RNS Number:1318P
Grampian Hldgs PLC
21 December 2001
21 December, 2001
GRAMPIAN HOLDINGS P.L.C.
PROPOSED RETURN OF CAPITAL
AND CHANGE OF NAME
Not for release, publication or distribution in or into the United States,
Canada, Australia, Japan or the Republic of Ireland
Highlights
- Following the receipt of approximately #62 million from the sale of EWM and
related properties, approximately #45m of cash will be returned to
Shareholders subject to their approval at an EGM to be held on 18 January
2002, and subsequent Court approval
- To effect the return of cash, a certain proportion of Shareholders' existing
holdings will be cancelled in return for a cash amount. The Board currently
expects Ordinary Shares to be cancelled at a price of between 80p and 90p
- Shareholders may also apply for either a higher or lower amount of cash or
shares, subject to availability, and a Loan Note Alternative will also be
available
- With effect from 1 January 2002, Andrew Malcolm will become Chief Executive
of the Group; Mike McGill, formerly Group Financial Controller of John
Menzies plc, will become Group Finance Director and John Douglas, the Deputy
Company Secretary, will become Group Company Secretary. These appointments
follow the retirement of David McGibbon as Finance Director and Company
Secretary on 31 December 2001
- David McGibbon and Colin Birrell, formerly Chief Executive of EWM, will both
remain as non-executive directors until after the EGM. Further Board changes
will follow in due course to reflect the new focus and size of the Group
- Subject to Shareholder approval, the Company will be renamed The Malcolm
Group p.l.c. after the Group's remaining trading entity, the logistics and
construction services company, The Malcolm Group Limited
- Commenting on the proposed return of cash, David McGibbon, Finance Director,
said:
"It has been a lengthy, but ultimately successful process to realise for
shareholders a cash return of over 45 per cent of the Group's current market
capitalisation. Shareholders will also retain an investment in a focused and
growing logistics and construction services business."
Enquiries
Grampian David McGibbon 0141 357 2000
Deutsche Bank Jeremy Lucas 020 7545 8000
Cazenove Malcolm Moir 020 7588 2828
Holborn Public Relations David Bick 020 7929 5599
Media House Tom Cassidy 0141 226 3700
Deutsche Bank and Cazenove, which are regulated in the United Kingdom for the
conduct of designated investment business by the Financial Services Authority,
are acting for Grampian and no one else in connection with the Proposal and
will not be responsible to anyone other than Grampian for providing the
protections afforded to their respective clients or for providing advice in
relation to the Proposal.
THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE FULL TEXT OF THE FOLLOWING
ANNOUNCEMENT. THE APPENDIX TO THE FOLLOWING ANNOUNCEMENT CONTAINS DEFINITIONS
OF CERTAIN WORDS AND EXPRESSIONS USED IN THIS SUMMARY AND THE FOLLOWING
ANNOUNCEMENT.
21 December, 2001
GRAMPIAN HOLDINGS P.L.C.
PROPOSED RETURN OF CAPITAL
AND CHANGE OF NAME
Not for release, publication or distribution in or into the United States,
Canada, Australia, Japan or the Republic of Ireland.
Introduction
On 25 July 2001, Grampian completed the disposal of EWM following the approval
of Shareholders. In addition, the Board announced today that it had completed
the disposal of certain properties occupied by the EWM Group, which were not
included in the disposal of EWM. The aggregate proceeds received by Grampian
from these disposals is approximately #62 million (before expenses), inclusive
of the repayment of approximately #2.2 million of inter-company indebtedness.
In a circular to Shareholders dated 6 July 2001, the Board stated its
intention to return to Shareholders approximately #45 million of these
proceeds, with the balance being retained to support the future development of
The Malcolm Group.
The purpose of this announcement is to set out the Board's proposals for
returning cash to Shareholders, which will require Shareholder approval and
the confirmation of the Court, and for a change of name of the Company.
