Asia
Pacific, Europe, the Middle East and Africa and North America and
includes both software and services that can be accessed in the
cloud, on-premise or deployed into hybrid environments. The primary
offerings within this segment comprise:
-- Clareti Control products
o A leading enterprise-grade business self-service platform for
the reconciliation and control of "any and all" transaction data in
financial markets.
o With these products, Gresham seeks to disrupt markets
typically dominated by legacy vendors whose inflexible technology
often fails to achieve more granular and real-time data control and
to replace in-house systems and manual processes.
o These products are sold to customers as applications for
specific use cases and include Clareti Transaction Control, Clareti
Cash Control, Clareti Securities Control and Clareti Regulatory
Control.
-- Clareti Connect products
o This is an innovative service that enables customers to
participate in the complex inter-connected global financial system
without needing to be concerned with integration risk, cost and
time to market.
o These products enable institutions to seamlessly connect their
banking, payments, trading, accounting and regulatory systems and
their external partners with intelligent
straight-through-processing in a way that is reliable and cost
effective.
o Products are sold primarily as a cloud service bringing
together tools and software libraries built or acquired by Gresham
into a rich menu of industry connectivity and data transformation
services.
-- Other Solutions - this segment comprises the supply and/or
support and maintenance of a range of well-established solutions to
large or enterprise-level customers in a variety of end
markets.
-- Contracting Services - this segment involves the supply of IT
contracting services to just one banking customer, ANZ.
1.2 Strategy
Gresham's strategy is to develop and sell innovative software
solutions to address data problems endemic in the financial
services industry in order to drive profitable growth and create
long-term Shareholder value. To achieve this, Gresham has adopted
the following specific strategies:
-- Build a high-margin, recurring revenue stream based on Clareti software and cloud services:
In 2020, Gresham increased Clareti annualised recurring revenues
by 29 per cent. despite the challenging prevailing conditions, and
completed its transition of all new Clareti customers to
subscription-based licensing.
-- Create a valuable financial technology business through
Clareti-led growth and complementary acquisitions:
Gresham also added several key accounts, delivered important
customer implementations that increased its addressable market and
completed the acquisition of Inforalgo which added valuable cloud
connectivity technology to the Clareti portfolio.
-- Establish Clareti as the enterprise data integrity platform "category leader":
Gresham won the Waters Technology award for Best Buy-Side
Reconciliation Platform in 2020 and ran several successful
marketing campaigns to promote Gresham's brand and offerings to its
target market.
-- Focus product investment on innovative Clareti solutions for chosen markets:
Gresham delivered new, market-differentiating features and
capabilities in 2020 to solve well-defined market problems. It also
adopted new technologies to increase the re-usability of IP assets
across solutions.
-- Retain strategic non-Clareti revenues to support Clareti-led growth:
Non-Clareti revenues are operated at high-margin and support the
Group's profitability despite high levels of investment in Clareti.
In 2020, non-Clareti revenues were ahead of the Board's original
expectations.
Further details on Gresham's strategy and business model can be
found in its 2020 Annual Financial Report.
1.3 Rationale for the Acquisition
Compelling and immediate financial impact
The Acquisition is expected to be immediately significantly
accretive to earnings, on an adjusted(1) basis, in the first part
financial year of ownership (year ending 31 December 2021), and
further accretive to earnings, on an adjusted(1) basis, in the
first full year of ownership (year ending 31 December 2022). The
Board estimates that, following Completion, the Enlarged Group will
be able to achieve synergies through reductions in senior
leadership costs. However, the Board notes that in the short term,
these cost savings will be predominantly offset by a higher annual
operating cost base of the Enlarged Group resulting from
investments to be made into central functions in order to align
Electra with Gresham's global operating platform, corporate
governance procedures and reporting requirements.
In the medium to longer term, it is anticipated that further
benefits will be achieved, through efficiencies in product
development (including access for the Enlarged Group to a greater
range of re-usable IP assets) and customer support as future
investments are made on a combined basis, utilising an enlarged and
more global resource pool, and by centralising core functions.
These longer-term benefits have not been modelled in Gresham's
baseline investment case.
(1) Adjusted for one-off exceptional charges, acquired
amortisation, IFRS 16 lease charges and share-based payments.
Acceleration of earnings growth and earnings quality
Electra is a profitable and growing business. Since inception,
Electra has had the strategic advantage of being able to secure
growth primarily in its large, homogeneous local U.S. market. As a
result, it has achieved deep penetration and now benefits from a
higher level of cash profitability compared to the Gresham Group's
more internationally distributed Clareti business.
In each of the financial years ended 31 December 2019 and 31
December 2020, Electra delivered approximately 4 per cent. of
revenue growth and 13 per cent. and 9 per cent. of recurring
revenue growth respectively. As with many other comparable
businesses, Electra experienced a slowdown in recurring revenue
growth in FY2020 as a result of COVID-19, but growth rates are
expected to increase in FY2021. Whilst Electra experienced a slight
drop in margins in FY2019 as its migration from a perpetual to a
subscription-based licensing business was completed, FY2020 saw a
strong improvement and was well-ahead of FY2018, with a 15 per
cent. and 24 per cent. adjusted EBITDA margin and a 3 per cent. and
9 per cent. adjusted cash EBITDA margin being achieved in FY2019
and FY2020 respectively. On a standalone basis, as previously
reported, Gresham's Clareti business is tracking towards cash
EBITDA profitability being achieved on a full-year basis during
FY2022. The acquisition of Electra will accelerate the combined
cash EBITDA break-even point which is now expected to be achieved
in the first 12 months post-Acquisition.
Based purely on an aggregation of Gresham's and Electra's
respective businesses, forward looking annual recurring revenues
("ARR") totalled GBP24.6 million as at 31 December 2020. For
FY2020, on a standalone basis, Gresham's high growth, strategically
important Clareti business represented 63 per cent. of Group
revenues of GBP24.8 million. On an aggregated basis, revenues from
the combined Clareti and Electra businesses represented 73 per
cent. of total Gresham Group and Electra revenues of GBP35.0
million. This transformation will completely remove the Group's
long-standing dependency on its legacy businesses which have been
in structural decline for the last decade.
In recent years, Electra has successfully made the transition to
a subscription-based licensing model and benefits from high levels
of customer retention. Electra also targets the attractive capital
markets industry segment that has been the primary engine of growth
for Gresham. The Acquisition will more than double the Enlarged
Group's customer numbers, thereby improving the likely resilience
of its revenues and reducing customer concentration risk. Based
upon an aggregation of the FY2020 combined Clareti and Electra
results, the Acquisition will also increase Clareti recurring
revenues by 85 per cent. and further improve the Enlarged Group's
quality of earnings.
Strengthening position in the United States
The United States is the largest homogeneous market for capital
markets technology in the world, with North America accounting for
approximately 50 per cent. of the global asset management industry.
Success in the U.S. market is, therefore, believed by the Board to
be key to the Company's long-term aspirations.
Since winning its first Clareti sale in the U.S. in 2015,
Gresham's customer base in North America has grown steadily through
organic direct sales and acquisitions, most recently of Inforalgo
and, prior to that in 2016, C24 Technologies. As at 31 December
2020, 29 per cent. of Clareti ARR came from customers in North
America; combined with Electra, this becomes 57 per cent. Gresham's
current physical presence there is limited to eight staff and
further investment is required into sales, delivery, cloud and
customer support to take advantage of the market opportunity.
Combining Gresham's and Electra's respective U.S.
customer-facing operations is expected to extend sales reach and
deliver economies of scale in other functions. Furthermore, there
is anticipated to be substantial opportunity for growth within the
Enlarged Group's customer base through product cross-sell.
Notwithstanding the competitive nature of the businesses'
respective reconciliation solutions, there is pleasingly only a
limited overlap in the customer bases of Gresham and Electra. As a
result, the combined Clareti and Electra customer base of the
Enlarged Group will comprise over 190 organisations in North
America upon Completion and a total combined customer count in
excess of 270. In terms of market share, Gresham will become a
leading independent provider of reconciliation software to the U.S.
buy-side community. The Acquisition represents an exciting
opportunity to underpin Gresham's beachhead operation in the U.S.
and secure a market leadership position which would otherwise be
likely to take several years to establish.
Increase share of wallet with buy-side customers
Investment management firms are increasingly seeking to reduce
their operating costs and gain greater automation, transparency and
control over their operations. Buy-side firms see robust core
reconciliations of cash, positions, transactions and NAV
calculations as a fundamental business need and are prepared to
invest to remove manual dependencies from the process. They are
also seeking to achieve integration across front, middle and back
offices, driving a need for inter-systems controls. In parallel,
they are seeking to simplify and integrate their technology and
data estate by consolidating their technology partners and
accelerating their move to cloud. Firms are increasingly open to
working with partners to provide outsourced services in specialist
areas such as data management, reconciliations, compliance and
reporting.
Electra's primary product strengths are in core reconciliation
software and data aggregation services. By contrast, Gresham's
competitive advantage is in more complex inter-systems
reconciliations, regulatory reporting and control, payments
integration and other connectivity solutions. Both organisations
also have relatively new cloud hosting and managed services
capabilities. Bringing these products and services together will
enable Gresham to provide more complete, higher value, automation
solutions thereby competing more effectively against platform
providers and providing strong differentiation against point
solution providers.
Provides global operating scale
Despite steady rates of year-on-year organic recurring revenue
growth, both Gresham and Electra remain relatively small players
competing in the global enterprise financial technology market. It
is Gresham's aspiration to build a global company of substantial
scale and to become a significant next generation player in the
market and a known and respected brand.
Whilst the success of the Clareti-led growth strategy over the
last few years has enabled the Gresham Group to become cash
generative, the Clareti business itself is not yet standalone cash
profitable. The business has matured from the pioneering days of
the Clareti start-up; by the end of 2020, Clareti annualised
recurring revenue had grown to GBP12.3 million and the Group had
over 120 Clareti customers. The Company has invested to build out
global distribution, service delivery and customer support
platforms, as well as investing into the product innovations, cloud
infrastructure and managed services solutions required by the
market.
Whilst no longer a start-up, as a small scale-up business,
Gresham has yet to achieve the target levels of operational gearing
and cash generation expected of a mature enterprise software
company. In acquiring Electra, a company with a similar business
model, target market and strategic purpose, Gresham will
significantly increase its recurring software revenues. The
Enlarged Group will have approximately 200 employees servicing over
270 customers in over 15 countries around the world. This revenue
and platform scale will take the Enlarged Group into a new stage in
its growth journey. Gresham will become a larger small company with
its sights firmly set on becoming a smaller large company within
the next five years.
In the Board's view, the Acquisition is aligned with Gresham's
strategic plan and seeks to maximise value for Shareholders, with
the Company being well placed to pursue its strategy of profitable
growth.
2. Financial effects of the Acquisition
Electra is being acquired for a total consideration, to be
satisfied entirely in cash, of up to US$38.6 million, comprising
US$28.95 million in upfront consideration and up to US$9.65 million
in deferred consideration payable in two instalments (of up to
US$4.825 million respectively) to be made (subject to the
achievement of performance criteria) after the first and second
anniversaries of Completion on a debt free, cash free basis.
For the year ended 31 December 2020, Electra delivered audited
revenue of GBP10.1 million, audited adjusted EBITDA of GBP2.4
million, audited adjusted cash EBITDA of GBP0.9 million and an
audited profit before tax of GBP0.4 million.
The Board remains confident in the structural growth
opportunities of Electra's target markets as well as, in the short
term, the ability to maintain the recurring revenue growth
demonstrated by Electra over the historical period and to at least
maintain its existing margins. As a result, in the mid to long-term
following completion of the Acquisition, the Directors expect there
to be the potential to further enhance Electra's growth rates and
margins.
The Company and Gresham International have entered into a new
US$15 million multicurrency revolving credit and US$10 million
accordion loan facility with Bank of Ireland. It is not anticipated
that the New Loan Facility will be used to fund any of the initial
consideration payable in respect of the Acquisition but drawdowns
may be made under the facility in respect of any further payments
by Gresham Enterprise of the deferred consideration which may
become due to the Vendors under the Stock Purchase Agreement.
3. Information on Electra
Electra is a leading, innovative provider of software solutions
and services for post-trade processing including reconciliation,
data collection and transformation, trade settlement and client fee
billing for the financial services industry, primarily targeted at
buy-side firms. Electra was founded in 1998 by John Landry, amongst
others, who holds the controlling interest in its issued and
outstanding shares of common stock and currently operates as its
Chief Executive Officer. Electra is headquartered in New York, USA
and has approximately 50 employees. With over 150 customers
globally, Electra has a low customer concentration with its largest
customer comprising approximately 6 per cent. of its annualised
recurring revenue of GBP8.8 million as at 31 December 2020.
Electra's customer base includes institutional investment managers,
hedge funds, insurance companies, fund administrators and plan
sponsors.
Electra's strategy is to deliver best-in-class solutions that
mitigate risk, cost and inefficiencies prevalent across the
post-trade process, selling primarily to buy-side firms and service
providers who have relatively standardised requirements. Electra's
business model seeks to deliver solutions to its customers
primarily in a Software-as-a-Service (SaaS) environment, which
Electra hosts in third-party cloud platforms with revenue based on
number of seats and/or data volumes. Revenues are also derived from
licensed software with respect to on-premise deployments that the
customer manages themselves, and its offerings are augmented with
managed services.
Electra's products are comprised as follows:
-- Electra Reconciliation is a solution designed specifically
for the asset management industry, helping buy-side firms and
service providers mitigate risk, cost and inefficiencies across
reconciliation, exception management and the post-trade process,
and eliminate labour processes. The product, which contains
patented technology, integrates and compares data across
departments, in order to expedite exceptions management and allow
customers to review exceptions activity, understand the causes and
impact of exceptions and enable immediate exception
resolutions.
-- Electra Data provides customers with a fully outsourced data
collection, validation and aggregation service. The product
includes a data dashboard to allow for summarised viewing and
detailed status information in real time. It consolidates
securities, cash position, transaction and research information
from third parties and then reformats the data so it can be
integrated with a customer's system specifications and its business
applications.
-- Electra Settlements is an application that allows the
post-trade settlement process to be fully automated by
consolidating post-trade processing into a single system and
dashboard for automating wire instructions. Data is automatically
sent to counterparties and can be customised to eliminate manual
workflows. It mitigates settlement risk by accelerating trade
affirmations.
-- Electra Billing allows investment firms to calculate fees and
invoice clients based on criteria such as assets under management
and performance fees. It allows for complex approval workflows and
audit trails for these core processes.
-- Electra Managed Services provides an add-on outsourcing
service for specific reconciliation and data collection processes
which can be tailored to a customer's requirements.
-- Electra FailSafe is a risk management system designed to
aggregate and display pending trades, highlight trades at risk of
failing, expose failed trades and present the information on a
secure web interface. The system enables the creation of alerts and
provides an audit trail for specific trades.
Electra Reconciliation and Electra Data are considered to be the
lead offerings and together accounted for approximately 96 per
cent. of Electra's recurring revenues as at 31 December 2020.
Summary financial information on Electra Information Systems,
Inc.
