TIDMHLO
RNS Number : 6755M
Healthcare Locums PLC
19 August 2011
19 August 2011
The distribution of this announcement into jurisdictions other
than the United Kingdom may be restricted by law. Any failure to
comply with any of the restrictions may constitute a violation of
the securities law of any such jurisdiction. In particular this
announcement should not be distributed, forwarded to or transmitted
to the United States or any other Restricted Jurisdiction. The New
Ordinary Shares, the Application Form and the Circular have not
been, nor will be, registered under the US Securities Act or under
the applicable securities laws of any state of the United States or
under the securities laws of any other Restricted Jurisdiction or
any state, province or territory thereof or any other jurisdiction
outside the United Kingdom.
There will be no public offer in the United States or any other
Restricted Jurisdictions. Accordingly, neither the New Ordinary
Shares, Open Offer Entitlements nor the Application Form may be
taken up, offered, sold, resold, delivered or distributed, directly
or indirectly, through CREST or otherwise, within, into or from the
United States or any of the other Restricted Jurisdictions or to,
or for the account of, any person with a registered address in, or
who is resident or ordinarily resident in, or a citizen of such
jurisdictions or to any person in any country or territory where to
do so would or might contravene local securities laws or
regulations except pursuant to an applicable exemption.
Healthcare Locums plc
("HCL" or the "Company" or the "Group")
GBP60 million Placing and Open Offer of up to GBP4.25
million
Debt for Equity Conversion and Debt Repayment and
Restructuring
Approval of Waiver by the Takeover Panel
and
Notice of General Meeting
The Board of Healthcare Locums plc has today announced a
substantial refinancing of the Company designed to secure the
Company's future by putting it on a solid financial footing and
provide Healthcare Locums with the requisite cash and debt
resources and capital structure to give it the capability to
generate significant returns and enable trading in Ordinary Shares
on AIM to be resumed. The refinancing comprises a GBP60 million
Placing, an Open Offer of up to GBP4.25 million, the Debt for
Equity Conversion and the Debt Repayment and Restructuring
(together referred to as the "Refinancing"). The Board has also
announced the publication of Healthcare Locums' audited Financial
Statements for the year ended 31 December 2010.
The Placing, the Open Offer, the Debt for Equity Conversion and
the Debt Repayment and Restructuring are all conditional upon the
approval of the Shareholders at the General Meeting. The
restoration of trading on AIM of the Ordinary Shares will take
place upon and subject to completion of the Refinancing.
The Placing has been offered to a range of new and existing
shareholders. In particular, as part of the Placing, Toscafund, an
existing shareholder, that has been very supportive of the company
and its management, reflecting its positive view of the company's
future prospects for growth, has agreed to subscribe GBP33.6
million for 336,375,000 New Ordinary Shares and (separately from
the Debt for Equity Conversion) ACE Limited has agreed to subscribe
GBP13.16 million for 131,625,000 New Ordinary Shares. The issue of
Placing Shares to both Toscafund and ACE Limited is conditional
upon the Waiver being granted by the Takeover Panel becoming
effective, which is in turn conditional upon the approval of the
Independent Shareholders at the General Meeting voting on a
poll.
In the event that the Refinancing Resolutions are not passed at
the General Meeting and the Refinancing is not implemented, then
the Group will be unable to satisfy its existing financial
covenants and/or service its existing borrowings or meet its
ongoing funding requirements without further support from the
Lenders. In such event, the Group would be in default under the
Existing Facilities. Such a default under the Existing Facilities,
in addition to any default which may subsist due to
misrepresentations made under the terms of the Existing Facilities
at the time they were entered into, would entitle the Lenders to
demand repayment of the Existing Facilities. Further, if the
Refinancing does not proceed, the Banks have informed the Company
that they will only continue to support the business on the basis
that a sale of all or part of the Group is pursued. This would be
likely to involve formal insolvency proceedings for all or part of
the Group. This would, in the Board's opinion, result in
Shareholders receiving no value for their current
shareholdings.
Commenting on the refinancing, Peter Sullivan, Chairman of
Healthcare Locums, said:
"We are pleased to have achieved this refinancing in such
difficult markets. The Board has considered a range of alternatives
that would deliver the optimum value for stakeholders and revise
the company's current capital structure to allow a strengthened
business to move forward. The Board believes that the refinancing,
if completed will provide the Group with a strengthened balance
sheet and additional cash funding for operational initiatives,
thereby creating a viable, sustainable capital structure giving it
the capability to achieve significant returns."
The information set out below in this announcement has been
extracted from the circular dated 19 August 2011 which is to be
sent to shareholders today (the "Circular"), a copy of which will
be available on the Company's website, www.healthcarelocums.com
shortly.
Contact details:
Healthcare Locums Plc
Peter Sullivan, Chairman
Tel: 0207 451 1451
Fairfax I.S. PLC
Nomad and Joint Broker
Simon Bennett/Ewan Leggat/Laura Littley
Tel: 020 7598 5368
Hawkpoint Partners Limited
Andrew Speirs
Tel: 0207 665 4574
Pelham Bell Pottinger
David Rydell/Emma Kent/Duncan Mayall
Tel: 020 7861 3232
Cautionary note regarding forward-looking statements
This document contains statements about Healthcare Locums plc
that are or may be deemed to be "forward-looking statements".
All statements, other than statements of historical facts,
included in this document may be forward-looking statements and are
subject to, amongst other things, the risk factors described in
Part II of this document. Without limitation, any statements
preceded or followed by, or that include, the words "targets",
"plans", "believes", "expects", "aims", "intends", "will", "may",
"should", "anticipates", "estimates", "projects", or words or terms
of similar substance or the negative thereof, are forward-looking
statements. Forward-looking statements include statements relating
to the following: (i) future capital expenditures, expenses,
revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy, losses and future prospects
and (ii) business and management strategies and the expansion and
growth of the operations of Healthcare Locums plc.
These forward-looking statements are not guarantees of future
performance and have not been reviewed by the Independent Auditors
of Healthcare Locums plc. These forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of any such
person, or industry results, to be materially different from any
results, performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are
based on numerous assumptions regarding the present and future
business strategies of such persons and the environment in which
each will operate in the future. Investors should not place undue
reliance on such forward-looking statements and, save as is
required by law or regulation (including to meet the requirements
of the AIM Rules, the Takeover Code, the Prospectus Rules and/or
the FSMA), Healthcare Locums plc does not undertake any obligation
to update publicly or revise any forward-looking statements
(including to reflect any change in expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based). All subsequent oral or written
forward-looking statements attributed to Healthcare Locums plc or
any persons acting on their behalf are expressly qualified in their
entirety by the cautionary statement above. All forward-looking
statements contained in this document are based on information
available to the Directors of Healthcare Locums plc at the date of
this document, unless some other time is specified in relation to
them, and the posting or receipt of this document shall not give
rise to any implication that there has been no change in the facts
set forth herein since such date.
