RNS Number:7615Q
Health Media Group PLC
10 October 2003
10 October 2003
Health Media Group plc
("Health Media", "the Group" or "the Company")
Proposed acquisition of Bybrook Limited ("Bybrook")
Proposed waiver of rule 9 of the City Code
Proposed Capital Reorganisation
Proposed Placing of 18,732,252 ordinary shares of 5p each at 112.54p per share
Application for admission to trading on AIM
and proposed change of name to RWS Holdings plc
Nominated Adviser and Broker until Admission
Arbuthnot Securities Limited
Nominated Adviser and Broker following Admission
Collins Stewart Limited
Bybrook Limited, the holding company of RWS Group ("RWS"), a leading provider of
intellectual property support services (patent translations and technical
searches), today announced that its shareholders have conditionally offered to
sell the whole of its issued share capital, in a reverse takeover, to the AIM
listed company Health Media Group plc.
* At the Placing Price of 112.54p per share, the consideration for the
Acquisition values Bybrook at approximately #42.0m and the Enlarged Group at
approximately #42.5m. The Placing Price equates to approximately 2.25p per
ordinary share of Health Media Group plc prior to the Capital Restructuring
referred to below.
* There will be a related Placing by Collins Stewart (as agent for the
Company) of 18,732,252 New Ordinary Shares to institutional investors,
representing 49.6% of the Enlarged Share Capital or approximately #21.1m. No
new money is being raised for Bybrook or RWS as a result of the Placing.
* The shareholders of Bybrook ("Vendors") have offered irrevocably to
sell, subject to the approval of Health Media shareholders, the whole of the
issued share capital of Bybrook to the Company on the terms of the
Acquisition Agreement. In addition, Health Media has entered into the
Irrevocable Agreement under which it has undertaken to accept the Offers and
to execute the Acquisition Agreement if the resolutions to be proposed to
Health Media shareholders at the EGM to be held on 10 November 2003 are
passed. The consideration for the Acquisition values Bybrook at
approximately #42.0m and will be satisfied by the allotment of 37,320,064
new Ordinary Shares ("the New Ordinary Shares").
* The New Ordinary Shares will represent approximately 98.8% of the
enlarged issued ordinary share capital of the Company immediately following
completion of the Acquisition.
* Health Media's Independent Directors recommend that Shareholders vote in
favour of the proposed resolutions and undertakings have been given in
respect of approximately 55.9% of Health Media's share capital to vote in
favour of the resolutions.
* A Capital Restructuring of Health Media's Existing Share Capital will
take place to enable the acquisition of Bybrook to be effected and will
apply to those holders of Health Media Group's ordinary shares of 25p each
who are on the Company's register of members on 10 November 2003.
* It is proposed that the name of the Enlarged Group will be changed to
RWS Holdings plc and that its Board will comprise Andrew Brode (Executive
Chairman), Elisabeth Lucas (Executive Director), Michael McCarthy (Finance
Director), John Ivey (Senior Non-Executive Director) and Peter Mountford
(Non-Executive Director).
Information on RWS Group
* The Board believes that the RWS Group is a market leader in the
provision of intellectual property support services - patent translations
and technical services. Operating from offices in the United Kingdom,
mainland Europe, New York and the Far East, RWS comprises two divisions:
- The RWS Translation division provides patent and document translation,
filing and localisation services;
- The RWS Information division offers a comprehensive range of patent
search, retrieval and monitoring services.
The Board believes the RWS Group to be the largest patent translation specialist
in Europe, translating over 30,000 patents and IP related documents per annum.
* RWS Group has a blue chip client base including companies in the medical,
pharmaceutical, chemical, aerospace, defence, automotive and telecoms
industries as well as patent agents.
* The Board believes that growth in its market is being driven by the
increasing desire by companies to protect their intellectual property, as
demonstrated by a doubling of the number of patent applications filed at the
European Patent Office over the last 10 years, and by the growing research
and development spend of such companies.
* Over the three years to 31 March 2003 operating profits (excluding
goodwill amortisation) and sales generated by the continuing RWS Group have
increased at compound annual rates of 35.9% and 18.0% respectively. In the
year ended 31 March 2003, the continuing RWS Group, generated operating
profits (excluding goodwill amortisation) of approximately #4.4m (2002:
#2.9m) from turnover of approximately #25.3m (2002: #21.2m).
* The financial performance for the first five months of the current year
is significantly ahead of the same period last year. Sales generated in July
2003 constituted a record month and August was also ahead of expectations.
-ends-
For further information, please contact:
RWS Group
Andrew Brode, Executive Chairman 01753 480200
Liz Lucas, Executive Director
Weber Shandwick Square Mile
Nick Oborne or Katie Hunt 020 7067 0700
Collins Stewart
Steve Roberts or Mark Connelly 020 7523 8350
Arbuthnot
Tim Goodman 0121 632 2100
No person is authorised, in connection with the Placing, to give any information
or make any representation other than as contained in this announcement and, if
given or made, such information or representation must not be relied upon as
having been authorised by the Company or Collins Stewart or Arbuthnot or their
respective directors.
