TIDMAUK
RNS Number : 5939R
Aukett Swanke Group PLC
02 March 2023
2 March 2023
AUKETT SWANKE GROUP PLC
("Aukett Swanke", the "Company")
PROPOSED ACQUISITION OF THE TORPEDO FACTORY GROUP LIMITED
APPROVAL OF WAIVER OF OBLIGATIONS UNDER RULE 9 OF THE CITY CODE
ON TAKEOVERS AND MERGERS
AND
NOTICE OF GENERAL MEETING
Aukett Swanke (AIM: AUK), a company that principally provides
architectural and interior design services, is pleased to announce
it has executed documentation relating to the acquisition of
Torpedo Factory Group Limited (" TFG ") an audio, visual and stage
technology provider to organisations in the UK and Europe (the
"Acquisition").
The Acquisition is being implemented by means of an offer to TFG
Shareholders to acquire the entire issued and to be issued share
capital of TFG. The Company has also entered into the Transaction
Agreement, recording the terms on which the Principal Sellers have
irrevocably agreed to accept such Offer.
The Acquisition is conditional upon, inter alia, the approval of
Shareholders of the Resolutions (including the Waiver Resolution)
which will be sought at the General Meeting convened for 10.00 a.m.
on 20 March 2023. The Circular, containing the Notice of General
Meeting, is being published and made available to Shareholders
today.
Unless otherwise indicated, defined terms in this announcement
shall have the same meaning as described in the Circular. The
expected timetable of principal events and the Chairman's statement
from the Circular are set out further below.
HIGHLIGHTS
- Consideration for the acquisition of 100% of TFG's current
issued shares to be satisfied through the issue of 110,142,286
Consideration Shares, valued at GBP2,808,628.29 (based on the
Company's share price at the Latest Practicable Date). Additional
consideration of up to GBP 92,593.66 to TFG Option Holders, to be
satisfied through the issue of up to further 3,631,124 new Ordinary
Shares after Completion.
- TFG is a technology systems integrator and services business
operating primarily in three market areas, including (i)
"Intelligent Environments", which designs, installs and maintains
integrated audio-visual systems for corporate and public sector
clients, primarily working directly with commercial property
occupiers but also with main contractors on construction fit-out
projects; and (ii) "Stage Technology" which creates and maintains
technologically powerful systems for a wide range of performance
spaces. In addition, TFG's "Live Events" business provides the
technology to deliver live events, both within venues and streamed
to the wider world. TFG operates in the UK and Europe, from five
sites across the UK.
- Nick Clark, CEO and founder of TFG, to join the Aukett Swanke
board as an executive director, at Completion.
- Following Completion, TFG Shareholders will own 40% of the
enlarged Group (excluding any additional Shares issued to TFG
Option Holders).
- Acquisition in line with Aukett Swanke's objective, in
addition to developing the core architecture businesses, to become
a master systems designer, integrator and operator in the provision
of smart buildings technology. Extending the Group's offering to
its clients to include such smart solutions is expected to provide
a competitive advantage to the Group's core business and to add new
income streams.
Clive Carver, Aukett Swanke Group plc Chairman, said:
"Aukett Swanke's skills and knowledge gained from many years at
the prestige end of the traditional architecture market combined
with TFG's focus on exploiting the opportunities afforded by
technology will allow the enlarged group to offer a wide range of
services to existing and new clients in the property world."
Nick Clark, Founder and CEO, Torpedo Factory Group Limited,
said:
"This is an exciting opportunity for both companies. Technology
is transforming the way buildings are designed, built, and run. As
one of the world's leading architecture firms Aukett Swanke will be
at the forefront of this change. TFG brings expertise in technology
system design and integration, and being part of ASG positions us
well to capitalise on the growing demand for Smart Buildings.
Together we can make the built environment more sustainable while
providing a better experience for those who engage with it."
The Circular will be made available on the Company's website at
www.aukettswankeplc.com.
Contacts
Aukett Swanke Group Plc +44 (0) 20 7843 3000
Clive Carver, Chairman
Robert Fry, Chief Executive
Strand Hanson Limited, Financial and Nominated Adviser +44 (0) 20 7409 3494
Richard Johnson, James Bellman
Zeus Capital Limited, Broker +44 (0) 20 3829 5000
Simon Johnson, Louisa Waddell
Investor/Media + 44 (0) 7979 604 687
Chris Steele
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR").
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The dates and times set out below are based on the Company's
current expectations and may be subject to change. Any change will
be notified via a Regulatory Information Service. References to
times are to London times, unless otherwise stated.
Publication of the Circular
2 March 2023
Latest time and date for receipt of Forms of Proxy
for the General Meeting 10.00 a.m. on 16 March 2023
Time and date of the General Meeting 10.00 a.m. on 20 March
2023
Completion of the Initial Acquisition 20 March 2023
Admission of the Consideration Shares and commencement of
dealings in
such shares on AIM
22 March 2023
Latest date for exercise of the TFG Options 20 September
2023
Last date for Admission of Additional Consideration Shares and 3
October 2023
commencement of dealing in such shares on AIM
STATISTICS
Number of Ordinary Shares in issue as at the Latest
Practical Date 165,213,652
Number of Consideration Shares proposed to be issued
pursuant to the
Initial Acquisition 110,142,286
Issue price per Consideration Share 2.55 pence
Completion Enlarged Share Capital immediately following
the Initial Acquisition 275,355,938
Consideration Shares as a percentage of the Completion
Enlarged Share Capital 40.00%
Maximum number of Additional Consideration Shares
proposed to be issued to the
Participating TFG Option Holders 3,631,124
Issue price per Additional Consideration Share 2.55 pence
Additionally Enlarged Share Capital following the
exercise of TFG Options by the
Participating TFG Option Holders 278,987,062
Consideration Shares and Additional Consideration 40.78%
Shares
as a percentage of the Additionally Enlarged Share
Capital 32.38%
Concert Party percentage holding of the Completion 31.96%
Enlarged Share Capital
Concert Party percentage holding of the Additionally
Enlarged Share Capital
Concert Party percentage holding of the CP Options
Enlarged Share Capital 34.38%
LETTER FROM THE CHAIRMAN
Aukett Swanke Group Plc
(incorporated and registered in England & Wales under the
Companies Act 1985 with registered number 02155571)
Dear Sir or Madam,
Proposed issue of up to 113,773,410 new Ordinary Shares in
connection with the proposed acquisition of Torpedo Factory Group
Limited
Approval of Waiver of obligations under Rule 9 of the Takeover
Code
Notice of General Meeting
1. INTRODUCTION
On 2 March 2023, the Board announced that Aukett Swanke Group
had: (i) made an offer to buy from the TFG Shareholders the entire
issued and to be issued share capital of Torpedo Factory Group, an
audio, visual and stage technology provider to organisations in the
UK and Europe; and (ii) entered into the Transaction Agreement
recording the terms on which the Principal Sellers had irrevocably
agreed to accept such Offer.