LETTER FROM THE CHAIRMAN
HEALTHCARE LOCUMS plc
(Incorporated in England and Wales with registered number
4736913)
Registered Office 10 Old Bailey, London, EC4M 7NG
Directors
Peter Sullivan Non-executive Chairman
Stephen Burke Chief Executive Officer
Colin Whipp Interim Chief Financial Officer
Andrew McRae Managing Director Healthcare Australia
David Henderson Senior Independent Non-executive Director
19 August 2011
To Shareholders and, for information purposes only, to the
holders of Options
Dear Shareholder,
2010 Financial Statements
GBP60 million Placing and Open Offer of up to GBP4.25
million
Debt for Equity Conversion and Debt Repayment and
Restructuring
Approval of Waiver by the Takeover Panel
And
Notice of General Meeting
1. Introduction
On 25 January 2011 the Board announced the suspension of HCL's
shares from trading on AIM with immediate effect. The announcement
stated that the Board had strong reason to believe that the
financial performance of HCL for the year ended 31 December 2010
would be materially below expectations. Serious accounting
irregularities had been brought to the attention of the Board as a
result of which the Company announced that it would be carrying out
an immediate investigation to consider the financial
implications.
On that date, Kate Bleasdale, Executive Vice-Chairman, and Diane
Jarvis, Chief Financial Officer, were suspended. Subsequently, Alan
Walker, Diane Jarvis, Alasdair Liddell and Mo Dedat resigned from
the Board. Kate Bleasdale also resigned from the Board on 23
February 2011 and was later dismissed as an employee.
I was appointed to your Board as Chairman on 18 February 2011
together with David Henderson as senior independent director. We
were pleased to have been joined in May 2011 by Stephen Burke as
Chief Executive Officer, Colin Whipp as Interim Chief Financial
Officer and by Andy McRae as Managing Director of Healthcare
Australia Holdings.
On 29 June 2011 the Board announced that the lifting of the
suspension of trading in the Company's shares and the production of
the 2010 Financial Statements had regrettably taken longer than the
Board would have hoped, for the reasons explained in that
announcement.
The Board has today announced a substantial refinancing of the
Company designed to secure the
Company's future by putting it on a solid financial footing and
provide HCL with the requisite cash and debt resources and capital
structure to give it the capability to generate significant returns
and enable trading in Ordinary Shares on AIM to be resumed. The
refinancing comprises a GBP60 million Placing, an Open Offer of up
to GBP4.25 million, the Debt for Equity Conversion and the Debt
Repayment and Restructuring (together referred to as the
"Refinancing"). The Board has also announced the publication of
HCL's audited financial statements for the year ended 31 December
2010. Copies of the audited 2010 Annual Report have been posted to
Shareholders along with the Circular.
The key terms of the Refinancing are as follows:
-- A GBP60 million Placing of 600 million New Ordinary Shares at
10p per share;
-- An equitisation of GBP2.5 million of existing debt owed to
Craig Tibbles into 25 million New Ordinary Shares and equitisations
of GBP1.14 million of commission owed to Toscafund and GBP0.45
million of fees and commission owed to ACE Limited, in each case as
part of the Placing. The Interim Working Capital Facility will, to
the extent borrowed, also be equitised as part of the Placing;
-- A GBP22.4 million debt (including accrued interest) for
equity swap with Ares Lux resulting in the issue of 125 million New
Ordinary Shares to Ares Lux at approximately 18p per share,
equating to 14.91 per cent. of the issued share capital (excluding
any take up under the Open Offer) immediately following the
Placing;
This is the same in economic terms as Ares Lux converting
GBP12.5 million of the debt owed to it by the Company into New
Ordinary Shares at the Issue Price and writing off GBP9.9 million
of debt and accrued interest owed to it;
-- A GBP10.21 million conversion of existing debt owed to Ares
Lux into Zero Coupon Notes issued to Ares
Lux in an initial principal amount of GBP10.21 million, which
may increase depending on certain events occurring, including in
relation to the future performance of the Group;
-- A write-off of approximately GBP6.5 million of existing debt
and accrued interest under certain tranches of the Senior Facility
Agreement owed to the Banks. The final figure will be determined
when exchange rates are fixed on or around Admission;
-- The Company and the Banks will partially close their existing
hedging agreements in respect of the sterling facilities under the
Senior Facilities Agreement which will incur break costs of up to a
value of GBP2.70 million which will be written off by the
Banks;
-- A GBP35.0 million repayment of existing debt owed to the
Banks and a restatement of the terms of the remaining debt owed to
the Banks;
-- An Open Offer of up to 42,505,790 New Ordinary Shares, open
to all Qualifying Shareholders pro rata
to their shareholdings at a subscription price of 10p per New
Ordinary Share; and
-- Qualifying Shareholders wishing to apply for New Ordinary
Shares under the Open Offer in excess of
their pro rata entitlements will be able to apply for additional
shares to the extent that other shareholders do not take up their
entitlements.
The Placing, the Open Offer, the Debt for Equity Conversion and
the Debt Repayment and Restructuring
are all conditional upon the approval of the Shareholders at the
General Meeting. The restoration of trading on AIM of the Ordinary
Shares will take place upon and subject to completion of the
Refinancing.
The Placing has been offered to a range of new and existing
shareholders. In particular, as part of the
Placing, Toscafund, an existing shareholder, has agreed to
subscribe GBP33.6 million for 336,375,000 New Ordinary Shares and
(separately from the Debt for Equity Conversion) ACE Limited has
agreed to subscribe GBP13.16 million for 131,625,000 New Ordinary
Shares. The issue of Placing Shares to both Toscafund and ACE
Limited is conditional upon the Waiver being granted by the
Takeover Panel becoming effective, which is in turn conditional
upon the approval of the Independent Shareholders at the General
Meeting voting on a poll.
The purpose of the Circular is to provide you with the details
of, and the background to, the Refinancing and the Waiver and to
explain why the Directors believe that the Refinancing is in the
best interests of the Company and all Shareholders.
Your attention is drawn to the risk factors set out in Part II:
"Risk Factors" of the Circular available on the Company's website
www.healthcarelocums.com.
The opportunity is also being taken to consider at the General
Meeting certain business which it was not possible or appropriate
to consider at the AGM because of the delay in the production of
the 2010 audited Financial Statements.
In the event that the Refinancing Resolutions are not passed at
the General Meeting and the
Refinancing is not implemented, then the Group will be unable to
satisfy its existing financial covenants and/or service its
existing borrowings or meet its ongoing funding requirements
without further support from the Lenders. In such event, the Group
would be in default under the Existing Facilities. Such a default
under the Existing Facilities, in addition to any default which may
subsist due to misrepresentations made under the terms of the
Existing Facilities at the time they were entered into, would
entitle the Lenders to demand repayment of the Existing Facilities.
