TAL has informed Tawa that it has no plans to invest in new
projects or initiatives and will seek to return as much value as
possible to TAL Shareholders and will manage TAL in a manner to
achieve this. The expected dividend policy of TAL is set out in
paragraph 11 of this announcement.
5. Summary of how the Proposals are to be effected
Reorganisation
The Reorganisation is intended to effect the transfer of the
business and assets of the Risk Carrier Business to TAL (other than
the Retained Risk Carrier Companies and those business and assets
of the Risk Carrier Business already owned by TAL). TAL is a
private limited company. In connection with the Reorganisation, TAL
has agreed, in exchange for the transfer of the business and assets
of the Risk Carrier business, to assume conduct of certain
litigation and guarantee obligations of Tawa which relate to the
Risk Carrier Business, in order to seek to protect the Services
Business from the outcomes, positive or negative, of such
litigation and guarantee obligations.
The Demerger Framework Agreement provides for cross-indemnities
principally designed to place financial responsibility for the
obligations and liabilities in respect of any guarantee, indemnity
or other undertaking provided by Tawa to the Risk Carrier Business
with TAL and financial responsibility for the obligations and
liabilities in respect of any guarantee, indemnity or other
undertaking provided by TAL to the Services Business with Tawa, as
from 1 January 2014.
The Reorganisation is subject to certain regulatory
clearances.
Demerger
The Demerger is to be effected by Tawa declaring a dividend of
the TAL Ordinary Shares to Qualifying Tawa Shareholders at a value
equal to the book value of Tawa's shareholding in TAL. Tawa does
not currently have sufficient distributable reserves to declare the
dividend in specie to effect the Demerger. The Reduction of Capital
will create sufficient distributable reserves to enable the
dividend in specie to be declared and paid by cancelling Tawa's
share premium account, cancelling the Tawa Existing Ordinary Shares
held in treasury and reducing the nominal value of each Tawa
Existing Ordinary Share.
The Demerger is subject to certain third party consents.
The Demerger is conditional, inter alia, on:-
-- the approval by Shareholders of the Proposal Resolutions;
-- the confirmation of the Reduction of Capital by the Court;
-- the tax clearance being obtained from HMRC (which is not expected to be withheld);
-- certain third party consents;
-- consent from the Tawa Group's bank to continue to provide and
amend (as necessary in the context of the Demerger) the existing
debt facilities, further details of which are set out in paragraph
6 of this announcement; and
-- no other events or developments having occurred or existing
that, in the judgment of the Board, in its sole and absolute
discretion, would make it inadvisable to effect the Demerger.
It should be noted that, although it is currently Tawa's
intention that the Demerger should be concluded, Tawa is entitled
not to proceed with the Demerger if at any time prior to the Board
resolving to recommend the Demerger the Board considers that it
would not be in the best interests of Shareholders as a whole.
Tawa will not have a shareholding in TAL following the Demerger.
It is expected that Mr Gilles Erulin will be the only director
common to both Tawa and TAL. With effect from the Demerger
Effective Date, Mr Colin Bird will resign as a director of Tawa and
will be appointed as a director of TAL.
6. Financial effects of the Demerger
The expected benefits of the Demerger are set out in paragraph 2
of this announcement. The illustrative effect of the Demerger on
Tawa's assets and liabilities as at 30 June 2013 (as adjusted for
the provision against the equity value of QX Re referred to above)
would be to reduce net assets (excluding any goodwill write off) by
an estimated GBP59 million. There will be no change to the
illustrative net asset value of the Services Business (GBP12
million as at 30 June 2013). The illustrative effect of the
Demerger on TAL's assets and liabilities as at 30 June 2013 would
be to increase net assets by an estimated GBP57 million.
The Board expects one-off cash costs arising on the
implementation of the Proposals to be approximately GBP1 million
comprising restructuring, accountancy, legal, financial and
corporate broking advice. These costs will be shared between Tawa
and TAL. The Demerger has no impact on the Tawa Group's overall
working capital levels.