One of the purposes of this Circular is to explain, and to
provided details as to, the background to and the reasons for the
Acquisition and how the Acquisition would expand the Group's
activities in the property arena.
Implementation of the Initial Acquisition
The Initial Acquisition will be implemented by way of the Offer
and if any Minority Sellers do not accept the Offer in accordance
with its terms, any TFG Shares held by such Minority Sellers will
be acquired by the Company simultaneously with completion of the
Offer pursuant to the Drag-Along Notice.
Accordingly, pursuant to the Initial Acquisition, the Company
will, on Completion, acquire the entire issued share capital of TFG
as at the date of this Circular.
The consideration for the Initial Acquisition is the issue of
110,142,286 Consideration Shares to the Sellers in proportion (as
nearly as may be practicable) to their current respective TFG
holdings.
The Consideration Shares shall be issued and allotted on
Completion conditional on: (i) receipt by the Buyer of signed Forms
of Acceptance from TFG Shareholders holding not less than 75% of
the TFG Shares; and (ii) the Transaction Agreement (which contains,
amongst other conditions, a condition that the Allotment and Waiver
Resolutions are passed) remaining in full force and effect and
having become unconditional.
The Consideration Shares are expected to represent, in
aggregate, 40.00% of the Completion Enlarged Share Capital. The
Concert Party, comprising the Principal Sellers, will, at
Completion, together hold approximately 32.38% of the Completion
Enlarged Share Capital. The Concert Party is described further in
paragraph 9 of this this letter from the Chairman and paragraph 4
of Additional Information.
CP Options Shares
The Company has agreed, subject to Completion, to grant Freddie
Jenner and Jason Brameld (both members of the Concert Party)
options to subscribe for 3,700,000 and 4,700,000 Ordinary Shares
respectively, pursuant to the terms set out in the CP Option
Agreements.
Provided that Freddie Jenner and Jason Brameld remain employees
of the Group, their CP Options will vest on, and become exercisable
at a price of 1 pence per Ordinary Share, from, the second
anniversary of the CP Option Agreements.
If both Freddie Jenner and Jason Brameld exercise the CP Options
granted to them under the CP Option Agreements (once they are able
to do so), and assuming all of the TFG Options are surrendered and
no further Ordinary Shares are issued, the Concert Party would, in
aggregate, hold Ordinary Shares carrying a maximum of 34.38% of the
voting rights of the Company.
The issue of the CP Options Shares is conditional upon, inter
alia, the Shareholders passing the Allotment Resolution and the
passing of the Waiver Resolution by the Independent Shareholders,
on a poll, at the General Meeting.
Forfeiture of TFG Options and Acquisition of Option Shares
Pursuant to the Letter to Option Holders, TFG has made an offer
to the Participating TFG Option Holders under which they may
surrender their TFG Options in return for a cash payment. The
maximum aggregate sum payable by TFG to the Participating TFG
Option Holders, assuming acceptance in full, in respect of this
offer is GBP42,430.51. Payments to Participating TFG Option Holders
who accept this offer are anticipated to be paid in April 2023.
Notwithstanding the above, following Completion, the TFG Option
Holders (other than those who are members of the Concert Party or
who have surrendered their TFG Options in accordance with the
Letter to Option Holders) will be entitled to exercise their TFG
Options at any time until the date falling six months after
Completion.
Following valid exercise of any TFG Options by a Participating
TFG Option Holder, TFG will issue the relevant Option Shares to
that Participating TFG Option Holder on the second Business Day of
the calendar month following the month of exercise. Upon such
issue, those Option Shares will be compulsorily acquired by ASG
pursuant to the drag-along rights in TFG's articles of
association.
The consideration for the acquisition of any Option Shares is
the issue to the Participating TFG Option Holders of 39.2555
Additional Consideration Shares for each Option Share, with such
total number of Additional Consideration Shares to be issued to
each Participating TFG Option Holder rounded down to the nearest
whole number.
The Consideration Shares, and any Additional Consideration
Shares, will rank pari passu in all respects with the Ordinary
Shares in issue including the right to receive all dividends and
other distributions made or paid following their respective
Admission.
If all of the TFG Option Holders exercise their TFG Options in
full, 3,631,124 Additional Consideration Shares will be issued.
This will result in an Additionally Enlarged Share Capital of
278,987,062 Ordinary Shares of which 31.96% will be held by the
Concert Party. If no TFG Option Holders exercise any TFG Options,
the Completion Enlarged Share Capital will remain at 275,355,938
Ordinary Shares of which the Concert Party will hold 32.38%.
Waiver Resolution
The issue of the Consideration Shares, any Additional
Consideration Shares, and CP Options Shares is conditional upon,
inter alia, the Shareholders passing the Allotment Resolution and,
with respect to the Consideration Shares and CP Options Shares, the
passing of the Waiver Resolution by the Independent Shareholders,
on a poll, at the General Meeting.