Further details will be set out in a Circular to be sent to Shareholders
today. An EGM to approve these proposals is being convened for 18 January
2002.
In summary, the effect of the Proposal is that part of each Shareholder's
holding of Ordinary Shares on the Record Date will be cancelled for cash, with
the balance of such holding being retained. The price at which Ordinary Shares
are to be cancelled will be fixed and announced by the Board following the
EGM. The Board currently intends to fix this price at a premium to the market
price prevailing immediately following the EGM. As at 20 December 2001, the
latest practicable date prior to this announcement, the closing middle market
price of an Ordinary Share (as derived from the Daily Official List) was
81.5p. Against that background, the Board currently expects that the
Cancellation Price will be between 80p and 90p. This will, however, be
reviewed in the light of prevailing market conditions following the EGM.
Background to, and reasons for, the Proposal
The EWM Disposal and the Property Disposal were consistent with the Board's
stated strategy of re-focusing the Group's operations and disposing of
non-core businesses in order to maximise Shareholder value. They concluded a
series of disposal transactions over the last four years. As a result, the
Group is now able to focus all of its resources on further developing The
Malcolm Group. However, the disposals have left Grampian with surplus capital.
In the circular to Shareholders dated 6 July 2001, the Board stated its
intention to consider the most appropriate manner of returning cash to
Shareholders. The Board has now consulted with a cross-section of Shareholders
and with the Company's advisers and has considered various possible methods of
returning cash to Shareholders. The Board has concluded that the Proposal set
out in this announcement represents the best means of achieving this, taking
into account the interests of the Company and the Shareholders as a whole.
Grampian has insufficient distributable reserves to effect in full a return of
#45 million of cash to Shareholders. Accordingly, the Proposal will involve a
Capital Reduction, which requires the confirmation of the Court.
The Proposal
Under the Proposal, subject to Shareholder approval and Court confirmation,
part of Grampian's issued share capital on the Record Date will be cancelled
for cash. The amount of Grampian's issued share capital which will be
cancelled will depend, inter alia, upon the Cancellation Price fixed by the
Board.
(a) Basic Proposal
Once the Board has fixed the Cancellation Price, it will announce the terms of
the Basic Proposal. These terms will be clearly set out in the Forms of
Election to be sent to Qualifying Shareholders after the EGM.
Under the Basic Proposal, Qualifying Shareholders will receive a cash payment
equal to the Cancellation Price multiplied by the number of Ordinary Shares
held by them on the Record Date which are cancelled. All Qualifying
Shareholders will be subject to the Basic Proposal.
The terms of the Basic Proposal will be set so as to provide Qualifying
Shareholders with a total capital return of approximately #45 million. The
precise amount of the total capital return will depend upon the number of
Ordinary Shares (if any) issued after the terms of the Basic Proposal have
been announced, and before the Record Date, upon the exercise of options under
the Grampian Share Option Schemes or otherwise. It will also depend upon the
effect of the scaling up or down of fractions of Ordinary Shares which would
otherwise fall to be cancelled.
The Board intends to set the terms of the Basic Proposal such that the total
amount of capital to be returned to Qualifying Shareholders will be no more
than #50,000 above or below #45 million (subject to the effect of any further
issues of Ordinary Shares as described above).
For example, if the Board were to fix the Cancellation Price at 85p (being the
mid-point of the indicative range of 80p to 90p per Ordinary Share), that
would require the cancellation of 52,941,176 Ordinary Shares in order to
return #45 million to Qualifying Shareholders (52,941,176 x 85p = #45
million). The terms of the Basic Proposal will be arrived at by dividing the
number of Ordinary Shares in issue (currently 116,483,593) by the number of
Ordinary Shares which would require to be cancelled to return #45 million
(52,941,176), the result of which is approximately 2.20x. Accordingly,
assuming Grampian's issued share capital does not change, the terms of the
Basic Proposal would be 454 Ordinary Shares to be cancelled for every 1,000
Ordinary Shares held (and so in proportion for any other number of Ordinary
Shares held) (454 x 2.2 = approximately 1,000).
