RNS Number:8542K
Future Network PLC
28 September 2001
Not for release, publication or distribution in or into the United States,
Canada, the Republic of Ireland, France, The Netherlands, Australia, South
Africa or Japan
28 September 2001
THE FUTURE NETWORK PLC
Proposed refinancing through 6 for 5 Rights Issue to raise #34.6m
The Future Network plc (LSE: FNET), the international specialist consumer
publishing group, today announces a proposed refinancing of the Company.
Refinancing details
* 6 for 5 Rights Issue at 20 pence per share to raise #33.0 million net of
expenses;
* Rights Issue fully-underwritten at the issue price by Morgan Stanley
and Beeson Gregory;
* Amended and restated #35m five-year revolving debt facility
Board changes
* Appointment of Roger Parry as Chairman
* Chris Anderson steps down from position of Chairman to non-executive
Director
Directors' intentions
* Each of Roger Parry, Brendan Clouston and Michael Penington has
irrevocably undertaken to take up their rights in full under the Rights
Issue to subscribe for 48,000, 144,000 and 6,000 New Ordinary Shares
respectively. In addition to taking up their rights, Roger Parry, Brendan
Clouston and Michael Penington have each agreed to subscribe for an
additional 250,000 New Ordinary Shares, in aggregate representing 750,000
New Ordinary Shares, pursuant to a conditional pre-placing agreement.
* Patrick Taylor, Elisabeth Murdoch and Colin Morrison do not hold
Future Shares and therefore are not entitled to participate in the Rights
Issue. However, Colin Morrison, Elisabeth Murdoch and Patrick Taylor have,
pursuant to a conditional pre-placing agreement, agreed to subscribe for
additional New Ordinary Shares in the amounts of 175,000, 50,000 and
100,000 respectively.
* Greg Ingham has undertaken to take up rights in respect of 100,000
New Ordinary Shares and not in respect of any other entitlement. Chris
Anderson has undertaken not to take up his rights under the Rights Issue.
In aggregate, these undertakings not to exercise rights apply to 48,907,524
New Ordinary Shares, representing 28.2 per cent of the New Ordinary Shares
to be issued. Morgan Stanley and Beeson Gregory have undertaken to place
(or failing which, to purchase themselves) the nil paid rights in respect of
these New Ordinary Shares.
* In addition, Morgan Stanley and Beeson Gregory have undertaken to use
their reasonable efforts to procure purchasers for 10.05 million existing
Future Shares currently held by Chris Anderson, at a price of not less than
20p per Future share.
Commenting on the refinancing and Board changes, Future's new Chairman, Roger
Parry said:
"Having considered a number of alternatives, we have concluded that
shareholders' interests are best served by a rights issue, which enables them
to participate in the future of the business. The proceeds will be used to
repay Group debt and to establish a more appropriate capital structure for the
Group.
"There have been a number of changes to the Future Board since the beginning
of the year. Michael Penington took over in March as Interim Finance Director
with the resignation of Ian Linkins. As recently announced, John Bowman joins
the company as Finance Director on November 16th. The Board is delighted to
have someone with his experience joining the team. I would like to thank
Michael Penington for his extraordinary and successful efforts over the past
few months. He returns to his normal role as a non-executive as soon as John
joins. Patrick Taylor joined as a non-executive Director in April and was
appointed Chairman of the Audit Committee. Colin Morrison joined us in
January as Chief Operating Officer. He is now, in addition, taking over as
Managing Director of the UK - which is our largest business. Chris Anderson,
the founder of Future, has resigned as Chairman and I am taking over that role
with immediate effect. He will remain as a non-executive director.
"We now have a strong management team in place with clearly defined roles.
Following a successful refinancing, the restructuring of the Group will
continue to reduce costs and improve margins."
For further information:
The Future Network plc
Greg Ingham, Chief Executive 01225 442244
Michael Penington, Interim Finance Director
Morgan Stanley
Alex Northcott 020 7425 8000
Beeson Gregory
Graham Meek/Tom Price 020 7488 4040
Hogarth Partnership
James Longfield/Georgina Briscoe 020 7357 9477
This announcement is issued by The Future Network plc and the Directors of The
Future Network plc are the persons responsible for the information contained
in this announcement. Morgan Stanley & Co. International Limited and Beeson
Gregory Limited, which are regulated in the United Kingdom by The Securities
and Futures Authority Limited, have approved this announcement for the
purposes of section 57 of the Financial Services Act 1986. Morgan Stanley &
Co. International Limited and Beeson Gregory Limited are acting exclusively
for The Future Network plc and no-one else in connection with the Rights Issue
and will not be responsible to anyone other than The Future Network plc for
providing the protections afforded to their respective customers or for
providing advice in relation to the Rights Issue or the contents of this
announcement. The contents of this announcement do not constitute an offer or
invitation to acquire shares in The Future Network plc.