Arbuthnot, which is regulated in the United Kingdom by The Financial Services
Authority, is acting as nominated adviser and broker to the Company until
Admission and no one else, and will not be responsible to anyone other than the
Company for providing the protections afforded to clients of Arbuthnot or for
providing advice in relation to the matters contained in this announcement or
any matter concerning the Proposals or Admission. The responsibility of
Arbuthnot as nominated adviser and broker to the Company until Admission is owed
solely to the London Stock Exchange.
Collins Stewart, which is regulated in the United Kingdom by The Financial
Services Authority, will act as nominated adviser and broker to the Company
following Admission and no one else, and will not be responsible to anyone other
than the Company for providing the protections afforded to clients of Collins
Stewart or for providing advice in relation to the matters contained in this
announcement or any matter concerning the Proposals or Admission. The
responsibility of Collins Stewart as nominated adviser and broker to the Company
after Admission will be owed solely to the London Stock Exchange.
Health Media Group plc
("Health Media", "the Group" or "the Company")
Proposed acquisition of Bybrook Limited ("Bybrook")
Proposed waiver of rule 9 of the City Code
Proposed Capital Reorganisation
Proposed Placing of 18,732,252 ordinary shares of 5p each at 112.54p per share
Application for admission to trading on AIM
and proposed change of name to RWS Holdings plc
Nominated Adviser and Broker until Admission
Arbuthnot Securities Limited
Nominated Adviser and Broker following Admission
Collins Stewart Limited
Introduction
It was announced today that the shareholders of Bybrook have offered irrevocably
to sell, subject to Shareholders' approval, the whole of the issued share
capital of Bybrook to the Company on the terms of the Acquisition Agreement. In
addition, the Company has entered into the Irrevocable Agreement under which it
has undertaken to accept the Offers and execute the Acquisition Agreement if the
Resolutions to be proposed to Shareholders are passed The consideration for the
Acquisition values Bybrook at approximately #42.0 million and will be satisfied
by the allotment of the New Ordinary Shares. The New Ordinary Shares will
represent approximately 98.8% of the Enlarged Share Capital.
Bybrook is the holding company of RWS Group. RWS Group is a provider of
intellectual property support services (patent translations and technical
searches) to the medical, pharmaceutical, chemical, aerospace, defence,
automotive and telecoms industries. The RWS Group also provides specialist
technical, legal and financial translation services to a number of areas of
industry outside the patent arena. Based in the United Kingdom, the RWS Group
also operates from offices in mainland Europe, New York and the Far East.
Further details on Bybrook and the RWS Group are set out below and in the
Admission Document which will be posted to Shareholders today.
In view of the change in nature of the Group's business as a result of the
Acquisition, it is proposed that the name of the Company be changed to RWS
Holdings plc.
In view of its size, the Acquisition would constitute a reverse takeover of the
Company under the AIM Rules, a substantial property transaction with a director
under section 320 of the Act and a change of control under the City Code and
therefore requires the prior approval of Shareholders at the Extraordinary
General Meeting. If the Resolutions are duly passed at the EGM, the Company's
existing quotation on AIM will be cancelled and the Company will apply for the
Enlarged Share Capital to be admitted to trading on AIM.
Health Media proposes to issue 37,320,064 New Ordinary Shares at a Placing Price
of 112.54p per share, with a total value of #42.0m. Of these, 18,732,252 will be
issued to institutional placees by Collins Stewart (as agent for the Company)
and 18,587,812 will be issued to one of the Vendors, representing approximately
49.6% and 49.2% of the Enlarged Share Capital respectively. The Placing values
Bybrook at approximately #42.0m and the Enlarged Group at approximately #42.5m.
Andrew Brode, Chairman of the Company, together with Peter Mountford, a
non-executive director of the Company, are both interested in the Acquisition by
virtue of, firstly, Andrew Brode's directorship and beneficial interest in
Bybrook representing 69.9 per cent. of Bybrook's issued share capital, and
secondly, Peter Mountford's proposed option arrangements within the Enlarged
Group as more particularly described in the Admission Document. As a result of
Andrew Brode's shareholding interest in Bybrook the Acquisition is deemed to be
a related party transaction pursuant to the AIM Rules. As a result of their
respective interests in the transaction neither Andrew Brode nor Peter Mountford
have participated in the Board's deliberations with regard to the Acquisition
and will not vote on the Resolutions.
Background to and reasons for the Acquisition
Health Media Group is a shell company originally established to develop, through
acquisition, a group providing services within the education, publishing and
media sectors. In August 2001 the Company acquired the entire issued share
capital of Pang Management Limited (formerly Health Media Group Limited) in
consideration of the issue to the holders of shares in Pang Management Limited
of 18,700,000 Ordinary Shares. Pang Management Limited was the holding company
of a group of companies which was a provider of health-related news,
information, education and technology solutions. The business was not successful
and in August 2002 was sold for #125,000 leaving the Group without any trading
activities. Following the sale of the business of Pang Management Limited, a
liquidator was appointed to Pang Health Limited (formerly Health Media Limited),
a wholly owned subsidiary of Pang Management Limited.
