TIDMGWI TIDMO5G
RNS Number : 9635Z
Globalworth Real Estate Inv Ltd
27 May 2021
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
26 May 2021
Globalworth Real Estate Investments Limited ("Globalworth" or
the "Company")
Publication of Response Circular
The Independent Committee of the Globalworth Board announces
today that it is publishing its response circular (the "Response
Circular") in connection with the unsolicited cash offer by CPI
Property Group S.A. and Aroundtown SA at EUR7.00 per Globalworth
Share (the "Offer").
The Independent Committee continues to believe that the Offer
significantly undervalues Globalworth, its assets and its
prospects. A letter from the Chairman of the Board, and on behalf
of the Independent Committee, as set out in the Response Circular
has been extracted in full below.
The full Response Circular is available to view at
https://www.globalworth.com/investor-relations/offer-for-globalworth
.
Terms used but not otherwise defined in this announcement shall
have the meanings given to them in the Response Circular.
Letter from the Chairman of Globalworth Real Estate Investments
Limited
Dear Globalworth Shareholder,
RESPONSE TO THE UNILATERAL OFFER BY CPI PROPERTY GROUP S.A. AND
AROUNDTOWN SA, THROUGH ZAKIONO ENTERPRISES LIMITED, FOR GLOBALWORTH
REAL ESTATE INVESTMENTS LIMITED
1. Introduction
On 14 April 2021, CPI Property Group S.A (" CPI ") and
Aroundtown SA (" Aroundtown " and, together with CPI, the "
Consortium ") announced a firm intention to make a cash offer for
Globalworth pursuant to which Zakiono Enterprises Limited ("
Zakiono "), an entity indirectly wholly owned by CPI, would acquire
the entire issued and to be issued share capital not already owned
by Zakiono or the Consortium at a price of EUR7.00 in cash per
Globalworth Share (the " Offer ").
On 19 April 2021, Globalworth announced the formation of a
committee comprising three independent directors, Geoff Miller,
John Whittle and Andreea Petreanu (the " Independent Committee "),
to evaluate the terms of the Offer. The other Globalworth Directors
were not considered independent for the purposes of evaluating the
Offer due to their connections to the members of the Consortium (in
respect of Martin Bartyzal, having been appointed by CPI pursuant
to rights enshrined in Globalworth's articles of association, and
David Maimon, having been nominated by Aroundtown and appointed by
the Globalworth Board) or to Growthpoint as a significant
Globalworth shareholder (in respect of Norbert Sasse as Growthpoint
CEO having been appointed by Growthpoint pursuant to rights
enshrined in Globalworth's articles of association and Richard van
Vliet, having been nominated by Growthpoint and appointed by the
Globalworth Board) or by reason of their executive management
position (Dimitris Raptis as CEO).
The Independent Committee believes that the Offer significantly
undervalues Globalworth, its assets and its prospects. This
document sets out the valuation and other considerations taken into
account by the Independent Committee in reaching its conclusion
that Globalworth Shareholders should reject the Offer.
TO REJECT THE OFFER YOU NEED TO TAKE NO ACTION
Details of the Offer were set out in the offer document sent to
Globalworth Shareholders on 12 May 2021 (the " Offer Document
").
2. The Independent Committee's views on the Offer Price
The Independent Committee believes that the Offer, which values
the entire issued and to be issued ordinary share capital of
Globalworth at approximately EUR1,571 million[1] (or EUR774 million
in respect of the entire issued and to be issued ordinary share
capital of Globalworth not held by the Consortium), significantly
undervalues Globalworth, its assets and its prospects.
The Offer Price of EUR7.00 per Globalworth Share represents a
discount of approximately 27% to Globalworth's six-month volume
weighted average price ([2]) as at 21 February 2020, being the last
date prior to the start of the COVID-19 pandemic.
The Offer Price represents a significant discount to
Globalworth's EPRA NAV (EPRA NRV[3]), which was EUR8.68[4] per
Globalworth Share as at 31 December 2020 and EUR8.59[5] as at 31
March 2021, representing a discount of 19.4% and 18.5%,
respectively. Taking into account the cash and cash equivalents at
31 December 2020 of EUR527.8 million and at 31 March 2021 of
EUR469.7 million, the Offer Price represents a discount of 26.7%
and 24.6% to Globalworth's EPRA NAV adjusted for cash and cash
equivalents at 31 December 2020 and 31 March 2021,
respectively.