Year ended Year ended Year ended
31 December 31 December 31 December
2018 2019 2020
GBP'000 GBP'000 GBP'000
Revenue 9,257 9,732 10,121
Gross profit 6,879 7,226 7,505
Operating profit 873 336 503
Profit before tax 810 280 443
Gross Assets 5,135 5,493 6,407
Net Assets 2,728 3,075 3,353
Over the historical reporting period, Electra's sales increased
from approximately GBP9.3 million in FY2018 to approximately
GBP10.1 million (2) in FY2020, a CAGR of 4 per cent. This increase
was predominantly driven by a growth in recurring revenues which
experienced a CAGR of 10 per cent. over the reporting period. In
FY2020, 97 per cent. of revenue was recurring and the gross revenue
retention rate was in excess of 92 per cent. Gross margin was
stable at approximately 74 per cent. throughout the reporting
period. Adjusted EBITDA and adjusted cash EBITDA respectively
increased from approximately GBP1.7 million and GBP0.4 million in
FY2018 to approximately GBP2.4 million and GBP0.9 million in
FY2020. This resulted in an adjusted EBITDA CAGR of 19 per cent.
and a cash EBITDA CAGR of 50 per cent. over the historical
reporting period to FY2020. As at 31 December 2020, the gross
assets of Electra totalled GBP6.4 million and forward looking ARR
totalled GBP8.8 million (3) . Of this sum, Electra Reconciliation
and Electra Data represented annualised recurring revenues of
approximately GBP5.0 million and GBP3.6 million respectively.
(2) In alignment with IFRS, all of Electra's income statement
transactions have been translated from US$, the significant base
currency, to GBP using average rates across the relevant reporting
periods and all of its balance sheet transactions have been
translated as at the closing rates prevailing in respect of each
such period.
(3) Forward looking ARR is not an IFRS measure, but has been
translated as at the closing rates prevailing in respect of that
period.
4. Summary of the terms of the Acquisition
The Acquisition is being made pursuant to the terms of the Stock
Purchase Agreement. Under the Stock Purchase Agreement, Gresham
Enterprise has agreed, subject to certain conditions, to purchase
all of the issued and outstanding shares of common stock of Electra
for a consideration of up to US$38.6 million on a debt free, cash
free basis, of which US$28.95 million will be payable in cash on
Completion, subject to customary adjustments based on the working
capital levels of Electra as at that date. Further cash
consideration of up to US$9.65 million will then be payable to the
Vendors by reference to the levels of recurring revenue achieved by
Electra in the first two years of its ownership by Gresham, such
sum being paid in two separate instalments (of up to US$4.825
million respectively, subject to downwards adjustment in proportion
to the extent to which target recurring revenues are not achieved)
to be made after the first and second anniversaries of
Completion.
Pursuant to the Stock Purchase Agreement, the Vendors have each
given customary representations, warranties, covenants and
indemnities to Gresham Enterprise with regard to Electra as well as
regarding the conduct of Electra's business during the period up to
Completion.
Completion of the Acquisition is conditional upon the
satisfaction (or waiver, where applicable) of the following
conditions (among others):
-- approval by Shareholders at the General Meeting of the
Acquisition (as a Class 1 transaction under the Listing Rules) and
of a further Resolution required under the Companies Act to allow
the Directors to allot and issue the Placing Shares without first
offering them to existing Shareholders;
-- the representations and warranties of Electra and the Vendors
contained in the Stock Purchase Agreement continuing, subject to
certain exceptions, to be true and correct as of the Completion
Date;
-- consummation of the transactions contemplated by the Stock
Purchase Agreement being permitted by applicable law and there
being no order issued by any court of competent jurisdiction or
other legal or regulatory restraint or prohibition limiting or
restricting the consummation of the transactions contemplated by
the agreement or Gresham Enterprise's ownership, conduct or
operation of Electra's business following Completion;
-- no defined material adverse effect having occurred; and
-- immediately after the passing of the applicable Resolutions, the Placing Shares having been unconditionally allotted and issued by the Company, the Placing Agreement not having been terminated and having become and remaining unconditional in all respects and, immediately following Completion having taken place, Admission of the Placing Shares then occurring.
The Stock Purchase Agreement contains various termination
rights, including in the event that the applicable Resolutions are
not approved by Shareholders at the General Meeting or if there is
a material breach of any of the representations, warranties,
covenants or agreements given by the parties in the Stock Purchase
Agreement which would give rise to the failure of any of the
conditions to Completion.
The Board expects that, subject to the satisfaction and/or
waiver (where applicable) of these Conditions, Completion will
occur on or around 22 June 2021.
5. Financing of the Acquisition
The cash consideration payable for the Acquisition on Completion
is US$28.95 million. The Group proposes to finance this amount
using the net proceeds of the Placing and Retail Offer (after
taking into account expenses related thereto and in respect of the
Acquisition) with the remainder being funded from the Group's
existing cash resources.
Details of the Placing and the Retail Offer
The Company is proposing to raise GBP20 million pursuant to the
Placing and up to GBP1 million pursuant to the Retail Offer (in
each case, before expenses) to fund part of the upfront
consideration due in respect of the Acquisition, together with
associated transaction costs.
The Issue Price of 160 pence per New Ordinary Share which does
not represent any discount to the closing mid-market price of an
Existing Ordinary Share of 160 pence on 27 May 2021 (being the
latest practicable date prior to this Announcement).
Prior to launch of the Placing and Retail Offer, the Company
consulted with a number of its institutional Shareholders to gauge
their feedback as to the terms of the Transaction. Feedback from
this consultation was supportive and, as a result, the Board has
chosen to proceed with the Placing and Retail Offer to finance the
initial consideration payable in respect of the Acquisition through
an equity raise and using its existing cash resources without first
offering the New Ordinary Shares to existing Shareholders. The
Directors believe that the additional costs that would have been
incurred, both financially and in terms of management time, if the
Company were to have offered all Shareholders the opportunity to
acquire Ordinary Shares (for example, via an open offer or a rights
issue), are such that a non-pre-emptive share issue to a limited
number of institutional and other investors via the Placing and
Retail Offer is a more appropriate method of raising finance for
the purposes of the Acquisition. The Placing has therefore been
structured as an accelerated bookbuild to minimise execution and
market risk and neither that nor the Retail Offer have been
underwritten.
The Placing is to be effected pursuant to the Placing Agreement.
The Placing will result in the issue of up to 13,125,000 New
Ordinary Shares, representing approximately 18.7 per cent. of the
Existing Ordinary Shares.
Retail Offer
The Retail Offer will be open to private and other investors
subscribing via PrimaryBid.com and will conditionally raise up to
GBP1 million (before fees and expenses) through the issue of the
Retail Offer Shares.
General
The New Ordinary Shares will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends or other distributions
declared, made or paid after their date of issue and will carry the
same voting rights as the Existing Ordinary Shares. The New
Ordinary Shares will be in registered form and will be capable of
being held either in certificated form or in uncertificated form in
CREST. The New Ordinary Shares will be admitted to the Official
List with a premium listing and admitted to trading on the London
Stock Exchange's Main Market for listed securities. It is expected
that Admission will become effective and that dealings in the New
Ordinary Shares will commence at 8:00 a.m. on 22 June 2021.
Dilution
It is proposed that up to 13,125,000 New Ordinary Shares will be
issued in connection with the Placing and Retail Offer. This will
result in the Company's issued share capital increasing by up to
approximately 18.7 per cent. in aggregate. For illustrative
purposes, immediately following Completion, those existing
Shareholders as at the latest practicable date prior to this
Announcement will, together, own approximately 84.2 per cent. of
the issued share capital of the Company as enlarged by the Placing
and Retail Offer.
Details of the New Loan Facility
The New Loan Facility comprises a US$15 million multicurrency
revolving credit facility ("Facility A") and (at the lender's
discretion) a separate option for a US$10 million accordion loan
facility. Amounts borrowed under Facility A may be used, among
others, to fund the consideration payable under the Acquisition,
for any associated fees, costs, taxes and expenses, for the
refinancing of certain financial indebtedness incurred in relation
to acquisitions permitted under the terms of the facility and for
the general corporate and working capital purposes of the Enlarged
Group.
The rate of interest payable on each loan made under Facility A
is the margin (defined therein) plus (as applicable, depending on
the currency denomination of each loan) the sterling overnight
index average reference rate or secured overnight financing rate.
The margin payable on any Facility A loans is also subject to a
margin ratchet, pinned to an adjusted leverage covenant contained
in the New Loan Facility, where the highest margin payable is 2.75
per cent. per annum and the lowest is 2 per cent. per annum. The
maturity date of the New Loan Facility is its third anniversary but
the facility agreement also contains two extension options whereby
the Company may (subject to obtaining the lender's consent) give
notice to Bank of Ireland that it wishes to extend the maturity
date of the New Loan Facility by additional periods, each of one
year.
6. Information on Gresham and future strategy
Following Completion, Gresham intends to continue pursuing its
successful stated strategy of developing and selling innovative
software solutions and cloud services to address data problems
endemic in the financial services industry in order to drive
profitable growth and create long-term Shareholder value.
Over the last ten years or so, the global shift to digital has
driven dramatic change in society and business, with entire
industries being reimagined and transformed by data and
inter-connected real-time processes. In financial services, these
technology advances and competitive pressures are compounded by
increasing regulatory, risk and compliance demands. Firms are
striving to achieve full front-to-back and end-to-end control and
digitisation of their businesses. They are replacing archaic,
inflexible systems and manual processes and investing in automation
to improve the speed, accuracy and efficiency of their data
processing. Executives need to have complete confidence in their
data and processes to make good decisions, ensure optimal outcomes
and protect their reputations.
The acquisition of Electra is aligned with Gresham's mission to
bring digital integrity, agility and confidence to financial
markets. Gresham expects to fully integrate the Electra business
into its global, functional, operating model over the course of the
first year of ownership. Integration will commence immediately with
HQ functions, systems and processes, followed by sales, product,
delivery and customer support. Priority will be given to the
successful execution of the FY2021 sales plans of Electra and
Gresham, and the rapid implementation of the go-to-market strategy
for the Enlarged Group, including the cross-sell of products and
services. The Electra name will be retained as a product level
brand for the U.S. buy-side for a transitional period. The Enlarged
Group will continue to invest in its sales and marketing resource
to drive organic ARR growth through the acquisition of new
customers as well as growth in existing accounts in the industry
and geographic segments currently targeted by both businesses.
In summary, Gresham will be in a stronger position to build on
its existing operations and will seek to win a greater share of its
target addressable market. The Board will update Shareholders on
the Enlarged Group's strategic progress in its half-year results
expected to be announced in July 2021.
7. Synergies
Following Completion, immediate cost savings are expected to be
realised through the removal of duplicate senior leadership costs.
However, the Board notes that in the short term these savings will
be predominantly offset by a higher annual operating cost base of
the Enlarged Group resulting from investments to be made into
central functions in order to align Electra with Gresham's global
operating platform, corporate governance procedures and reporting
requirements. Accordingly, the Board does not expect to achieve any
material cost synergies in the short term.
However, based on the due diligence process undertaken in
advance of the Acquisition and its experience of integrating the
Inforalgo acquisition, the Board has identified certain cost and
efficiency synergies that are expected to materialise in the medium
to longer term. In particular, the Board anticipates that the
Enlarged Group will benefit from having a single corporate overhead
structure, centralised functions and investments, and shared
infrastructure and systems. The Enlarged Group will be able to
share existing resources across geographic regions. Gresham's
strong presence in Europe and Australia combined with Electra's
significant U.S. footprint will create a better balanced global
operation. The expected synergies identified above reflect both the
beneficial elements and the relevant costs, are contingent upon
completion of the Acquisition and would not be achieved
independently.
Similarly, in respect of potential revenue synergies, whilst the
Board does not anticipate significant enhancements to independent
Electra and Clareti growth rates in the short term, enhancements
are expected in the mid to long term. Over the mid to long-term,
the Board anticipates being able to increase Electra's recurring
revenue growth rates to at least the levels achieved in respect of
the Group's Clareti products as cross-sell and upsell opportunities
are realised and both the increased size and significantly
increased North American sales and marketing presence of the
Enlarged Group begins to deliver.
8. Current trading, trends and future prospects
Gresham Technologies plc
On 9 March 2021, the Company published its full year results for
the year ended 31 December 2020. Gresham Group's overall
performance was described in the Chief Executive Officer's
statement. The Company reported that in challenging circumstances,
the team grew Clareti ARR by almost 30 per cent. High levels of
investment into product innovation and customer services were
sustained, whilst also increasing earnings. The Inforalgo
acquisition, completed in the second half of 2020, was swiftly
integrated and is already delivering returns. Investment into sales
and marketing has been stepped up for the first half of FY2021 with
a strong field team in place.
Gresham entered 2021 with an installed base of over 120 Clareti
customers generating annualised recurring revenue of GBP12.3
million, which was GBP2.8 million and 29 per cent. higher than at
the beginning of 2020. The Group already has good visibility on its
legacy non-Clareti businesses. As a result, the Company is now much
more resilient than it has been for many years. Gresham's pipeline
has strengthened considerably in the last nine months and our
financial services clients are investing into intelligent
automation solutions to remove manual processes and save costs. We
also expect to see ongoing spend on regulatory reporting
infrastructure. Gresham will focus its sales efforts on these
growth areas where the Board believes its technology has
significant benefits over legacy vendors and newer competitors. The
Company will also seek to identify further earnings-enhancing
acquisitions in these same core markets.
FY2021 has started positively with several new customer wins in
Europe and the United States and multiple upgrades have been signed
with existing customers. Customer retention rates remain high.
Subject to sustaining the Group's new business win rate,
incremental investment in sales and distribution is planned for the
second half of the year in order to further strengthen the pipeline
into 2022.
Electra Information Systems, Inc.
Electra's performance for the first quarter of FY2021 was
aligned with the Board's expectations. Recurring revenues increased
by 5 per cent. against those achieved in the first-quarter of
FY2020. Customer retention remains high and Gresham anticipates
full year FY2021 growth similar to that achieved by Electra during
the period reported in the historical financial information to be
contained in the Shareholder Circular.
9. RISK FACTORS
9.1 Risks related to the Acquisition
The following risks and uncertainties relate to the
Acquisition:
Conditions in Stock Purchase Agreement
Completion of the Stock Purchase Agreement is conditional upon,
among others, the satisfaction (or waiver, if applicable) of the
following conditions:
-- the approval of the applicable Resolutions by Shareholders at the General Meeting;
-- the representations and warranties of Electra and the Vendors
contained in the Stock Purchase Agreement continuing, subject to
certain exceptions, to be true and correct as of the Completion
Date;
-- consummation of the transactions contemplated by the Stock
Purchase Agreement being permitted by applicable law and there
being no order issued by any court of competent jurisdiction or
other restraint or prohibition limiting or restricting the
consummation of the transactions contemplated by the agreement or
Gresham Enterprise's ownership, conduct or operation of Electra's
business following Completion;
-- no defined material adverse effect having occurred; and
-- immediately after the passing of the applicable Resolutions, the Placing Shares having been unconditionally allotted and issued by the Company, the Placing Agreement not having been terminated and having become and remaining unconditional in all respects and, immediately following Completion having taken place, Admission of the Placing Shares then occurring.
There can be no assurance that the outstanding conditions will
be satisfied (or waived, if applicable) in the necessary timeframe
and, accordingly, that Completion will take place.
Satisfying the conditions may also take longer than Gresham and
the Vendors expect and could impact expected costs. Any delay in
completing the Acquisition may also adversely affect any synergies
and other benefits that the Company may achieve if the Acquisition
is not completed within the expected timeframe. In addition,
Gresham's and Electra's management would have spent significant
time in connection with the Acquisition, which could otherwise have
been spent in connection with the other activities of the Gresham
Group and Electra, as applicable.
