future revenues of Tawa being lower than expected, expected cost
savings from the Reduction of Capital and the Demerger or other
future transactions not being realised fully or in line with
expected timeframes, competitive pressures in the industry
increasing, foreign exchange rate fluctuations and interest rate
fluctuations (including those from any potential credit rating
decline) and legal or regulatory developments and changes. Given
these risks and uncertainties, investors should not place undue
reliance on forward-looking statements.
Neither Tawa, nor any of its respective associates or directors,
officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied by
any forward-looking statements contained herein will actually
occur. Other than in accordance with their legal or regulatory
obligations (including under the AIM Rules, the Disclosure and
Transparency Rules of the Financial Conduct Authority and the City
Code on Takeovers and Mergers), Tawa is not under any obligation
and expressly disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Event Time and/or
date
2013/2014
Date of this announcement 20 December
2013
Latest time and date for receipt of 10 a.m. on
Forms of Proxy 8 January
2014
General Meeting 10 January
2014
Initial directions hearing at the 30 January
Court in respect of the Reduction 2014
of Capital
Latest time and date for lodging transfers 26 March
of Tawa Existing Ordinary Shares in 2014
order for the transferee to be registered
at the Demerger Record Time
Final Court hearing to confirm the 26 March
Reduction of Capital 2014
Effective Date of the Reduction of 26 March
Capital 2014
Date of publication of RNS announcement 28 March
in respect of Tawa's 2013 results 2014
Demerger Record Time 5 p.m. on
28 March
2014*
Demerger Effective Date (transfer 31 March
of TAL Ordinary Shares) 2014*
Expected date for despatch of definitive By 31 May
share certificates for TAL Ordinary 2014
Shares
(1) The times and dates set out in the expected timetable of
principal events above and mentioned throughout this announcement
may be adjusted by Tawa in consultation with Peel Hunt, in which
event details of the new times and dates will be notified to the
London Stock Exchange, and where appropriate, to Shareholders.
(2) All references in this announcement to times are to London time unless otherwise stated.
* These dates are indicative only and will depend, amongst other
things, on the dates on which the Court confirms the Reduction of
Capital and on which the Reduction of Capital becomes
effective.
Tawa PLC
Proposed Demerger of TAWA plc's Risk Carrier Business
Via
Reduction of Capital,
and
Notice of General Meeting
1. Introduction
As you may be aware since the acquisitions by Tawa of Pro
Insurance Solutions and the Chiltington Group and the investment in
Asta, Tawa comprises two main operating divisions: the Services
Business (the provision of underwriting support, claims management,
agency management, consulting services and system solutions to
reinsurers) and the Risk Carrier Business (comprising the
management of insurance companies in run-off and investments in
broking and a managing general agency).
Following a strategic review to evaluate the best options for
maximising Shareholder value, the Board has today announced its
intention to demerge Tawa's operating divisions into two
independent groups. The Board believes that the Services Business
and the Risk Carrier Business will be better placed to pursue their
respective strategies as separate and distinct legal entities.
In order to achieve this separation, the Board is seeking
Shareholder approval for the Demerger. There are several steps
required to implement the Demerger, as follows:
-- the Reorganisation - this involves the transfer of certain of
the business and assets of the Risk Carrier Business to TAL,
currently a wholly-owned subsidiary of Tawa, so that TAL holds all
of the assets comprising the Risk Carrier Business;
-- the Reduction of Capital - Tawa does not currently have
sufficient distributable reserves to implement the Demerger and
accordingly Tawa will be applying to the Court for the capital
reduction which has the effect of increasing distributable
reserves; the Reduction of Capital will involve the cancellation of
Tawa's share premium account, the cancellation of 190,695 Tawa
Existing Ordinary Shares held in treasury and the reduction in the
nominal value of each Tawa Existing Ordinary Share; and
-- the Demerger - the Demerger will be effected after the
Reduction of Capital, by declaring a dividend in specie of TAL
Ordinary Shares to Qualifying Tawa Shareholders.
The Demerger is conditional, inter alia, upon the approval of
Shareholders at the General Meeting and the confirmation of the
Reduction of Capital by the Court. Pursuant to AIM Rules, the
Demerger requires Shareholder approval and accordingly the Demerger
Resolution is being proposed.
The Demerger is expected to become effective on 31 March
2014.
If the Demerger proceeds, Shareholders will continue to own
their Tawa Ordinary Shares and Shareholders (other than Tawa US
Shareholders) who are registered on the Share Register at the
Demerger Record Time will receive:
One TAL Ordinary Share for every one Tawa Ordinary Share,
then held by them.
Immediately following the Demerger becoming effective, the
issued share capital of each of Tawa and TAL (excluding (i) the
number of Tawa Ordinary Shares held by Tawa US Shareholders and
(ii) the number of Tawa Existing Ordinary Shares held in treasury)
will be the same.
It is proposed that, following the Demerger, Tawa will be the
holding company for the Continuing Tawa Group whose business will
comprise the Services Business.
It is also proposed that Tawa change its name to Pro Insurance
Solutions plc and change its ticker to PROG. The Tawa Ordinary
Shares will continue to be traded on AIM. TAL will continue to be
an unquoted private limited company.
The Board recognises that the Demerger will result in Qualifying
Tawa Shareholders holding shares in two distinct legal entities,
one publicly listed and one unlisted and further acknowledges that
holding unlisted securities may create difficulty for some
Shareholders. FinP has agreed to provide a share exchange offer
(the Share Exchange Offer) whereby Qualifying TAL Shareholders will
have the opportunity to exchange some or all of their TAL Ordinary
Shares for Tawa Ordinary Shares held by FinP. Further details of
these arrangements are contained in paragraph 10 of this
announcement
The purpose of this announcement is to:
(i) set out the background to and reasons for the Proposals;
(ii) explain why the Board believes that the Proposals are in
the best interests of Shareholders as a whole;
(iii) explain the steps required to be taken to implement the Proposals;
(iii) explain the Resolutions to be put to Shareholders at the
General Meeting to be held on 10 January 2014; and
(iv) recommend that Shareholders vote in favour of the Resolutions.
2. Background to and reasons for the Demerger
The Tawa Group is a specialised investor in the insurance
industry and has, since its formation in 2001, acquired six
insurance companies in the run-off sector. Tawa has also reinsured
a run-off portfolio through the establishment of a dedicated
reinsurance vehicle in Bermuda. In April 2012 Tawa acquired the HIR
Group which enabled the Tawa Group to offer a platform for European
run-off portfolio transfers under European Union regulations.
Tawa also operates as an incubator for new projects, supporting
professional teams aspiring to create new businesses in the
insurance industry, and has to date launched three companies as
part of this business initiative and consequently has investments
in Lodestar Marine Ltd (a Marine business MGA) and Q360 Ltd (a
reinsurance broker) as well as an investment in Stripe Global
Services Ltd (a web based data processing system).
Focus on Services Business
In the last few years, Tawa has expanded significantly in the
servicing arena of the international insurance industry with the
acquisition of Pro Insurance Solutions, the Chiltington Group, the
creation of, and one-third participation, in a consortium for the
acquisition of Asta and the establishment of a 66 person service
platform in the US. The Services Business is the focus of the Tawa
Group and the Board believes that the Risk Carrier Business would
be better suited to being owned and managed as a separate legal
entity.
Perceived impact of Risk Carrier Business on the Tawa Group
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