TIDMELTA
RNS Number : 5520O
Electra Private Equity PLC
08 November 2016
Electra Private Equity PLC
8 November 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO AUSTRALIA, CANADA, JAPAN, NEW ZEALAND AND SOUTH AFRICA
OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION
Electra Private Equity PLC
PROPOSED RETURN OF UP TO GBP200 MILLION TO SHAREHOLDERS BY WAY
OF A TER OFFER
London 8 November 2016
Electra Private Equity PLC (the "Company") hereby announces that
it intends to make a return of capital of up to GBP200 million to
shareholders by way of a tender offer by Morgan Stanley & Co.
International plc ("Morgan Stanley") acting as principal (the
"Tender Offer").
A circular dated 8 November 2016 (the "Circular"), containing
the full terms and conditions of the Tender Offer, including
instructions to Qualifying Shareholders on how to tender their
Ordinary Shares, together with a Tender Form and details of a
General Meeting to be held on 2 December 2016 at which approval for
the Tender Offer will be sought, will be posted to Qualifying
Shareholders today.
The Circular has been submitted to the National Storage
Mechanism and will shortly be available for public inspection at
www.morningstar.co.uk/uk/NSM.
A copy of the Circular is now available to view on the Company's
website at www.electraequity.com.
Background
Following the announcement of the Company's strategic review
(the "Review") on 25 January 2016 and the giving by the Company of
notice of termination of its Management and Investment Guideline
Agreement (the "MIG") with Electra Partners on 26 May 2016, the
Company has continued to realise cash through asset realisations,
but has reduced reinvestment pending the outcome of the Review. The
outcome of Phase I of the Review and the intention to undertake the
proposed Tender Offer were announced on 14 October 2016.
The principal outcome of Phase I of the Review was that the
Company intends to migrate to a corporate structure and cease to be
a fund. The Company is developing internal resources to assume all
operating and investment activities from 1 June 2017. As a result
of ongoing restrictions under the MIG, the Company is unable to
evaluate its portfolio fully until after the termination of the MIG
takes effect on 1 June 2017, or earlier should Electra Partners
agree to grant the Company access to the portfolio companies'
financial information and management teams.
In the period since 31 March 2016 the Company has made a number
of asset realisations that have had the effect of increasing both
the Company's net asset value and its cash balance. Full details of
these items will be reflected in the Group's audited results for
its financial year ended 30 September 2016 (the "Group's 2016
Results"), which are due to be announced on 9 December 2016.
The Company's board of directors (the "Board") believes that the
cash accumulated through the recent asset realisations could have a
negative impact on continued growth in net asset value per Ordinary
Share and does not provide the most efficient capital structure for
the Company. Within its existing investment policy the Company is
able to manage the potential negative impact on growth in net asset
value by undertaking share buy-backs and implementing the Tender
Offer.
The repurchase of Ordinary Shares following the Tender Offer
will be financed from the Company's existing resources. As of 30
September 2016, the Company's cash balance was in excess of GBP650
million. Accordingly, following a return of capital of up to GBP200
million, the Company would remain in a net cash position with a
strong balance sheet.
The Board will not treat sums paid to Shareholders through the
Tender Offer as forming part of the targeted 3% of the Company's
net asset value which they aim to pay to Shareholders each year by
way of cash dividend or share buybacks.
Reasons for implementing the Tender Offer
The Company has considered several options for returning value
to Shareholders. For the purpose of this return of up to GBP200
million, the Board decided to implement a tender offer because it
believes this process benefits both Shareholders and the Company.
In particular the Tender Offer:
-- provides Shareholders with the choice of whether or not they
wish to tender all or part of their Ordinary Shares;
-- is available to Shareholders irrespective of the size of their shareholdings;
-- enables Shareholders who do not wish to receive cash at this
time to maintain their full investment in the Company; and
-- enables the Company to facilitate the repurchase in a single transaction.
The return of excess cash by the Company to Shareholders should
also reduce the negative impact of holding this cash on growth in
net asset value per Ordinary Share.
The Tender Offer
It is proposed that up to 4,651,162 Ordinary Shares
(representing approximately 11.55% of the Issued Ordinary Share
Capital) should be purchased under the Tender Offer, for a maximum
aggregate cash consideration of GBP200 million. Qualifying
Shareholders will be able to tender their Ordinary Shares within
the range of prices from 4,300 pence to 4,650 pence per Ordinary
Share inclusive (the "Price Range"). 4,300 pence per Ordinary Share
represents a discount of 2.7%, and 4,650 pence per Ordinary Share
represents a premium of 5.3%, to the closing price per Ordinary
Share of 4,418 pence on 7 November 2016 (being the latest
practicable date prior to publication of the Circular).