Since August 2002 the Existing Directors have sought to realise value for
Shareholders by seeking to use Health Media Group as a shell for a reverse
takeover. However the range of opportunities explored has been constrained by
the negligible cash resources of Health Media Group, and no interested parties
other than Bybrook have been identified.
At the most recent year end, the Company had a cash balance of only #3,000 and,
with no present revenue stream or likely sources of funding, will be unable to
finance the ongoing costs associated with maintaining its quotation on AIM.
Furthermore, this lack of funding makes it increasingly difficult for the
Existing Directors to pursue any opportunities for the Group which may arise.
The Group has latent capital tax losses of approximately #11 million which it
has been unable to utilise. The Independent Directors believe that it is
difficult to ascribe a value to tax losses since the losses within the Group are
likely to be of use to only a limited number of companies. For these companies
the value of the losses is uncertain and subject to agreement with the Inland
Revenue, but may potentially represent considerable value. Nevertheless the
Independent Directors believe that the valuation attributed to these capital
losses by the Proposals is consistent with their understanding of current market
practice in relation to the value of tax losses.
In light of the Company's current financial position the Independent Directors
believe that if the Resolutions are not passed and accordingly the Proposals are
not completed, in the absence of alternative funding arrangements the Board will
have no alternative other than to seek the advice of an insolvency practitioner
in which event a liquidation of the Company is expected to follow. Should this
take place, it is highly uncertain whether any value for shareholders would be
recoverable.
Information on the RWS Group
The Proposed Directors believe the RWS Group to be a market leader in the
provision of intellectual property support services (patent translation and
technical searches) to the medical, pharmaceutical, chemical, aerospace,
defence, automotive and telecoms industries. The RWS Group also provides
specialist technical, legal and financial translation services to a number of
areas of industry outside the patent arena and operates from offices in the
United Kingdom, mainland Europe, New York and the Far East. The RWS Group was
originally established under the name of Randall Woolcott Services Limited in
1982 and has since grown substantially both through organic growth and by a
series of acquisitions.
The Proposed Directors believe that the RWS Group has grown into one of the
largest patent translation specialists in Europe, translating in excess of
30,000 patents and intellectual property related documents per annum.
The RWS Group comprises two divisions, the RWS Translation division and the RWS
Information division. The RWS Translation division provides patent and document
translation, filing and localisation services principally for companies based in
Europe, North America and the Far East. The RWS Information division offers a
comprehensive range of patent search, retrieval and monitoring services.
Bybrook's loss-making US business (RWS LLC) has been demerged from the Bybrook
Group. As at 31 August 2003, the RWS Group (excluding RWS LLC) had over 270 full
time employees, of which 64 were specialist translators and 25 were patent
searchers.
The RWS Translation division
Translation of highly complex documents in areas such as medicine, electronics
or engineering requires the translator to not only have highly competent
language skills but, more particularly, also a specialist knowledge of the
subject matter. RWS Translation either employs or has access to highly skilled
translators who are subject specialists and who have received specific training
for patent translation work. As at 31 August 2003, RWS Group employed 64
specialist translators and had access to a further 600 carefully selected
freelance translators. It predominantly uses in-house translators that
specialise in the translation of patents in areas such as biochemistry,
chemistry, electronics, engineering, genetics, medicine, pharmaceuticals and
telecommunications.
The RWS Translation division has consistently shown significant growth in recent
years, such growth being driven by a number of factors, including:
* an increasing desire by companies to protect their intellectual property
which has resulted in a doubling of the number of patent applications filed
at the European Patent Office in the last ten years;
* growing research and development spend of such companies; and
* the increasing accessibility of intellectual property information through
new media dissemination services such as the internet which, in turn, has
accelerated the need for quick and effective intellectual property
protection.
The RWS Translation division offers a European Translation and Filing service
("ETF") which was set up in 1994 to provide a comprehensive offering for
translating and filing European patents. Under current European legislation the
claims of granted patents are required to be lodged in the three main languages,
English, French and German. Patents are then required to be translated into the
languages of the other designated states in order to ensure enforceability.
RWS Japan provides a Japanese Translation and Filing Service which is similar to
the ETF service and has been growing strongly in recent years.
The RWS Translation division provides its translation services to a large number
of market-leading companies that operate within the pharmaceutical, chemical,
telecommunications, technology, aerospace, defence, automotive and electronics
sectors.
In the year ended 31 March 2003, the RWS Translation division generated
approximately #22.4m of sales, representing 88.6% of Bybrook Group's sales
(excluding RWS LLC).
The RWS Information division
The RWS Information division provides a range of services including patent and
trademark search and retrieval, patent watch and documentation information
services such as ownership and duration. Whilst historically representing less
than 20% of RWS Group sales, the RWS Information division enables the RWS Group
to offer a comprehensive service in respect of patents and related
documentation. The RWS Information division also enables clients to conduct
searches to establish the viability of existing patent filings, potential
infringements of patent rights by competitor companies and also to locate
relevant documentation that may invalidate an invention in a patent claim. It
also offers a patent watch service in respect of other filings by third parties
that may infringe upon existing patent rights. To a company where safeguarding
intellectual property rights is key, the ability to access such information
quickly and accurately can be an important factor in safeguarding future
profitability.