Therefore, the aggregate consequences of a material delay in
completing or failing to complete the Acquisition may have a
material adverse effect on the business, prospects, financial
condition and/or results of operations of the Gresham Group and
Electra and, in the case of a delay only, the Enlarged Group.
If the Acquisition does not proceed to Completion, there may
also be an adverse impact on the reputation and brand of the Group
and, given market perceptions, a negative impact on the price of
the Ordinary Shares, for example, as a result of negative media
scrutiny arising in connection with the failure to complete.
Warranties, indemnities and undertakings in the Stock Purchase
Agreement
The Stock Purchase Agreement contains customary warranties,
indemnities and other representations (including in relation to
tax) given by the Vendors and Electra in favour of Gresham
Enterprise. The Company has, through the due diligence procedures
it deemed reasonable and appropriate, and in negotiating the terms
of the Stock Purchase Agreement, taken steps to minimise the risk
of a liability arising under these provisions. However, there can
be no assurance that this due diligence exercise revealed or
highlighted all relevant facts that may be necessary or helpful in
evaluating the Acquisition and the Stock Purchase Agreement may not
provide for Gresham to recover all types of losses which it could
suffer following Completion, whether because those losses are not
covered by appropriate provisions of the Stock Purchase Agreement
or are otherwise excluded by its provisions, in particular by the
application of any time limitations on claims or financial
limitations on the Vendors' liability. Any failure to bring a
successful claim arising from a breach of any such warranties,
indemnities or representations could have a material adverse effect
on the Enlarged Group's financial condition and on its reputation
and brand.
The due diligence conducted by the Group in connection with the
Acquisition may not have revealed all relevant considerations,
liabilities or regulatory and conduct issues
The due diligence conducted by the Gresham Group on Electra in
connection with the Acquisition may not have revealed all relevant
considerations, liabilities or regulatory and conduct issues in
relation to the Acquisition, including the existence of facts that
may otherwise have impacted on the decision to proceed with the
Acquisition, the determination of the consideration payable to the
Vendors or the formulation of a business strategy for the Gresham
Group, Electra or, following Completion, the Enlarged Group.
In addition, information provided during the due diligence
process may have been incomplete, inadequate or inaccurate. The
Gresham Group and, following Completion, the Enlarged Group may
also be subject to legacy conduct and other exposures with respect
to Electra which were not identified through due diligence. If any
of the aforementioned occurs, the Gresham Group could suffer
reputational damage and may also be liable for losses suffered by
an affected party, each of which could have a material adverse
effect on the business, reputation and brand, prospects, financial
condition and/or results of operations of the Gresham Group and,
following Completion, the Enlarged Group.
Change of control
A number of Electra's customer contracts (including its largest
by annual revenues) include provisions that give the customer a
right (but not the obligation) to terminate the contract upon a
change of control of Electra unless prior consent is obtained from
the customer. While neither Electra nor Gresham has any reason to
believe these arrangements will not continue following Completion,
none of Electra's customers was aware of the Acquisition prior to
the date hereof and their views have not, given confidentiality
concerns, been sought. The Acquisition is an event giving rise to a
change of control of Electra and, accordingly, there is a risk that
customers who enjoy such a right may seek to terminate their
contract with Electra either immediately or upon shorter notice
than would otherwise be required had the change of control event
not occurred. Whilst any termination of customer agreements arising
from the fact of Completion would reduce the amount of the deferred
consideration payable by Gresham Enterprise to the Vendors, if any
such contract is terminated, Electra would cease to derive revenues
from the customer contract, which would reduce the net benefits of
the Acquisition and impact the Enlarged Group's business and
financial position. To mitigate this risk, Electra will be expected
to seek consents to the change of control from affected customers
prior to Completion, but there can be no assurance it will be
successful in securing these consents.
Further, Electra's lease agreement relating to its premises in
New York City also includes a change of control provision that,
upon Acquisition, would entitle the landlord to terminate the lease
with immediate effect or with shorter notice than would otherwise
be required had the change of control event not occurred, unless
the landlord's prior consent is obtained. If the lease were to be
terminated, Electra would no longer have access to its premises in
New York City, which could negatively impact its ability to conduct
its business operations and which, in turn, may impact the Enlarged
Group's business, prospects, financial condition and/or results of
operations. To mitigate this further risk, Electra will also be
expected to seek consent to the change of control from its landlord
prior to Completion, but there can be no assurance that it will be
successful in securing this consent either.
The Acquisition may have a disruptive effect on the Gresham
business, impact relationships with strategic partners of the
Gresham Group and Electra and could have a material adverse effect
on the Group, Electra and, following Completion, the Enlarged
Group
Notwithstanding the Gresham Group's and Electra's longstanding
relationships with many of their respective strategic partners,
uncertainty about the effects of the Acquisition on the future
business relationships with those strategic partners (including
customers, distributors, resellers and suppliers), may have a
material adverse effect on the business, prospects, financial
condition and/or results of operations of the Gresham Group,
Electra and, following Completion, the Enlarged Group.
These uncertainties could cause parties that have business or
other relationships with the Gresham Group, Electra and, following
Completion, the Enlarged Group, either to cease or seek to cease
doing business or to change their terms of business or take other
decisions concerning the business of the Gresham Group, Electra
and, following Completion, the Enlarged Group. This could result in
the loss of strategic partners who may no longer choose to do
business with the Gresham Group, Electra and, following Completion,
the Enlarged Group which may have a material adverse effect on the
Enlarged Group's operations, revenues and results.
The Enlarged Group may not realise, or it may take longer to
realise, the expected synergies or other benefits of the
Acquisition
Acquisitions are, by their nature, inherently risky undertakings
and, while strategic investments such as acquisitions present
opportunities for accelerated growth and the Gresham Group has
successfully undertaken and implemented a number of acquisitions
previously, this is its first acquisition made outside the UK and
Europe, is significantly larger in scale than previous deals and,
as such, no assurance can be given that the Acquisition will be
successful.
The Enlarged Group may fail to achieve certain, or all of, the
anticipated synergies or other benefits that Gresham expects to
realise as a result of the Acquisition, they may be materially
lower than have been estimated or it may take longer or cost more
than expected to realise those synergies or other benefits. If the
anticipated synergies or other benefits are not achieved, or take
longer than expected to be realised, this could hinder Gresham's
strategic growth plan, potentially jeopardise its position in the
market and have a material adverse effect on the business,
prospects, financial condition and/or results of operations of the
Enlarged Group.
Technology modernisation
Gresham's due diligence has identified certain technology
modernisation requirements with respect to Electra's products.
Whilst Electra has initiated these modernisations, which are
expected to deliver certain benefits, the extent and duration of
the modernisation activities required are not currently quantified
or quantifiable. There is a risk either that investments exceeding
those currently provided for may be required to complete these
modernisations, or that the modernisations may not be successful or
deliver the benefits expected, which could negatively affect the
Enlarged Group's business, prospects, financial condition and/or
results of operations.
To mitigate such risks, Gresham intends to carry out a full
review of Electra's modernisation plans as part of a comprehensive
post-Completion integration process, as referred to below. In
particular, Gresham will examine how the Enlarged Group's other IP
assets may be used to accelerate the modernisation requirements and
gradually work towards a combined technology stack and/or services
capable of satisfying multiple product requirements. However, there
can be no assurance that this will be feasible.
Pre-Completion changes in Electra's business
During the period from the signing of the Stock Purchase
Agreement to Completion, events or developments may occur,
including changes in the trading, operations or outlook of Gresham
or Electra, or external market factors, which could make the terms
of the Acquisition less attractive for the Company. Gresham
Enterprise would be obliged to complete the Acquisition
notwithstanding such events or developments. This may have an
adverse effect on Gresham's business, prospects, financial
condition and/or results of operations.
Potential future tax liabilities
Electra is subject to the corporate and other tax rules of the
United States where it principally operates. The correct
interpretation and application of any changes in applicable tax
rates, reliefs and tax laws can be challenging in practice. Any
failure to identify and manage this risk could lead to additional
taxes, penalties and interest being imposed on the Enlarged
Group.
There are also certain tax liabilities to which Electra may be
subject in the future in relation to the historic financial period.
Whilst these liabilities are largely indemnified against under the
Stock Purchase Agreement, there is one specifically identified and
quantified contingent tax claim which Gresham has agreed, in part,
to share liability for with the Vendors, up to a maximum US$300,000
of which would be payable by Gresham. The eventual final sum
payable in respect of this claim may be higher or lower and/or
other additional but presently unidentified tax liabilities may
also fall due. This may have an adverse effect on the Enlarged
Group's financial condition and/or results of operations.
Integration risks
The success of the Acquisition will depend, in part, on the
ability of the Directors and the Enlarged Group's management to
successfully integrate Electra's operations, technologies and
personnel into those of the Gresham Group's existing business. The
Group's management team have reasonable experience of implementing
an integration plan of the scale proposed but, if the Enlarged
Group fails to successfully integrate the two businesses, or such
integration is delayed or costs more than expected, this could
negatively impact on the business, prospects, financial condition
and/or results of operations of the Enlarged Group. The integration
of these operations may also result in unanticipated operational
problems, expenses and other liabilities, and the diversion of
management's attention.
The challenges involved in this integration are anticipated to
include the following:
-- co-ordinating communications with, and/or the provision of
products, services and solutions by the Enlarged Group to,
customers of both the Gresham Group and Electra;
-- consolidating the technologies used in the Enlarged Group's
products and services, taking into account the modernisation
requirements of certain Electra products noted above;
-- the consolidation of certain systems, procedures, accounting
functions, other facilities and technologies;
-- additional capital or other expenditure requirements;
-- ensuring that management systems and administrative and
financial controls are adequate for the effective management of the
Enlarged Group;
-- the alignment of financial accounting and reporting policies and practices;
-- achieving continuity of service and a compelling product
roadmap to ensure the retention of acquired customers;
-- resolving any outstanding or unforeseen legal, regulatory,
contractual, employee or other issues arising from the Acquisition;
and
-- assimilating the personnel and business cultures of the
Gresham Group's existing businesses with those of Electra and
continuing to incentivise key employees.
Integration of the cultures and philosophies of the Gresham
Group and Electra is also likely to be made more challenging to the
extent that the current operational disruption resulting from the
COVID-19 pandemic and the restrictions put in place by governments
in the U.S., the UK and elsewhere are continuing at the time of
Completion, particularly if employees are still required to work
from home.
There can be no assurances that the Enlarged Group will be
successful in meeting all of these challenges.
The value of Electra may be less than the consideration payable
under the Stock Purchase Agreement
Notwithstanding a fairly assessed price, and the fact that a
significant amount of the consideration payable to the Vendors
under the Stock Purchase Agreement is contingent on Electra's
performance during the two years following Completion, the amount
payable under the Stock Purchase Agreement may turn out to exceed
the value to the Enlarged Group of acquiring Electra.
Notably in this regard, Electra's top ten customers by number
account for approximately 24 per cent. of its total recurring
billings. In addition, certain of Electra's recurring revenues are
based on the level of usage made by certain of its customers of the
software which is licensed to them. These arrangements do not
provide for a minimum term or amount to be paid by those customers
and a decline in their usage of Electra's products could result in
a decline in its revenues and may have a material adverse effect on
its business, prospects, financial condition and/or results of
operations and, following Completion, on those of the Enlarged
Group.
Acquisition related costs may exceed expectations
The Enlarged Group may incur higher than expected integration,
transaction and Acquisition-related costs. In addition, the Gresham
Group has incurred legal, accounting and transaction fees and other
costs related to the Acquisition. Some of these costs are payable
regardless of whether the Acquisition is completed (in which case,
they may not be recovered from the Vendors or Electra), and such
costs may also be higher than anticipated, which may reduce the net
benefits of the Acquisition and impact the Gresham Group's or,
following Completion, the Enlarged Group's business, prospects,
financial condition and/or results of operations.
9.2 Risks related to the Enlarged Group
Electra may not perform in line with expectations
The historical operating results of Electra may not necessarily
be indicative of future performance. Furthermore, Electra's future
ability to contribute fully to the Enlarged Group's cash flows and
operating profitability will be dependent upon a number of factors,
including certain risks described in this section of the
document.
The Enlarged Group's success will depend on retaining and
attracting key personnel
Following Completion, the Enlarged Group may not be able to
retain key personnel as there can be no assurance that individuals
employed by Electra or the Gresham Group will remain employed by
the Enlarged Group.
Electra's senior management team is led by Founder and Chief
Executive Officer, John Landry who is responsible for managing the
operations of Electra. Mr Landry has agreed to provide on an ad hoc
basis certain transitional support to Gresham with regard to
Electra for a period of up to 12 months following Completion.
The Directors believe that Electra's senior management team are
responsible for creating a strong culture which has helped Electra
attract high-quality personnel, maintain a high retention rate of
key staff and create a workforce that is dedicated to delivering
high-quality products, services and solutions. Although Electra has
a track record of long-service amongst most of its senior
management, there is no guarantee that these individuals, including
its COO, CFO, CTO, Chief Revenue Officer and key Product Managers,
will remain with the Enlarged Group. The failure to retain key
management and staff could have a material adverse effect on
Electra and, following Completion, the Enlarged Group's business,
prospects, financial condition and/or results of operations.
The success of the Enlarged Group will also depend on its future
ability to recruit further key personnel. The inability to attract
employees, or any delay in replacing a departed employee, may
result in business disruption, intellectual property leakage, the
loss of local market knowledge and longstanding relationships with
customers and other strategic partners which may have a material
adverse effect on the Enlarged Group's business, prospects,
financial condition and/or results of operations.
Future strategy and external market competition
The future success of the Acquisition and of the Enlarged Group
will depend on the successful implementation of its business
strategy. The implementation of this business strategy will be
subject to certain risks and factors outside the Board or the
Company's control, including changes in the markets in which
Gresham currently operates.
In addition, the markets in which the Gresham Group and Electra
currently operate and, following Completion, the Enlarged Group
will operate are competitive and are characterised to varying
degrees by rapid technological change, evolving industry standards,
evolving business models and consolidation within the software
industry. The Enlarged Group will continue to face competition from
a number of sources in the market for its software solutions,
including significantly larger organisations, and could be
adversely affected through declining product sales if market
dynamics change rapidly and the Company fails or is unable to
identify and address competitor threats as they emerge.
The Enlarged Group's competitors may also establish strategic or
commercial relationships among themselves or with existing or
potential customers or other third parties, which may have the
effect of reducing the Enlarged Group's ability to promote and sell
its products successfully.
In addition, the software industry is currently undergoing
consolidation as software companies seek to offer more extensive
suites and broader arrays of products, services and solutions. The
COVID-19 pandemic has created further uncertainty in the technology
market due to its global impact, which could lead to increased
consolidation from potential opportunistic acquisitions by
competitors or competitors reassessing or realigning their
strategies. In doing so, these competitors may be able to reduce
prices on software that competes with the Gresham Group's,
Electra's and, following Completion, the Enlarged Group's products,
services and solutions, in part by leveraging their larger
economies of scale.
Consolidation may also permit competitors to offer a broader
suite of products and more comprehensive bundled solutions,
including software and services. This industry consolidation may
result in increased pricing pressure and/or loss of business to
these larger competitors. Competitor threats may also emerge from
smaller organisations who, due to their size, may be in a better
position to adopt newer technologies and/or rapidly develop and
release new, competitive products to the Enlarged Group's current
or target markets, particularly if they are funded by venture
capital or private equity, resulting in additional competitive
pressure on the Enlarged Group.