Offer Price in Relation to Historical Share Price
On the last trading day prior to the announcement of the
intention to launch the Offer (13 April 2021), Globalworth Shares
were listed at a closing price of EUR5.86 on the London Stock
Exchange. The Offer price therefore exceeds the closing price by
EUR1.14, which corresponds to a premium of just 19.5%.
The following table shows the volume-weighted average exchange
price (" VWAP ") per Globalworth Share for the past one, three and
six calendar months, as well as the spot price at the time of the
announcement of the intention to launch the Offer.
Spot price 1 month 3 months 6 months
13 April (15 March (14 January (14 October
2021 (closing 2021 to 13 2021 to 13 2020 to 13
price) April 2021) April 2021) April 2021)
VWAP (EUR) 5.86 5.85 6.83 6.66
Premium (Offer Price
minus VWAP) (EUR) 1.14 1.15 0.17 0.34
Premium (Offer Price
to VWAP) 19.5% 19.6% 2.5% 5.1%
Source: Factset, based on Offer Price of EUR7.00 per Share
(without factoring in a dividend).
The following table shows the VWAP per Globalworth Share for the
past one, three and six calendar months as at 21 February 2020,
being the last date prior to the start of the COVID-19 pandemic,
demonstrating a discount of the Offer of approximately 27% to
Globalworth's Share across each period.
1 month 3 months 6 months
(22 January 2020 (22 November (22 August 2019
to 21 February 2019 to 21 February
2020) to 21 February 2020)
2020)
VWAP (EUR) 9.65 9.65 9.63
Premium (Offer Price
minus VWAP) (EUR) (2.65) (2.65) (2.63)
Premium (Offer Price
to VWAP) (27.5%) (27.4%) (27.3%)
Source: Factset, based on Offer Price of EUR7.00 per Share
(without factoring in a dividend).
By any of these metrics the Independent Committee considers the
premia implied by the Offer to be wholly inadequate in the context
of a change of control transaction.
Performance Indicators
The following table shows selected financial indicators in EUR
for Globalworth since 2018 that have been taken from the
consolidated annual financial statements prepared in accordance
with IFRS, and an unaudited consolidated statement of financial
position as at 31 March 2021.
Unaudited
consolidated
Indicator 2018 2019 2020 Mar-21
------------------------------------ ---- ---- ---- -------------
Diluted NAV per Globalworth
Share in EUR 8.18 8.61 7.93 7.82
EPRA NAV (EPRA NRV) per Globalworth
Share in EUR[6] 9.04 9.30 8.68 8.59
The objective of the EPRA NRV measure is to highlight the value
of net assets on a long-term basis. Assets and liabilities that are
not expected to crystallise in normal circumstances such as the
fair value movements on financial derivatives and deferred taxes on
property valuation surpluses are therefore excluded. Since the aim
of the metric is to also reflect what would be needed to recreate
the company through the investment markets based on its current
capital and financing structure, related costs such as real estate
transfer taxes should be included.[7]
Based on these industry standard financial indicators it is
clear that the Offer very significantly undervalues the
Company.
3. The Independent Committee's views on the effect of the
implementation of the Offer and the Consortium's future intentions
on Globalworth's interests, employees and locations
The Code requires the Independent Committee to express its views
on the effect of the Offer on all the Company's interests,
including, specifically, employees. It also requires the
Independent Committee to express its views on the Consortium's
strategic plans for the Company and the likely repercussions of
those plans on employment and the locations of Globalworth's places
of business, to the extent those plans are set out in the
Consortium's Offer Document.
Globalworth Shareholders' attention is drawn to paragraph 8 of
Part 1 of the Offer Document in relation to the proposals to be
made in respect of the Globalworth's interests, employees and
locations of business, wherein the Consortium stated that it had
not had access to Globalworth's non-public information and as a
result had been unable to formulate detailed plans regarding the
impact of the Offer on Globalworth and its employees, management or
operations. The Independent Committee refutes the assertion that
the Consortium did not have access to such information as would
have allowed it to formulate detailed plans and notes that,
notwithstanding the fact that the Consortium did not request such
information, the Independent Committee proactively offered to
provide it. That offer was not taken up by the Consortium.