The RWS Information division's customers comprise a wide range of multi-national
corporates and firms of patent attorneys.
In the year ended 31 March 2003, the RWS Information division generated sales of
#2.9m, representing 11.4% of Bybrook Group's sales (excluding RWS LLC).
Key strengths
The Proposed Directors believe that the RWS Group has the following key
strengths:
* a leading position in a growing market;
* an extremely capable and experienced management team;
* a track record of cash generative growth;
* a reputation for the excellence and quality of its work;
* strong relationships with a blue-chip and diverse customer base;
* access to a wide number of high quality translators and searchers, both
employees and freelance; and
* an ability to work at the cutting edge of intellectual property
developments through the skills of its highly specialised translation and
search resources.
Market opportunities
The patent translation and technical search marketplace has seen significant
growth in recent years with RWS Group's customers paying increasing attention to
the protection of their intellectual property rights. This has been demonstrated
by significant increases in the number of patent applications being filed at the
European Patent Office in recent years. The Proposed Directors believe that this
trend will continue for at least the short to medium term.
The Proposed Directors believe that the barriers to entry for newcomers to the
patent translation and technical search marketplaces are significant. The RWS
Group has, over time, developed strong relationships with a high quality
customer base and employs or has access to a large number of permanent and
freelance translators and searchers who are highly trained and typically possess
skill sets that are extremely uncommon.
Customers
RWS Group has a broad customer base and its major clients are predominantly blue
chip companies operating in the medical, pharmaceutical, chemical, aerospace,
defence, automotive and telecoms industries and patent agents. In the year ended
31 March 2003, the Group's top ten customers accounted for 30.7% of Bybrook
Group sales, with no one customer accounting for more than 6.7% of Bybrook Group
sales.
The RWS Group has a high level of customer retention and it invests significant
time in maintaining client relationships through close monitoring of work
volumes and regular communication.
Capital Reorganisation
As Shareholders may be aware, at the time of their suspension the Ordinary
Shares were trading at a discount to their nominal value (being 25p per share).
The Company is not permitted to issue shares at a discount to their nominal
value. The Capital Reorganisation consists of a conversion of each Existing
Ordinary Share into one ordinary share of 0.1p and 249 Deferred Shares, a
consolidation of every 50 ordinary shares of 0.1p each into one ordinary share
of 5p and the Capital Reduction. The net effect of the Capital Reorganisation is
that every holder of 50 ordinary shares of 25p each will in place of these
shares receive one ordinary share of 5p. The fractions of Ordinary Shares
arising from the Capital Reorganisation will be converted into Deferred Shares.
The Capital Restructuring will enable the Proposals to be effected and will
apply to those Shareholders on the register of members of the Company on 10
November 2003.
Terms of the Acquisition
The Vendors have made the Offers pursuant to which they have offered irrevocably
to sell the entire issued share capital of Bybrook to the Company on the terms
of the Acquisition Agreement. The Company has irrevocably undertaken to accept
the Offers and execute the Acquisition Agreement if the Resolutions to be
proposed at the EGM are passed. The consideration for the Acquisition values
Bybrook at approximately #42.0 million and will be satisfied by the allotment of
the New Ordinary Shares. The Acquisition will be conditional inter alia on:
(i) the approval of the Resolutions to be proposed at the EGM;
(ii) confirmation that the Panel will not require the Concert Party to make a
general offer to acquire the whole of the share capital of the Company;
(iii) Admission becoming effective on 11 November 2003 (or such later date as
the Company and Collins Stewart may agree but in any event no later than
10 December 2003).
Further information on the Offers and the Acquisition Agreement is set out in
the Admission Document which will be posted to Shareholders today.
Details of the Placing
The Company proposes to issue the New Ordinary Shares at the Placing Price in
accordance with the terms of the Acquisition Agreement. Of these New Ordinary
Shares, the Placing Shares will be issued to institutional Placees, which will,
in aggregate, represent approximately 49.6 per cent. of the Enlarged Share
Capital. The remainder of the New Ordinary Shares, being the Vendor Shares, will
be issued to one of the Vendors which will, in aggregate, represent
approximately 49.2 per cent. of the Enlarged Share Capital.
The Placing is conditional upon, inter alia:
(i) the approval of the Resolutions to be proposed at the EGM;
(ii) the Offers being accepted by the Company and the Acquisition Agreement
being entered into by it and becoming unconditional in all respects and not
having been terminated in accordance with its terms;
(iii) the Placing Agreement becoming unconditional in all respects (save in
respect of certain escrow conditions) and not having been terminated in
accordance with its terms; and
(iv) Admission becoming effective on 11 November 2003 (or such
later date as the Company and Collins Stewart may agree but in any event no
later than 10 December 2003).
Further details of the Placing Agreement are set out in the Admission Document.
Financial effects of the Acquisition
The Proposed Directors expect the Acquisition to substantially increase the
revenues of the Company and strengthen the Company's balance sheet.