Any of these factors may have a material adverse effect on the
business, prospects, financial condition and/or results of
operations of the Gresham Group, Electra and, following Completion,
the Enlarged Group.
The Enlarged Group's financial performance and prospects may be
adversely affected by COVID-19, the long-term impact of which is
still unknown
On 11 March 2020, the World Health Organisation announced that
the outbreak of COVID-19 (commonly referred to as the Coronavirus)
had been declared a global pandemic. This widespread health crisis
has adversely affected the global economy, periodically resulting
in volatility in financial markets. The full, long-term impacts of
the pandemic are still evolving and, as yet, still remain to some
extent unknown.
Whilst COVID-19 has not had a material impact on the Gresham
Group and Electra to date other than a period of reduced sales
during 2020 as customers attended to their own COVID-19-related
internal operational priorities, the future development of the
pandemic still remains relatively uncertain and there is no
assurance this will not have a material adverse effect on the
business, prospects, financial condition and/or results of
operations of the Gresham Group, Electra and, following Completion,
the Enlarged Group. Such effects could include disruptions or
restrictions on the ability of employees to work effectively, as
well as further temporary closures of facilities or the facilities
of customers or suppliers, which could affect the Gresham Group,
Electra and, following Completion, the Enlarged Group's ability to
perform its contracts or purchase orders. Resulting cost increases
may not be fully recoverable under those contracts or purchase
orders or adequately covered by insurance which, in turn, could
impact the Gresham Group, Electra and, following Completion, the
Enlarged Group's profitability.
The full extent of this impact will depend on the continued
geographical range of the virus, infection rates, the severity and
related mortality rates of the virus, the timing and efficacy of
vaccine roll-outs, the evolution and administration of further
vaccines and the further, ongoing steps taken nationally and
globally to limit the further spread, variance and proliferation of
the virus.
Gresham Group and Electra are, in some cases, deemed to be
critical suppliers to the financial markets and customers that they
serve (for example, banks and other financial institutions) and, as
such, have been required to continue to provide critical services
to their respective customers during the COVID-19 pandemic.
Additionally, demand for their products has remained robust to
date, other than a period of reduced sales during 2020.
Accordingly, neither the Gresham Group nor Electra has experienced
a material detrimental impact to its respective business from 31
December 2020 to 27 May 2021 (being the latest practicable date
prior to this Announcement ).
In light of COVID-19, many organisations have made changes to
their standard operating procedures and have reviewed their own
cost bases. Whilst Gresham's and Electra's customer retention rates
have remained high since the pandemic began, there can be no
assurance that customers will not seek to reduce their costs either
by re-negotiating contract terms or migrating to lower-cost
competitors. Furthermore, ongoing remote working and a lack of (or
further limitations on) physical meetings restricts collaboration
opportunities with colleagues and customers alike. This may impact
productivity and sales and marketing activities, which in turn
could impact the business and prospects of the Gresham Group,
Electra and, following Completion, the Enlarged Group.
As COVID-19 has not had a material impact on the Gresham Group
and Electra to date, the Company is unable to provide any
additional information (other than that set out above) on its
potential impact on the Gresham Group, Electra and, following
Completion, the Enlarged Group.
Customer privacy, data protection and online security
Although the Gresham Group and Electra each seek to implement
adequate cybersecurity programmes, the continually increasing
sophistication of hackers and the prevalence of other cybersecurity
threats means there is an ongoing risk of breaches of the Gresham
Group's, Electra's and, following Completion, the Enlarged Group's
IT and security systems resulting in unauthorised access to data
centres (which may lead to business disruption or a loss of source
code or other confidential information) or other parts of its IT
environments containing confidential information. The Enlarged
Group may be subject to other security breaches of its information
technology systems, including sophisticated schemes, collusion to
defraud or other illegal activities. A party that is able to
circumvent the Enlarged Group's security systems, either by
physical means or electronically, could access or steal personal
data, financial data, customer data and other sensitive information
held by it.
The attractiveness of the Enlarged Group's products and services
to its customers depends, materially, on those customers trusting
that their (or their own customers' and clients') identities,
confidential data and the details of the transactions made by them
(or on their behalf) on the Enlarged Group's products and systems
will not be disclosed by the Enlarged Group to unauthorised third
parties, other than in permitted circumstances.
Security breaches could also expose the Enlarged Group to
litigation, possible liability and considerable reputational risk.
If the Enlarged Group or any of the third party services on which
it relies fails to process and manage customer data online in a
secure manner, or if they otherwise fail to protect customer
privacy and confidentiality in online transactions, there is a risk
that the Enlarged Group's customers and potential customers would
be deterred from using its services. While the Enlarged Group will
continue to make significant efforts to protect itself and its
customers from the occurrence of such activities, there can be no
assurance that such measures will be successful.
Protection of intellectual property rights
The Gresham Group and Electra each currently rely and, following
Completion, the Enlarged Group will rely, on patents, registered
and unregistered trademarks, copyright, trade secrets and
proprietary know-how and concepts. The Enlarged Group will continue
to seek to protect the ownership and intellectual property rights
in its current and future software products, in the UK, the United
States and elsewhere, through a combination of patents, trademarks,
copyrights and trade secret laws, as well as appropriate
confidentiality agreements.
Although the Gresham Group is not currently aware of any
potential or ongoing material breach of its intellectual property
by any third party, including its competitors, nor any breach by
Gresham of its competitors' intellectual property, any failure to
obtain or maintain adequate protection of intellectual property
rights for any reason could have a material adverse effect on the
business, prospects, financial condition and/or results of
operations of the Gresham Group, Electra and, following Completion,
the Enlarged Group.
While the protection afforded by patent, trademark, copyright
and trade secret laws may provide some advantages, the competitive
position of participants in their industry is often principally
determined by other factors, such as the technical and creative
skills of its personnel, the frequency of new product developments
and the ability to anticipate and rapidly respond to evolving
market requirements. To the extent that a competitor effectively
uses its intellectual property portfolio, including patents, to
prevent the Gresham Group, Electra and, following Completion, the
Enlarged Group from selling products that allegedly infringe such
competitor's products, their results of operations could be
materially adversely affected.
The Gresham Group and Electra also rely and, following
Completion, the Enlarged Group will continue to place material
reliance on unpatented and unregistered proprietary software,
technology and products. It is possible that others will
independently develop the same or similar software, technology or
products, obtain access to such unpatented unregistered technology
or otherwise, reverse engineer or decompile the Gresham Group's
and, following Completion, the Enlarged Group's software
products.
In common with other companies in the software industry, the
Gresham Group, Electra and, following Completion, the Enlarged
Group may continue to use or decide from time to time to extend its
use of open source software in certain of its products. Despite
rigorous processes to select only open source software that should
not compromise the Group's, Electra's and, following Completion,
the Enlarged Group's intellectual property, there may be
uncertainty about the legal effect of some open source software
licences. By using open source software, the Gresham Group, Electra
and, following Completion, the Enlarged Group may become obliged to
disclose parts of its own source code or may unknowingly be
infringing the intellectual property rights of a third party.
To protect trade secrets and other proprietary information,
employees, consultants, advisers and collaborators are typically
required to enter into confidentiality agreements with the Gresham
Group and Electra. However, it can never be assured that agreements
of this sort will provide meaningful protection for trade secrets,
know-how or other proprietary information in the event of any
unauthorised use, misappropriation or disclosure. If the Gresham
Group, Electra and, following Completion, the Enlarged Group are
unable to maintain the proprietary nature of their technologies or
to detect and take appropriate steps to enforce their rights
against any third party infringing on those rights, sales could
decrease and this could have a material adverse effect on the
business, prospects, financial condition and/or results of
operations of the Enlarged Group.
Following Completion the indebtedness of the Enlarged Group may
materially increase, which could affect the Enlarged Group's
business flexibility in the longer term
Gresham may finance any future deferred consideration payable to
the Vendors in respect of the Acquisition through the New Loan
Facility. As such, completion of the Acquisition may result in the
Enlarged Group substantially increasing its levels of debt in the
future compared to its historical position given that, while all
existing indebtedness of Electra will be discharged on Completion,
Gresham currently has no borrowings.
An increased level of debt could have the effect, among other
things, of reducing the Enlarged Group's flexibility to respond to
changing business and economic conditions. The amount of cash
required to service any increased debt levels, and thus the demands
on the Enlarged Group's cash resources, will be greater than the
amount of the cash flows which were required to service the Group's
debt and to pay dividends prior to the Acquisition.
Increased levels of debt could, in the longer term, also reduce
funds available for the Enlarged Group's investments in capital
expenditures, other acquisitions, share repurchases and/or other
activities and may potentially create competitive disadvantages for
the Enlarged Group relative to other companies with lower debt
levels.
Exchange rate fluctuations
Gresham's reporting currency is, and will following Completion
remain, pounds sterling. To that extent, one of its principal
foreign currency exposures will, due to its enlarged U.S.
operations, relate to movements in the U.S. dollar and pounds
sterling exchange rate and U.S. dollar denominated costs in the
U.S. This exposure may adversely affect its reported pounds
sterling profits, cash flows and balance sheet positions, such as
net debt. While Gresham already earns significant U.S. dollar and
other non-sterling denominated revenues and implements policies
appropriate to manage these exposures on an ongoing basis, the
Acquisition will significantly increase the amount of its U.S.
dollar earnings, cash flows and balance sheet values.
While policies will be adjusted appropriately to take account of
these increased exposures in the Enlarged Group, there can be no
assurance that the financial performance and condition of the
Enlarged Group as reported in pounds sterling will not be adversely
affected by future movements in the U.S. dollar/pounds sterling
exchange rate.
9.3 Risks related to the Placing and Retail Offer and Ordinary
Shares
The risk of executing the Acquisition could cause Gresham's
share price to decline
The market price of the Ordinary Shares may decline as a result
of the Acquisition if, among other reasons, the integration of
Electra's business with that of Gresham is delayed or is
unsuccessful, Gresham does not achieve the expected benefits of the
Acquisition as rapidly or to the extent anticipated or at all, the
effect of the Acquisition on Gresham's financial results is not
consistent with the expectations of investors, or Shareholders sell
a significant number of their Ordinary Shares after Completion.
The Company's share price may be subject to volatility and may
not reflect the underlying value of the Group and, following
Completion, the Enlarged Group
The market price of the Ordinary Shares could be subject to
significant fluctuations due to a change in sentiment in the market
regarding the Ordinary Shares (or securities similar to them). Such
risks depend on the market's perception of the likelihood of
completion of the Placing and Retail Offer, and/or in response to
various facts and events, including any regulatory changes
affecting the Gresham Group's and, following Completion, the
Enlarged Group's operations, variations in its operating results
and any future business developments of the Gresham Group and,
following Completion, the Enlarged Group and/or its competitors.
Stock markets have from time to time experienced (and may in the
future also experience) significant price and volume fluctuations
that have affected (and may in the future affect) the market prices
for securities which may be unrelated to the operating performance
or prospects of the Gresham Group and, following Completion, the
Enlarged Group. Furthermore, the operating results and prospects of
the Gresham Group and, following Completion, the Enlarged Group may
from time to time fall below the expectations of market analysts
and investors. Any of these events could result in a decline in the
market price of the Ordinary Shares.
Shareholders will experience a dilution of their existing
percentage ownership of Ordinary Shares and will have a reduced
voting interest in Gresham
In light of the decision taken by the Directors to undertake the
Placing and Retail Offer on a non-pre-emptive basis, rather than
pro rata to existing Shareholders, the percentage ownership of the
Ordinary Shares by the Company's existing Shareholders will be
reduced. Gresham intends to issue up to 13,125,000 New Ordinary
Shares in connection with the Acquisition which will represent, in
aggregate, approximately 18.7 per cent. of the Existing Ordinary
Shares. This will result in Gresham's issued share capital
increasing by up to approximately 18.7 per cent. As a consequence,
the number of voting rights which can be exercised and the
influence which may be exerted by existing Shareholders in respect
of the Enlarged Group will be reduced.
The market price of Ordinary Shares may go down as well as
up
Shareholders should be aware that shares are risk investments
and the value of an investment in Ordinary Shares, and any income
received from them, may go down as well as up and can be highly
volatile and subject to wide fluctuations in response to a variety
of factors, potentially leading to losses for Shareholders. The
price at which the Ordinary Shares may be quoted may not always
reflect the underlying value or prospects of the Group or,
following Completion, the Enlarged Group and the price which
Shareholders may realise for their Ordinary Shares will be
influenced by a large number of factors, some specific to Gresham
and its operations (including, but not limited to, variations in
the operating results of the Group or the Enlarged Group,
divergence in financial results from analysts' expectations,
changes in earnings estimates by stock market analysts, market
appraisals of the Group's or the Enlarged Group's strategy, any
additions or departures of key personnel, litigation, and press,
newspaper and/or other media reports) and some which may, as a
result of general economic conditions, legislative changes or in
the Group's or the Enlarged Group's sector, affect the industry as
a whole, other comparable companies or publicly traded companies
generally.
Dividends
The ongoing ability of the Company to make further dividend
payments to Shareholders will depend on a number of factors,
including its financial condition and results of operations, any
contractual restrictions (in particular those which have been
imposed by Bank of Ireland pursuant to the New Loan Facility) and
other factors considered relevant by the Directors. Under English
law, any payment of dividends is subject to the Companies Act. All
final dividends to be distributed by the Company must also be
recommended by the Directors and approved by Shareholders.
Moreover, under English law, the Company may pay dividends on
the Ordinary Shares only out of profits available for distribution
in accordance with the Companies Act. Although the Directors
intend, where permitted, to continue to pay dividends to
Shareholders in the future, there can be no assurance either that
the Company will declare and pay, or have the ability to declare
and pay, any further dividends on the Ordinary Shares, or as to the
amount of such dividends, if any.
An investment in the Ordinary Shares may not be suitable for all
recipients of this Announcement
The Ordinary Shares may not be a suitable investment for all
recipients of this Announcement. Before making any investment
decision, prospective investors are advised to consult an
appropriate independent financial adviser authorised under FSMA (if
in the UK) or from another appropriately authorised independent
financial adviser who specialises in advising on the acquisition of
securities.
10. Recommendation
The Board considers the Transaction to be in the best interests
of the Company and Shareholders as a whole, and most likely to
promote the success of the Company for the benefit of those
Shareholders. Accordingly, the Board unanimously recommends that
Shareholders vote (by proxy) in favour of the Resolutions to be
proposed at the General Meeting, as those Directors who are
Shareholders intend to do in respect of their own beneficial
holdings of Ordinary Shares representing, in aggregate,
approximately 0.27 per cent. of the Company's existing issued share
capital.
APPIX
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES
ONLY
THIS ANNOUNCEMENT, AND THE INFORMATION CONTAINED IN IT, IS
RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF
SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION,
RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL ("RESTRICTED
JURISDICTIONS").