Information on the Rights Issue
The Company is proposing to offer up to 173,154,310 New Ordinary Shares in
connection with the Rights Issue, to raise approximately #33.0 million, net of
expenses.
Qualifying Shareholders are being offered New Ordinary Shares at a price of 20
pence per share on the following basis:
6 New Ordinary Shares for every 5 existing Future Share(s)
held at the close of business on 10 October 2001, and so in proportion for any
other number of Future Shares then held. The Issue Price is payable in full
upon acceptance.
The Issue Price of 20 pence per New Ordinary Share represents a 18.4 per cent
discount to the closing middle market price of 24.5 pence per Future Share on
27 September 2001, the last Business Day before the announcement of the Rights
Issue. Fractions of New Ordinary Shares will not be allotted and fractional
entitlements will be rounded down to the nearest whole number and disregarded.
The New Ordinary Shares to be issued pursuant to the Rights Issue will be
underwritten in full at the Issue Price by Morgan Stanley and Beeson Gregory.
The Rights Issue is subject to shareholder approval at an Extraordinary
General Meeting, which has been convened for 10:00am on 15 October, 2001 at
the offices of SJ Berwin, 222 Grays Inn Road, London WC1X 8XF.
Application has been made to the UK Listing Authority for the New Ordinary
Shares to be admitted to the Official List and to the London Stock Exchange
for the New Ordinary Shares to be admitted to trading on the market for listed
securities of the London Stock Exchange. None of the New Ordinary Shares have
been or will be made available in whole or in part to the public in
conjunction with such application, other than pursuant to the Rights Issue.
The New Ordinary Shares will, when issued and fully paid, rank pari passu in
all respects with the Future Shares currently in issue, including the right to
receive all dividends or other distributions made, paid or declared after the
date of this document.
It is expected that Admission will become effective and dealings in the New
Ordinary Shares will commence, nil paid, on the London Stock Exchange at 8:
00am on 16 October 2001.
Background to and reasons for the Rights Issue
In the circular to Future Shareholders dated 14 June 2001, the Board stated
that work remained to be done to improve profit margins and reduce the Group's
level of debt.
On 27 September 2001 the Company entered into an agreement to amend and
restate its existing multi-currency debt facility, which amendment and
restatement is conditional upon completion of the Rights Issue and repayment
of existing borrowings from the net proceeds of #33.0 million. The amended
and restated debt facility will expire on the fifth anniversary of completion
of the Rights Issue, and will provide the Company with #35.0 million long term
debt finance suitable to the Company's present requirements.
The Board considers that the amended and restated debt facility provides
greater operational flexibility for the Company than the existing facility,
which is due to expire in September 2002. The Board also considers that in
the absence of completing the Rights Issue, the Company would not be able to
secure longer term debt financing on terms as favourable as those set out in
the amended and restated debt facility agreement.
The Board, having considered a number of alternatives, has concluded that
shareholders' interests are best served by a rights issue to existing Future
Shareholders. The Rights Issue will introduce new equity capital into the
Company, which will be applied in repaying Group debt and to establish a more
appropriate capital structure for the Group.
Board Changes
Roger Parry has today been appointed Chairman of the Company and Chris
Anderson has stepped down from that position to become Non-Executive Director.
Chris has been Chairman of the Company since its admission to listing in
June 1999. It was announced, on 29 August 2001, that John Bowman had been
appointed Group Finance Director, his appointment becoming effective as from
16 November 2001. Michael Penington, who has been acting as Interim Finance
Director since 19 March 2001, will at that time relinquish his role and resume
his position as Non-Executive Director.
Directors' Intentions
Each of Roger Parry, Brendan Clouston and Michael Penington has irrevocably
undertaken to take up their rights in full under the Rights Issue to subscribe
for 48,000, 144,000 and 6,000 New Ordinary Shares respectively. In addition
to taking up their rights, Roger Parry, Brendan Clouston and Michael Penington
have each agreed to subscribe for an additional 250,000 New Ordinary Shares,
in aggregate representing 750,000 New Ordinary Shares, pursuant to a
conditional pre-placing agreement.
Patrick Taylor, Elisabeth Murdoch and Colin Morrison do not hold Future Shares
and therefore are not entitled to participate in the Rights Issue. However,
Colin Morrison, Elisabeth Murdoch and Patrick Taylor have, pursuant to a
conditional pre-placing agreement, agreed to subscribe for additional New
Ordinary Shares in the amounts of 175,000, 50,000 and 100,000 respectively.