Following the publication of the Offer Document, the Independent
Committee and its advisers were concerned about the lack of clarity
provided by the Consortium in the Offer Document, particularly
regarding their intentions as to the consolidation of their
holdings of Globalworth Shares, the future composition of the board
and what the Consortium referred to as their "anticipated plans"
for the Company. This concern was shared by Globalworth's largest
independent Shareholder, Growthpoint.
As a result, on 21 May 2021, the Independent Committee sent a
letter to the Consortium, which is set out in Part III of this
document, seeking certain clarifications in relation to the
Consortium's intentions for Globalworth (the " Clarification Letter
").
In particular, the Independent Committee considers that it is of
material significance for Globalworth Shareholders when deciding on
the merits of the Offer, to understand what the Consortium's
intentions are regarding the proposed consolidation of their
holdings of Globalworth Shares in the event the Offer lapses or is
otherwise withdrawn. This is on the basis that if their
shareholdings are consolidated, certain existing corporate
governance protections terminate, the most important of which is
the requirement for the Globalworth Board to maintain a majority of
independent directors. As such, the Clarification Letter sought
further clarification on the Consortium's intentions regarding
independent directors and the composition of the board.
In the Clarification Letter, the Independent Committee also
offered to discuss alternative transactions to the Offer that may
deliver greater value to all Globalworth Shareholders.
Within the Consortium's limited existing disclosure the
Independent Committee notes that the Consortium states that it:
-- does not currently intend to make any changes to existing
employment rights, including pension rights, of the management and
employees of Globalworth and its subsidiaries;
-- does not currently intend to change the places of
Globalworth's business, including the location of its headquarters
and the headquarters' functions;
-- does not intend to redeploy any of Globalworth's fixed assets; and
-- intends to maintain Globalworth's AIM listing.
However the Consortium has stated its intention, following the
Offer becoming or being declared unconditional in all respects,
to:
-- within six months of the Offer completing, undertake a
strategic review of Globalworth's business;
-- make changes to the Globalworth Board in order to reflect the
Consortium's majority shareholding in Globalworth, with the effect
that the Consortium intends to take control of the Board and cause
Globalworth to implement the Consortium's (unstated) strategy going
forward; and
-- consider proposals regarding the incentivisation of
management and employees that may include arrangements to secure
the ongoing participation of Globalworth's senior management.
In light of this the Independent Committee notes the
following:
-- there is a material risk that in the event that the Offer
goes unconditional in all respects or the Consortium consolidates
its shareholding in Zakiono (which may happen even if the Offer
does not go unconditional in all respects) the Consortium may seek
to materially weaken or remove current governance protections that
benefit Globalworth's minority shareholders;
-- the Consortium has provided no description of its anticipated
plans for Globalworth or the basis for its assertion that those
plans will improve Globalworth's business performance;
-- a combination of weakened governance protections and the
Consortium's anticipated plans for Globalworth could, among other
things, result in Globalworth generating reduced profits available
for the purpose of paying dividends, reducing income for
shareholders and depressing the value of Globalworth's shares;
-- as set out in the Independent Committee's letter to the
Consortium dated 21 May 2021, the Independent Committee has offered
to explore all avenues that may result in delivering greater value
to all Globalworth Shareholders; and
-- should the Offer go unconditional in all respects or, should
the Offer lapse but the Consortium consolidate their holdings in
Zakiono, and the Consortium maintains the AIM listing, there would
be a material risk that the reduced liquidity of remaining listed
shares would severely impact their trading value.
In the absence of more detailed information regarding the
Consortium's plans for the Company, the Independent Committee
cannot be certain as to the full repercussions of the Offer on the
Company's interests and is unable to comment further at this stage.
The Independent Committee remains hopeful that the Consortium will
clarify its intentions so that Globalworth Shareholders are able to
reach a properly informed view on the merits of the Offer.