A General Meeting is therefore being convened at 10.00 a.m. on
20 March 2023 (or any reconvened meeting following any adjournment
of the General Meeting) at the offices of the Company.
Should the approval of Independent Shareholders not be obtained
at the General Meeting for the Resolutions, the Acquisition will
not proceed.
The purpose of this letter is to explain why the Directors
consider the Acquisition to be in the best interests of the Company
and why they recommend that Shareholders vote in favour of the
Resolutions to be proposed at the General Meeting.
2. BACKGROUND
Following actions to exit from certain loss making activities,
the Group now comprises only the two UK architect businesses,
holdings in two German architecture practices and several
international licence agreements, which collectively are too small
to support and justify the costs associated with maintaining a
public listing. The Board has therefore been looking both to grow
the core architecture practice and for an opportunity to broaden
its activities.
The principal attractions of TFG are its building systems
activities and its understanding of the technologies behind them.
Working with the Group's architects the strategy of the enlarged
group would be to augment and continue the development of its
architecture businesses and to become a leading participant in the
provision of smart building systems.
3. INFORMATION ON THE AUKETT SWANKE GROUP
Aukett Swanke Group is the holding company for a professional
services group of companies focussed on the property sector that
provides architectural design services along with specialisms in
master planning, interior design and executive architecture.
ASG has established a reputation as an award winning and leading
architectural design firm featuring regularly in the World
Architecture 100 (2023 - 61(st) , 2022 - 63(rd) , 2021 - 54(th) )
and Architect Journal 100 (2022 - 70(th) , 2021 - 68(th) ) listings
having won 8 UK design awards in 2022 and built a client base of
leading investor, commercial and financial institutions
representing owners, developers, occupiers, and other stakeholders
in the built environment.
The Company's ability to service a broad range of clients from
project conception to completion, often in a design leadership
role, is supported by the significant investment made in 2D, 3D and
advanced software-based building modelling systems. This has
enabled the Group's businesses to work with clients throughout the
design, procurement, handover, post completion and occupation
stages of projects.
4. INFORMATION ON TFG
TFG is a technology systems integrator and services business
operating primarily in three market areas.
The most significant of these are: (i) its "Intelligent
Environments" business which designs, installs and maintains
integrated audio-visual systems for corporate and public sector
clients, primarily working directly with commercial property
occupiers but also with main contractors on construction fit-out
projects; and (ii) its "Stage Technology" business which creates
and maintains technologically powerful systems for a wide range of
performance spaces. In addition, TFG's "Live Events" business
provides the technology to deliver live events, both within venues
and streamed to the wider world.
TFG operates in the UK and Europe, from five sites across the
UK.
For the 18 month period ended 30 June 2021, TFG reported audited
revenues of GBP7.73m, loss before tax of GBP0.24m and net assets of
GBP2.25m. Unaudited management accounts for the 12 month period
ended 30 June 2022 indicate TFG will report revenues of GBP7.73m,
profit before tax but after the disposal of an associated
undertaking of GBP0.27m, and net assets of GBP2.52m.
Trading in the current financial year is broadly in line with
TFG management expectations, with EBITDA just above breakeven. At
31 December 2022 TFG's unaudited management accounts indicate net
assets were GBP2.40m, which included a freehold property valued at
GBP3.05m, debts of GBP2.71m, and approximately GBP1.14m in cash.
There are no current ratings or outlooks publicly accorded to TFG
by ratings agencies.
5. THE ACQUISITION
As the Group's businesses emerge from the challenges of recent
years, the Company expects the future of core architectural
endeavour will be inextricably bound to developments in new and
hybrid building typologies, technology systems, and the development
of 'smart' solutions for the future built environment. We expect
these will include developments in building system monitoring,
management and use of buildings, artificial intelligence, off-site
manufacturing and real time use of data and systems.
Extending the Group's offering to its clients to include such
smart solutions is expected to provide a competitive advantage to
the Group's core business and to add new income streams not
dependent on an ever-expanding headcount.
In the same way as new regulatory requirements and the
introduction of BIM/Revit project modelling have been embraced in
recent years we expect the impact of technologies such as those
illustrated above be extensive.
The Group's objective, in addition to developing the core
architecture businesses, is to become a master systems designer,
integrator and operator in the provision of smart buildings
technology.
The Acquisition would mark the starting point for further growth
activity to broaden the reach of the enlarged Group's products in
the smart buildings and IoT environment. In this way, the Company
expects to be able to transition the Group's business model over
time from being purely transaction-based to one that can generate
both the upfront revenues from construction and recurring revenues
over longer time periods through software licence fees, monitoring
activities and related services as extensions to its current
service offerings.
The Company also believes that such an enhanced technology focus
would allow the Group's clients to find better ways to deliver and
achieve greater value and environmental sustainability in their
construction projects.
6. PRINCIPAL TERMS OF THE ACQUISITION
Principal Sellers
The Company and the Principal Sellers have entered into the
Transaction Agreement, the terms of which require the Principal
Sellers to (i) accept the Offer and transfer the TFG Shares held by
them to the Company on Completion; and (ii) facilitate the transfer
of any TFG Shares not acquired pursuant to the Offer to the Company
by exercising their "drag along" rights contained in TFG's articles
of association and serving the Minority Sellers with the Drag-Along
Notice.
Pursuant to the Transaction Agreement, Nick Clark, Freddie
Jenner and Jason Brameld (all Principal Sellers and members of the
Concert Party) have agreed to surrender all of their respective TFG
Options.
The consideration for the purchase of the entire issued share
capital of TFG at Completion under the Transaction Agreement, Offer
and (if applicable) the Drag-Along Notice is GBP2,808,628.29 , to
be satisfied by the issue of the Consideration Shares to each of
the Sellers in respect of their proportional shareholding in TFG
such that the Sellers, following Completion, will own 40.00% of the
Completion Enlarged Share Capital.