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT
HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT:
(A) IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA"),
PERSONS WHO ARE, UNLESS OTHERWISE AGREED BY NPLUS1 SINGER CAPITAL
MARKETS LIMITED ("BOOKRUNNER") OR ITS ASSOCIATES, "QUALIFIED
INVESTORS" (FOR THE PURPOSES OF THIS ANNOUNCEMENT, REFERRED TO AS
"EEA QUALIFIED INVESTORS") WITHIN THE MEANING OF ARTICLE 2(E) OF
THE EU PROSPECTUS REGULATION (WHICH MEANS REGULATION (EU) 2017/1129
AS AMED AND/OR SUPPLEMENTED FROM TIME TO TIME AND INCLUDES ANY
RELEVANT IMPLEMENTING MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS
REGULATION"); AND (B) IN THE UNITED KINGDOM, PERSONS WHO ARE,
UNLESS OTHERWISE AGREED BY THE BOOKRUNNER, "QUALIFIED INVESTORS"
(FOR THE PURPOSES OF THIS ANNOUNCEMENT REFERRED TO AS "UK QUALIFIED
INVESTORS") WITHIN THE MEANING OF ARTICLE 2(E) OF THE PROSPECTUS
REGULATION, WHICH FORMS PART OF RETAINED EU LAW IN THE UNITED
KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE
"UK PROSPECTUS REGULATION") WHO ARE ALSO: (I) "INVESTMENT
PROFESSIONALS" WITHIN THE MEANING OF ARTICLE 19(5) OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE
"ORDER"); OR (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D)
("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF
THE ORDER; OR (C) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFUL TO
COMMUNICATE THEM (ALL SUCH PERSONS IN (A), (B) AND (C), TOGETHER
BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT AND THE
TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED UPON OR
RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. EACH RECIPIENT
IS DEEMED TO CONFIRM, REPRESENT AND WARRANT TO THE COMPANY THAT
THEY ARE A RELEVANT PERSON. ANY INVESTMENT OR INVESTMENT ACTIVITY
TO WHICH THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT
HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE
ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS INTO WHOSE
POSSESSION THIS ANNOUNCEMENT COMES ARE REQUIRED BY THE COMPANY AND
THE BOOKRUNNER TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH
RESTRICTIONS.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR FORM PART OF AN OFFER TO SELL OR ISSUE OR A
SOLICITATION OF AN OFFER OR INVITATION TO BUY OR SUBSCRIBE FOR OR
OTHERWISE ACQUIRE ANY SECURITIES IN ANY JURISDICTION INCLUDING,
WITHOUT LIMITATION, THE RESTRICTED JURISDICTIONS OR ANY OTHER
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS OR MAY BE
UNLAWFUL. NO COPY OR PART OF THIS ANNOUNCEMENT AND THE INFORMATION
CONTAINED IN IT MAY BE PUBLISHED OR DISTRIBUTED, DIRECTLY OR
INDIRECTLY, TO PERSONS IN A RESTRICTED JURISDICTION UNLESS
PERMITTED PURSUANT TO AN EXEMPTION UNDER THE RELEVANT LOCAL LAW OR
REGULATION IN ANY SUCH JURISDICTION.
PERSONS DISTRIBUTING ANY PART OF THIS ANNOUNCEMENT MUST SATISFY
THEMSELVES THAT IT IS LAWFUL TO DO SO. PERSONS (INCLUDING, WITHOUT
LIMITATION, NOMINEES AND TRUSTEES) WHO HAVE A CONTRACTUAL OR OTHER
LEGAL OBLIGATION TO FORWARD A COPY OF THIS ANNOUNCEMENT SHOULD SEEK
APPROPRIATE ADVICE BEFORE TAKING ANY ACTION. PERSONS INTO WHOSE
POSSESSION THIS ANNOUNCEMENT COMES ARE REQUIRED BY THE COMPANY AND
THE BOOKRUNNER TO INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH
RESTRICTIONS.
THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OR UNDER THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED,
SOLD, RESOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN
OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES. NO PUBLIC OFFERING OF THE
PLACING SHARES IS BEING MADE IN THE UNITED STATES, THE UNITED
KINGDOM OR ELSEWHERE. THE PLACING SHARES ARE BEING OFFERED AND SOLD
OUTSIDE THE UNITED STATES IN "OFFSHORE TRANSACTIONS", AS DEFINED
IN, AND IN COMPLIANCE WITH, REGULATION S UNDER THE SECURITIES ACT.
PERSONS RECEIVING THIS ANNOUNCEMENT (INCLUDING CUSTODIANS, NOMINEES
AND TRUSTEES) MUST NOT FORWARD, DISTRIBUTE, MAIL OR OTHERWISE
TRANSMIT IT OR ANY PART OF IT IN OR INTO THE UNITED STATES.
THE RELEVANT CLEARANCES HAVE NOT BEEN, NOR WILL THEY BE,
OBTAINED FROM THE SECURITIES COMMISSION OF ANY PROVINCE OR
TERRITORY OF CANADA; NO PROSPECTUS HAS BEEN LODGED WITH, OR
REGISTERED BY, THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
OR THE JAPANESE MINISTRY OF FINANCE; AND THE PLACING SHARES HAVE
NOT BEEN, NOR WILL THEY BE, REGISTERED UNDER OR OFFERED IN
COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE, PROVINCE OR
TERRITORY OF AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC
OF SOUTH AFRICA. ACCORDINGLY, THE PLACING SHARES MAY NOT (UNLESS AN
EXEMPTION UNDER THE RELEVANT SECURITIES LAWS IS APPLICABLE) BE
OFFERED, SOLD, RESOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR
INTO AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH
AFRICA OR ANY OTHER JURISDICTION OUTSIDE THE UNITED KINGDOM.
NO ACTION HAS BEEN TAKEN BY ANY AFFILIATE THAT WOULD PERMIT AN
OFFER OF THE PLACING SHARES OR POSSESSION OR DISTRIBUTION OF THIS
ANNOUNCEMENT OR ANY OTHER PUBLICITY MATERIAL RELATING TO SUCH
PLACING SHARES IN ANY JURISDICTION WHERE ANY ACTION FOR THAT
PURPOSE IS REQUIRED.
ANY INDICATION IN THIS ANNOUNCEMENT OF THE PRICE AT WHICH THE
COMPANY'S SHARES HAVE BEEN BOUGHT OR SOLD IN THE PAST CANNOT BE
RELIED UPON AS A GUIDE TO FUTURE PERFORMANCE. THE PRICE AND VALUE
OF SECURITIES CAN GO DOWN AS WELL AS UP. PERSONS REQUIRING ADVICE
SHOULD CONSULT AN INDEPENT FINANCIAL ADVISER.
NO STATEMENT IN THIS ANNOUNCEMENT IS INTED TO BE A PROFIT
FORECAST AND NO STATEMENT IN THIS ANNOUNCEMENT SHOULD BE
INTERPRETED TO MEAN THAT EARNINGS PER SHARE OF THE COMPANY FOR THE
CURRENT OR FUTURE FINANCIAL YEARS WOULD NECESSARILY MATCH OR EXCEED
THE HISTORICAL PUBLISHED EARNINGS PER SHARE OF THE COMPANY.
THE CONTENTS OF THIS ANNOUNCEMENT ARE NOT TO BE CONSTRUED AS
LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. EACH SHAREHOLDER OR
PROSPECTIVE INVESTOR SHOULD CONSULT WITH HIS OR HER OR ITS OWN
LEGAL ADVISER, BUSINESS ADVISER, FINANCIAL ADVISER OR TAX ADVISER
FOR LEGAL, FINANCIAL, BUSINESS OR TAX ADVICE.
N+1 SINGER, WHICH IS AUTHORISED AND REGULATED IN THE UNITED
KINGDOM BY THE FCA, IS ACTING SOLELY FOR THE COMPANY AND NO-ONE
ELSE IN CONNECTION WITH THE PLACING, THE ACQUISITION AND THE
TRANSACTIONS AND ARRANGEMENTS DESCRIBED IN THIS ANNOUNCEMENT AND
WILL NOT REGARD ANY OTHER PERSON (WHETHER OR NOT A RECIPIENT OF
THIS ANNOUNCEMENT) AS A CLIENT IN RELATION TO THE PLACING OR THE
TRANSACTIONS AND ARRANGEMENTS DESCRIBED IN THIS ANNOUNCEMENT. N+1
SINGER IS NOT RESPONSIBLE TO ANYONE OTHER THAN THE COMPANY FOR
PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF N+1 SINGER OR FOR
PROVIDING ADVICE IN CONNECTION WITH THE CONTENTS OF THIS
ANNOUNCEMENT, THE PLACING, THE ACQUISITION OR THE TRANSACTIONS AND
ARRANGEMENTS DESCRIBED HEREIN.
THE CONTENTS OF THIS ANNOUNCEMENT HAVE NOT BEEN REVIEWED BY ANY
REGULATORY AUTHORITY IN THE UNITED KINGDOM OR ELSEWHERE. RECIPIENTS
OF THIS ANNOUNCEMENT SHOULD EXERCISE CAUTION IN RELATION TO THE
PLACING IF THEY ARE IN ANY DOUBT AS TO THE CONTENTS OF THIS
ANNOUNCEMENT AND SEEK INDEPENT PROFESSIONAL ADVICE.
BY PARTICIPATING IN THE PLACING, EACH PLACEE IS DEEMED TO HAVE
READ AND UNDERSTOOD THIS ANNOUNCEMENT IN ITS ENTIRETY AND TO BE
MAKING SUCH OFFER TO ACQUIRE PLACING SHARES ON THE TERMS AND
SUBJECT TO THE CONDITIONS SET OUT IN THIS ANNOUNCEMENT AND TO BE
PROVIDING THE REPRESENTATIONS, WARRANTIES, UNDERTAKINGS, AGREEMENTS
AND ACKNOWLEDGEMENTS CONTAINED IN THIS APPIX.
EACH PLACEE SHOULD CONSULT WITH ITS ADVISERS AS TO LEGAL, TAX,
BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES.
THE DISTRIBUTION OF THIS ANNOUNCEMENT, ANY PART OF IT OR ANY
INFORMATION CONTAINED IN IT MAY BE RESTRICTED BY LAW IN CERTAIN
JURISDICTIONS, AND ANY PERSON INTO WHOSE POSSESSION THIS
ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT
COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, SUCH
RESTRICTIONS.
No prospectus
No offering document or prospectus has been or will be prepared,
submitted or approved by the FCA, the London Stock Exchange or any
other authority in relation to the Placing and no such prospectus
is required to be published. Placees' commitments will be made
solely on the basis of the information contained in this
Announcement and the business and financial informa ti on that the
Company is required to publish in accordance with UK MAR and the
rules and prac ti ces of the London Stock Exchange and of the FCA
(collec ti vely the "Exchange Informa ti on ") or has (or will have
prior to Admission) published via a regulatory information service
("Publicly Available Informa ti on ") (save that in the case of
Exchange Informa ti on and Publicly Available Informa ti on, a
Placee's right to rely on that informa ti on is limited to the
rights that such Placee would have as a ma tt er of law in the
absence of this paragraph) . Placees' commitments will also be
subject to the further terms set forth in the form of confirmation
to be provided to individual prospective Placees.
Each Placee, by accepting a participation in the Placing,
acknowledges and agrees that the content of this Announcement is
exclusively the responsibility of the Company and confirms that it
has neither received nor relied on any other information (other
than (a) the Exchange Information and/or Publicly Available
Information, (b) the amount of the relevant Placing participation
in the oral and/or written confirmation given to Placees and (c)
the trade confirmation referred to above ), representation,
warranty or statement made by or on behalf of the Company, the
Bookrunner, their respective Affiliates or any other person.
Neither the Bookrunner, nor the Company, nor their respective
Affiliates nor any other person will be liable for any Placee's
decision to participate in the Placing based on any other
information, representation, warranty or statement which Placees
may have obtained or received and, if given or made, such
information, representation, warranty or statement must not be
relied upon as having been authorised by the Bookrunner, the
Company or any of their respective Affiliates.
Each Placee, by accepting a participation in the Placing, also
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company.
Neither the Company nor the Bookrunner is making any undertaking,
representation or warranty to any Placee regarding the legality of
an investment in the Placing Shares by such Placee under any legal,
investment or similar laws or regulations. Each Placee should not
consider any information in this Announcement to be legal, tax or
business advice. Each Placee should consult its own solicitor, tax
adviser and financial adviser for independent legal, tax and
financial advice regarding an investment in the Placing Shares.
Nothing in this paragraph shall exclude or limit the liability of
any person for fraud or fraudulent misrepresentation by that
person.
Details of the Placing Agreement and the Placing Shares
The Company has today entered into the Placing Agreement with
the Bookrunner and N+1 Advisory and N+1 Advisory has agreed to act
as Sponsor to the Company in relation to submission of the
Shareholder Circular (including any Supplementary Circular) to the
FCA for approval and other ancillary matters in relation to the
Acquisition. Pursuant to the Placing Agreement, the Bookrunner has,
subject to the terms set out in such agreement, agreed to use its
reasonable endeavours, as agent for the Company, to procure Placees
for the Placing Shares. The Bookrunner will today commence the
Bookbuild for the purpose of determining the demand for
participation in the Placing by Placees. The exact number of
Placing Shares to be allocated and issued to each Placee shall be
determined by the Bookrunner (in consultation with the Company)
following completion of the Bookbuild. This Appendix gives details
of the terms and conditions of, and the mechanics for participation
in, the Placing. The Placing is not being underwritten (in whole or
in part) by the Bookrunner or any other person.
The Placing Shares will, when issued, be subject to the
Articles, be credited as fully paid and rank pari passu in all
respects with each other and with the Existing Ordinary Shares,
including the right to receive all dividends and other
distributions declared, made or paid in respect of such Existing
Ordinary Shares after the date of issue of the Placing Shares. The
Placing Shares will be issued free of any encumbrance, lien or
other security interest.
Application for admission to trading
Application will be made to the London Stock Exchange for
admission of the Placing Shares to trading on the Main Market.
It is expected that Admission will take place no later than 8.00
a.m. on 22 June 2021 and that dealings in the Placing Shares on the
Main Market will commence at the same time.
Principal terms of the Bookbuild and Placing
1 N+1 Capital Markets is acting as broker to the Placing, as
agent for and on behalf of the Company. N+1 Capital Markets is
authorised and regulated in the United Kingdom by the FCA and is
acting exclusively for the Company and no one else in connection
with the matters referred to in this Announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to the customers of N+1 Capital Markets or for
providing advice in relation to the matters described in this
Announcement.
2 N+1 Advisory is acting as the Company's Sponsor in connection
with publication of the Shareholder Circular and any Supplementary
Circular and general communication with the FCA in respect of all
ancillary matters, including the Acquisition and the Shareholder
Circular and any Supplementary Circular. The appointment confers on
N+1 Advisory all powers, authorities and discretions as are
necessary or incidental to the appointment and the performance by
N+1 Advisory as Sponsor.
3 N+1 Advisory as a Sponsor owes obligations and has
responsibilities pursuant to the Listing Rules to the FCA. As a
result instances may arise where N+1 Advisory's obligations and
duties to the FCA may conflict with those owed to the Company; in
such instances N+1 Advisory's obligations and duties to the FCA
will take priority. N+1 Advisory is required to promptly notify the
FCA if it becomes aware that the Company has failed to comply with
legislation, including the Listing Rules, Disclosure and
Transparency Rules, FSMA, the FS Act, MAR (as appropriate) and UK
MAR.
4 N+1 Singer is receiving corporate finance fees and certain
commissions on the Placing.
5 Participation in the Placing will only be available to persons
who may lawfully be, and are, invited by N+1 Capital Markets to
participate. N+1 Capital Markets and any of its Affiliates are
entitled to participate in the Placing as principal.
6 The price per Placing Share (the "Issue Price") is fixed at
160 pence and is payable to N+1 Capital Markets by all Placees.