Further, if the Refinancing does not proceed, the Banks have
informed the Company that they will only continue to support the
business on the basis that a sale of all or part of the Group is
pursued. This would be likely to involve formal insolvency
proceedings for all or part of the Group. This would, in the
Board's opinion, result in Shareholders receiving no value for
their current shareholdings.
2. Background to and reasons for the Refinancing
Investigations
Following the announcement on 25 January 2011, the then Board
launched an immediate internal investigation into the serious
accounting irregularities, the circumstances surrounding their
existence and the financial implications for the Group.
The internal investigation into the apparent accounting
irregularities initially focused on the responsibility, if any, of
Diane Jarvis, Chief Financial Officer and Kate Bleasdale, Executive
Vice Chairman. It involved interviews with all of the Previous
Directors and senior members of the finance staff in the UK.
The internal investigation then went on to investigate the
knowledge of the Previous Directors and senior finance staff
regarding the accounting irregularities and other related issues of
Corporate Governance.
The principal findings of the internal investigation and other
reviews by the Directors and the corrective actions taken were:
-- In reporting results for earlier years the Group recognised
revenue of GBP0.9 million in 2008 in relation to sales in the US,
although none of the revenue had yet been invoiced.
In 2009 a further GBP3.1 million of revenue was recognised in
advance of invoice date as the Previous Directors assessed that the
appropriate milestones had been reached to recognise revenue in
accordance with IAS 18 "Revenue". None of the revenue was invoiced
in 2009.
The Board has reviewed the Group's accounting policy for revenue
recognition in this area and determined that it is more appropriate
to recognise this revenue only when it is invoiced.
The impact before tax of this restatement is to reduce net
assets at 31 December 2009 by GBP4.0 million.
-- Software development costs had been capitalised and were
still on the balance sheet even though the assets were no longer
being used by the business.
The Board has made the appropriate impairment.
The impact before tax of this restatement is to reduce net
assets at 31 December 2009 by GBP5.4 million.
-- In previous years, the Group capitalised costs associated
with the development of an international candidate database. The
judgement surrounding the appropriateness of that treatment was
disclosed as a 'critical judgement' in prior Annual Reports. The
costs capitalised included the costs of collecting information in
connection with identified candidates.
Following an approach by the Financial Reporting Review Panel
(FRRP), the Directors have reconsidered the previous judgements
made regarding whether these costs meet the definition of an
intangible asset under IAS 38. The Board concluded that whilst the
costs of construction of the underlying database would result in an
intangible asset under IAS 38, the costs of collecting information
in connection with identified candidates do not in themselves
result in obtaining legal control over the individual candidates
and as such the costs are indistinguishable from the costs of
developing the business as a whole.
Consequently, the Board wrote off such costs as incurred, rather
than capitalise them.
The impact before tax of this restatement is to reduce net
assets at 31 December 2009 by GBP4.8 million.
-- Sales ledger credits arise as a result of unintentional
overpayments by customers. The Group informs customers when this
happens; amounts overpaid remain as a liability until repaid or no
longer repayable.
The Group previously accounted for such overpayments by
reflecting a liability that represented the Directors' assessment
of the likely amount due to be returned to customers based on
historical levels of credits actually redeemed over a 12 month
period. The remainder of the credits were released to income.
Following a review of the sales ledger credits released to
income, the Directors believe it would be more appropriate to
reinstate these amounts as liabilities of the Group and only to
release such credits to income after the Statute of Limitations
(six years) renders the amount irredeemable or earlier only if
appropriate to derecognise in accordance with IAS 39.
The impact before tax of this restatement is to reduce net
assets at 31 December 2009 by GBP3.3 million.
-- During 2010 the Group had an invoice discounting facility
with Barclays Bank, under which it could borrow against certain
unpaid customer invoices.
On a number of occasions the Group used the facility
inappropriately by double counting certain invoices and by
borrowing against fictitious invoices.
The Group discontinued all its invoice discounting facilities in
December 2010.
-- Costs had been allocated incorrectly to reorganisation costs
in the monthly management accounts during 2010, thereby overstating
Adjusted Profit from operations.
The Directors have reviewed the definition of costs previously
designated as reorganisation costs. In the 2009 Financial
Statements, the full year-to-date costs including salary,
employment costs and redundancy or compensation payments of any
staff made redundant during the year were classified as
reorganisation costs. For the 2010 Financial Statements only the
costs directly associated with such terminations have been
classified as reorganisation costs and 2009 has been restated for
consistency.
The reorganisation costs principally include employee redundancy
costs, relocation of offices associated with the ongoing
off-shoring of back and middle office functions to India, legal and
professional fees and also the ongoing restructuring within the
Qualified Social Workers division.
-- Additionally, the Directors have undertaken a review of the
level of accruals at 31 December 2008 and
31 December 2009. The Group had accounted for various costs for
commissions and bonus expenses for employees and Directors in the
year in which they were paid, rather than accruing them based upon
the activities and performance of the year for which the incentives
arose.
The Directors have reviewed this practice and restated the prior
year accounts by accruing costs in the year to which they
relate.
The impact before tax of this restatement is to reduce net
assets at 31 December 2009 by GBP1.8 million.
The overall impact after tax of the restatements is to reduce
net assets at 31 December 2009 from the previously reported GBP67.2
million to the restated GBP50.0 million, a reduction of 26 per
cent.
The Previous Directors resigned at various times prior to the
completion of the internal investigation and, as noted above, a new
Board was appointed.
In response to the findings of the internal investigation, Grant
Thornton was engaged in April 2011 to investigate and report in
relation to the accounting adjustments, the acquisition of Redwood,
the payment of dividends and cash flow management.
Grant Thornton also investigated certain other issues and
identified that historically there were specific transactions which
suggest that the Company was not fully complying with the NHS terms
and conditions set out in the Framework Agreements.
The Board has had limited time to undertake an entire review of
the practices within the Group and has therefore prioritised areas
which have been highlighted by customer complaint or specific
issues identified internally. The Board has committed significant
resource to uncovering and taking appropriate remedial action in
relation to potential historical breaches of the terms of Framework
Agreements. The Group is currently in discussion with certain NHS
trusts to resolve issues they have raised. Should further issues be
raised by customers, the Board will seek to resolve them
promptly.
Appropriate specific provisions have been made in the 2010
Financial Statements and in the Board's cash flow forecasts.
The investigations also found that Corporate Governance was
below the level expected from a publicly listed company, as
reported on below.
As a result of the matters described above, a number of
disciplinary hearings have been held with the outcome that certain
Previous Directors and other staff were either dismissed or chose
to resign.
The Board is currently considering with its legal advisers how
best to progress any claims that the Company may be able to bring
in connection with the matters described above.
Furthermore, the Board has sought to ensure that appropriate
remedial measures have been taken. New systems have been put in
place so that monthly management accounts can be relied upon in the
future, thus minimising the risk of the events leading up to the
suspension of the Company's shares recurring.