Nick Clark, Keith McCullagh, Freddie Jenner and Jason Brameld,
being some of the Principal Sellers, have also agreed under the
Transaction Agreement to give warranties to the Company subject to
customary contractual limitations.
The Consideration Shares will be issued at the mid-market
closing price of 2.55 pence on 28 February 2023, being the Latest
Practical Date. The Consideration Shares represent a total value of
GBP2,808,628.29.
Conditional on the passing of all the Resolutions at the General
Meeting, the Company will allot the Consideration Shares and apply
to the London Stock Exchange for Admission.
As explained in paragraph 1 above, CP Options will be granted by
the Company to Freddie Jenner and Jason Brameld at Completion and
will become exercisable by them on the second anniversary of
Completion (subject to the terms of the CP Option Agreements). If
these CP Options are exercised in full by Freddie Jenner and Jason
Brameld , and assuming all of the TFG Options are surrendered and
no further Ordinary Shares are issued, the Concert Party would, in
aggregate, hold a maximum of 34.38% of the CP Options Enlarged
Share Capital. If any TFG Options or any other ASG options are
exercised or other Ordinary Shares are issued prior to the exercise
of the CP Options by Freddie Jenner or Jason Brameld, the Concert
Party holding would be diluted.
TFG Option Holders (other than the TFG Surrendered Option
Holders)
In accordance with the TFG CSOP, all of the TFG Option Holders
(other than the TFG Surrendered Option Holders) will remain
entitled to exercise their TFG Options at any time during the six
months following Completion, being the Option Period.
If a TFG Option Holder exercises their TFG Options during the
Option Period in accordance with the TFG CSOP, TFG will issue and
allot that Participating TFG Option Holder with their Option Shares
on the second Business Day in the first calendar month following
the month in which that TFG Option Holder exercises their TFG
Options. Upon the issue of such Option Shares, ASG will acquire
those Option Shares pursuant to the "drag along" provisions in
TFG's articles of association.
The consideration payable to each Participating TFG Option
Holder for the purchase of their Option Shares following the
exercise of any TFG Options is the issue and allotment of
Additional Consideration Shares to each Participating TFG Option
Holder in proportion to their TFG Options in TFG.
At each completion of a drag-along of the Option Shares, the
Company will allot the relevant number of Additional Consideration
Shares and apply to the London Stock Exchange for Admission.
In the event that all TFG Option Holders (other than those who
are members of the Concert Party) choose to exercise their TFG
Options, the TFG Option Holders and the Sellers will together hold
40.78 % of the Company's Additionally Enlarged Share Capital and
the Concert Party will hold 31.96 % of the Company's Additionally
Enlarged Share Capital.
The Additional Consideration Shares shall rank pari passu in all
respects with the Ordinary Shares in issue. The Additional
Consideration Shares represent a maximum further total value of GBP
92,593.66.
All TFG Options that are not surrendered or exercised within the
Option Period, will lapse and no further rights shall attach to
them in respect of shares in either TFG of the Company.
7. BOARD CHANGES
On Completion, it is proposed that Nick Clark will join the
Board as an executive director.
Nick is chief executive of TFG. He founded the business in 1997
and has grown it through a combination of acquisitions and organic
growth. Prior to founding TFG Nick studied physics at Imperial
College graduating with a BSc Hons 2(i) followed by an MPhil in
Microelectronic Engineering and Semiconductor Physics at the
University of Cambridge.
Upon appointment as an executive director, Nick will enter into
a new employment contract with the Company.
In June 2022, Nick was appointed a non-executive director at
Drumz plc, the AIM-listed investing company focused on investing in
and acquiring established software businesses.
8. APPLICATION OF THE TAKEOVER CODE
The issuance of the Consideration Shares, any Additional
Consideration Shares following the exercise of any TFG Options
after Completion, and the CP Options Shares give rise to certain
considerations under the Takeover Code. The Takeover Code is issued
and administered by the Panel. The Takeover Code applies to all
takeover and merger transactions, howsoever effected, where the
offeree company is, among other things, a listed or unlisted public
company resident in the United Kingdom, the Channel Islands or the
Isle of Man (and to certain categories of private limited
companies). The Company is a public company with its registered
office in the United Kingdom, whose Ordinary Shares are admitted to
trading on AIM of the London Stock Exchange, and its Shareholders
are therefore entitled to the protections afforded by the Takeover
Code.
Under Rule 9 of the Takeover Code, when (i) any person who
acquires, whether by a series of transactions over a period of time
or by one specific transaction, an interest (as defined in the
Takeover Code) in shares which (taken together with shares in which
he is already interested and in which persons acting in concert
with him/her are interested) carry 30% or more of the voting rights
of a company that is subject to the Takeover Code, or (ii) where a
person (together with persons acting in concert with that person)
is interested in shares (as defined in the Takeover Code) which
carry 30% or more of the voting rights of a company that is subject
to the Takeover Code but does not hold more than 50% of the shares
carrying voting rights, and such person increases the percentage of
shares carrying voting rights in which he/she are interested, that
person is normally required to make a general offer to the
remaining holders to acquire their shares.
An offer under Rule 9 of the Takeover Code must be in cash (or
be accompanied by a cash alternative) at not less than the highest
price paid by the person required to make the offer or any person
acting in concert with him during the 12 month period prior to the
announcement of the offer.
For the purposes of the Takeover Code, persons acting in concert
include persons who, pursuant to an agreement or understanding
(whether formal or informal), co-operate to obtain or consolidate
control of a company or frustrate the successful outcome of an
offer for a company subject to the Takeover Code. For the purposes
of the Takeover Code, "control" means an interest or interests in
shares carrying in aggregate 30% or more of the voting rights of a
company, irrespective of whether such interest or interests give de
facto control. Under the Takeover Code, shareholders in a private
company who sell their shares in that company in consideration for
the issue of new shares in a company to which the Takeover Code
applies are also presumed to be acting in concert in respect of
that company unless the contrary is established.