Strategy of the Enlarged Group
The Enlarged Group has a clear strategy of achieving further growth in
profitability in order to increase shareholder value, which will be implemented
by the New Board and senior management of the Enlarged Group. The New Board
expects to achieve this growth principally organically and also by selective
acquisition. The strategy to achieve organic growth is to be implemented by
exploiting the current favourable market conditions (which the Proposed
Directors expect to continue for at least the short to medium term) and,
additionally, by taking advantage of the increased market awareness the Proposed
Directors expect to generate from the Proposals together with targeted spend on
marketing. The New Board will also seek to further increase operating
efficiencies thereby providing increased support to operating margins.
The New Board also expects to add to the Enlarged Group's profitability by
continuing to selectively acquire niche businesses within the professional
translation and information search marketplace. The New Board is mindful of the
need for acquisitions to be earnings accretive and to increase return on capital
employed.
New Board
On Admission, Mr.Kaye and Mr. Fisher have agreed to resign from the board of
Health Media and the New Board of the Enlarged Group will comprise:
Andrew Brode, aged 63 (Executive Chairman)
Andrew Brode, a chartered accountant, was between 1978 and 1990 chief executive
of Wolters Kluwer (UK) plc, one of the UK's largest business-to-business
information groups. In 1990 he founded Bybrook and became involved in a
management buy-out of Eclipse, which was sold to Reed Elsevier in January 2000.
In 1995 he led the management buy in of RWS Group. He is a substantial
shareholder in and Chairman of Bybrook. He is also a non-executive director of
Vitesse Media plc, Sport First plc and other private equity financed media
companies.
Elisabeth Lucas, aged 47 (Executive Director)
Elisabeth Lucas is a linguist by profession who joined RWS Group in 1977. She
moved from translation into the management team in the late 1980s and became the
managing director of RWS Group's Translation Division in 1992. Elisabeth Lucas
was responsible for the introduction of the European Translation and Filing
service component of the business of the RWS Group in 1994. On the acquisition
of RWS Group by Bybrook in 1995 she became the Chief Executive Officer of the
RWS Translation division and is responsible, together with Andrew Brode, for the
worldwide operations of RWS Group's translation activities.
Michael McCarthy, aged 57 (Finance Director)
Michael McCarthy joined RWS Group as finance director in 2000. Between 1988 and
1999 he was employed by RAC Motoring Services Limited, initially as Corporate
Chief Accountant, then as Head of Tax and Treasury. Prior to that, between 1979
and 1987, he was Financial Controller then Finance Director of an automotive
paint manufacturing company. The earlier part of his career was as a management
accountant in the agricultural consultancy division of Booker McConnell and as
an Assistant Manager with Price Waterhouse in London, following qualification
with Stoy Hayward & Co.
John Ivey, aged 62 (Senior Non-Executive Director)
John Ivey will be the Senior Non-Executive Director. He is chief executive of
The Davis Service Group plc, a position he has held since 1987 following the
merger with The Sunlight Service Group plc. John is also Non-Executive Chairman
of Derwent Valley Holdings plc.
Peter Mountford, aged 46 (Non-Executive Director)
Peter Mountford is a director of a number of companies, including GW
Pharmaceuticals plc of which he is a non-executive. He qualified as a Chartered
Accountant in 1982, and in 1986 was one of the founding directors of Arthur
Andersen Corporate Finance. Between 1989 and 1991, he was seconded to the
Takeover Panel where he advised on a number of takeovers and public company
transactions. He returned to Arthur Andersen in 1991 as a Corporate Finance
Director, where he advised on a series of transactions including friendly and
hostile public company bids, reverse takeovers, management buyouts and joint
ventures. Together with Adrian Bradshaw, he set up Bradmount Investments Limited
in 1995 as a private investment company.
Details of the service contracts of the Proposed Directors are set out in the
Admission Document.
Financial Information on Bybrook
The following table summarises the consolidated trading record of Bybrook and is
extracted, without material adjustment, from the Accountants' Report in Part V
of the Admission Document. The following figures are adjusted to exclude
goodwill amortisation and the results of its US business, RWS LLC, which has
been demerged from Bybrook.
The basis of this adjustment is set out in Part II of the Admission Document.
Year ended Year ended Year ended
31 March 31 March 31 March
2001 2002 2003
#'000 #'000 #'000
Turnover 18,130 21,154 25,252
--------- ------------ -----------
Gross profit 8,007 9,211 10,328
--------- ------------ -----------
Operating profit before amortisation of
goodwill 2,366 2,916 4,367
--------- ------------ -----------
As at 31 March 2003, Bybrook (including RWS LLC) had net assets of #19.617
million.
Current trading and prospects of the Enlarged Group
Health Media has not traded or carried on any business since 16 August 2002 when
it sold its business. Since 16 August 2002 the costs of operating the Group have
been kept to a minimum.
Since 31 March 2003, trading at RWS Group has exceeded the RWS Directors'
expectations. Management accounts of RWS Group indicate that sales for the first
five months of the current financial year are significantly ahead of the same
period last year. Sales generated in July constituted a record month and August
was also ahead of expectations. The Proposed Directors therefore view the
prospects of the Enlarged Group for at least the remainder of the current
financial year to be favourable.