Assuming a Cancellation Price of no less than 80p, and no more than 90p, the
maximum and minimum number of Ordinary Shares to be cancelled would be,
respectively, 56,261,575 and 49,971,461 (subject only to the effect of the
treatment of fractions).
By way of illustration only, the following table demonstrates what the effect
of the Basic Proposal will be, at different Cancellation Prices, for a holder
of 1,000 Ordinary Shares:
Cancellation Ordinary Shares cancelled Cash Ordinary Shares
Price received retained
80p 483 #386.40 517
85p 454 #385.90 546
90p 429 #386.10 571
Notes: The above table reflects the number of Ordinary Shares currently in
issue of 116,483,593. The precise effect will depend upon the number of
Ordinary Shares in issue immediately after the EGM.
It also reflects the scaling up or down of fractions of an Ordinary Share
which would otherwise fall to be cancelled.
The Cancellation Price fixed by the Board will not affect the amount of cash
receivable by Qualifying Shareholders under the Basic Proposal (save for the
effect of the treatment of fractions). The Cancellation Price will, however,
affect the number of Ordinary Shares to be cancelled under the Basic Proposal
(and therefore the number of Ordinary Shares to be retained).
In theory, the overall value of Ordinary Shares retained by each Qualifying
Shareholder will be the same, regardless of the Cancellation Price.
(b) Excess Elections
The Board recognises that Qualifying Shareholders may wish to retain more
Ordinary Shares (thereby receiving less cash), or receive more cash (thereby
retaining fewer Ordinary Shares), than will be available to them under the
Basic Proposal. Accordingly, any Qualifying Shareholder may make an Excess
Election under which he may elect to have all, some or none of his Ordinary
Shares cancelled. An Excess Election may (depending upon the extent to which
it is met) have the effect of varying the amount of cash a Qualifying
Shareholder receives and the number of Ordinary Shares he retains. However,
the total amount of cash available, and the total number of Ordinary Shares to
be cancelled, under the Proposal will not vary, and as a result Excess Cash
Elections will be scaled down to the extent that there are insufficient Excess
Shares Elections, and vice versa.
If Qualifying Shareholders make no Excess Election, they will receive cash,
and retain Ordinary Shares, on the terms of the Basic Proposal.
The effect of the Proposal is that Qualifying Shareholders will retain their
proportionate interest in the issued share capital of the Company (subject
only to the effect of the treatment of fractions) save to the extent that they
make an Excess Election which is satisfied in whole or in part. Forms of
Election, which will enable Qualifying Shareholders to make an Excess
Election, are expected to be despatched on 22 January 2002, assuming the
Reduction Resolution is duly passed at the EGM.
Further details of the Proposal, including Excess Elections, will be set out
in the Circular.
Loan Note Alternative
Qualifying UK Shareholders will be able to elect to receive Loan Notes in lieu
of all or part of the cash amount to which they would otherwise be entitled
under the Proposal. However, if valid elections for the Loan Note Alternative
are not received in respect of at least #2.0 million in nominal amount of Loan
Notes, no Loan Notes will be issued unless Grampian, in its sole discretion,
determines otherwise. For regulatory reasons, the Loan Note Alternative is not
being made available to Overseas Shareholders. Forms of Election, which will
enable Qualifying UK Shareholders to elect for the Loan Note Alternative, are
expected to be despatched on 22 January 2002, assuming the Reduction
Resolution is duly passed at the EGM.
Further details of the Loan Note Alternative will be set out in the Circular.
Taxation
In summary, it is anticipated that the receipt by a Shareholder of cash under
the Proposal will generally be treated as a part disposal for the purposes of
UK taxation of chargeable gains.
Shareholders who are in any doubt as to their taxation position should consult
their independent professional adviser.