9. CONCERT PARTY AND TAKEOVER CODE
The Company has agreed with the Panel that the Principal Sellers
(but not also the Minority Sellers) should be presumed to be acting
in concert for the purposes of the Takeover Code.
Information on the Concert Party
If the requisite resolutions are passed at the General Meeting
and the Consideration Shares are issued by the Company to the
Sellers (including the Concert Party) pursuant to the Transaction
Agreement, Offer and Drag-Along Notice and each member of the
Concert Party has surrendered the maximum number of their TFG
Options, then, as set out in the table below:
a. column 3 sets out that, on Completion, assuming no further
Ordinary Shares are issued by the Company and prior to the exercise
of any TFG Options and/or CP Options, the Concert Party would, in
aggregate, hold Ordinary Shares carrying a maximum of 32.38%. of
the voting rights of the Company;
b. column 4 sets out that the minimum holding of the Concert
Party following Completion would, assuming all of the TFG Options
are exercised (except for the TFG Options being surrendered by Nick
Clark, Freddie Jenner and Jason Brameld pursuant to the Transaction
Agreement) and Freddie Jenner and Jason Brameld do not exercise
their CP Options, in aggregate, be Ordinary Shares carrying a
maximum of 31.96%. of the voting rights of the Company; and
c. column 5 sets out that the maximum holding of the Concert
Party following Completion would, assuming all of the TFG Options
are surrendered and both Freddie Jenner and Jason Brameld exercise
their CP Options, in aggregate, be Ordinary Shares carrying a
maximum of 34.38% of the voting rights of the Company.
(1) (2) (3) Completion (4) Minimum (5) Maximum
Concert Shares Total number Total number of Total number of
Party Member currently of Ordinary Shares Ordinary Shares Ordinary Shares and
held and % in ASG's and % in ASG's % in ASG's CP Options
in TFG Completion Enlarged Additionally Enlarged Enlarged Share Capital
Share Capital Share Capital
----------- ----------------------- ------------------------- --------------------------
Shareholder Shares Shares % Shares % Shares in %
in TFG in ASG in ASG ASG
----------- -------------- ------- --------------- -------- ---------------- --------
Nick Clark 611,672 24,011,490 8.72 24,011,490 8.61 24,011,490 8.46
----------- -------------- ------- --------------- -------- ---------------- --------
Keith McCullagh 572,252 22,464,038 8.16 22,464,038 8.05 22,464,038 7.92
----------- -------------- ------- --------------- -------- ---------------- --------
Siobhan
Robinson 420,834 16,520,049 6.00 16,520,049 5.92 16,520,049 5.82
----------- -------------- ------- --------------- -------- ---------------- --------
Jean McCullagh 480,827 18,875,104 6.85 18,875,104 6.77 18,875,104 6.65
----------- -------------- ------- --------------- -------- ---------------- --------
Freddie
Jenner
&
Melanie
Jenner 154,496 6,064,817 2.20 6,064,817 2.17 9,764,817 3.44
----------- -------------- ------- --------------- -------- ---------------- --------
Jason Brameld 20,000 785,110 0.29 785,110 0.28 5,485,110 1.93
----------- -------------- ------- --------------- -------- ---------------- --------
Pamela
Clark 6,522 256,024 0.09 256,024 0.09 256,024 0.09
----------- -------------- ------- --------------- -------- ---------------- --------
Simon Clark
&
Amanda
Boyce 4,658 182,852 0.07 182,852 0.07 182,852 0.06
----------- -------------- ------- --------------- -------- ---------------- --------
Total 2,271,261 89,159,484 32.38 89,159,484 31.96 97,559,484 34.38
----------- -------------- ------- --------------- -------- ---------------- --------
The Concert Party will therefore hold 32.38 % of the Completion
Enlarged Share Capital.
If any TFG Options are exercised in the Option Period (being the
six months following Completion), the Company will acquire the
resulting Option Shares in accordance with the drag-along provision
in the TFG articles of association in consideration for the issue
of Additional Consideration Shares. If all of the remaining TFG
Options are exercised during the Option Period and no CP Options
are exercised, the Concert Party would hold 31.96 % of the
Additionally Enlarged Share Capital.
If no TFG Options are exercised in the Option Period (being the
six months following Completion) but both Freddie Jenner and Jason
Brameld exercise their CP Options (when they are able to do so),
the Concert Party would hold 34.38 % of the CP Options Enlarged
Share Capital. This is the maximum percentage the Concert Party
could hold as a result of the Acquisition and exercise of the CP
Options.
Shareholders should be aware that under the Takeover Code, as
the Concert Party will hold shares carrying over 30% of the voting
rights of the Company but would not hold Ordinary Shares carrying
more than 50% of the voting rights in the Company and therefore, as
long as members of the Concert Party continue to be acting in
concert, any further increase in the Concert Party's aggregate
interest in Ordinary Shares will be subject to Rule 9 of the
Takeover Code.
For the purposes of the Takeover Code, members of the Concert
Party are treated as acting in concert with regard to their
interests in the issued share capital of the Company.
The Concert Party will not be restricted from making an offer
should it wish to do so.
Panel Waiver
The Panel has agreed to waive the obligation for the Concert
Party to make a general offer to all Shareholders under Rule 9 of
the Takeover Code in circumstances where that obligation would
otherwise arise, following the issuance of the Consideration Shares
and the CP Options Shares following exercise of the CP Options,
subject to the approval of independent shareholders (to be taken on
a poll) at a general meeting of the Company. Accordingly, the
Waiver Resolution is being proposed at the General Meeting.
The Waiver to the which the Panel has agreed will be invalidated
if any purchases of Ordinary Shares are made by any member of the
Concert Party, or any person acting in concert with them, in the
period between the date of this Circular and the General
Meeting.