Qualifying Shareholders will be entitled to tender some or all
of their Ordinary Shares to be purchased by Morgan Stanley (acting
as principal). Qualifying Shareholders may tender their Ordinary
Shares for sale at a price (or prices) within the Price Range.
Subject to satisfaction of the Tender Conditions, Morgan Stanley
will purchase all Ordinary Shares validly tendered under the Tender
Offer at a single price per Ordinary Share (the "Strike Price"),
which will be determined at the end of the Tender Offer period in
accordance with the mechanism set out below.
The Strike Price will be the lowest price per Ordinary Share in
the Price Range that will allow Morgan Stanley to purchase the
maximum number of Ordinary Shares for a total cost not exceeding
GBP200 million (or, if less, the net asset value per Ordinary Share
as shown by the Group's 2016 Results).
The Tender Offer is being made available to Qualifying
Shareholders who are on the Register at 6.00 p.m. on 21 December
2016.
The Tender Offer is to be effected by Morgan Stanley (acting as
principal) purchasing Ordinary Shares from Qualifying Shareholders.
Morgan Stanley, in turn, has the right to require the Company to
purchase from it, and can be required by the Company to sell to it,
such Ordinary Shares at the Strike Price under a tender offer and
option agreement (the "Tender Offer and Option Agreement"). All
Ordinary Shares purchased by the Company from Morgan Stanley in
connection with the Tender Offer will be cancelled.
Rule 9 Waiver
Edward Bramson, a director of the Company, is a managing member
of Sherborne Investors Management LP. He, together with other
parties associated with Sherborne Investors Management LP and Ian
Brindle, another director of the Company, (together the "Sherborne
Parties") are viewed as acting in concert for the purposes of the
Takeover Code. The Sherborne Parties are interested in 28.38% of
the Company's issued share capital. They reserve the right to
participate in the Tender Offer but their shareholding in the
Company could potentially increase as a result of the
implementation of the Tender Offer. If they do not participate,
their holding could increase to 32.08%, should the Tender Offer be
taken up in full by Shareholders at the Minimum Price.
Consequently, the Company has applied to the Panel for a waiver
of Rule 9 of the Takeover Code in order to permit the Tender Offer
to occur without triggering an obligation on the part of the
Sherborne Parties to make a general offer to Shareholders. The
Panel has agreed, subject to the approval of shareholders (other
than the Sherborne Parties) by ordinary resolution on a poll vote,
to waive the requirement for the Sherborne Parties to make a
general offer to all Shareholders (the "Waiver").
Circumstances in which the Tender Offer may not proceed
The Tender Offer is conditional on, among other things, the
passing of the resolutions set out in the Notice of General Meeting
which is contained in the Circular.
The Board has reserved the right, at any time prior to the
announcement of the results of the Tender Offer, to require Morgan
Stanley not to proceed with the Tender Offer if it concludes that
the implementation of the Tender Offer is no longer in the
interests of the Company and/or Shareholders as a whole. The Board
has also reserved the right, at any time prior to the announcement
of the results of the Tender Offer, with the prior consent of HSBC
Bank plc ("HSBC") and Morgan Stanley, to revise the aggregate value
of the Tender Offer, or to extend the period during which the
Tender Offer is open, based on market conditions and/or other
factors, subject to compliance with applicable legal and regulatory
requirements. An appropriate announcement will be made if the Board
elects to exercise any of these rights and/or the Tender Offer does
not proceed.
General Meeting
A General Meeting is being convened for 9.00 a.m. on 2 December
2016 to consider and, if thought fit, pass the resolutions to
approve the Waiver and approve the Tender Offer as set out in full
in the Notice of General Meeting at the end of the Circular. Full
details of the Tender Offer timetable, mechanics and settlement
procedure are set out in the Circular and this announcement should
be read in conjunction with the Circular.
