Offer from Georgica PLC
October 05 2000 - 8:19AM
UK Regulatory
RNS Number:0831S
Allied Leisure PLC
5 October 2000
Not for release in, into or from the United States, Canada,
Australia or Japan.
Allied Leisure PLC
("Allied" or "the Group")
Offer from Georgica plc
("Georgica")
The Board of Allied has today written to shareholders
setting out the background to the Offer and detailing the
Board's advice as to the action shareholders should take in
relation to the Offer.
A full text of the letter to shareholders is attached.
In summary, the Board of Allied has concluded that it cannot
advise shareholders to remain in a minority position and
has, with the greatest reluctance, decided to recommend
shareholders to accept the Offer.
The Directors of Allied also intend to accept the Offer in
respect of their own beneficial holdings in Allied shares.
Enquiries:
Allied Leisure PLC
Neil Goulden, Group Chief Executive 07771 963395
Square Mile Communications
Kevin Smith/Becky Jewers 020 7601 1000
The Directors of Allied accept responsibility for the
information contained in this announcement, except that the
only responsibility accepted in respect of the information
relating to Georgica, which has been compiled from published
sources, is to ensure that it has been correctly and fairly
reproduced and represented. Subject as aforesaid, to the
best of the knowledge and belief of the Allied Directors
(who have taken all reasonable care to ensure such is the
case), such information is in accordance with the facts and
does not omit anything likely to affect the import of such
information.
Close Brothers Corporate Finance Limited, which is regulated
in the United Kingdom by the Securities and Futures
Authority, is acting for Allied and no one else in
connection with the Offer and will not be responsible to
anyone other than Allied for providing the protections
afforded to customers of Close Brothers Corporate Finance
Limited or for providing advice in relation to the Offer.
This announcement has been approved by Close Brothers
Corporate Finance Limited for the purposes of Section 57 of
the Financial Services Act 1986.
Not for release in, into or from the United States, Canada,
Australia or Japan.
Allied Leisure PLC
("Allied" or "the Group")
Offer from Georgica plc
("Georgica")
The Offer Document containing the terms of the Offer made by
WestLB Panmure Limited on behalf of Georgica was posted on
21 September 2000. Ken Scobie, Chairman of Allied, has
today written to shareholders setting out the background to
the Offer and detailing the Allied Board's advice as to the
action shareholders should take in relation to the Offer.
The Georgica Offer
On 21 September 2000, Georgica announced an all share offer
to acquire the entire issued share capital of Allied ("the
Offer"). On the same day, Georgica announced that it had
(subject to technicalities) over 50 per cent. acceptances of
the Offer. Georgica is a newly formed public company that
has not commenced trading and was established for the
purposes of making the Offer. Georgica has applied to admit
the Georgica Shares to AIM and the Offer is conditional upon
AIM announcing that it has agreed to admit the Georgica
Shares to trading. Assuming full acceptance of the Offer,
Allied Shareholders will own 99.8 per cent. of the issued
ordinary share capital of Georgica. In addition, Nicholas
Oppenheim (Vice Chairman and Chief Executive of Georgica)
and members of his family have subscribed for 2,538,075
convertible ordinary shares for approximately #2.5 million
in cash. These are convertible into a maximum of 10,152,300
Georgica Shares (diluting Allied Shareholders to
approximately 84.2 per cent. of the fully diluted share
capital, assuming full acceptance of the Offer) dependant on
the growth achieved in Georgica's share price and/or the
passage of time. The maximum conversion will be available if
the aggregate of the average Georgica Share price, over a
period of twenty trading days, and the sum of the dividends
or other returns of capital per Georgica Share paid by
Georgica since its admission to AIM, reach at least 400p. In
any event the convertible ordinary shares will convert
automatically after ten years from the date of admission at
the conversion rate then applicable.
The Offer is being made by WestLB Panmure on behalf of
Georgica and is:
For each Allied share one Georgica Share
On 26 September 2000, Georgica announced that it had
received valid acceptances of the Offer in respect of 50.8
per cent. of the issued share capital of Allied and declared
the Offer unconditional as to acceptances. The Offer still
remains subject to a number of other conditions including,
amongst other things, AIM announcing that it has agreed to
admit the Georgica Shares to trading.