Corporate Governance
On joining as Chairman it was evident that there were extremely
poor levels of Corporate Governance.
Additionally, there was a lack of normal business policies and
procedures and insufficient management of costs. The level of
record keeping surrounding major decisions taken by the Previous
Board was well below the standard which Shareholders would expect
from a publicly listed company.
Your new Board is committed to maintaining high standards of
Corporate Governance, managing the
Group in an effective, entrepreneurial and ethical manner for
the benefit of shareholders over the longer term.
Under the AIM Rules, the Company is not required to implement
the full provisions of the UK Corporate
Governance Code (formerly the Combined Code), which applies for
financial years starting on or after
29 June 2010. However, the Company is committed to applying the
principles of good governance contained in the UK Corporate
Governance Code as appropriate for a company of this size and
nature.
The Interim Chief Financial Officer, Colin Whipp, has announced
that following the successful stabilization and recapitalisation of
the Company he will be stepping down from his interim role.
Following the completion of the Refinancing, the Board will
commence the process of recruiting a permanent Chief Financial
Officer and will update Shareholders in due course.
Finally, the Board is seeking to appoint two additional
independent non-executive directors and will update Shareholders as
soon as possible.
Restatement of Financial Statements
Whilst preparing the 2010 Financial Statements, and further to
the findings of the investigations as detailed above, the Board
recognised the need to restate the 2009 financial statements,
including net equity at 31 December 2008.
Your Board believes that the Group's accounts are a true and
fair representation of the financial position as at 31 December
2010.
Results for the year to 31 December 2010
Performance in 2010 may be summarised as follows:
2010 2009 (Restated)
GBPm GBPm
Revenue 157.2 167.5
Cost of Sales (116.0) (117.1)
--------- ----------------
Gross Profit 41.2 50.4
Gross Profit % 26% 30%
Administrative costs (41.3) (34.8)
--------- ----------------
Adjusted EBITDA * (0.1) 15.6
Depreciation of property,
plant and equipment
Amortisation of intangible (0.6) (0.5)
assets (1.7) (1.0)
Share scheme charges (0.5) (0.5)
--------- ----------------
Adjusted (loss)/profit
from
operations ** (2.9) 13.6
Highlighted items
Goodwill impairment (46.0) -
Others (net) *** (3.2) (5.8)
--------- ----------------
(Loss)/profit from
operations (52.1) 7.8
Foreign exchange gains
(net) 1.5 -
Finance expense (net) (5.9) (2.0)
--------- ----------------
(Loss)/Profit before
tax (56.5) 5.9
Taxation 2.1 (2.8)
--------- ----------------
(Loss)/Profit for the
year (54.4) 3.1
--------- ----------------
Basic earnings per (50.0)p 2.9p
share (pence)
* Adjusted EBITDA is Adjusted (loss)/profit from operations
before depreciation of property, plant and equipment, amortisation
of intangibles and share scheme charges.
** Adjusted (loss)/profit from operations refers to
(Loss)/Profit from operations before impairment of goodwill and
other highlighted items as analysed in Note 5 to the Financial
Statements
*** Other highlighted items are analysed in Note 5 to the
Financial Statements.
The gross debt at 31 December 2010 was GBP125.6m, a significant
increase of GBP104.2 million compared to GBP21.4 million at 31
December 2009. This increase was mainly due to GBP89.7 million (net
of cash acquired) being spent during the year on acquisitions.
As explained in the Financial Review section of the 2010 Annual
Report, the Board believes that it is probable that at 31 December
2010, the Group was in default under the Existing Facilities, and
the Lenders have reserved their rights in relation to any defaults
that may subsist and have not waived any defaults that may subsist
unless the Refinancing proceeds. In these circumstances the Board
considered it appropriate to classify all of the Group's loans as
current liabilities at 31 December 2010.
Your Board believes that during 2010, the Company's previous
strategy of operating largely under contracts not governed by the
Framework Agreements left it wrong-footed and ill-prepared to
respond sufficiently to the increasing focus of NHS spending
through the Framework Agreements. The Previous Board's failure to
respond sufficiently to the changing market place meant firstly the
business had an inadequate supply of locums clinically compliant
with the more onerous framework standards and secondly it had
access to only a restricted number of Framework Agreements.
The impact of this change in the market place upon the UK
business's performance (excluding the impact of acquisitions made
in the second half of 2010) may be summarised as follows:
H1 2010 H2 2010 Movement
Organic business
(ex acquisitions) GBPm GBPm %
Revenues 74.9 63.2 -16%
Gross profit 20.9 15.8 -24%
Gross profit percentage 28% 25% -3%
The primary reason for the deterioration in performance was the
reduction in typically higher margin non- Framework Agreement
business.
Your current Board has already taken measures to ensure the UK
business model is adapted to changes in its market place and
further details on our strategy are set out in paragraph 4 of this
Part I.
A detailed review of the financial information for 2010 and 2009
is set out in the Financial Review in the 2010 Annual Report.
Your attention is drawn to the Independent Auditor's Report
contained in the 2010 Annual Report, in which the Company's
auditors, BDO LLP have qualified their opinion on the 2010
Financial Statements on the basis stated and have included sections
respectively headed "Emphasis of matter - Going concern" and
"Emphasis of matter - potential illegality of dividends".
Reasons for the Refinancing
The acquisition of HCA in December 2010 was entirely funded
through debt provided by CBA, NAB and Ares Lux under the Existing
Facilities. The then existing bank debt of the Group was also
refinanced under the Existing Facilities.
On 25 January 2011, just over one month after the refinancing,
the Previous Board announced to shareholders that the financial
performance of HCL for the year to 31 December 2010 would be
materially below market expectations. In particular, it became
evident that the UK business was cash negative before dividend
payments and its business model had not adapted sufficiently to the
changing market place. During the course of the investigations
which took place over the following months, it became apparent that
the current capital structure of the Group and the costs of
servicing its debt were unsustainable and accordingly a capital
restructuring was required.
The Board has considered a range of alternatives that would
deliver in the timeframe available the optimum value for
stakeholders and revise the Company's current capital structure to
allow a strengthened business to move forward.
The Board believes that the Refinancing, if completed, will
provide the Group with a strengthened balance sheet and additional
cash funding for operational initiatives, thereby creating a
viable, more sustainable capital structure giving it the capability
to achieve significant returns.
Accordingly, the Board believes that the Refinancing is in the
best interests of the Company and its shareholders as a whole.
3. Key elements of the proposals
3.1 Placing
The Company is undertaking a Placing with a number of
institutional Shareholders and new institutional investors which
will, conditional (amongst other things) on Admission and the
resumption of trading on AIM of the Ordinary Shares, raise GBP60
million before expenses (at least approximately GBP50.9 million by
way of cash proceeds and up to approximately GBP9.1 million by way
of equitisation of the Interim Working Capital Facility and other
debts owed by the Company related to the Refinancing) through the
issue of 600 million New Ordinary Shares at the Issue Price. The
Issue Price represents a 91.11 per cent. discount to the price of
112.5 pence per Ordinary Share at which the Ordinary Shares traded
on AIM immediately prior to their suspension from trading on 25
January 2011.