On 24 May 2021, the Independent Committee received a response to
the Clarification Letter from the Consortium. The response provided
very limited detail in addition to that included in the Offer
Document. The Consortium confirmed that the reference to its
"anticipated plans" for Globalworth referred solely to the
statement that it "anticipates making changes to Globalworth's
board in order to reflect the Consortium's majority shareholding in
Globalworth". The Consortium also reiterated its statement in the
Offer Document that it has not made any further plans as regards
Globalworth other than that it intends to carry out a strategic
review of Globalworth's business.
Additionally, the Consortium confirmed in its response that its
members intend to consolidate their shareholdings in Globalworth
upon the terms set out in the Consortium Bid Agreement and the
Subscription Agreement, following the receipt of the antitrust
clearances that are conditions to the Offer. The Consortium also
stated it intends to jointly manage Globalworth pursuant to the
Shareholders' Agreement following such consolidation.
No further detail was provided on any other clarifications
requested by the Independent Committee in the Clarification
Letter.
4. The Independent Committee's views on the Consortium's
proposals for the Globalworth Share Schemes
Your attention is drawn to paragraph 12 of Part 1 of the Offer
Document in relation to proposals to participants in the
Globalworth Share Schemes. Zakiono recently issued its proposals to
participants in the Globalworth Share Schemes as required under
Rule 15 of the Code.
The Independent Committee will communicate separately with
participants in the Globalworth Share Schemes to confirm the impact
of the Offer on awards held under the Globalworth Share
Schemes.
5. Current trading of Globalworth
The Independent Committee is not aware of any significant change
in the financial or trading position of Globalworth since 31
December 2020, being the latest date at which historical financial
information for the Globalworth Group has been published.
6. Financing Arrangements
Globalworth is party to a number of existing financing
arrangements which are subject to change of control provisions that
would be triggered if the Offer: (i) becomes wholly unconditional;
or (ii) if the members of the Consortium consolidate their
shareholdings in Zakiono as described at paragraph 5, page 12 of
the Offer Document (each, a " Change of Control ").
Loans
The amounts outstanding under Globalworth's existing loan
documents correspond to approximately EUR227,260,000 in aggregate,
which would entitle each of the relevant lenders to demand
repayment of each of the outstanding loans if a Change of Control
occurs. Whilst no amounts are currently drawn under Globalworth's
EUR215,000,000 existing revolving credit facility, the relevant
lenders will also be entitled to cancel their respective
commitments if a Change of Control occurs - thereby risking
Globalworth's ability to draw on this significant line of credit if
/ when required. The Independent Committee notes that the
Consortium has not confirmed how it would refinance Globalworth's
outstanding loans, nor whether it would intend to seek any waivers
of the relevant contractual provisions or put in place a new
revolving credit facility.
Bonds
Additionally, Globalworth has approximately EUR1,273 million of
bonds outstanding, comprising approximately EUR323 million of its
2.875% Notes due 2022, EUR550 million in aggregate principal amount
of its 3% Notes due 2025 and EUR400 million in aggregate principal
amount of its 2.950% Notes due 2026 (the " Bonds ").
If (1) a Change of Control occurs, and (2) certain rating
downgrades of the Bonds occur within a certain period following the
announcement of the intention to effect such Change of Control, the
holders of the Bonds will have the option to require Globalworth to
redeem the Bonds at 100% of their principal amount together with
accrued and unpaid interest on the Bonds to the redemption date.
The Independent Committee notes that the Consortium has not
confirmed how it would finance any redemption of the Bonds in such
circumstances.
7. Take No Action
Your decision as to whether you accept the Offer will depend
upon your individual circumstances. If you are in any doubt as to
what action you should take, you should seek your own independent
professional advice. However, the Independent Committee, which has
been so advised by J.P. Morgan and Panmure Gordon as to the
financial terms of the Offer, consider that the Offer significantly
undervalues Globalworth, its assets and its prospects and, in light
of this and notwithstanding the other considerations outlined
above, unanimously recommend that Globalworth Shareholders reject
the Offer. In providing its financial advice to the Independent
Committee, each of J.P. Morgan and Panmure Gordon have taken into
account the commercial assessment of the Independent Committee.
Panmure Gordon is providing independent financial advice to the
Independent Committee for the purposes of Rule 3 of the Code and,
in doing so, has taken into account the commercial assessments of
the Independent Committee.