7 The book for the Placing will open with immediate effect. The
accelerated bookbuilding process (the "Bookbuilding Process") is
expected to close not later than 5.30 p.m. (London time) today, but
may be closed at such earlier or later time as N+1 Capital Markets,
in its absolute discretion, determines and the Bookrunner may, in
agreement with the Company, also accept bids that are received
after the Bookbuild has closed. Further announcements will be made
following the closure of the Bookbuilding Process detailing the
results of the Bookbuilding Process
8 Each Placee's allocation is determined by N+1 Capital Markets
in its discretion following consultation with the Company and has
been or will be confirmed orally by N+1 Capital Markets. That oral
confirmation will give rise to an irrevocable, legally binding
commitment by that person (who at that point becomes a Placee), in
favour of N+1 Capital Markets and the Company, under which it
agrees to acquire the number of Placing Shares allocated to the
Placee at the Issue Price and otherwise on the terms and subject to
the conditions set out in this Appendix and in accordance with the
Articles. Except with N+1 Capital Markets' written consent, such
commitment will not be capable of variation or revocation at the
time at which it is confirmed.
9 Each Placee's allocation and commitment will be evidenced by a
form of confirmation issued to such Placee by N+1 Capital Markets
as soon as possible after oral confirmation of its allocation. The
terms and conditions of this Announcement (including the Appendix)
will be deemed to be incorporated in that form of confirmation.
10 Each Placee will have an immediate, separate, irrevocable and
binding obligation, owed to N+1 Capital Markets (as agent for the
Company), to pay to N+1 Capital Markets (or as it may direct) in
cleared funds an amount equal to the product of the Issue Price and
the number of Placing Shares such Placee has agreed to acquire and
the Company has agreed to allot and issue to that Placee.
11 Irrespective of the time at which a Placee's allocation(s)
pursuant to the Placing is/are confirmed, settlement for all
Placing Shares to be acquired pursuant to the Placing will be
required to be made at the same time, on the basis explained below
under "Registration and Settlement".
12 All obligations of N+1 Capital Markets and N+1 Advisory
respectively under the Placing and the Placing Agreement will be
subject to fulfilment of the conditions referred to below under
"Conditions of the Placing" and to the Placing not being terminated
on the basis referred to below under "Termination of the
Placing".
13 By participating in the Placing, each Placee agrees that its
rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by that Placee.
14 To the fullest extent permissible by law and applicable FCA
rules, none of (a) the Affiliates or (b) any person acting on N+1
Capital Markets' and/or N+1 Advisory's behalf, shall have any
liability (including, to the extent permissible by law, any
fiduciary duties) to the Placees or to any other person whether
acting on behalf of a Placee or otherwise. In particular, neither
N+1 Capital Markets, N+1 Advisory nor any of their affiliates shall
have any liability (including, to the extent permissible by law,
any fiduciary duties) in respect of their conduct of the Placing or
of such alternative method of effecting the Placing as N+1 Capital
Markets and the Company may agree.
Registration and settlement
Settlement of transactions in the Placing Shares (ISIN:
GB0008808825 ) will take place within the CREST system, subject to
certain exceptions. Settlement through CREST will be on a T+2 basis
unless otherwise notified by the Bookrunner, and is expected to
occur on the date of Admission (expected to be 22 June 2021). The
Bookrunner reserves the right to require settlement for, and
delivery of, the Placing Shares to Placees by such other means as
it deems necessary, if delivery or settlement is not possible or
practicable within the CREST system within the timetable set out in
this Announcement or would not be consistent with the regulatory
requirements in the Placee's jurisdiction. The Bookrunner will use
the CASS Delivery Versus Payment exemption (under CASS 7.11.14R
within the FCA Handbook Client Assets Sourcebook) with regard to
settlement of funds, in connection with the Placing, should it see
fit.
Each Placee allocated Placing Shares in the Placing will be sent
a form of confirmation in accordance with the standing arrangements
in place with the Bookrunner stating the number of Placing Shares
allocated to it, the Issue Price, the aggregate amount owed by such
Placee to the Bookrunner and settlement instructions. Each Placee
agrees that it will do all things necessary to ensure that delivery
and payment is completed in accordance with either the standing
CREST or certificated settlement instructions that it has in place
with the Bookrunner.
A Placee's entitlement to receive any Placing Shares under the
Placing will be conditional on the Bookrunner's receipt of payment
in full for such Placing Shares by the relevant time to be stated
in the form of confirmation referred to above, or by such later
time and/or date as the Bookrunner and the Company may in their
absolute discretion determine, or otherwise in accordance with that
confirmation's terms.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above the base rate of
Barclays Bank Plc.
Each Placee is deemed to agree that if it does not comply with
these obligations: (a) the Company may elect at its discretion to
be released from all obligations with respect to the issue of all
or any such Placing Shares to such Placee; and/or (b) the
Bookrunner may sell (and is irrevocably authorised by such Placee
to do so) all or any Placing Shares on such Placee's behalf and
then retain from the proceeds, for the account and benefit of the
Bookrunner (i) any amount up to the total amount due to it as, or
in respect of, subscription monies, or as interest on such monies,
for any Placing Shares, (ii) any amount required to cover any stamp
duty or stamp duty reserve tax (together with any interest or
penalties) arising on the sale of such Placing Shares on such
Placee's behalf, and (iii) any amount required to cover dealing
costs and/or commissions necessarily or reasonably incurred by it
in respect of such sale; and (c) such Placee shall remain liable to
the Bookrunner for the full amount of any losses or shortfall and
of any costs which it may suffer or incur as a result of it (i) not
receiving payment in full for such Placing Shares by the required
time, and/or (ii) the sale of any such Placing Shares to any other
person at whatever price and on whatever terms actually obtained
for such sale by or for it. By communicating a bid for Placing
Shares, each Placee confers on the Bookrunner all such authorities
and powers necessary to carry out any such sale under this
paragraph and agrees to ratify and confirm all actions which the
Bookrunner lawfully takes in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or
settlement agent, the Placee should ensure that the form of
confirmation is copied and delivered immediately to the relevant
person within that organisation.
Insofar as Placing Shares are registered in the Placee's name or
that of its nominee or in the name of any person for whom the
Placee is contracting as agent or nominee, such Placing Shares
will, subject as provided below, be so registered free from any
liability to stamp duty or stamp duty reserve tax. If there are any
circumstances in which any other stamp duty or stamp duty reserve
tax is payable in respect of the issue of the Placing Shares,
neither the Bookrunner nor the Company shall be responsible for the
payment thereof. Placees will not be entitled to receive any fee or
commission in connection with the Placing.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming
unconditional in all respects (other than in respect of Admission)
and not having been terminated in accordance with its terms.
The obligations of the Bookrunner and N+1 Advisory under the
Placing Agreement are, and the Placing is, conditional upon, inter
alia:
1 the Shareholder Circular having been forwarded to the FCA in
accordance with Listing Rule 9.6.1 and approval of the same by the
FCA in accordance with Listing Rule 13.2;
2 the posting of the Shareholder Circular and Form of Proxy to
Shareholders entitled to receive the same by no later than 5.00
p.m. on 2 June 2021;
3 a Supplementary Circular having been produced by the Company
should any of the matters set out in Listing Rule 10.5.4(2) have
arisen prior to the General Meeting and (i) such Supplementary
Circular having been sent to all Shareholders entitled to receive
the same in accordance with Listing Rule 10.5.4(1)(b); and (ii)
Listing Rules 10.5.4(1), 13.1.9 and 13.2 having been complied
with;
4 the applicable Resolutions having been duly passed without
amendment (other than those amendments approved by N+1 Singer in
advance (acting reasonably)) at the General Meeting on the date
specified in the notice of General Meeting to be set out in the
Shareholder Circular or any adjournment thereof;
5 the Stock Purchase Agreement not lapsing, being withdrawn or
otherwise terminating prior to Admission and the Acquisition having
become unconditional save for Admission;
6 the Company having complied with all its obligations under the
Placing Agreement and having satisfied all other conditions to be
performed or satisfied by it under the Placing Agreement which fall
to be performed or satisfied on or prior to Admission which, in
each case in the good faith opinion of N+1 Singer, are Material (as
defined in the Placing Agreement);
7 the Main Market Application (and all other documents required
to be submitted with the Main Market Application, including the
minutes of a meeting of the Board approving: (i) the issue and
allotment of the Placing Shares, (ii) release of this Announcement
through a RIS and (iii) application for Admission) each being
signed by an appropriate Director and provided to the
Bookrunner;
8 the Company having given instructions to N+1 Capital Markets
to apply for Admission and to enable the release of this
Announcement through a RIS;
9 the completed Main Market Application (and all other documents
required to be submitted with the Main Market Application) being
delivered to the London Stock Exchange in accordance with the
Listing Rules by or on behalf of the Company not later than 8.00
p.m. on 17 June 2021;
10 each of the warranties given by the Company and contained in
the Placing Agreement being true and accurate and not misleading on
and as of (i) the date of the Placing Agreement; and on (ii) the
date of the General Meeting (and any adjournment thereof); (iii)
the date of any Supplementary Circular; and (iv) the date of
Admission, as though they had been given and made on such dates by
reference to the facts and circumstances at the relevant time;
11 the Placing Shares having been allotted, conditional only on
Admission, by 5.00 p.m. on the Business Day before Admission (or
such later time and/or date as N+1 Singer (acting reasonably) and
the Company may agree in writing);
12 the obligations of N+1 Singer in respect of the Placing not
having been terminated in accordance with clause 15 of the Placing
Agreement prior to Admission;
13 no matter having arisen prior to Admission which would give
rise to a claim under clause 14 (Indemnities) of the Placing
Agreement; and
14 the documents referred to in clauses 6 and 7.1 of the Placing
Agreement having been delivered in accordance with those respective
clauses,
(all conditions to the obligations of N+1 Singer included in the
Placing Agreement being together, the "conditions").
If any of the conditions are not fulfilled in all respects, or
are not waived in writing in whole or in part by N+1 Singer (such
waiver to be in N+1 Singer's absolute discretion and on such terms
as it thinks appropriate and only to the extent permitted by law
and regulation), or become incapable of being fulfilled (and are
not so waived) on or before the required time and/or date specified
for fulfilment or, if no time and/or date is specified for the
fulfilment thereof, by 8.00 a.m. on 22 June 2021 (or such later
time(s) and/or date(s) as N+1 Singer may agree (being not later
than 22 July 2021)) and the Placing Agreement is then terminated in
accordance with its terms, the Placing will lapse and the Placee's
rights and obligations shall cease and terminate at such time and
each Placee agrees that no claim can be made by or on behalf of the
Placee (or any person on whose behalf the Placee is acting) in
respect thereof against N+1 Singer and/or the Company or any of
their respective affiliates .
By participating in the Placing, each Placee agrees that its
rights and obligations cease and terminate only in the
circumstances described above and under "Termination of the
Placing" below and will not be capable of rescission or termination
by it.
Certain conditions may be waived in whole or in part by N+1
Singer, in its absolute discretion by notice in writing to the
Company, and N+1 Singer may also agree in writing with the Company
to extend the time for satisfaction of any condition. Any such
extension or waiver will not affect Placees' commitments as set out
in this Announcement.
N+1 Singer may terminate the Placing Agreement in certain
circumstances, details of which are set out below.
Neither N+1 Singer, the Company nor any of their respective
affiliates, agents, directors, officers or employees shall have any
liability to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision any of
them may make as to whether or not to waive or to extend the time
and/or date for the satisfaction of any condition of the Placing
nor for any decision any of them may make as to the satisfaction of
any condition or in respect of the Placing generally and by
participating in the Placing, each Placee agrees that any such
decision is within the absolute discretion of N+1 Singer.
Termination of the Placing
N+1 Singer may terminate the Placing Agreement, in accordance
with its terms, at any time prior to Admission if, inter alia:
1 the Stock Purchase Agreement lapses, is withdrawn, terminated
or otherwise terminates; or
2 the Company fails to comply with any of its obligations under
the Placing Agreement, the terms of the Placing or the Stock
Purchase Agreement, the Companies Act, FSMA, the FS Act, MAR (as
applicable), UK MAR, the Listing Rules or any other law or
regulation applicable to the Placing and/or the Stock Purchase
Agreement which, in any such case, N+1 Singer considers in its
absolute discretion (acting in good faith) to be Material; or
3 any of the warranties of the Company given in the Placing
Agreement is untrue or inaccurate in any respect by reference to
the facts or circumstances subsisting at that time or if a matter
has arisen that might reasonably be expected to give rise to a
claim under clause 14 of the Placing Agreement; or
4 any statement contained in the Shareholder Circular or the
Form of Proxy, this Announcement, the investor presentation, the
form of confirmation, any other announcement published by the
Company or on its behalf in relation to the Placing and/or the
Acquisition or any Supplementary Circular (the " Issue Documents ")
is or has become untrue, incorrect or misleading in any respect
which is Material, or any matter has arisen which would, if the
Placing were made at that time, constitute a Material omission from
the Issue Documents or any of them; or
5 in the opinion of N+1 Singer (acting in good faith), there
shall have been any Material adverse change (whether or not
foreseeable at the date of the Placing Agreement) in, or any
development reasonably likely to involve a prospective Material
adverse change in, the condition (financial, operational, legal or
otherwise) or the earnings, business affairs or business prospects
of the Group or the Enlarged Group taken as a whole, whether or not
arising in the ordinary course of business; or
6 there has occurred any material adverse change in the
financial markets in the United Kingdom or the international
financial markets, any outbreak of hostilities or escalation of
hostilities or other calamity or crisis or any change or
development involving a prospective change in national or
international political, financial or economic conditions, or
currency exchange rates, in each case the effect of which is such
as to make it, in the judgment of N+1 Singer (acting reasonably and
in good faith), impracticable or inadvisable to market the Placing
Shares and/or to proceed with the Placing in the manner
contemplated in the Issue Documents or which may materially and
adversely affect the success of the Placing; or
7 if trading generally on the London Stock Exchange has been
suspended or limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by
such exchange or by such system or by order of any governmental
authority, or a material disruption has occurred in commercial,
banking or securities settlement or clearance services in the
United States or in Europe; or
8 a banking moratorium has been declared by US or UK authorities; or
9 there has occurred a material adverse change or a material
prospective adverse change since the date of the Placing Agreement
in UK taxation affecting the Ordinary Shares or the transfer of the
Ordinary Shares or the imposition of exchange controls by the
United Kingdom.
If the Placing Agreement is terminated in accordance with its
terms, the rights and obligations of each Placee in respect of the
Placing as described in this Announcement shall cease and terminate
at such time and no claim can be made by any Placee against N+1
Singer and/or the Company or any of their respective affiliates in
respect thereof.
By participating in the Placing, each Placee agrees with the
Company and N+1 Singer that the exercise by the Company or N+1
Singer of any right of termination or any other right or other
discretion under the Placing Agreement shall be within the absolute
discretion of the Company or N+1 Singer and that neither the
Company nor N+1 Singer need make any reference to such Placee and
that neither N+1 Singer, the Company, nor any of their respective
affiliates, agents, directors, officers or employees shall have any
liability to such Placee (or to any other person whether acting on
behalf of a Placee or otherwise) whatsoever in connection with any
such exercise.
By participating in the Placing, each Placee agrees that its
rights and obligations terminate only in the circumstances
described above and/or under the "Conditions of the Placing"
section above and will not be capable of rescission or termination
by it after its allocation of Placing Shares has been confirmed
orally by N+1 Capital Markets.