Expected Transaction Timeline
Tender Offer opens 8 November 2016
Latest time and date for receipt of Forms 9.00 a.m. on 30 November
of Proxy for the General Meeting 2016
General Meeting 9.00 a.m. on 2 December
2016
Announcement of results of the General 2 December 2016
Meeting
Announcement of Group's 2016 Results 9 December 2016
Latest time and date for receipt of Tender 6.00 p.m. on 21 December
Forms and share certificates in relation 2016
to the Tender Offer
Latest time and date for settlement of 6.00 p.m. on 21 December
TTE Instructions in relation to the Tender 2016
Offer
Tender Offer Record Date 6.00 p.m. on 21 December
2016
Announcement of results of the Tender 22 December 2016
Offer
Purchase of Ordinary Shares under the 22 December 2016
Tender Offer
CREST accounts credited in respect of 23 December 2016
Tender Offer proceeds for Uncertificated
Ordinary Shares
CREST accounts credited for revised, Uncertificated 23 December 2016
holdings of Ordinary Shares (or, in the
case of unsuccessful tenders, for entire
holdings of Ordinary Shares)
Cheques despatched in respect of Tender 30 December 2016
Offer proceeds for Certificated Ordinary
Shares
Return of share certificates in respect by 9 January 2017
of unsuccessful tenders of Ordinary Shares
in Certificated form
Despatch of balance share certificates by 9 January 2017
in respect of unsold Ordinary Shares in
Certificated form
The dates and times given are based on the Company's current
expectation and may be subject to change. Any changes to the
expected timetable will be announced via a Regulatory Information
Service.
Recommendation
The Board is making no recommendation to Shareholders in
relation to participation in the Tender Offer itself. Whether or
not Qualifying Shareholders decide to tender all or any of their
Ordinary Shares will depend, among other things, on their view of
the Company's prospects and their own individual circumstances,
including their tax position. Shareholders are recommended to
consult their duly authorised independent advisers and make their
own decision.
Shareholder helpline
If Shareholders have any questions about the procedure for
tendering Ordinary Shares or making a TTE Instruction or want help
filling in the Tender Form, they should telephone the Shareholder
Helpline on 0333 207 6514 or on +44 121 415 0993 (if calling from
outside the UK). Lines are open from between 8.30 a.m. to 5.30 p.m.
(UK time) Monday to Friday (excluding public holidays) and will
remain open up to and including 13 January 2017. Calls to the
helpline from outside the UK will be charged at the applicable
international rate. Please note that Equiniti Limited cannot
provide advice on the merits of the proposals described in the
Circular nor give financial, tax, investment or legal advice.
Capitalised terms used in this announcement and not otherwise
defined have the meanings ascribed to them in the Circular.
This announcement contains inside information.
For further information, please contact:
HSBC Bank plc
Simon Alexander
Alex Thomas
Thomas Pinks
Tel +44 20 7991 8888
Morgan Stanley
Andrew Foster
Sam McLennan
Richard Brown
Tel: +44 20 7425 8000
Brunswick Group LLP
Gill Ackers/Kim Fletcher
Electra@brunswickgroup.com
Tel: +44 20 7404 5959
Gavin Manson
Chief Financial Officer
Electra Private Equity PLC
Overseas shareholders
The availability of the Tender Offer to Shareholders who are not
resident in the United Kingdom may be affected by the laws of the
relevant jurisdiction in which they are located. Persons who are
not resident in the United Kingdom should read paragraph 8 of Part
IV of the Circular and should inform themselves about, and observe,
any applicable legal or regulatory requirements.
This announcement does not constitute or form part of any offer
or invitation to sell, or any solicitation of any offer to purchase
or subscribe for any Ordinary Shares nor shall it (or any part of
it) or the fact of its distribution, form the basis of, or be
relied on in connection with, any contract therefor. The Tender
Offer is made only pursuant to the Circular and the related Tender
Form with respect to the Ordinary Shares. The Tender Offer is not
being made to holders of Ordinary Shares residing in any
jurisdiction in which the making of the Tender Offer would not be
in compliance with the laws of that jurisdiction.
Accordingly, unless otherwise determined by HSBC and Morgan
Stanley and permitted by applicable law and regulation, neither the
Circular nor the accompanying Tender Form and/or any related
document is being, nor may it be, directly or indirectly, mailed,
transmitted or otherwise forwarded, distributed, or sent in, into
or from Australia, Canada, Japan, New Zealand or South Africa or
any other jurisdiction where the mailing of the Circular or the
accompanying documents into or inside such jurisdiction would
constitute a violation of the laws of such jurisdiction (each a
"Restricted Jurisdiction"). Persons receiving the Circular, the
Tender Form and/or any related document (including, without
limitation, trustees, nominees or custodians) must not mail or
otherwise forward, distribute or send it in, into or from a
Restricted Jurisdiction, as to do so may invalidate any purported
acceptance of the Tender Offer. Any person (including, without
limitation, trustees, nominees or custodians) who would or
otherwise intends to, or who may have a contractual or legal
obligation to, forward the Circular, the accompanying Tender Form
and/or any related document to any jurisdiction outside the United
Kingdom, should seek appropriate advice before taking any
action.