A number of existing and new institutional investors have
committed to participate in the Placing. Fairfax, as agent for the
Company, has received commitments under the Placing (i) from
Toscafund, to subscribe GBP33.6 million for 336,375,000 million New
Ordinary Shares (of which GBP1,137,500 will be off-set against the
Placing commission payable to Toscafund referred to below), (ii)
from ACE Limited, to subscribe GBP13.16 million for 131,625,000
million New Ordinary Shares (this is in addition to the Debt for
Equity Conversion; up to GBP5.0 million of principal amount of, and
interest and commitment fees accrued on, the amount drawn down
under the Interim Working Capital Facility, the GBP0.25 million
arrangement fee under the Interim Working Capital Facility and the
GBP0.20 million Placing commission payable to ACE Limited referred
to below will each be off-set against ACE Limited's GBP13.16
million subscription obligation under the Placing), (iii) from
Craig Tibbles, to subscribe for GBP2.5 million by way of release of
debt for 25 million New Ordinary Shares, and (iv) from new and
other existing institutional investors, to subscribe for the
remaining amount of the Placing, in each case subject to the
conditions set out in the Placing and Open Offer Agreement.
Further details of the Placing and Open Offer Agreement are set
out in paragraph 5.1 of Part VI of the Circular available on the
Company's website www.healthcarelocums.com.
The Company has agreed to pay Toscafund a commission of
GBP1,137,500 and ACE Limited a commission of GBP200,000 for
participating in the Placing, to be off-set against subscription
monies payable by Toscafund and ACE Limited respectively for
Placing Shares under the Placing.
Such commissions are considered to be within the range of normal
market rate for a transaction of this type.
Directors' participation in the Placing
The Directors are participating in the Placing as follows:
Percentage
No. of New Percentage shareholding
Ordinary shareholding if maximum
Shares Total if no number of
% of subscribed shareholding Ordinary Ordinary
No. of Existing for post Placing shares are shares are
Existing Issued pursuant and Debt for taken up taken up
Director's Ordinary Share to the Equity under the under the
name Shares Capital placing Conversion Open offer Open Offer
Peter
Sullivan Nil 0.00% 200,000 200,000 0.024% 0.023%
Stephen
Burke Nil 0.00% 1,000,000 1,000,000 0.119% 0.114%
David
Henderson Nil 0.00% 200,000 200,000 0.024% 0.023%
Andrew
McRae Nil 0.00% 500,000 500,000 0.060% 0.057%
Colin Whipp Nil 0.00% 200,000 200,000 0.024% 0.023%
Toscafund and Ares participation in the Placing
As at the date of the Circular the Toscafund Concert Party has
an interest in 21,531,352 Ordinary Shares in the Company. As a
result of Toscafund's participation in the Placing, it is
anticipated that the Toscafund Concert Party will have an interest
in a total of 357,906,352 Ordinary Shares in the Company,
representing between a minimum of 40.63 per cent. and a maximum of
42.69 per cent. of the Enlarged Issued Share Capital following the
Refinancing, depending on the take up of the Open Offer.
As at the date of the Circular the ACE Concert Party had no
interest in the share capital of the Company, save for the ACE
Warrants. As a result of ACE Limited's participation in the Placing
and Ares Lux's participation in the Debt for Equity Conversion, it
is anticipated that the ACE Concert Party will have an interest in
a total of 256,625,000 Ordinary Shares in the Company, representing
between a minimum of 29.13 per cent. and a maximum of 30.61 per
cent. of the Enlarged Issued Share Capital following the
Refinancing, depending on the take up of the Open Offer.
The table below sets out the shareholdings in the Company of the
Toscafund Concert Party and ACE
Concert Party at the date of the Circular and on Admission
(assuming satisfaction of the conditions to the Placing) based on
the minimum and maximum level of take up under the Open Offer:
Percentage
No. of New No. of New Percentage shareholding
Ordinary Ordinary shareholding if maximum
Shares Shares to Total if no number of
% of subscribed be issued shareholding Ordinary Ordinary
No. of Existing for pursuant to post Placing Shares are Shares are
existing Issued pursuant to the Debt and Debt for taken up taken up
Name of Ordinary Share the for Equity Equity under the under the
shareholder Shares Capital Placing Conversion Conversion Open Offer Open Offer
Toscafund
Concert
Party 21,531,352 19.00% 336,375,000 - 357,906,352 42.69% 40.63%
ACE Concert
Party - 0.00% 131,625,000 125,000,000 256,625,000 30.61% 29.13%
Toscafund has given an irrevocable undertaking to the Company to
vote in favour of the Refinancing
Resolutions at the General Meeting in respect of the 17,053,513
Ordinary Shares for which it has authority to exercise voting
rights, other than the Waiver Resolution (on which it is not
entitled to vote), and not to acquire any further Ordinary Shares
prior to the Refinancing taking effect. Further details of this
undertaking are set out in paragraph 12 of Part VI of the Circular
available on the Company's website www.healthcarelocums.com.
The Company has also entered into a relationship agreement with
Toscafund under which, conditional upon and with effect from
completion of the Placing, Toscafund will agree that so long as
Toscafund manages shares representing 20 per cent. or more of the
issued share capital of the Company, Toscafund will not interfere
with the independent operation of the Board of Directors of the
Company. In addition, so long as Toscafund manages shares
representing 20 per cent. or more of the issued share capital of
the Company, Toscafund will be entitled to nominate one
non-executive Director for appointment to the Board. Further
details of the Toscafund Relationship Agreement are set out in
paragraph 5.3 of Part VI of the Circular available on the Company's
website www.healthcarelocums.com.
The Company and Fairfax have entered into a lock-up agreement
with ACE Limited and Ares Lux under which, conditional upon
Admission, ACE Limited and Ares Lux agree to certain restrictions
in respect of the sale or other disposal of Ordinary Shares held by
them for a period of 12 months from Admission. Further details of
the ACE Lock-up Agreement are set out in paragraph 5.4 of Part VI
of the Circular available on the Company's website
www.healthcarelocums.com.
Related party transaction
Toscafund's participation in the Placing is a related party
transaction under the AIM Rules. Having consulted with the
Company's nominated adviser, Fairfax, the Directors consider that
the terms of Toscafund's participation in the Placing are fair and
reasonable insofar as Shareholders are concerned. In giving advice
to the Directors, Fairfax has taken into account the Directors'
commercial assessments of Toscafund's participation in the
Placing.