Dealings and trading
Application will be made by the Company for the Enlarged Share Capital to be
admitted to AIM on completion of the Acquisition and the Placing. Subject to
completion of the Acquisition and the Placing, trading in such shares is
expected to commence on 11 November 2003.
It is expected that dealings will recommence in the existing ordinary shares of
Health Media on Monday, 13 October 2003 following the publication of the
Company's Report and Accounts for the period to February 2003 (the "Report and
Accounts") which are expected to be published and posted to Shareholders later
today. However, until such time as the Report and Accounts are posted dealings
in the Existing Ordinary Shares will remain suspended. Once the Report and
Accounts are posted a further announcement will be made.
The City Code
Pursuant to Rule 9 of the City Code, when any person, or group of persons acting
in concert, acquires shares in a company which is subject to the City Code, when
taken together with shares already held by such person or persons, carry 30 per
cent. or more of the voting rights of that company, such person or persons,
except with the consent of the Panel, is or are required to make a general offer
to all shareholders in that company to acquire the remaining shares in the
company not already held by them at the highest price paid by any of them for
such shares in the previous 12 months.
Further, when any person, or group of persons acting in concert, holds shares
which carry not less than 30 per cent. but not more than 50 per cent. of the
voting rights of a company which is subject to the City Code, such person or
persons, except with the consent of the Panel, may not normally acquire further
shares which increase the percentage of the voting rights in the company held by
them, without making a general offer to all shareholders in that company to
acquire the remaining shares in the company not already held by them at the
highest price paid by any of them for such shares in the previous 12 months.
Following Admission and on completion of the Acquisition, those shareholders who
are deemed by the Panel to be acting in concert for the purposes of the City
Code, will hold Ordinary Shares as follows:
No of Ordinary Percentage of
Shares Enlarged Share
Capital
Andrew Brode 3,000 0.01
RBC Trustees 18,587,812 49.20
---------- ----------
18,590,812 49.21
* Andrew Brode is the sole beneficiary, through a life interest settlement, of a
trust managed by RBC Trustees.
Further information on the members of the Concert Party is set out in the
Admission Document.
Following completion of the Proposals, the Concert Party's shareholding will
amount to approximately 49.2 per cent. of the Enlarged Share Capital. However,
in this instance, the Panel has agreed to waive the obligation of the Concert
Party, or any member thereof, to make a general offer under Rule 9 of the City
Code arising on completion of the Proposals provided the Waiver is approved by
independent Shareholders on a poll at the Extraordinary General Meeting (see
Resolution 3). To be passed, Resolution 3 will require the approval of a simple
majority of votes cast on that poll.
As a potential controller of the Company, the Concert Party has indicated that
its intentions following completion of the Proposals would be to assist in the
development of the Company's strategy as set out in the Admission Document and
to make no material changes to this strategy and to continue Bybrook's existing
business activities and to make no material changes to the business, including
any redeployment of its fixed assets or the employment of its staff. On the
basis that Health Media Group is currently a shell company with no trading
business, following Admission there will be no active business of Health Media
Group to be discontinued.
Dividend Policy
At present Health Media is unable to pay a dividend due to the deficit in its
distributable reserves. Following Admission, the New Board proposes to apply to
the Court for the Capital Reduction so as to eliminate the deficit in
distributable reserves and to permit the payment of a dividend.
Save for the pre-flotation dividend being paid to Bybrook shareholders in the
amount of #10 million and an interim dividend in respect of the 6 months ended
31 March 2003 in the amount of #0.5 million, no dividends have ever been
declared or paid by Bybrook.
Following completion of the Capital Reduction, the New Board intends to pursue a
progressive dividend policy in line with the Enlarged Group's achieved rate of
growth in earnings over time whilst maintaining a suitable level of dividend
cover and retaining sufficient of its earnings to fund the development and
growth of the RWS business.
Were the Company (as enlarged by the Acquisition) to have been traded on AIM for
the whole of the financial year ended 31 March 2003, the New Board would have
recommended a total dividend in respect of that year equivalent to 3.35p per
Ordinary Share of 5p, which would represent a net dividend yield of
approximately 3 per cent. to the Placing Price. This dividend would have been
covered by earnings (excluding RWS LLC losses and goodwill amortisation)
approximately 2.3 times.
It is envisaged that interim dividends will be payable in July and final
dividends in February of each year, in the approximate proportions of one-third
to two-thirds respectively to the total annual dividend. It is intended that the
first dividend to be paid by the Company following Admission will be the interim
dividend in respect of the period from Admission to 31 March 2004, which the
Company expects to pay in July 2004.
Recommendation and voting intentions
Andrew Brode and Peter Mountford are interested in the Proposals and have,
accordingly, not participated in the Board's deliberations with regard to the
Acquisition and have agreed, with regard to the Resolutions, that they will
abstain, and have undertaken to take all reasonable steps to ensure that their
associates will abstain, from exercising any voting rights at the Extraordinary
General Meeting.