Representations, warranties and further terms
By par ti cipa ti ng in the Placing, each Placee (and any person
ac ti ng on such Placee's behalf) will be deemed to make the
following representa ti ons, warran ti es, acknowledgements,
agreements and undertakings (as the case may be) to the Bookrunner
and the Company, in each case as a fundamental term of its applica
ti on for Placing Shares:
1 it has read and understood this Announcement in its entirety
(including this Appendix) and acknowledges that its participation
in the Placing will be governed by the terms and conditions of the
Placing as referred to and included in this Announcement (including
this Appendix);
2 it is a Relevant Person (as defined above) and undertakes that
it will acquire, hold, manage or dispose of any Placing Shares that
are allocated to it for the purposes of its business;
3 in the case of a Relevant Person in a member state of the EEA
which is subject to the Prospectus Regulation (each a "Relevant
Member State") who acquires any Placing Shares pursuant to the
Placing:
(a) it is an EEA Qualified Investor; and
(b) in respect of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 5(1) of the
Prospectus Regulation:
(i) the Placing Shares acquired by it in the Placing have not
been acquired on behalf of, nor have they been acquired with a view
to their offer or resale to, persons in any Relevant Member State
other than EEA Qualified Investors or in circumstances in which the
prior consent of the Bookrunner has been given to the offer or
resale; or
(ii) where Placing Shares have been acquired by it on behalf of
persons in any Relevant Member State other than EEA Qualified
Investors, the offer of those Placing Shares to it is not treated
under the Prospectus Regulation as having been made to such
persons;
4 in the case of a Relevant Person in the United Kingdom who
acquires any Placing Shares pursuant to the Placing:
(a) it is a UK Qualified Investor; and
(b) i n respect of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 5(1) of the
UK Prospectus Regulation:
(i) the Placing Shares acquired by it in the Placing have not
been acquired on behalf of, nor have they been acquired with a view
to their offer or resale to, persons in the United Kingdom other
than UK Qualified Investors or in circumstances in which the prior
consent of the Bookrunner has been given to the offer or resale;
or
(ii) where Placing Shares have been acquired by it on behalf of
persons in the United Kingdom other than UK Qualified Investors,
the offer of those Placing Shares to it is not treated under the UK
Prospectus Regulation as having been made to such persons;
5 it is outside of the United States and is otherwise acquiring
the Placing Shares in an "offshore transaction" meeting the
requirements of Regulation S;
6 it, and the person(s), if any, for whose account or benefit it
is subscribing for the Placing Shares, is not subscribing for
and/or purchasing Placing Shares as a result of any "directed
selling efforts" as defined in Regulation S or as a result of any
form of "general solicitation" or "general advertising" within the
meaning of Rule 502(c) under the Securities Act ;
7 it is not, and any person who it is acting on behalf of is
not, and at the time the Placing Shares are subscribed will not be,
a national or resident of, or a corporation, partnership or other
entity organised under the laws of, or with an address in, any
Restricted Jurisdiction, and it acknowledges and agrees that the
Placing Shares have not been, and will not be, registered or
otherwise qualified under the securities legislation of any
Restricted Jurisdiction and may not be offered, sold, or acquired,
directly or indirectly, within those jurisdictions;
8 if it is outside the United Kingdom, neither this
Announcement, the form of confirmation nor any other offering,
marke ti ng or other material issued in connec ti on with the
Placing cons ti tutes an invita ti on, offer or promo ti on to, or
arrangement with, it or any person whom it is procuring to
subscribe for Placing Shares pursuant to the Placing unless, in the
relevant territory, such offer, invita ti on or other course of
conduct could lawfully be made to it or such person and such
materials could lawfully be provided to it or such person and
Placing Shares could lawfully be distributed to and subscribed and
held by it or such person without compliance with any unfulfilled
approval, registra ti on or other regulatory or legal
requirements;
9 it will not make any offer to the public of those Placing
Shares to be purchased by it for the purposes of the Prospectus
Regula ti on Rules made by the FCA pursuant to the Prospectus
Regula ti on Rules (Amendment) Instrument 2020 (FCA 2020/73);
10 if in the United Kingdom, unless otherwise agreed by the
Bookrunner, it is a "professional client" or an "eligible
counterparty" within the meaning of Chapter 3 of the FCA Handbook
Conduct of Business Sourcebook (" COBS ") and it is purchasing
Placing Shares for investment only and not with a view to resale or
distribu ti on;
11 it has not distributed, and will not distribute, any
materials rela ti ng to the Placing Shares and it will be acquiring
the Placing Shares for its own account as principal or for a discre
ti onary account or accounts (with respect to which it has the
authority to make the statements set out in this Announcement) for
investment purposes only and it does not have any contract,
understanding or arrangement with any person to sell, pledge,
transfer or grant a par ti cipa ti on therein to such person or any
third person with respect to any Placing Shares; save that if it is
a private client stockbroker or fund manager, it confirms that in
purchasing Placing Shares it is ac ti ng under the terms of one or
more discre ti onary mandates granted to it by private clients and
it is not ac ti ng on an execu ti on only basis or under specific
instruc ti ons to purchase Placing Shares for the account of any
third party;
12 acknowledges that no prospectus or offering document has been
or will be prepared in connection with the Placing and that it has
not received and will not receive a prospectus or other offering
document in connection with the Placing or the Placing Shares;
13 the Existing Ordinary Shares are admitted to trading on the
Main Market, and the Company is therefore required to publish the
Exchange Information, which includes a description of the nature of
the Company's business and the Company's financial information,
including balance sheets, income statements or similar statements
and that it is able to obtain or access the Exchange Information
and Publicly Available Information and that it has reviewed such
Exchange Information and Publicly Available Information ;
14 pursuant to the Listing Rules, the Acquisition constitutes a
Class 1 transaction for the Company and is therefore conditional
upon, amongst other things, the passing by the Shareholders at the
General Meeting of an ordinary resolution approving the
Acquisition;
15 in accepting its participation in the Placing, it is relying
solely on this Announcement, the Exchange Informa ti on and the
Publicly Available Informa ti on (save that in the case of Exchange
Informa ti on and Publicly Available Informa ti on, a Placee's
right to rely on that informa ti on is limited to the right that
such Placee would have as a ma tt er of law in the absence of this
paragraph) and not on any other information given, or
representation, warranty or statement made at any time, by any
person concerning the Company, the Placing Shares or the Placing.
Subject to paragraphs 17 and 18 below, it agrees that neither the
Company nor the Bookrunner, nor any of their respective Affiliates
nor persons acting on their behalf will have any liability for any
other information, warranty or representation. It irrevocably and
unconditionally waives any rights it may have in respect of any
other information, warranty or representation;
16 it has made its own assessment of the Company, the Placing
Shares and the terms and conditions of the Placing and has relied
on its own investigation of the business, financial or other
position of the Company in accepting a participation in the Placing
and has satisfied itself that the information is still current;
17 neither the Bookrunner nor any of its Affiliates nor any
person acting on their behalf has provided, and will not provide it
with, any material or information regarding the Placing Shares or
the Company; nor has it requested that the Bookrunner or any of its
Affiliates nor any person acting on their behalf provide it with
any such material or information; nor is it relying on any
investigation that the Bookrunner, any of its Affiliates or any
person acting on their behalf may have conducted with respect to
the Placing Shares or the Company;
18 the content of this Announcement is exclusively the
responsibility of the Company and neither the Bookrunner nor any of
its Affiliates nor any person acting on their behalf will be
responsible for or shall have any liability for any information,
representation or statement relating to the Company contained in
this Announcement or any information previously published by or on
behalf of the Company and neither the Bookrunner nor any of its
Affiliates nor any person acting on their behalf will be liable for
any Placee's decision to participate in the Placing based on any
information, representation or statement contained in this
Announcement or otherwise;
19 it has such knowledge and experience in financial, business
and international investment matters as is required to evaluate the
merits and risks of subscribing for Placing Shares. It further
represents and warrants that it is experienced in investing in
securities of this nature and is aware that it may be required to
bear, and is able to bear, the economic risk of, and is able to
sustain, a complete loss in connection with the Placing. It also
represents and warrants that it has had sufficient time to consider
and has conducted its own investigation with respect to its
subscription for Placing Shares, including the associated tax,
legal and other economic considerations, and has relied upon its
own examination and due diligence of the Company and its affiliates
taken as a whole, and the terms of the Placing, including the
merits and risks involved;
20 it has not relied on any confidential price sensitive
information concerning the Company in making its investment
decision to participate in the Placing and is not purchasing
Placing Shares on the basis of material non-public information or
inside information (as defined under UK MAR);
21 if it has received any confidential price sensitive
information (including inside information as defined under UK MAR)
about the Company in advance of the Placing, it warrants that it
has received such information within the market soundings regime
provided for in Article 11 of UK MAR and has not: (a) dealt in the
securities of the Company; (b) encouraged or required another
person to deal in the securities of the Company; or (c) disclosed
such information to any person, prior to the information being made
publicly available;
22 it is aware of its obligations regarding insider dealing,
including, without limitation, as contained within the Criminal
Justice Act 1993 and UK MAR, and confirms that it has and will
continue to comply with those obligations;
23 it has the funds available to pay for the Placing Shares for
which it has agreed to subscribe and acknowledges, agrees and
undertakes that it will pay the total subscription amount in
accordance with the terms of this Announcement at the due time and
on the due date set out herein, failing which the relevant Placing
Shares may be placed with other Placees or sold at such price as
the Bookrunner and the Company determine;
24 it has not relied on any information relating to the Company
contained in any research reports prepared by the Bookrunner and
its Affiliates or any person acting on their behalf and understands
that (a) neither the Bookrunner nor any of its Affiliates nor any
person acting on their behalf has or shall have any liability for
public information or any representation; (b) neither the
Bookrunner nor any of its respective Affiliates, nor any person
acting on their behalf, has or shall have any liability for any
additional information that has otherwise been made available to
such Placee, whether at the date of this Announcement or otherwise;
and (c) neither the Bookrunner nor any of its Affiliates, nor any
person acting on their behalf, makes any representation or
warranty, express or implied, as to the truth, accuracy or
completeness of such information, whether at the date of this
Announcement or otherwise;
25 it (a) is entitled to acquire Placing Shares under the laws
and regulations of all relevant jurisdictions which apply to it;
(b) has fully observed such laws and regulations and obtained all
such governmental and other guarantees and other consents and
authorities (including, without limitation, in the case of any
person on whose behalf it is acting, all necessary consents and
authorities to agree to the terms set out or referred to in this
Announcement including this Appendix) which may be required
thereunder and has complied with all necessary formalities; (c) has
all necessary capacity and authority and is entitled to commit to
its participation in the Placing and to perform its obligations in
relation thereto and will honour such obligations, and to make the
representations and agreements contained in this Appendix; (d) has
paid any issue, transfer or other taxes due in connection with its
participation in the Placing in any territory; (e) has not taken
any action which will or may result in the Company or the
Bookrunner or any of their Affiliates or any person acting on their
behalf being in breach of the legal and/or regulatory requirements
of any territory in connection with the Placing; and (f) if it is a
pension fund or investment company, is aware of and acknowledges
that it is required to comply with all applicable laws and
regulations with respect to its subscription for Placing
Shares;
26 it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which it is permitted to do so pursuant to section 21 of FSMA
and it acknowledges and agrees that this Announcement has not been
approved by the Bookrunner in its capacity as an authorised person
under section 21 of FSMA and it may not therefore be subject to the
controls which would apply if it was made or approved as a
financial promotion by an authorised person;
27 it is aware of, has complied with and will comply with all
applicable laws with respect to anything done by it, or on its
behalf, in relation to the Placing Shares (including, without
limitation, all relevant provisions of FSMA and the FS Act) in
respect of anything done in, from or otherwise involving the United
Kingdom;
28 it is aware of and has complied with its obligations in
connection with money laundering and terrorist financing under the
Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism
Act 2006, the Money Laundering, Terrorist Financing and Transfer of
Funds (Information on the Payer) Regulations 2017 and related or
similar rules, regulations or guidelines, issued, administered or
enforced by any government agency having jurisdiction in respect
thereof and the Money Laundering Sourcebook of the FCA (together,
the "Money Laundering Regulations") and, if it is making payment on
behalf of a third party, that satisfactory evidence has been
obtained and recorded by it to verify the identity of the third
party as required by the Money Laundering Regulations;
29 in order to ensure compliance with the Money Laundering
Regulations, the Bookrunner or the Company's registrars may, in
their absolute discretion, require verification of its identity.
Pending the provision to the Bookrunner or the Company's
registrars, as applicable, of evidence of identity, definitive
certificates in respect of the Placing Shares may be retained at
the Bookrunner's absolute discretion or, where appropriate,
delivery of the Placing Shares to it in uncertificated form, may be
retained at the Bookrunner's or the Company's registrars', as the
case may be, absolute discretion. If within a reasonable time after
a request for verification of identity, the Bookrunner (for itself
and as agent on behalf of the Company) or the Company's registrars
have not received evidence satisfactory to them, the Bookrunner
and/or the Company may, at its absolute discretion, terminate its
commitment in respect of the Placing, in which event the monies
payable on subscription will, if already paid, be returned without
interest to the account of the drawee's
bank from which they were originally debited;
30 its participation in the Placing will not give rise to an
offer being required to be made by it, or any person with whom it
is acting in concert, pursuant to Rule 9 of the City Code on
Takeovers and Mergers;
31 it (and any person acting on its behalf) will pay for the
Placing Shares acquired by it in accordance with this Announcement
at the due time and on the due date set out in this Announcement or
in any form of confirmation issued pursuant to this Announcement
against delivery of such Placing Shares to it, failing which the
relevant Placing Shares may be placed with other Placees or sold as
the Bookrunner or the Company may, in their absolute discretion,
determine and it will remain liable for any shortfall in the net
proceeds of such sale below the Placing proceeds of such Placing
Shares and it may be required to bear any costs, commissions, stamp
duty or stamp duty reserve tax (together with any interest or
penalties due pursuant to the terms set out or referred to in this
Announcement) which may arise upon the sale of such Placee's
Placing Shares on its behalf;
32 neither the Bookrunner, nor any of its Affiliates nor any
person acting on their behalf is making any recommendations to it
or advising it regarding the suitability or merits of any
transaction it may enter into in connection with the Placing, and
that neither the Bookrunner, nor any of its Affiliates nor any
person acting on their behalf has any duties or responsibilities to
it for providing advice in relation to the Placing or in respect of
any representations, warranties, undertakings or indemnities
contained in the Placing Agreement or for the exercise or
performance of any of the Bookrunner's rights and obligations
thereunder, including any right to waive or vary any condition or
exercise any termination right contained therein;
33 it irrevocably appoints the Bookrunner and any of its duly
authorised officers as its agent for the purposes of executing and
delivering to the Company and/or its registrars any documents on
its behalf necessary to enable it to be registered as the holder of
any of the Placing Shares agreed to be taken up by it under the
Placing;
34 any person who confirms to the Bookrunner on behalf of a
Placee an agreement to subscribe for Placing Shares and/or who
authorises the Bookrunner to notify the Placee's name to the
Company's registrars, has authority to do so on behalf of the
Placee;
35 the agreement to settle each Placee's allocation of Placing
Shares (and/or the allocation of a person for whom it is
contracting as agent) free of stamp duty and stamp duty reserve tax
depends on the settlement relating only to a subscription by it
and/or such person direct from the Company of the Placing Shares in
question. Such agreement assumes that the Placing Shares are not
being acquired in connection with arrangements to issue depositary
receipts or to issue or transfer the Placing Shares into a
clearance service. If there were any such arrangements, or the
settlement related to another dealing in the Placing Shares, stamp
duty or stamp duty reserve tax may be payable and the Placee agrees
that it shall be responsible for such stamp duty or stamp duty
reserve tax, and acknowledges that neither the Company nor the
Bookrunner will be responsible therefor . If this is the case, the
Placee should take its own advice and notify the Bookrunner,
accordingly;
36 it agrees to participate in the Placing on the basis that the
Placing Shares will be allotted to the CREST stock account of the
Bookrunner who will hold them as nominee on behalf of such Placee
until settlement in accordance with its standing settlement
instructions;
37 any money held in an account with the Bookrunner on behalf of
the Placee and/or any person acting on behalf of the Placee will
not be treated as client money within the meaning of the relevant
rules and regulations of the FCA made under FSMA. The Placee
acknowledges that such money will not be subject to the protections
conferred by the client money rules; as a consequence, this money
will not be segregated from the Bookrunner's money in accordance
with the client money rules and will be used by the Bookrunner in
the course of its business; and the Placee will rank only as a
general creditor of the Bookrunner;
38 the Bookrunner may choose to invoke the CASS Delivery Versus
Payment exemption (under CASS 7.11.14R within the FCA Handbook
Client Assets Sourcebook) with regard to settlement of funds, in
connection with the Placing, should it see fit;
39 neither it nor, as the case may be, its clients expects the
Bookrunner to have any du ti es or responsibili ti es to such
persons similar or comparable to the du ti es of "best execu ti on"
and "suitability" imposed by the COBS, and the Bookrunner is not ac
ti ng for it or its clients, and the Bookrunner will not be
responsible for providing the protec ti ons afforded to customers
of the Bookrunner or for providing advice in respect of the transac
ti ons described in this Announcement;
40 time is of the essence as regard its obligations in respect
of its participation in the Placing under these terms and
conditions;
41 the basis of any Placee's allocation in the Placing will be
determined together by the Bookrunner and the Company in their
absolute discretion. The right is reserved to reject in whole or in
part and/or to scale back any participation in the Placing;
42 its commitment to subscribe for Placing Shares on the terms
set out in this Announcement including this Appendix will continue
notwithstanding any amendment that may in future be made to the
terms of the Placing and Placees will have no right to be consulted
or require that their consent be obtained with respect to the
conduct of the Placing;
43 the Bookrunner and its Affiliates acting as an investor for
its or their own account(s) may subscribe for and/or purchase
Placing Shares and, in that capacity may retain, purchase, offer to
sell or otherwise deal for its or their own account(s) in the
Placing Shares, any other securities of the Company or other
related investments in connection with the Placing or otherwise.