Intentions of the Concert Party
The individual members of the Concert Party have each confirmed
to the Company that they are not proposing, following Completion
and issuance of the Consideration Shares, Additional Consideration
Shares, and the CP Options Shares following exercise of the CP
Options, and save as a result of the Acquisition, to seek any
changes in the general nature of the Company's business. The
Concert Party members have further specifically confirmed that they
have no intention to change the Company's plans with respect
to:
(i) the future business of the Company (including any research and development functions);
(ii) the composition of the Board, nor the Company's plans with
respect to the continued employment of employees and management of
the Company and its subsidiaries or their headcount (including to
the conditions of employment or any material change to the balance
of skills and functions of employees and management); or
(iii) the strategic plans for the Company and their likely
repercussions on employment and on the locations of the Company's
place of business, including the location of the Company's
headquarters and headquarters functions;
(iv) employer contributions into any of the Company's pension
schemes, the accrual of benefits for existing members, nor the
admission of new members;
(v) redeployment of the Company's fixed assets; or
(vi) the maintenance of the Company's Ordinary Shares being admitted to trading on AIM.
The Directors, all being independent, believe the Acquisition is
in the best interests of the Company and Shareholders, and that the
Waiver Resolution be passed and hereby recommend that Shareholders
vote in favour of the Waiver Resolution. Strand Hanson, as the
Company's independent financial adviser, has taken into account the
Directors' commercial assessments. In accordance with the
requirements of the Takeover Code, members of the Concert Party are
not permitted to vote on the Waiver Resolution and in any event do
not hold any Ordinary Shares as at the date of this Circular.
Your attention is drawn to Additional Information below which
sets out certain further information and financial information that
is required to be disclosed pursuant to the Takeover Code.
10. GENERAL MEETING
For the reasons set out above, Completion is conditional upon,
inter alia, the approval by the Shareholders of the Resolutions at
the General Meeting. You will find set out at the end of this
Circular the Notice of General Meeting to be held at 10.00 am on 20
March 2023 at the offices of the Company, for the purpose of
considering, and if thought fit, passing the Resolutions set out in
the Notice of General Meeting, and further described below.
Allotment Resolution
The Allotment Resolution is an ordinary resolution to provide
the Directors with authority to allot shares in the Company, and
grant rights to subscribe for or to convert any security into
shares of the Company (such shares, and rights to subscribe for or
to convert any security into shares of the Company) up to an
aggregate nominal amount of GBP1,221,734.10, in connection with the
Acquisition and the grant of the CP Options.
The authority granted by the Allotment Resolution is required to
provide the Board with authority to allot the Consideration Shares,
as well as any Additional Consideration Shares and CP Options
Shares, and the Directors will not use the authority granted by the
Allotment Resolution for any other reason.
Waiver Resolution
The Waiver Resolution is required in order for the Acquisition
and any issue and allotment of CP Options Shares pursuant to the
exercise of the CP Options to proceed. It will be proposed as an
ordinary resolution to be voted on a poll by the Independent
Shareholders only in accordance with the requirements of the
Panel.
The waiver granted by the Panel of the obligation that would
otherwise arise for the members of the Concert Party to make a
general offer for the entire issued share capital of the Company
not held by them as a result of the issue of up to 89,159,484
Ordinary Shares to them at Completion and 8,400,000 Ordinary Shares
to Freddie Jenner and Jason Brameld on exercise of the CP Options,
is subject to approval of the Waiver Resolution.
In order to comply with the Takeover Code, this Waiver
Resolution will be taken on a poll and each of the members of the
Concert Party (none of whom in any event currently hold any shares
in the Company) will not be eligible to vote on such
resolution.
All Shareholders may attend the General Meeting.
11. APPLICATION FOR ADMISSION OF THE CONSIDERATION SHARES AND
ADDITIONAL CONSIDERATION SHARES
It is expected that Admission of the Consideration Shares will
become effective and that dealings in such shares will commence on
22 March 2023, conditional on, and subsequent to, the passing of
the Allotment Resolution and the Waiver Resolution at the General
Meeting.
It is expected that Admission of any Additional Consideration
Shares issued to Participating TFG Option Holders in consideration
for the transfer of their Option Shares will become effective and
dealings would commence on the second Business Day of the calendar
month following the month in which the relevant TFG Options are
exercised, subsequent to the issue of those Additional
Consideration Shares to the relevant TFG Option Holder.
In the event that the CP Options are exercised, it is expected
that Admission of any CP Option Shares issued to Freddie Jenner
and/or Jason Brameld would become effective within two Business
Days of the CP Options Shares being issued.
The total number of Ordinary Shares in issue following the issue
of the Consideration Shares will be 275,355,938, if the maximum
number of Additional Consideration Shares is issued, the total
number of Ordinary Shares in issue will be 278,987,062 and, if the
maximum number of CP Options Shares is issued, the total number of
Ordinary Shares in issue will be 287,387,062, in each case assuming
that there is no further issue of Ordinary Shares or exercise or
conversion of other ASG options.
12. ACTIONS TO BE TAKEN
A Form of Proxy for use in connection with the General Meeting
is enclosed. Whether or not you intend to attend the General
Meeting, it is important, particularly in view of the fact that the
Waiver Resolution to be put to the General Meeting will be
determined by a poll of Independent Shareholders, that you duly
complete, execute and return the enclosed Form of Proxy, by hand or
by post, to Equiniti Limited, Aspect House, Spencer Road, Lancing,
West Sussex BN99 6DA in accordance with the instructions printed
thereon. To be valid, the completed Form of Proxy must be returned
as soon as possible and, in any event, so as to arrive by no later
than 10.00 a.m. on 16 March 2023 (or, in the case of an adjournment
of the General Meeting, not later than 48 hours before the time
fixed for the holding of the adjourned meeting).