The Company, certain affiliated companies, the nominees or
brokers (acting as agents), including HSBC and Morgan Stanley may,
and intend to, make certain purchases of, or arrangements to
purchase, Ordinary Shares outside the Tender Offer during the
period in which the Tender Offer remains open for acceptance. Such
purchases or arrangements to purchase will be made outside the
United States and will comply with applicable law. Information
regarding such purchases will be disclosed in the United States on
the Company's website to the extent that such information is made
public in the United Kingdom. The Tender Offer is being made in the
United States by Morgan Stanley & Co. LLC, acting as nominee
for Morgan Stanley and no one else.
General
HSBC and Morgan Stanley, each of whom is authorised by the
Prudential Regulation Authority and regulated by the Prudential
Regulation Authority and the Financial Conduct Authority, are
acting for the Company and no one else in connection with the
Tender Offer and the Rule 9 Waiver Resolution and HSBC and Morgan
Stanley, their affiliates and their respective directors, officers,
employees and agents will not regard any other person as their
client, nor will they be responsible to anyone other than the
Company for providing the protections afforded to their clients nor
for providing advice in connection with the Tender Offer, the
Waiver or any other matters or arrangements referred to in this
announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on HSBC and Morgan Stanley by the Financial and
Services Markets Act 2000, the Financial Services Act 2012 or the
regulatory regimes established thereunder, neither HSBC nor Morgan
Stanley accepts any responsibility or liability whatsoever or makes
any representation or warranty, express or implied, concerning the
contents of this announcement, including its accuracy, completeness
or verification, or for any other statement made or purported to be
made by it, or on its behalf, in connection with the Company, the
Tender Offer, the Waiver or the Circular. Each of HSBC and Morgan
Stanley, their affiliates and their respective directors, officers,
employees and agents accordingly disclaims all and any
responsibility, or liability whether arising in tort, contract or
otherwise (save as referred to above) which they might otherwise
have in respect of this announcement or any such statement.
This announcement contains (or may contain) certain
forward-looking statements with respect to the Company's current
expectations and projections about future events. These statements,
which sometimes use, but are not limited to, words such as
'anticipate', 'believe', 'intend', 'estimate', 'expect' and words
of similar meaning, reflect the directors' beliefs and expectations
and involve a number of risks, uncertainties and assumptions that
could cause actual results and performance to differ materially
from any expected future results or performance expressed or
implied by the forward-looking statement. Statements contained in
this announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. The information contained in this
announcement is subject to change without notice and, except as
required by applicable law, neither the Company nor HSBC nor Morgan
Stanley assumes any responsibility or obligation to update publicly
or review any of the forward looking statements contained herein.
You should not place undue reliance on forward-looking statements,
which speak only as of the date of this announcement.
The Tender Offer relates to securities of a non-US company that
is subject to the disclosure requirements, rules and practices
applicable to companies listed in the UK, which differ from those
of the United States in certain material respects. The Circular has
been prepared in accordance with UK style and practice for the
purpose of complying with English law and the Listing Rules. The
Tender Offer is not subject to the disclosure and other procedural
requirements of Regulation 14D under the US Exchange Act. The
Tender Offer will be made in the United States in accordance with
the requirements of Regulation 14E under the US Exchange Act, as
exempted by Rule 14d-1(d) thereunder. US Shareholders should note
that the Ordinary Shares are not listed on a US securities exchange
and the Company is not subject to the periodic reporting
requirements of the US Exchange Act and is not required to, and
does not, file any reports with the US Securities and Exchange
Commission thereunder.
To the extent permitted by applicable law and in accordance with
normal UK practice, the Company, HSBC, Morgan Stanley, or any of
their affiliates, may make certain purchases of, or arrangements to
purchase, Ordinary Shares outside the United States during the
period in which the Tender Offer remains open for acceptance,
including sales and purchases of Ordinary Shares effected by HSBC
and Morgan Stanley acting as market makers in the Ordinary Shares.
These purchases, or other arrangements, may occur either in the
open market at prevailing prices or in private transactions at
negotiated prices. In order to be excepted from the requirements of
Rule 14e-5 under the US Exchange Act by virtue of Rule 14e-5(b)(12)
thereunder, such purchases, or arrangements to purchase, must
comply with applicable English law and regulation, including the
Listing Rules, and the relevant provisions of the US Exchange Act.
Any information about such purchases will be disclosed as required
in the UK and the United States and, if required, will be reported
via the Regulatory Information Service of the London Stock Exchange
and will be available on the London Stock Exchange website at
http://www.londonstockexchange.com.
The Tender Offer has not been approved by the SEC or by the
securities regulatory authority of any state or of any other United
States jurisdiction, nor has the SEC or any such securities
regulatory authority passed upon the accuracy or adequacy of this
document. Any representation to the contrary is a criminal offence
in the United States.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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