Accordingly, the Independent Committee unanimously recommend
that YOU SHOULD TAKE NO ACTION in relation to the Offer and that
YOU SHOULD NOT SIGN ANY DOCUMENT THAT THE CONSORTIUM OR ITS
ADVISERS SEND TO YOU . If you have already accepted the Offer,
there are certain circumstances in which you can withdraw your
acceptance of the Offer and a summary of the rights of withdrawal
is set out in paragraph 5 of Part 2 of the Offer Document.
The members of the Independent Committee and the other
Globalworth Directors who hold Globalworth Shares (other than the
Globalworth CEO) do not intend to accept the Offer in respect of
their own beneficial interests in Globalworth Shares.
Whilst the Globalworth CEO believes that the Offer Price does
not reflect the fundamental value of the Company, in light of his
personal circumstances and concern as to the future liquidity and
trading value of the Globalworth Shares, the Globalworth CEO has
indicated that he intends to accept the Offer.
The Independent Committee notes that a change in any one of a
number of factors could result in it changing its recommendation to
shareholders, including an increase in the Offer Price or a
decision by Growthpoint, EBRD or Oak Hill Advisors to accept the
Offer. If any material new facts arise in relation to the Offer
following the publication of this document, the Independent
Committee will consider such material new facts in light of its
recommendation to Globalworth Shareholders. The Independent
Committee will provide updates to the Globalworth Shareholders as
appropriate.
Yours faithfully,
Geoff Miller
Independent Non-Executive Director, Chairman of the Board and
the Nomination Committee
for and on behalf of the Independent Committee
Enquiries:
Globalworth Via advisers
Geoff Miller, Chairman of the Board
-------------
J.P. Morgan Cazenove (Financial Adviser) Tel: +44 20
7742 4000
-------------
Massimo Saletti / Leon Li
Dwayne Lysaght / Jonty Edwards
-------------
Panmure Gordon (Nominated Adviser and Joint Broker) Tel: +44 20
7886 2500
-------------
Dominic Morley / Alina Vaskina
-------------
Important notices
This announcement is not intended to and does not constitute an
offer to buy or the solicitation of an offer to subscribe for or
sell or an invitation to purchase or subscribe for any securities
or the solicitation of any vote in any jurisdiction. The release,
publication or distribution of this announcement in whole or in
part in, into or from certain jurisdictions may be restricted by
law and therefore persons in such jurisdictions should inform
themselves about and observe such restrictions.
The person responsible for arranging for the release of this
announcement on behalf of the Company is Nicola Marrin, Company
Secretary.
Disclaimer
J.P. Morgan Securities plc, which conducts its UK investment
banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"),
is authorised in the United Kingdom by the Prudential Regulation
Authority (the "PRA") and regulated in the United Kingdom by the
PRA and the Financial Conduct Authority. J.P. Morgan Cazenove is
acting as financial adviser exclusively for Globalworth and no one
else in connection with the matters set out in this announcement
and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to
anyone other than Globalworth for providing the protections
afforded to clients of J.P. Morgan Cazenove or its affiliates, nor
for providing advice in relation to any matter referred to
herein.
Panmure Gordon (UK) Limited ("Panmure Gordon") which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively for Globalworth and no one
else in connection with the matters set out in this announcement
and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to
anyone other than Globalworth for providing the protections
afforded to clients of Panmure Gordon or its affiliates, nor for
providing advice in relation to any matter referred to herein.
Rule 26.1 Disclosure
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be available at www.globalworth.com, by no later
than 12 noon (London time) on the business day following the date
of this announcement. The content of the website referred to in
this announcement is not incorporated into and does not form part
of this announcement.
[1] Value of the Offer as disclosed in the Rule 2.7 announcement
on 14 April 2021, based on a fully diluted number of 224.4 million
Globalworth Shares.
[2] 6M VWAP pre-COVID of EUR9.63 per share.
[3] From 2021 onwards, Globalworth reports EPRA NRV as the
equivalent metric to the previous EPRA NAV.
[4] Based on a fully diluted number of 221.5 million Globalworth Shares.
[5] Based on a fully diluted number of 221.2 million Globalworth Shares.
[6] From 2021 onwards, Globalworth reports EPRA NRV as the
equivalent metric to the previous EPRA NAV.
[7] Source: EPRA Best Practices Recommendation Guidelines as of October 2019.
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