Craig Tibbles' participation in the Placing
The Company and Craig Tibbles have agreed, conditional on
completion of the Refinancing, to restructure the two deferred
consideration payments of GBP2 million and GBP3 million payable by
the Company to Craig Tibbles under the terms of the Orion and MJV
Acquisition. One element of this agreement is that GBP2.5 million
is to be released by way of subscription by Craig Tibbles for 25
million New Ordinary Shares under the Placing. He has agreed a 12
month lock up in relation to the Placing Shares he receives.
Further details of the Craig Tibbles Variation Agreement are set
out in paragraph 5.10 of Part VI of the Circular available on the
Company's website www.healthcarelocums.com.
Proceeds of the Placing
Details on the use of proceeds and expenses incurred in relation
to the Refinancing including those in connection with the
preparation of this circular and obtaining the Waiver referred to
below, are set out in paragraph 3.4 of this Part I.
3.2 Open Offer
In order to provide Shareholders who have not taken part in the
Placing with an opportunity to participate in the Refinancing, the
Company is providing all Qualifying Shareholders with the
opportunity to subscribe at the Issue Price for an aggregate of
42,505,790 Open Offer Shares. This allows Shareholders to
participate in part of the Refinancing and to subscribe for New
Ordinary Shares at the Issue Price.
The Open Offer Shares are available to Qualifying Shareholders
under the Open Offer. Qualifying Shareholders are being offered the
opportunity to apply for additional Open Offer Shares in excess of
their pro rata entitlements to the extent that other Qualifying
Shareholders do not take up their entitlements in full. In the
event that applications are received for in excess of 42,505,790
Open Offer Shares, excess applications will be scaled back pro rata
to Qualifying Shareholders' existing shareholdings. The Open Offer
Shares have not been placed under the Placing subject to clawback
under the Open Offer nor have they been underwritten. Consequently,
there may be no or fewer than 42,505,790 Open Offer Shares issued
pursuant to the Open Offer.
Both the Placing and the Open Offer are conditional upon,
amongst other things, the approval of Shareholders of the
Refinancing Resolutions at the General Meeting and upon the Placing
and Open Offer Agreement becoming unconditional in all respects.
The Restructuring Agreement referred to in paragraph 3.3 below is
conditional upon, inter alia, the completion of the Placing and, as
such, also relies upon Shareholders passing the Refinancing
Resolutions.
The proceeds of the Open Offer, assuming that it is subscribed
in full, will amount to GBP4.25 million.
For the purposes of the Open Offer and the Prospectus Directive
the GBP:EUR exchange rate has been taken at EUR1.15:GBP1 as at
close of business on 18 August 2011.
3.3 Debt for Equity Conversion and Debt Repayment and
Restructuring
Conditional on Admission and subject to the terms of the
Restructuring Agreement, the Company has reached agreement with
Ares Lux and the Banks in relation to the Debt for Equity
Conversion and the Debt Repayment and Restructuring. The Company
has also reached agreement with ACE Limited in relation to the
Interim Working Capital Facility.
Agreement with Ares Lux and ACE Limited
ACE Limited has agreed to make the Interim Working Capital
Facility of up to GBP5.0 million available to the Company. The
Interim Working Capital Facility is not conditional on completion
of the Refinancing and the Company expects to utilise this facility
during the period prior to the General Meeting. Up to approximately
GBP5.0 million of principal amount of, plus interest and commitment
fee (of 2.5% per annum on the undrawn amount of the Interim Working
Capital Facility) accrued on the Interim Working Capital Facility
will be off-set against a corresponding part of the subscription
moneys payable by ACE Limited under the Placing. An arrangement fee
of GBP0.25 million is also payable to ACE Limited under the Interim
Working Capital Facility, which is additionally to be off-set
against subscription monies payable by ACE Limited under the
Placing.
Ares Lux has agreed, subject to the conditions referred to
above, to convert GBP22.4 million of the debt (including accrued
interest), currently owed to it by the Company under the Mezzanine
Facility Agreement) into New Ordinary Shares at approximately 18
pence per New Ordinary Share by way of the Debt for Equity
Conversion (the conversion of GBP22.4 million of debt and accrued
interest into New Ordinary Shares at approximately 18 pence per New
Ordinary Share is the same in economic terms as Ares Lux converting
GBP12.5 million of the debt owed to it by the Company into New
Ordinary Shares at the Issue Price and writing off approximately
GBP9.9 million of debt and accrued interest). Ares Lux has also
agreed, subject to the conditions referred to above, to waive all
interest anticipated to be accrued under the Mezzanine Facility
Agreement during the period to Admission.
Ares Lux has also agreed, subject to the conditions referred to
above, to convert GBP10.21 million of the debt currently owed to it
by the Company under the Mezzanine Facility Agreement into Zero
Coupon Notes, initially in a principal amount of GBP10.21 million.
If the Company achieves certain EBITDA or enterprise value targets
or if certain other conditions are met, the Company will be obliged
to issue further Zero Coupon Notes to Ares Lux, further details of
which are set out in paragraph 5.7 of Part VI of the Circular
available on the Company's website www.healthcarelocums.com.
The New Ordinary Shares and the initial GBP10.21 million Zero
Coupon Notes will be issued credited as fully paid. The Zero Coupon
Notes will not accrue interest. Except in certain circumstances
they will fall due for repayment on 30 September 2021.
ACE Limited has also agreed to participate in the Placing in an
amount of GBP13.16 million (as described above, up to GBP5.0
million of principal amount of, and interest and commitment fees
accrued on, the amount drawn down under the Interim Working Capital
Facility, the GBP0.25 million arrangement fee under the Interim
Working Capital Facility and the GBP0.20 million Placing commission
payable to ACE Limited will each be off-set against ACE Limited's
GBP13.16 million subscription obligation under the Placing).
As referred to above, the Company and Fairfax have entered into
the ACE Lock-up Agreement with ACE Limited and Ares Lux, further
details of which are set out in paragraph 5.4 of Part VI of the
Circular available on the Company's website
www.healthcarelocums.com.
Following completion of the Refinancing, the Company will not
owe any debt to Ares Lux under either the Mezzanine Facility
Agreement or to ACE Limited under the Interim Working Capital
Facility.
Agreement with the Banks
The Banks have agreed, subject to the conditions referred to
above, to write-off approximately GBP6.5 million of existing debt
and accrued interest owed under the Senior Facilities Agreement to
Admission. The final figure will be determined when exchange rates
are fixed at or around Admission.
On 18 July 2011, the Company repaid A$32.0 million of the debt
it owed to the Banks under the Senior Facilities Agreement out of
the net proceeds of sale of the Homecare Division of HCA. The
Company has agreed, subject to and upon satisfaction of the
conditions referred to above, to repay a further GBP35.0 million of
the debt it currently owes to the Banks under the Senior Facilities
Agreement, which will be funded out of the net proceeds of the
Placing.