Factors relevant to an assessment of the Offer
The Board believes that Allied's recently announced results
for the year ended 30 June 2000 demonstrate the progress
that has been made by Allied in building a business which
has a number of high quality leisure assets. The Board
believes that Allied is well positioned for a successful and
profitable future.
The Allied Board has been very conscious of its duty to
deliver shareholder value and has just completed a detailed
strategic review of its operations. One of the alternatives
to unlock shareholder value that the Board was actively
considering was the possibility of a cash offer for Allied
at a significant premium to its share price on the date of
Georgica's Offer.
The Board considers that the fundamental strengths of
Allied's businesses and their strategic value under the
existing management team were not reflected in Allied's
share price on the date of the Offer.
Moreover, Shareholders should note the following about the
Offer:
- it is at a nil premium to Allied's share price;
- it is in shares issued by a shell company which has
applied to be listed on AIM;
- Georgica is required to state within 28 days of the
Offer being declared wholly unconditional that it has
sufficient working capital to meet its then present
requirements, being at least for the next 12 months
from the date that the statement is made; and
- the Board of Allied currently have very limited
information on Georgica's strategy for Allied's business
and therefore cannot express a view on the future
prospects and management of Georgica. However, Georgica
has extended an invitation to Neil Goulden, Group Chief
Executive of Allied, and Martin Scott, Group Finance
Director of Allied, to join the Board of Georgica once
Georgica has received acceptances in respect of 90 per
cent. of the Allied Shares.
Had the Board been approached prior to the Offer being made,
it would not have supported the Offer. However, as Georgica
has announced that its Offer has been declared unconditional
as to acceptances, with acceptances for 50.8 per cent. of
Allied Shares, and assuming, as is likely, that the other
conditions to the Offer are satisfied, Georgica will achieve
voting control. Accordingly, Georgica will be able to
control the composition of the Board of Allied and the
future strategy of Allied.
Georgica and the institutional shareholders that supported
the Offer, in deciding to take the necessary steps for
Georgica to establish voting control over Allied by way of
an Offer made at nil premium, have created, in the opinion
of the Board, a highly unsatisfactory situation for Allied's
remaining shareholders. They have passed control of Allied
to Georgica without any extra value or premium being
available to Allied's Shareholders and without the Board
having the opportunity to pursue other alternatives, in
particular the possibility of a cash offer at a significant
premium.
The Board has had discussions with Georgica about the
possibility of improving the terms of the Offer for those
Shareholders who did not accept the Offer prior to it being
declared unconditional as to acceptances but the Board was
unable to elicit a better offer for those Shareholders.
The Non-Executive Directors of Allied have agreed with
Georgica that, without prejudice to their contractual rights
(including, where relevant, rights under options), they will
resign immediately after the Offer is declared wholly
unconditional.
The Allied Final Dividend
Since the Offer was declared unconditional as to acceptances
the Board have held discussions with Georgica which has
agreed to vote in favour of the final dividend of 4p payable
on Allied Shares in respect of the year to 30 June 2000, as
recommended by the Board on 2 October 2000. Georgica has
also agreed not to register the transfer of any shares in
respect of which acceptances of the Offer have been given
prior to the record date for that dividend. The dividend
will, therefore, be paid on 12 January 2001 to Shareholders
on the register on 6 October 2000.
Offer to holders of options under the Allied Share Option
Schemes
Georgica has also agreed that offers will be made to all
holders of options under the Allied Share Option Schemes
which will give them the choice either:
(i) to exercise their options and, if they wish, accept
the Offer; or
(ii) subject to Georgica receiving acceptances in respect
of 90 per cent. or more of the Allied Shares,exchange
their options over Allied Shares for options over
Georgica Shares (the "New Options") on equivalent
terms except that:
(a) the New Options will be immediately exercisable
for a period of six months from the date that
the Offer becomes wholly unconditional but will
lapse if not exercised within that period or if
the relevant option holder voluntarily leaves
employment or is dismissed for cause within that
time; and
(b) if holders of the New Options do exercise them
within the six month period available, Georgica
will have the choice either to issue them with
the Georgica Shares to which they are entitled
or to make a cash payment to them of the
difference between the market price of Georgica
Shares at the date of exercise and the relevant
exercise price.