The completion and return of the Form of Proxy will not prevent
Shareholders from attending and voting at the General Meeting in
person should you subsequently wish to do so.
13. RECOMMATIONS
The Directors, who have been so advised by Strand Hanson,
consider the Acquisition and the approval of the Allotment
Resolution and the Waiver Resolution to be fair and reasonable and
in the best interests of the Shareholders and the Company as a
whole. In providing its advice to the Directors, Strand Hanson has
taken into account the commercial assessments of the Directors.
Accordingly, the Directors unanimously recommend that Shareholders
vote in favour of each of the Resolutions as the Directors will be
doing in respect of their own beneficial holdings being, in
aggregate, 11,390,018 Ordinary Shares (representing approximately
6.894% of the Issued Ordinary Shares).
Yours faithfully
Clive Carver
Chairman
DEFINITIONS
"Acquisition" the Initial Acquisition and
any acquisition of the Option
Shares held by the Participating
TFG Option Holders (in one
or more transactions) as contemplated
by the Transaction Agreement
"Acting in Concert" has the meaning attributed
to it in the Takeover Code
"Admission" the admission of the Consideration
Shares and, if applicable,
the Additional Consideration
Shares (as applicable) to trading
on AIM becoming effective in
accordance with the AIM Rules
"Additional Consideration up to 3,631,124 new Ordinary
Shares" Shares proposed to be issued
to the Participating TFG Option
Holders
"Additionally Enlarged Share the issued share capital of
Capital" the Company (assuming that
there is no further issue of
Ordinary Shares or exercise
or conversion of ASG options
(including the CP Options)
in the capital of the Company)
as enlarged by the issue and
allotment of the Consideration
Shares and the maximum number
of the Additional Consideration
Shares
"AIM" the AIM market operated by
the London Stock Exchange
"AIM Rules" the AIM Rules for Companies
issued by the London Stock
Exchange
"Allotment Resolution" the resolution, as set out
in the Notice of General Meeting,
to be voted on by the Shareholders
at the General Meeting to authorise
the Board to allot the Consideration
Shares on a non-pre-emptive
basis
"Arrangement" includes any indemnity or option
arrangements, or any agreement
or understanding, formal or
informal, of whatever nature,
relating to the relevant securities
which may be an inducement
to deal or refrain from dealing
"Associate" includes (without limitation)
in relation to a company:
I. its parent, subsidiaries
and fellow subsidiaries, its
associated companies and companies
of which any such companies
are associated companies (for
this purpose ownership or control
of 20% or more of the equity
share capital of a company
is regarded as the test of
associated company status);
II. its connected advisers
(as defined in the Takeover
Code) or the connected advisers
to a company covered in (i)
above, including persons (other
than exempt principal traders
or exempt fund managers) controlling,
controlled by or under the
same control as such connected
advisers;
III. its directors (together
with their close relatives
and related trusts);
IV. its pension funds or the
pension funds of a company
covered in (i) above; and
V. its employee benefit trusts
or those of a company covered
in (i) above.
"Board" or "Directors" the board of directors of the
Company as at the date of this
Circular consisting of Clive
Carver, Raul Curiel, Robert
Fry, and Antony Barkwith
"borrowed" or "lent" includes for these purposes
any financial collateral arrangement
of the kind referred to in
Note 4 on Rule 4.6 of the Takeover
Code, but excludes any borrowed
Ordinary Shares which have
either been redelivered or
accepted for redelivery
"Circular" this document
"Companies Act" or "Act" the Companies Act 2006 as amended
from time to time
"Company" or "Aukett Swanke Aukett Swanke Group PLC, a
Group" or "ASG" company incorporated in England
and Wales with registration
number 02155571 whose registered
office is situated at 10 Bonhill
Street, London, England, EC2A
4PE
"Concert Party" Together (i) Nick Clark & Siobhan
Robinson; (ii) Keith McCullagh
& Jean McCullagh; (iii) Freddie
Jenner & Melanie Jenner; (iv)
Jason Brameld; (v) Pamela Clark;
and (vi) Simon Clark & Amanda
Boyce
"Completion" completion of the Initial Acquisition
"Completion Enlarged Share the issued share capital of
Capital" the Company at the date of
Admission of the Consideration
Shares (assuming that there
is no further issue of Ordinary
Shares, exercise of CSOP Options
or exercise of ASG options
in the capital of the Company)
"Connected Persons" means in relation to a director,
those persons whose interests
in Ordinary Shares the director
would be required to disclose
pursuant to Part 22 of the
Companies Act and related regulations
and includes any spouse, civil
partner, infants (including
stepchildren), relevant trusts
and any company in which a
director holds at least 20%
of its voting capital
"Consideration Shares" the 110,142,286 new Ordinary
Shares proposed to be issued
to the Sellers in consideration
of the Initial Acquisition
"CP Option Agreements" means the option agreements
to be entered into between
the Company and each of Freddie
Jenner and Jason Brameld on
the date of Completion
"CP Options" the options to be granted by
the Company to Freddie Jenner
and Jason Brameld to subscribe
for the CP Options Shares pursuant
to the CP Option Agreements
"CP Options Enlarged Share the issued share capital of
Capital" the Company at the date of
Admission of the Consideration
Shares and the CP Options Shares
(assuming that no Additional
Consideration Shares are issued
and there is no further issue
of Ordinary Shares or exercise
of ASG options in the capital
of the Company)
"CP Options Shares" an aggregate of 8,400,000 Ordinary
Shares
"CREST" the computerised settlement
system (as defined in the CREST
Regulations) operated by Euroclear
which facilitates the transfer
of shares in uncertificated
form
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755)
including any enactment or
subordinated legislation which
amends or supersedes those