Court confirmation
The Proposal involves a reduction of Grampian's capital by means of the
cancellation of the Cancellation Shares and the cancellation of the whole of
Grampian's share premium account and capital redemption reserve (which
currently stand at approximately #19.1 million and #2.8 million,
respectively). The resulting credit in Grampian's books of account, together
with certain of Grampian's profit and loss reserves, will be applied in
returning capital to Shareholders pursuant to the Proposal.
In addition to Shareholder approval, the Capital Reduction requires the
confirmation of the Court. In any application to the Court of this nature, the
Court's primary concern is to ensure that the applicant's creditors are
adequately protected. Having obtained professional advice, the Board is
confident that it should be able to satisfy this concern and secure the
necessary Court confirmation, but there can be no certainty about this. If,
for any reason, the Capital Reduction does not become effective by 5.00 pm on
20 May 2002, the Proposal will not proceed. In that event, the Board will
write to Shareholders again with alternative proposals for a cash return to
Shareholders of such amount as can practicably be accommodated by Grampian's
available distributable reserves, without the need for Court confirmation.
This amount is likely to be not less than #30 million.
Benefits of the Proposal
The Board believes that, if implemented, the Proposal will:
- reduce Grampian's cost of capital through the repayment of surplus equity,
thereby enhancing its earnings per share; and
- enable Qualifying Shareholders to benefit from a partial realisation of their
investment on attractive terms.
The return of capital under the Proposal will be financed from Grampian's
existing cash resources and banking facilities, allowing Grampian to put in
place a more appropriate long term funding structure.
The Board is satisfied that, following implementation of the Proposal, the
Group will have sufficient resources available to it for its future
development.
Dividend policy
The Board has historically pursued a progressive dividend policy and intends
to continue with that policy, subject to an adequate level of dividend cover,
future trading and the development needs of the Group and having regard to the
level of cash being returned to Qualifying Shareholders under the Proposal.
Grampian Share Option Schemes
Options outstanding under the Grampian Share Option Schemes will not be
affected by the Proposal. Further details will be set out in the Circular.
Change of name
Over the last four years, the Group has disposed of a number of disparate
businesses and is now focused upon The Malcolm Group. The Board therefore
believes that now is an appropriate time to reflect this transformation
through a change of the Company's name. Accordingly, subject to Shareholder
approval, the Board proposes to change the Company's name to "The Malcolm
Group p.l.c.".
Board changes
With effect from 1 January 2002, Andrew Malcolm will become Chief Executive of
the Group. Mike McGill, formerly Group Financial Controller at John Menzies
plc, will become Group Finance Director and John Douglas, currently Grampian's
Deputy Company Secretary, will be appointed Group Company Secretary. These
appointments follow the retirement of David McGibbon as Finance Director and
Company Secretary on 31 December 2001.
David McGibbon and Colin Birrell, formerly Chief Executive of the EWM Group,
and currently a non-executive director, will both remain as non-executive
directors until after the EGM.
The Board expects to announce further Board changes in the period ahead to
reflect the focus and size of the Group going forward.
Enquiries
Grampian David McGibbon 0141 357 2000
Deutsche Bank Jeremy Lucas 020 7545 8000
Cazenove Malcolm Moir 020 7588 2828
Holborn Public Relations David Bick 020 7929 5599
Media House Tom Cassidy 0141 226 3700
Deutsche Bank and Cazenove, which are regulated in the United Kingdom for the
conduct of designated investment business by the Financial Services Authority,
are acting for Grampian and no one else in connection with the Proposal and
will not be responsible to anyone other than Grampian for providing the
protections afforded to their respective clients or for providing advice in
relation to the Proposal.