In light of the reasons set out in "Background to and reasons for the
Acquisition", the Independent Directors consider that the Proposals are in the
best interests of the Company and Shareholders as a whole and having consulted
Arbuthnot, that the terms of the Acquisition are fair and reasonable insofar as
the Existing Shareholders are concerned. In addition the Independent Directors,
who have been so advised by Arbuthnot, consider the Waiver to be fair and
reasonable so far as the Existing Shareholders are concerned. In providing
advice to the Independent Directors, Arbuthnot has taken into account the
Independent Director's commercial assessments. Accordingly, the Independent
Directors recommend that you vote in favour of the Resolutions to be proposed at
the Extraordinary General Meeting. Further, certain shareholders have given
undertakings to vote their respective shares in favour of the Resolutions which,
in aggregate, amount to approximately 55.9 per cent. of the issued share capital
of the Company.
EXPECTED TIMETABLE
Latest time and date for receipt of forms of proxy for the 10.00 a.m. 8 November 2003
Annual General Meeting
Latest time and date for receipt of Forms of Proxy 10.05 a.m. 8 November 2003
for the Extraordinary General Meeting
Annual General Meeting 10.00 a.m. 10 November 2003
Extraordinary General Meeting 10.05 a.m. 10 November 2003
Record Date 10 November 2003
Completion of the Acquisition 11 November 2003
Dealings in the New Ordinary Shares to commence and in the 11 November 2003
Existing Ordinary Shares to recommence on AIM and CREST accounts credited
Definitive share certificates despatched by 18 November 2003
PLACING STATISTICS
Total number of Ordinary Shares of 25p each in issue prior to
the Placing and the Acquisition 23,104,748
Total number of Ordinary Shares of 5p each in issue prior to
the Placing and the Acquisition assuming completion of the
Capital Restructuring 462,094*
Number of Placing Shares being issued 18,732,252
Number of Vendor Shares being issued 18,587,812
Total number of New Ordinary Shares of 5p each being issued 37,320,064
Total number of Ordinary Shares of 5p each in issue following
the Placing and the Acquisition 37,782,158*
Placing Price 112.54p
Market capitalisation of the Company at the Placing Price
following the Acquisition and the Placing #42.52 million
* ignoring any fractions that may arise pursuant to the Capital Restructuring
For further information, please contact:
RWS Group
Andrew Brode, Executive Chairman 01753 480200
Liz Lucas, Executive Director
Weber Shandwick Square Mile
Nick Oborne or Katie Hunt 020 7067 0700
Collins Stewart
Steve Roberts or Mark Connelly 020 7523 8350
Arbuthnot
Tim Goodman 0121 632 2100
The following definitions apply throughout this document unless otherwise stated
or the context otherwise requires:
"Acquisition" the proposed conditional acquisition by the Company of the
entire issued share capital of Bybrook from the Vendors
pursuant to the Acquisition Agreement
"Acquisition the conditional agreement to be entered into between the
Agreement" Vendors and the Company relating to the sale and purchase of
the entire issued share capital of Bybrook, particulars of
which are set out in paragraph 8 of Part VII of the Admission
Document
"Act" the Companies Act 1985
"Admission" the admission of the Enlarged Share Capital to trading on AIM
becoming effective in accordance with the AIM Rules
"Admission the document published by the Company in connection with the
Document" Placing and Admission as required by and in accordance with
the AIM Rules
"AIM" a market operated by the London Stock Exchange
"AIM Rules" the rules for AIM companies as in force at the date of this
document issued by the London Stock Exchange
"Annual General the annual general meeting of the Company convened for 10.00
Meeting" or a.m. on 10 November 2003, or any adjournment thereof
"AGM"
"Arbuthnot" Arbuthnot Securities Limited
"Bybrook" Bybrook Limited
"Bybrook Group" Bybrook and its subsidiary undertakings as at the date of the
Admission Document
"Capital the proposed cancellation of the Deferred Shares, subject to
Reduction" approval by the Court
"Capital the Capital Restructuring and the Capital Reduction
Reorganisation"
"Capital the proposed reorganisation of the share capital of the
Restructuring" Company to be effected pursuant to Resolution 4 set out in the
notice of EGM at the end of the Admission Document
"City Code" the City Code on Takeovers and Mergers
"Collins Collins Stewart Limited
Stewart"
"Company" or Health Media Group plc
"Health Media
Group"
"Concert Party" Andrew Brode and RBC Trustees as trustees of a trust for the
benefit of Andrew Brode
"Court" the High Court of Justice in England and Wales
"CREST" the electronic settlement system operated by CRESTCo Limited,
which facilitates the transfer of title to shares in
uncertificated form
"CREST the Uncertificated Securities Regulations 2001 (SI 2001/No.
Regulations" 3755)
"Deferred deferred shares of 0.1p each in the capital of the Company to
Shares" be created as part of the Capital Restructuring
"Eclipse" Eclipse Group Limited
"EGM" or the extraordinary general meeting of the Company convened for
"Extraordinary 10.05 a.m. on 10 November 2003, or as soon thereafter as the
General Annual General Meeting of the Company convened for 10.00 a.m.