regulations or any such enactment
or subordinate legislation
for the time being
"Drag-Along Notice" the Drag-Along Notice sent
to the Minority Sellers by
the Principal Sellers, enclosing
the Offer Document
"Equiniti" Equiniti Limited, the Company's
registrars
"Euroclear"
Euroclear UK & Ireland Limited,
the operator of CREST
"FCA"
the Financial Conduct Authority
"Form of Acceptance" the form of acceptance in relation
to the Offer, enclosed with
the Offer Document
"Form of Proxy" the enclosed form of proxy
for use by Shareholders at
the General Meeting
"General Meeting" or "GM" the general meeting of the
Company convened by the Notice
of General Meeting, to be held
at the offices of the Company
at 10 Bonhill Street, London,
EC2A 4PE on 20 March 2023 at
10.00 a.m., notice of which
is set out at the end of this
document
"Group" Aukett Swanke Group PLC and
its subsidiaries
"Independent Shareholders" Shareholders who are independent
of a person who would otherwise
be required to make a Rule
9 Offer and any person acting
in concert with him or her
(as defined by the Code) which,
for the purposes of the Waiver,
excludes all members of the
Concert Party
"Initial Acquisition" the proposed acquisition by
Aukett Swanke Group of the
entire issued share capital
of TFG as at the date of this
Circular, in accordance with
the terms and conditions of
the Offer Document, Transaction
Agreement and Drag-Along Notice
"Issued Ordinary Shares" the 165,213,652 Ordinary Shares
in issue as at the Latest Practical
Date
"Issue Price" 2.55 pence per Consideration
Share and Additional Consideration
Share
"Latest Practical Date" 28 February 2023, being the
date that is the latest practicable
date prior to the publication
of this Circular
"Letter to Option Holders" means the letter sent by TFG
to the TFG Option Holders in
relation to the Offer
"Lock-In Deed" the deed between the Company
and each of the Principal Sellers,
further details of which are
set out in paragraph 11 of
Part III (Additional Information)
incorporated into this document
"London Stock Exchange" London Stock Exchange plc
"Longstop Date" 30 June 2023
"Minority Sellers" the shareholders of TFG as
at the date of this Circular,
other than the Principal Sellers
"Notice of General Meeting" the notice of general meeting
which is set out at the end
of this Circular
"Offer" the offer made by ASG to buy
the entire issued and to be
issued share capital of TFG
from the TFG Shareholders,
as set out in the Offer Document
"Offer Document" means the offer document dated
2 March 2023 sent by ASG to
the TFG Shareholders
"Ordinary Shares" the ordinary shares of GBP0.01
each in the capital of the
Company
"Option Period" means the six month period
commencing on Completion
"Option Shares" means any and all of the ordinary
shares of GBP0.05 each in TFG
which may be issued pursuant
to the exercise of the TFG
Options
"Panel" the Panel on Takeovers and
Mergers
"Participating TFG Option the TFG Option Holders (other
Holders" than those who are members
of the Concert Party) who exercise
their TFG Options at or after
Completion in accordance with
the TFG CSOP
"Principal Sellers" the members of the Concert
Party
"Resolutions" the resolutions to be proposed
at the General Meeting as set
out in the Notice of General
Meeting
"Rule 9 Offer" a general offer under Rule
9 of the Takeover Code
"Securities Act" US Securities Act of 1933,
as amended from time to time
"Sellers" the sellers of the ordinary
shares of GBP0.05 each in TFG
as at the date of this Circular,
being the Principal Sellers
and the Minority Sellers
"Shareholders" the holders of Ordinary Shares
"Short Position" means any short position (whether
conditional or absolute and
whether in the money or otherwise)
including any short position
under a derivative, any agreement
to sell or any delivery obligation
or right to require any other
person to purchase or take
delivery
"Strand Hanson" Strand Hanson Limited, the
Company's Nominated Adviser
for the purposes of the AIM
Rules and independent financial
adviser for the purposes of
Rule 3 of the Takeover Code
"subsidiary" or "subsidiary have the meanings given to
undertaking" them by the Act
"Takeover Code" the City Code on Takeovers
and Mergers
"TFG" or "Torpedo Factory Torpedo Factory Group Limited,
Group" a company registered in England
and Wales with registration
number 03298917 whose registered
office is situated at The Old
Torpedo Factory, St Leonard's
Road, London, NW10 6ST
"TFG CSOP" the Torpedo Factory Group Company
Share Option Plan 2015 and
2017
"TFG Surrendered Option Holders" Nick Clark, Freddie Jenner,
Jason Brameld and any other
TFG Option Holders who surrender
their TFG Options prior to
Completion in accordance with
the Letter to Option Holders
or Transaction Agreement (as
applicable)
"TFG Options" the options granted by TFG
to various of its employees
to subscribe for an aggregate
of 352,500 ordinary shares
of GBP0.05 each in TFG pursuant
to the TFG CSOP
"TFG Option Holders" the holders of TFG Options,
other than the Principal Sellers
"TFG Shareholders" the Principal Sellers and Minority
Sellers
"TFG Shares" means all of the issued shares
in the capital of TFG
"Transaction Agreement" the transaction agreement dated
28 February 2023 entered into
by (i) Aukett Swanke Group
and (ii) the Principal Sellers,
further details of which are
set out in Part II (letter
from the Chairman) incorporated
into this document
"Waiver" the waiver granted by the Panel
(conditional on the approval
of the Waiver Resolution by
the Independent Shareholders
on a poll) of the obligation
of the Concert Party to make
a Rule 9 Offer under the Takeover
Code on the allotment and issue
to it (or members of it) of
the Consideration Shares and
CP Options Shares
"Waiver Resolution" the ordinary resolution of
the Independent Shareholders
to approve the Waiver in respect
of the issue and allotment
of the Consideration Shares
and CP Options Shares to be
proposed on a poll at the General
Meeting and set out in the
Notice of General Meeting
"UK" the United Kingdom of Great
Britain and Northern Ireland
"GBP" or "Pounds" the lawful currency of the
UK
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