DEFINITIONS
The following definitions apply throughout this announcement, unless the
context otherwise requires:
"Basic the proposal summarised in paragraph (a) under "The Proposal"
Proposal" in this announcement, further details of which will be set out
in the Circular;
"Board" or the directors of Grampian;
"Directors"
"Cancellation the price determined by the Board at which Ordinary Shares are
Price" to be cancelled pursuant to the Proposal;
"Cancellation the Ordinary Shares which are to be cancelled pursuant to the
Shares" Proposal;
"Cazenove" Cazenove & Co. Ltd;
"Capital the proposed reduction of capital of Grampian by the
Reduction" cancellation of the Cancellation Shares, cancellation of the
share premium account and cancellation of the capital
redemption reserve, details of which will be set out in the
Circular;
"Circular" the circular giving further details of the Proposal to be sent
to Shareholders;
"Court" the High Court of Justice in England;
"Daily Official the Daily Official List published by London Stock Exchange Plc;
List"
"Deutsche Bank" Deutsche Bank AG London;
"Elections" the Excess Elections and the election for the Loan Note
Alternative, or any of them, as the context may require;
"EWM" The Edinburgh Woollen Mill Limited;
"EWM Disposal" the disposal by Grampian of EWM, which was completed on 25 July
2001;
"EWM Group" EWM and its subsidiaries;
"Excess Cash the election to cancel more Ordinary Shares for cash at the
Election" Cancellation Price than would be cancelled under the Basic
Proposal;
"Excess the Excess Cash Election and the Excess Shares Election, or
Elections" either of them, as the context may require;
"Excess Shares the election to retain more Ordinary Shares than would be
Election" retained under the Basic Proposal;
"Extraordinary the extraordinary general meeting of the Company to be held on
General 18 January 2002 (or any adjournment thereof), notice of which
Meeting" or will be set out in the Circular;
"EGM"
"Form of the form of election for use by Qualifying Shareholders in
Election" connection with the Excess Elections and by Qualifying UK
Shareholders in connection with the Loan Note Alternative;
"Grampian" or Grampian Holdings p.l.c.;
"Company"
"Grampian Share the Grampian Holdings 1994 Executive Share Option Scheme, the
Option Schemes" Grampian Holdings Executive Share Option Scheme, the Grampian
Holdings Savings-Related Share Option Scheme and the Grampian
Holdings Sharesave Scheme;
"Grampian ordinary shares of 25p each in the capital of Grampian;
Shares" or
"Ordinary
Shares"
"Group" Grampian and its subsidiaries;
"LIBOR" London Inter-Bank Offered Rate;
"Loan Note the opportunity for Qualifying UK Shareholders to elect to
Alternative" receive Loan Notes in lieu of all or part of the cash amount to
which they would otherwise be entitled under the Proposal;
"Loan Notes" unsecured loan notes 2011 to be issued to Qualifying UK
Shareholders who validly elect to receive the Loan Note
Alternative under the Proposal;
"Overseas Shareholders who are resident in countries other than the UK;
Shareholders"
"Property the disposal of certain properties occupied by EWM Group, which
Disposal" was completed and announced on 20 December 2001;
"Proposal" the proposals summarised in this announcement and to be set out
in the Circular for a return of capital to Shareholders,
including (without limitation) the Basic Proposal, the
Elections and the Capital Reduction;
"Qualifying Shareholders whose names are on the Register at the Record
Shareholders" Date;
"Qualifying UK Qualifying Shareholders who are resident in the UK;
Shareholders"
"Record Date" the record date determined by the Board for the purposes of the
Proposal which will be set out in the Circular;
"Reduction the resolution for the Capital Reduction to be set out in the
Resolution" notice of EGM in the Circular;
"Register" the register of members of Grampian;
"Shareholders" holders of Ordinary Shares;
"The Malcolm W.H. Malcolm and its subsidiaries;
Group"
"UK" or "United the United Kingdom of Great Britain and Northern Ireland; and
Kingdom"
"W.H. Malcolm" W.H. Malcolm Limited, a wholly owned subsidiary of Grampian.
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