In connection with these debt repayments, the Company and the
Banks will partially close their existing hedging agreement in
respect of the sterling facilities under the Senior Facilities
Agreement which will incur break costs of up to a value of GBP2.70
million which will be written off by the Banks.
The Banks have also agreed (subject to the conditions referred
to above) to amend and restate the Senior Facilities Agreement (the
"Amended and Restated Senior Facilities Agreement"). The principal
terms of the Amended and Restated Senior Facilities Agreement will
be as follows:
-- a term loan of A$60,000,000 (the "Term Loan") bearing an
interest rate of 3.5 per cent. per annum plus the costs of funding
for the Banks. The Term Loan will be repayable in the following
tranches between 2012 and 2014, with the outstanding balance to be
paid on 31 January 2015:
Date of Repayment Repayment Amount (A$)
30 September 2012 1,000,000
31 December 2012 1,000,000
31 March 2013 1,000,000
30 June 2013 1,000,000
30 September 2013 2,000,000
31 December 2013 2,000,000
31 March 2014 2,000,000
30 June 2014 2,000,000
30 September 2014 2,000,000
31 December 2014 2,000,000
TOTAL 16,000,000
-- letter of credit facilities in aggregate up to a maximum
principal amount of A$4,000,000 and GBP2,782,500 ("LOC Facilities")
bearing an issuance fee calculated by reference to a rate equal to
70% of the applicable margin (being 3.5%) on the face value of each
letter of credit instrument issued.
-- the Term Loan and the LOC Facilities are to be fully repaid
by 31 January 2015.
-- the Banks and the Company have agreed certain financial
covenants to be first tested on 30 September 2012, and then to be
tested on a bi-annual basis thereafter. These financial covenants
include an interest cover test and a leverage test.
-- a quarterly cash sweep commencing 30 June 2012 based on 50
per cent of free cash flow (less, among other things, certain
forecasted costs) generated during the quarter.
-- no dividends are to be payable by the Company until the
residual debt owed to the Banks under the Amended and Restated
Senior Facilities Agreement is reduced to GBP35 million (or its
equivalent in A$). Generally, dividends by the Company are
prohibited if breaches subsist under the Senior Facilities
Agreement.
-- the existing security for the debt owed under the Senior
Facilities Agreement will continue to apply to the debt owed under
the Amended and Restated Senior Facilities Agreement.
Agreement with Craig Tibbles
As referred to above, the Company and Craig Tibbles have agreed,
conditional on completion of the Refinancing, to restructure the
two deferred consideration payments of GBP2 million and GBP3
million payable by the Company to Craig Tibbles under the terms of
the Orion and MJV Acquisition. A further element of this agreement
is that Craig Tibbles is to be paid by the Company in October 2011
GBP1.0 million and in October 2012 GBP0.9 million (or,
alternatively at his election, GBP0.8m in June 2012), and upon the
posting of the Circular he is to be released GBP90,000 plus
interest accrued from an escrow account. Further details of the
Craig Tibbles Variation Agreement are set out in paragraph 5.10 of
Part VI of the Circular available on the Company's website
www.healthcarelocums.com.
3.4 Use of Proceeds
GBP35.0 million of the net proceeds of the Placing will be
applied in repaying part of the Senior Facilities.
Up to approximately GBP5.0 million of the principal amount of,
and interest plus commitment fee accrued on, the Interim Working
Capital Facility and the GBP0.25 million arrangement fee payable
under the Interim Working Capital Facility will be set-off against
proceeds of the Placing payable by ACE Limited as described
above.
The Board has provisionally earmarked the sum of GBP60.0
million, comprising the gross proceeds of the Placing (including
the sums saved by the Company by the agreed equitisations and
set-offs of debt with Toscafund, ACE Limited and Craig Tibbles),
but excluding any proceeds of the Open Offer, as intended to be
applied as follows (several of the following are subject to
variation and re-allocation in light of prevailing
circumstances):
Item GBPm
Pay down Senior Facilities Agreement 35.0
Working capital* 6.0
Group level contingency 6.0
Turnaround costs:
- Investment in IT 2.0
- Property rationalization 1.5
- Other 3.5
Refinancing expenses (including
Company's advisers' fees, the
Lenders' advisers' fees and Placing
commissions) 6.0
TOTAL 60.0
* Up to GBP5.0 million (depending on the amount drawn down) of
this working capital is provided under the Interim Working Capital
Facility.
Any proceeds of the Open Offer will be used to provide
additional ongoing working capital for the Group.
Following the Refinancing, the Group is expected to have
increased its cash resources by approximately GBP18 million. Future
earnings per share will be significantly diluted due to the number
of New Ordinary Shares being issued pursuant to the Refinancing as
a whole.
4. Current trading & Strategy
Current trading
Since the announcement on 25 January 2011 of the suspension of
HCL's shares from trading on AIM with immediate effect, the Group
has faced considerable challenges.
However, your Board believes that HCL is now in a position
where, subject to shareholder approval of the
Refinancing, it will be capable of delivering significant
returns.
The UK business remains a leading recruitment business in its
chosen sectors. Following the reengineering of the business's
operations designed to enable it to meet the changing needs in the
UK healthcare staffing market, the UK business is in a good
position to grow sustainably.
The HCA business in Australia has continued to trade in line
with expectations since its acquisition.
We also believe that synergies can be achieved over time by
owning both the Australian and UK healthcare recruitment
businesses.
A summary of unaudited Group gross margins for the six month
period to 30 June 2011, as extracted from unaudited management
accounts, are set out in Appendix III to the Circular. The Board
believes that the UK business has been stabilised and is now in a
position from which to recover. In the first half of 2011 the UK
traded at break even EBITDA (pre-exceptionals). The HCA business in
Australia has continued to generate revenues and margins in line
with management expectations in the first half of 2011.
Strategy for future growth
The new Board's strategy is founded on a commitment to strong
operational and cost control. It is the intention to grow the
business organically, building on what is already a top three
healthcare staffing business in the UK (source: Laing and Buisson
Report dated May 2011) and a leading Australian healthcare staffing
firm.
In the UK, the process of adapting to the changed public sector
environment is now well underway in HCL.We are focused on building
a long term relationship with the NHS and with private sector
providers through compliance and a quality led offering with
pricing transparency. We believe that the current economic
pressures and the longer term market dynamics referred to below
will give rise to opportunities for well-positioned providers to
demonstrate efficiency and value for money in outsourcing
services.
We have undertaken a detailed review of the internal systems and
are now starting to invest in improved systems and compliance
structures and are considering a simplified brand structure, which
we believe will enhance our market presence, whilst generating both
cost savings and improved productivity.
HCA is the largest nursing agency in Australia and a Panel
Supplier (Tier 1) in all six States and the Territories in
Australia. Notwithstanding its leading position, we see significant
market share growth opportunities in a consolidating market,
particularly in the populous Eastern States. We are in the process
of expanding Last Minute Locums, the locum Doctor business acquired
in August 2010, from its core market in New South Wales into the
other States and we will pursue the same organic strategy for
Allied Health Professionals in Australia. Our goal is to build a
broadly based specialist healthcare recruitment business in
Australia, similar to HCL's position in the UK.