Greg Ingham has undertaken (on behalf of himself and persons connected with
him) to take up rights solely in respect of 100,000 New Ordinary Shares
pursuant to the Rights Issue and not in respect of any other entitlement to
New Ordinary Shares. Chris Anderson has undertaken (on behalf of himself and
persons connected with him) not to take up his rights under the Rights Issue.
In aggregate, these undertakings not to exercise rights apply in respect of
48,907,524 New Ordinary Shares, being approximately 28.2 per cent of the New
Ordinary Shares to be issued pursuant to the Rights Issue. Morgan Stanley and
Beeson Gregory have undertaken to procure placees for (or, failing which, to
purchase themselves) the nil paid rights in respect of those 48,907,524 New
Ordinary Shares under a conditional pre-placing arrangement.
In addition, Chris Anderson has entered into a placing agreement with Morgan
Stanley Securities and Beeson Gregory pursuant to which Morgan Stanley and
Beeson Gregory have undertaken to use their reasonable efforts to procure
purchasers for 10,050,000 existing Future Shares held by Chris Anderson at a
price of not less than 20p per Future Share. The placing agreement is
conditional on completion of the Rights Issue. Chris Anderson has notified
the Company that he intends to use the net proceeds of the placing to repay in
part a loan from Morgan Stanley & Co. Inc. of US$6.8 million against which
32,655,588 Future Shares were pledged pursuant to a security interest.
Accordingly, following completion of the Rights Issue and assuming all of the
10,050,000 Future Shares are successfully placed, Chris Anderson will hold
26,630,537 Future Shares representing 8.4 per cent of the enlarged issued
share capital of Future.
Chris Anderson has agreed with Morgan Stanley and Beeson Gregory not to
dispose of, directly or indirectly, his remaining Future Shares (including any
not sold under the placing referred to above) until publication of the
Company's preliminary results for the year ended 31 December 2001. This
agreement may be waived in full, or in part, at the discretion of Morgan
Stanley and Beeson Gregory. The security interest referred to above will
remain in force until such time as the loan by Morgan Stanley & Co. Inc. to
Chris Anderson is repaid in full. In the event that the security interest
referred to above were exercised, a disposal of or other dealing in Chris
Anderson's shares which are subject to that security interest by Morgan
Stanley & Co. Inc. would not be subject to the lock-up agreement with Morgan
Stanley and Beeson Gregory.
The Company has agreed to pay John Bowman, on the date of release of the
Company's interim results for the financial period ended 30 June 2001, a
non-recurring bonus of #150,000. The Company has the right, at its
discretion, to satisfy all or part of that bonus by issuing Ordinary Shares to
Mr Bowman. The Company has determined that it will satisfy 50 per cent. of
this bonus (after deduction of amounts in respect of taxation and national
insurance) in cash, and will satisfy the balance 50 per cent. (after deduction
of amounts in respect of taxation and national insurance) by issuing Ordinary
Shares to Mr Bowman. The number of Ordinary Shares to be issued to Mr Bowman
will be calculated by dividing the relevant amount of the bonus by today's
closing middle market price of a Future Share.
Mr Bowman has undertaken to use the cash element of the bonus being paid to
him, inter alia, in taking up those rights to subscribe for New Ordinary
Shares under the terms of the Rights Issue as will attach to the shares issued
to him in satisfaction of his bonus entitlement.
Interim Results
In a separate statement issued today, The Future Network plc announced its
interim results for the six months to 30 June 2001.
Posting of the prospectus:
It is expected that the prospectus will be posted to Qualifying Shareholders
and, for information only, to Future share option holders, in due course.
Expected Timetable:
Record Date for the Rights Issue close of business 10 October 2001
Last time and date for receipt of forms of proxy 10.00 a.m. on 13 October 2001
Extraordinary General Meeting 10.00 a.m. on 15 October 2001
Provisional Allotment Letters despatched 15 October 2001
Dealings in New Ordinary Shares, nil paid, expected to
commence 8.00 a.m. on 16 October 2001
Latest time and date for splitting Provisional Allotment
Letters, nil paid 3.00 p.m. on 6 November 2001
Latest time and date for acceptance and payment in full
and registration of renunciation 3.00 p.m. on 8 November 2001
Dealings in New Ordinary Shares, fully paid, expected to
commence 8.00 a.m. on 9 November 2001
New Ordinary Shares credited to CREST stock accounts By 14 November 2001
Expected date for dispatch of definitive share
certificates for New Ordinary Shares By 16 November 2001
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