(in the case of options under the European Leisure
PLC SAYE Scheme and the Allied Leisure PLC SAYE
Scheme the choice described in this sub-paragraph
(ii) will not be made available if confirmation
cannot be obtained from the Inland Revenue, or the
Allied Board cannot otherwise satisfy itself, that
the approved status of these schemes will not
thereby be affected).
Alternatives open to Shareholders
There are three alternatives open to Shareholders who have
not yet accepted the Offer:
i) accept the Offer;
ii) take no action and retain the Allied Shares, except
that Shareholders should be aware that if Georgica
receives over 90 per cent. acceptances Georgica will
be entitled compulsorily to acquire the Allied
Shares; or
iii) sell the Allied Shares.
If Shareholders were to decide to take no action and not to
accept the Offer from Georgica they would remain in a
minority position as Shareholders in Allied, and be exposed
to certain risks:
Firstly, to the extent that other Shareholders accept the
Offer, there will be a reduction in the number of shares
held by the remaining minority. This is likely to result in
the market in Allied Shares becoming more limited. This
could adversely affect the price of Allied Shares.
Secondly, Georgica has said that in certain circumstances it
intends to seek to terminate the listing of Allied on the
London Stock Exchange. In that event, Allied Shareholders
might well find it difficult to sell their shares, or might
only be able to do so on unfavourable terms.
Finally, if Georgica runs Allied as an operating subsidiary
the profitability of the Allied Group will be affected by
trading with other members or associates of its group, if
any. Georgica's policies may, amongst other things, result
in Allied's future dividend stream to its Shareholders being
adversely affected. In this context, it is not possible for
the Board to forecast the future policies of Georgica.
Shareholders may, depending upon their personal financial
circumstances, prefer or even be obliged to sell their
Allied Shares in the market. The Board is not giving any
advice in this regard and if Shareholders are in any doubt
as to the action that they should take they are recommended
to seek their own independent financial advice. Shareholders
who hold their Allied Shares through PEPs are particularly
recommended to do so.
The Offer will only become wholly unconditional if, amongst
other things, the Georgica Shares are admitted to AIM. In
the unlikely event any of the outstanding conditions are not
satisfied or waived, the Offer will lapse and Forms of
Acceptance will have no effect.
Recommendation
The Board does not feel able to advise Shareholders to
remain in a minority position in a controlled company.
The Board, therefore, which has been so advised by Close
Brothers which has taken into account the Directors'
commercial assessments, has concluded, albeit with the
greatest reluctance, to recommend Shareholders to accept the
Offer. The Directors, therefore, intend to accept the Offer
in respect of their own beneficial holdings, amounting in
total to 207,987 Allied Shares.
Enquiries:
Allied Leisure PLC
Neil Goulden, Group Chief Executive 07771 963395
Square Mile Communications
Kevin Smith/Becky Jewers 020 7601 1000
The Directors of Allied accept responsibility for the
information contained in this announcement, except that the
only responsibility accepted in respect of the information
relating to Georgica, which has been compiled from published
sources, is to ensure that it has been correctly and fairly
reproduced and represented. Subject as aforesaid, to the
best of the knowledge and belief of the Allied Directors
(who have taken all reasonable care to ensure such is the
case), such information is in accordance with the facts and
does not omit anything likely to affect the import of such
information.
Close Brothers Corporate Finance Limited, which is regulated
in the United Kingdom by the Securities and Futures
Authority, is acting for Allied and no one else in
connection with the Offer and will not be responsible to
anyone other than Allied for providing the protections
afforded to customers of Close Brothers Corporate Finance
Limited or for providing advice in relation to the Offer.
This announcement has been approved by Close Brothers
Corporate Finance Limited for the purposes of Section 57 of
the Financial Services Act 1986.
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