Accordingly, references in this Announcement to the Placing Shares
being offered, subscribed, acquired or otherwise dealt with should
be read as including any offer to, or subscription, acquisition or
dealing by, the Bookrunner and/or any of its respective Affiliates
acting as an investor for its or their own account(s). Each Placee
further acknowledges that the Bookrunner and its Affiliates may
enter into financing arrangements and swaps with investors in
connection with which the Bookrunner and any of its Affiliates may
from time to time acquire, hold or dispose of such securities of
the Company, including the Placing Shares. Neither the Bookrunner
nor the Company intends to disclose the extent of any such
investment or transaction otherwise than in accordance with any
legal or regulatory obligation to do so;
44 it will (or will procure that its nominee will) if
applicable, make notification to the Company of any interest in the
Ordinary Shares in accordance with the Disclosure Guidance and
Transparency Rules published by the FCA;
45 any documents or communications sent to a Placee will be sent
at the Placee's risk and may be sent to any address notified by it
to the Bookrunner;
46 the exercise by the Bookrunner of any right or discretion
under the Placing Agreement shall be within the absolute discretion
of the Bookrunner and need not have any reference to it and shall
have no liability to it whatsoever in connection with any decision
to exercise or not to exercise any such right and each Placee
agrees that it has no rights against the Bookrunner or the Company,
or any of their respective Affiliates, under the Placing Agreement
pursuant to the Contracts (Rights of Third Parties Act) 1999;
47 the Company, the Bookrunner and others will rely upon the
truth and accuracy of the confirmations, acknowledgements,
representations, warranties, indemnities, agreements and
undertakings in this Announcement including this Appendix ("Placing
Confirmations") and, if any of the foregoing Placing Confirmations
is or becomes no longer true or accurate, the Placee shall promptly
notify the Bookrunner;
48 if it is subscribing for the Placing Shares as a fiduciary or
agent for one or more investor accounts, it has full power and
authority to make, and does make, the Placing Confirmations on
behalf of each such account;
49 it agrees to indemnify on an after-tax basis and hold
harmless each of the Company, the Bookrunner, their respective
Affiliates and any person acting on their behalf from any and all
costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach by it of
the Placing Confirmations; and
50 its participation in the Placing, these terms and conditions and any contractual or non-contractual obligations arising out of, or in relation thereto, shall be governed by and construed in accordance with English law and the courts of England shall have exclusive jurisdiction to hear and decide any proceedings which may arise out of or in connection with these terms and conditions, except that enforcement proceedings in respect of the Placee's obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Bookrunner or the Company in any jurisdiction.
The Placing Confirmations referred to above are given to each of
the Company and the Bookrunner (for their own benefit and, where
relevant, the benefit of their respective Affiliates) and any
person acting on their behalf, are irrevocable and shall not be
capable of termination by a Placee in any circumstances and will
survive completion of the Placing and Admission.
Each Placee, and any person acting on behalf of the Placee,
acknowledges that the Bookrunner does not owe any fiduciary or
other duties to any Placee in respect of any representations,
warranties, undertakings or indemnities in the Placing
Agreement.
The rights and remedies of the Bookrunner and the Company under
these terms and conditions are in addition to any rights and
remedies which would otherwise be available to each of them and the
exercise or partial exercise of one or more remedies will not
prevent the exercise of others. The provisions of this Announcement
may be waived, varied or modi ed as regards speci c Placees or on a
general basis by the Bookrunner.
No claim shall be made against the Company, the Bookrunner or
their respective Affiliates or any other person acting on their
behalf by a Placee to recover any damage, cost, charge or expense
which it may suffer or incur by reason of or arising from the
carrying out by it of any work to be done by it pursuant to this
Announcement or the performance of its obligations pursuant to this
Announcement or otherwise in connection with the Placing.
The agreement to se tt le a Placee's subscrip ti on (and/or the
subscrip ti on of a person for whom such Placee is contrac ti ng as
agent) free of stamp duty and stamp duty reserve tax depends on the
se tt lement rela ti ng only to a subscrip ti on by it and/or such
person direct from the Company for the Placing Shares in ques ti
on. Such agreement assumes that the Placing Shares are not being
subscribed for in connec ti on with arrangements to issue
depositary receipts or to transfer the Placing Shares into a
clearance service. If there are any such arrangements, or the se tt
lement relates to any other subsequent dealing in the Placing
Shares, stamp duty or stamp duty reserve tax may be payable, for
which neither the Company nor the Bookrunner will be responsible,
and the Placee to whom (or on behalf of whom, or in respect of the
person for whom it is par ti cipa ti ng in the Placing as an agent
or nominee) the alloca ti on, allotment, issue or delivery of
Placing Shares has given rise to such UK stamp duty or stamp duty
reserve tax undertakes to pay such UK stamp duty or stamp duty
reserve tax forthwith and to indemnify on an a ft er-tax basis and
to hold harmless the Company and the Bookrunner in the event that
the Company and/or the Bookrunner have incurred any such liability
to UK stamp duty or stamp duty reserve tax. If this is the case,
each Placee should seek its own advice and no ti fy the Bookrunner
accordingly.
In addition, Placees should note that they will be liable for
any capital duty, stamp duty and all other stamp, issue,
securities, transfer, registration, documentary or other duties or
taxes (including any interest, fines or penalties relating thereto)
payable outside the UK by them or any other person on the
acquisition by them of any Placing Shares or the agreement by them
to acquire any Placing Shares.
All times and dates in this Announcement may be subject to
amendment. The Bookrunner shall notify the Placees and any person
acting on behalf of the Placees of any such changes.
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context otherwise requires:
"Acquisition" the conditional acquisition by Gresham Enterprise
of all of the issued and outstanding shares
of common stock of Electra in accordance with
the terms of the Stock Purchase Agreement
"Admission" admission of the Placing Shares (or, as the
case may be, the Retail Offer Shares) to the
premium listing segment of the Official List
and to trading on the Main Market in accordance
with the Listing Rules
"Affiliate" the Company, N+1 Capital Markets and/or N+1
Advisory or any of their respective directors,
officers, partners, agents, employees, affiliates,
advisers, consultants or, in the case of N+1
Singer, persons connected with them as defined
in FSMA
"Announcement" this announcement, including the Appendix
"Appendix" the appendix to this Announcement
"Articles" the articles of association of the Company
"Board" or "Directors" the directors of the Company or any duly authorised
committee thereof
"Bookbuild" the accelerated bookbuilding process being
undertaken by the Bookrunner as agent for
the Company in relation to the Placing
"Bookrunner" N+1 Capital Markets
"CAGR" the compound annual growth rate.
"certificated" or an Ordinary Share recorded on the Company's
"in certificated form" share register as being held in certificated
form (namely, not in CREST)
"Company" Gresham Technologies plc
"Companies Act" the Companies Act 2006, as amended from time
to time.
"Completion" the closing of the Acquisition in accordance
with the terms of the Stock Purchase Agreement
"CREST" the relevant system (as defined in the CREST
Regulations being SI 2001/3755 as amended
from time to time) in respect of which Euroclear
UK & Ireland is the operator (as defined in
the CREST Regulations)
"CREST Proxy Instruction" a proxy appointment or instruction made using
CREST, authenticated in accordance with Euroclear
UK & Ireland 's specifications and containing
the information set out in the CREST manual
"Disclosure and Transparency the Disclosure Guidance and Transparency Rules
Rules" which form a block of the FCA Handbook
"Electra" Electra Information Systems, Inc. (incorporated
as a corporation in the State of New York,
United States)
"'Enlarged Group" the Group as enlarged by the Acquisition
"Existing Ordinary the 70,201,458 Ordinary Shares with voting
Shares" rights in issue at the date of this Announcement,
comprising the entire issued share capital
of the Company
"FCA" the Financial Conduct Authority in the UK
or its successor from time to time
"Form of Proxy" the form of proxy (which will accompany the
Shareholder Circular) for use by Shareholders
in connection with the General Meeting
"FS Act" the Financial Services Act 2012
"FSMA" the Financial Services and Markets Act 2000,
as amended
"FY2018", "FY2019", the financial years of each of the Gresham
"FY2020", "FY2021" Group and Electra ended or, as applicable,
and/or "FY2022" ending on 31 December respectively in each
such year
"General Meeting" the general meeting of the Company to be held
on a combined physical and electronic basis
at 10.00 a.m. on 21 June 2021, notice of which
will be set out in the Shareholder Circular
(or any adjournment thereof)
"Gresham Enterprise" Gresham Enterprise Storage, Inc. (incorporated
as a corporation in the State of Texas, United
States) being a wholly-owned subsidiary undertaking
of the Company.
"Group" or " Gresham the Company and its existing subsidiaries
Group" and subsidiary undertakings
"Issue Price" 160 pence, being the price per Placing Share
which will be payable pursuant to the Bookbuild
and the price per Retail Offer Share which
will be payable pursuant to the Retail Offer
"Listing Rules" the Listing Rules made by the FCA pursuant
to Part VI of FSMA governing, inter alia,
admission of securities to the Official List
"London Stock Exchange" London Stock Exchange plc
"Main Market" the Main Market, the market of that name operated
by the London Stock Exchange
"Main Market Application" the application to be made to the London Stock
Exchange for Admission in the form specified
by the Listing Rules
"MAR" the Market Abuse Regulation (EU No 596/2014)
and all delegated regulations, technical standards
and guidance relating thereto
"Material" material in the context of the Group or the
Enlarged Group (as the case may be) taken
as a whole , the Placing and/or the Admission
and/or the Acquisition
"New Loan Facility" a US$15 million multicurrency revolving credit
and US$10 million accordion loan facility
dated 28 May 2021 entered into by the Company
and Gresham International with Bank of Ireland
"New Ordinary Shares" together, the Placing Shares and the Retail
Offer Shares
"N+1 Advisory" Nplus1 Singer Advisory LLP, the Company's
sponsor for the purposes of the Acquisition
and the Shareholder Circular
"N+1 Capital Markets" Nplus1 Singer Capital Markets Limited, the
Company's broker and bookrunner for the purposes
of the Placing and Admission
"N+1 Singer" N+1 Advisory and N+1 Capital Markets
"Official List" the list of securities that have been admitted
to listing maintained by the FCA pursuant
to Part IV of FSMA
"Ordinary Shares" the ordinary shares of 5 pence each in the
capital of the Company
"pence" pence sterling, the lawful currency of the
UK
"Placees" those persons procured by N+1 Capital Markets
who subscribe for Placing Shares pursuant
to the Placing
"Placing" the proposed conditional placing of the Placing
Shares at the Placing Price pursuant to the
Placing Agreement
"Placing Agreement" the conditional placing and sponsor agreement
dated 28 May 2021 between the Company and
N+1 Singer relating to the Placing
"Placing Shares" the 12,500,000 new Ordinary Shares to be issued
pursuant to the Placing
"Prospectus Regulation" the Directive of the European Parliament and
of the Council of the European Union Regulation
(EU) 2017/1129
"Regulation S" Regulation S under the Securities Act
"Resolutions" the ordinary and special resolutions set out
in the notice convening the General Meeting
to be included in the Shareholder Circular
"Retail Offer Shares" the 625,000 New Ordinary Shares proposed to
be issued in connection with the Retail Offer
"RIS" any of the services set out in Appendix I
to the Listing Rules
"Securities Act" the United States Securities Act of 1933,
as amended
"Shareholders" the holders of Existing Ordinary Shares or
New Ordinary Shares (as the context requires)
at the relevant time
"Shareholder Circular" the Class 1 circular to be published by the
Company in connection with the Transaction
including a letter from the Chairman of the
Company and the notice convening the General
Meeting
"Sponsor" an investment bank or similar institution
which has been approved by the FCA to act
as a sponsor under Listing Rule 8
"Stock Purchase Agreement" the conditional stock purchase agreement entered
into on 28 May 2021 between John Landry, Robert
Danic, Scott Rhodes and Alexander Feigeles,
Gresham Enterprise and the Company in connection
with the Acquisition
"Supplementary Circular" such supplementary shareholder circular (if
any) as is required to be published by the
Company pursuant to the Listing Rules
"Transaction" the Acquisition, the Placing and the Retail
Offer.
"UK MAR" MAR which has effect (as amended) in English
law by virtue of the European Union (Withdrawal)
Act 2018, as amended
"UK Prospectus Regulation" the Prospectus Regulation as amended and retained
in UK law on 31 December 2020 by the European
Union (Withdrawal) Act 2018, as amended
"United Kingdom" or the United Kingdom of Great Britain and Northern
"UK" Ireland
"United States" or the United States of America, its territories
"US" and possessions, any state of the United States
of America, the District of Columbia and all
other areas subject to its jurisdiction and
any political sub-division thereof
"GBP" pounds sterling, the lawful currency of the
UK
"US$" and " U.S. United States dollars, the lawful currency
dollar" of the United States
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MSCPPUCWAUPGPPM
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