As part of the Demerger it is intended that the Tawa Group's
existing debt facilities be amended as necessary to accommodate the
structure of the Demerger and will continue to constitute separate
and independent facilities which will service the Risk Carrier
Business and the Services Business as follows:-
a fully drawn committed facility of GBP10 million to 19 January
2015 in favour of Tawa; and
a fully drawn committed facility of approximately $15 million to
28 March 2015 in favour of a TAL Group company.
Tawa has received from its bank, an in principle commitment to
continue to provide the said facilities and consent to the Demerger
subject to agreeing legally binding terms and documents, such
agreement and provision of the said facilities being a condition to
the Demerger.
In addition Tawa and TAL currently have a Euro 8 million
facility with FinP at their disposal, of which approximately Euro
3.3 million has been drawn down. TAL will have access to this
facility following the Demerger Effective Date and Tawa will have
access to the same facility through arrangements to be agreed and
approved by the boards of both TAL and Tawa which will enable them
to draw in aggregate a maximum of Euro 8 million. Protocols for the
withdrawal of funds by Tawa and TAL will also be agreed and
approved by both boards.
7. Board structures
Tawa currently has a strong and experienced operational
management team. Following the Demerger, this team will form the
core of the operational management of the Services Business and
will be continuing the operational management of the run-off
insurance companies within the TAL Group for at least 3 years,
ensuring appropriate continuity for both businesses. It is intended
that Mr Artur Niemczewski, will be appointed as the new Chief
Executive Officer of the Services Business from 1 February and will
lead Tawa into the future with effect from the Demerger Effective
Date when it is intended that he is appointed and take up the
position of Chief Executive Officer of Tawa. Mr Colin Bird will
resign from the Demerger Effective Date.
With effect from the completion of the Demerger, the directors
of Tawa, to be renamed Pro Insurance Solutions plc, are expected to
be:
-- Mr Timothy Joseph Carroll - Non-Executive Chairman
-- Mr Artur Niemczewski - Chief Executive Officer
-- Mr Gilles Marie Jacques Erulin - Non- Executive Director
-- Mr Loic Philippe Marie-Joseph Brivezac - Non-Executive Director
-- Mr Anthony John Hamilton - Non-Executive Director
With effect from completion of the Demerger, the directors of
TAL are expected to be:
-- Mr Colin Graham Bird - Chairman
-- Mr Gilles Marie Jacques Erulin - Chief Executive Officer
-- Mr David Vaughan - Executive Director
Following the Demerger, Mr Niemczewski will be appointed as
Chief Executive Officer of Pro Insurance Solutions plc.
Mr Niemczewski will take the position of Chief Executive Officer
for the Services Business with effect on 1 February 2014, following
leading the successful turnaround and sale of Garwyn Group Ltd as
Chief Executive Officer.
With nearly twenty years' experience within insurance and the
financial industry, Mr Niemczewski is a successful and passionate
business transformation leader with a track record in improving
business performance.
Over the past two years, Mr Niemczewski has led the
restructuring and revitalisation of Garwyn Group Ltd, the UK's
largest specialist liability loss adjuster. Under his leadership
the Garwyn team have re-established their market-leading position
and technical excellence in liability claims, revitalised client
service and relationships, and implemented modern technology. The
transformation programme culminated in a successful sale of Garwyn
to a complementary trade investor.
Prior to his role at Garwyn, Mr Niemczewski was Managing
Director of Xchanging Broking Services Ltd at Xchanging Plc. Mr
Niemczewski served as Chief Executive of Multi-National Division
for Marsh UK Ltd of Marsh, Inc and Chief Operating Officer of
Willis International Holdings Ltd at Willis Group. While at Willis,
Artur gained extensive international experience covering most
commercial insurance markets across North and South America, Asia,
and Continental Europe, including a secondment with Willis
Germany.
Mr Niemczewski served as Director of Strategy at AXA Insurance,
where he spearheaded the restructuring of AXA's UK property and
casualty business. He started his career as a strategy consultant
with McKinsey & Company.
Mr Niemczewski holds a PhD in Nuclear Engineering and an MSc in
Public Policy from Massachusetts Institute of Technology (MIT), and
an MSc in Mechanical Engineering from Warsaw University of
Technology.
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