Meeting" on 10 November 2003 is concluded or adjourned or any
adjournment thereof, notice of which is set out at the end of
the Admission Document
"Enlarged the Company and its subsidiary undertakings as enlarged by the
Group" Acquisition
"Enlarged Share the issued ordinary share capital of the Company following the
Capital" Acquisition and the Placing of all of the Placing Shares
"Existing the existing directors of Health Media Group whose names are
Directors" or set out on page 4 of the Admission Document
"Board"
"Existing the 23,104,748 existing issued ordinary shares of 25p each in
Ordinary the Company at the date of the Admission Document (and which
Shares" shall be converted, re-designated and consolidated in
accordance with the Resolutions)
"Group" the Company and its subsidiary undertakings as at the date of
this document
"Independent Nicholas Fisher and Gavin Mark Kaye, who are deemed to be
Directors" independent for the purposes of the Board's deliberation of the
Proposals
"Irrevocable the irrevocable agreement dated 10 October 2003 under which the
Agreement" Company has undertaken to execute the Acquisition Agreement if
the Resolutions are passed
"London Stock the London Stock Exchange plc
Exchange"
"New Board" or the new board of the Company following Admission comprising
"Proposed Andrew Brode, Peter Mountford and the New Directors
Directors"
"New Ordinary the Placing Shares and the Vendor Shares
Shares"
"Offers" the irrevocable offers by the Vendors dated 10 October 2003 to
sell the entire issued share capital of Bybrook to the Company
on the terms of the Acquisition Agreement
"Ordinary ordinary shares of 25p each in the capital of the Company prior
Shares" to Admission and, following the passing of the Resolutions and
on Admission, ordinary shares of 5p each in the capital of the
Company
"Panel" The Panel on Takeovers and Mergers
"Placing" the conditional placing of the Placing Shares subject to the
terms and conditions of the Placing Agreement
"Placing the conditional agreement dated 10 October 2003 between the
Agreement" Company, Bybrook, Collins Stewart, Arbuthnot, the Existing
Directors and the Proposed Directors relating to inter alia the
Placing, particulars of which are set out in paragraph 8 of
Part VII of the Admission Document
"Placing 112.54p per Placing Share
Price"
"Placing the 18,732,252 new Ordinary Shares of 5p each to be allotted to
Shares" placees pursuant to the terms of the Acquisition Agreement
"Proposals" together the Acquisition, the Placing and Admission
"RBC Trustees" RBC Trustees (Guernsey) Limited as trustees of the Andrew Brode
Life Interest Settlement, incorporated under the laws of
Guernsey with registered number 37379 and a registered office
at P.O. Box 48, Canada Court, Upland Road, St. Peter Port,
Guernsey, Channel Islands GY1 3BQ
"Reed Reed Elsevier (UK) Limited
Elsevier"
"Resolutions" the resolutions to be proposed at the EGM, as set out in the
notice of EGM at the end of the Admission Document
"RWS" or RWS RWS Group plc, an indirectly wholly owned subsidiary of Bybrook
Group" incorporated in England and Wales with registered number
1575193, together (where relevant) with its subsidiary
undertakings
"RWS RWS Information Limited, an indirectly wholly owned subsidiary
Information" of Bybrook incorporated in England and Wales with registered
number 1032254
"RWS Japan" KK RWS Group, an indirectly wholly owned subsidiary of Bybrook
incorporated under the laws of Japan
"RWS LLC" RWS Group LLC, a company incorporated under the laws of
Delaware together with its immediate holding companies
Watertone Limited and Brooklet Limited
"RWS RWS Translations Limited, an indirectly wholly owned subsidiary
Translation" of Bybrook incorporated in England and Wales with registered
number 1086416
"Shareholders" holders of Existing Ordinary Shares
"Vendors" Raphael Baron, David Owens, Andreas Siegmund, RBC Trustees
(Guernsey) Limited and 3i Group plc
"Vendor the 18,587,812 new Ordinary Shares to be allotted to one of the
Shares" Vendors pursuant to the terms of the Acquisition Agreement
"Waiver" the waiver by the Panel of the obligation of the Concert Party
to make a general offer under Rule 9 of the City Code
No person is authorised, in connection with the Placing, to give any information
or make any representation other than as contained in this announcement and, if
given or made, such information or representation must not be relied upon as
having been authorised by the Company or Collins Stewart or Arbuthnot or their
respective directors.
Arbuthnot, which is regulated in the United Kingdom by The Financial Services
Authority, is acting as nominated adviser and broker to the Company until
Admission and no one else, and will not be responsible to anyone other than the
Company for providing the protections afforded to clients of Arbuthnot or for
providing advice in relation to the matters contained in this announcement or
any matter concerning the Proposals or Admission. The responsibility of
Arbuthnot as nominated adviser and broker to the Company until Admission is owed
solely to the London Stock Exchange.
Collins Stewart, which is regulated in the United Kingdom by The Financial
Services Authority, will act as nominated adviser and broker to the Company
following Admission and no one else, and will not be responsible to anyone other
than the Company for providing the protections afforded to clients of Collins
Stewart or for providing advice in relation to the matters contained in this
announcement or any matter concerning the Proposals or Admission. The
responsibility of Collins Stewart as nominated adviser and broker to the Company
after Admission will be owed solely to the London Stock Exchange.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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