Market dynamics favour the Group's new business model and long
term drivers of growth - the growing and ageing population in the
UK and Australia, the demand for greater flexibility amongst both
healthcare workers and providers - remain unchanged.
Despite its recent troubles, HCL remains fundamentally a good
business. Today the Group employs some 580 staff and plays an
important role in fulfilling medical staffing needs in both
Australia and the UK, with over 13,000 locums placed and over 600
permanent placements made in the first half of 2011.
Further information on the strategy for the UK and Australia is
set out in the Operational Review section of the 2010 Annual
Report.
The Board is confident that HCL can grow again and prosper from
here on.
5. Rule 9 of the Takeover Code
The issue by the Company of New Ordinary Shares to Toscafund and
ACE Limited under the Placing and to Ares Lux under the Debt for
Equity Conversion gives rise to certain considerations under the
Takeover Code. Brief details of the Panel, the Takeover Code and
the protections they afford to Shareholders are described
below.
The Takeover Code is issued and administered by the Panel. The
Takeover Code applies to all takeover and merger transactions,
however effected, where the offeree company is, inter alia, a
listed or unlisted public company with its place of central
management in the United Kingdom. The Company is such a company and
Shareholders are entitled to the protections afforded by the
Takeover Code.
Under Rule 9 of the Takeover Code, any person or group of
persons acting in concert who acquires an interest (as defined in
the Takeover Code) in shares which, taken together with shares in
which he and persons acting in concert with him are already
interested, carry 30 per cent. or more of the voting rights in a
company which is subject to the Takeover Code is normally required
to make a general offer to all the remaining shareholders to
acquire their shares.
Similarly, when any person, together with persons acting in
concert with him, is interested in shares which, in aggregate,
carry not less than 30 per cent. of the voting rights of a company
but does not hold shares carrying more than 50 per cent. of such
voting rights, a general offer will normally be required if any
further interests in shares are acquired by any such person, or any
person acting in concert with him, which increases the percentage
of shares carrying voting rights in which he is interested.
An offer under Rule 9 must be made in cash (or with a full cash
alternative) at a price not less than the highest paid by the
person required to make the offer, or any person acting in concert
with him, for any interest in shares of the company during the 12
months prior to the announcement of the offer.
Under the Takeover Code, a concert party arises where persons
acting together pursuant to an agreement or understanding, whether
formal or informal, cooperate to obtain or consolidate control of a
company. Control means holding, or aggregate holdings of, shares
carrying 30 per cent. or more of the voting rights of the company,
irrespective of whether the holding or holdings give de facto
control.
The Panel considers Toscafund, any funds managed or advised by
Toscafund and by virtue of his interest in Toscafund, Mr. Martin
Hughes and thereby Old Oak Holdings Limited, Cheviot Asset
Management Limited, Tosca Penta Holdings Limited, Penta Capital LLP
and any funds managed by Cheviot Asset Management Limited and Penta
Capital LLP as persons acting in concert for the purposes of the
Takeover Code (the "Toscafund Concert Party").
The Panel considers ACE L.P., ACE Holdco UK, ACE Holdco Cayman,
ACE Limited, ACE Limited's wholly owned subsidiary, Ares Capital
European Investments Limited, Ares Management Limited, Ares Lux,
ACE (BVI) Limited (British Virgin Islands) and ACE (BVI) Trust
(British Virgin Islands) as persons acting in concert for the
purposes of the Takeover Code (the "ACE Concert Party").
6. Current and potential shareholding of the Toscafund Concert
Party
As at 18 August 2011, being the last practicable date prior to
the posting of the Circular, the Toscafund
Concert Party had an interest in 21,531,352 Ordinary Shares,
representing 19.00 per cent. of the issued share capital of the
Company.
As described in paragraph 3.1 above, as a result of Toscafund's
participation in the Placing, it is anticipated that the Toscafund
Concert Party will have an interest in 357,906,352 Ordinary Shares,
representing between a minimum of 40.63 per cent. and a maximum of
42.69 per cent. of the Enlarged Issued Share Capital, depending
upon the level of take up of the Open Offer.
7. Information on the Toscafund Concert Party
Toscafund is part of the Old Oak Group, a financial services
business with offices in London and Dubai which is engaged in asset
management, wealth management and private equity. The business was
founded in 2000 by Martin Hughes, the chief executive. The holding
company for the Old Oak Group is
Old Oak Holdings Limited, a company established and owned by
Martin Hughes. Group entities include
Cheviot Asset Management, a private client asset and wealth
manager and Penta Capital Partners, a private equity business. The
Old Oak Group has combined assets under management of around GBP4.9
billion.
Toscafund's primary activity is to act as an investment
manager/adviser to a number of investment funds and accounts that
follow primarily equity investment strategies. It was incorporated
in England and Wales on 13 June 2006 and has been authorised by the
Financial Services Authority to conduct investment business since
31 October 2006. Its principal place of business is at 7th Floor,
90 Long Acre, London WC2E 9RA.
The "Toscafund Concert Party" comprises Toscafund, any funds
managed or advised by Toscafund and by virtue of his interest in
Toscafund, Mr. Martin Hughes and thereby Old Oak Holdings Limited,
Cheviot
Asset Management Limited, Tosca Penta Holdings Limited, Penta
Capital LLP and any funds managed by Cheviot Asset Management
Limited and Penta Capital LLP.
Toscafund will participate in the Placing through funds managed
or advised by it. None of its funds are dependent on the Company or
its business.
8. Current and potential shareholding of the ACE Concert
Party
As at 18 August 2011, being the latest practicable date prior to
the publication of the Circular the ACE
Concert Party had no interest in the share capital of the
Company save for the ACE Warrants, details of which are set out on
paragraph 5.8 of Part VI. The ACE Warrants will be cancelled as a
result of the Refinancing.
As described in paragraph 3.1 above, as a result of the ACE
Limited's participation in the Placing and ACE Lux's participation
in the Debt for Equity Conversion, it is anticipated that the ACE
Concert Party will have an interest in 256,625,000 Ordinary Shares,
representing between a minimum of 29.13 per cent. and a maximum of
30.61 per cent. of the Enlarged Issued Share Capital depending upon
the level of take up of the Open Offer.
9. Information on the ACE Concert Party
ACE Limited is a privately owned investment company with offices
in London, Paris, Frankfurt and Stockholm with the primary aim of
providing debt finance for middle market companies. Since
inception
ACE has invested approximately $1.1 billion in over 35 different
companies predominantly across Europe.
ACE Limited has over $1.1 billion of committed capital which has
been provided by a number of international institutional investors,
sovereign wealth funds and banks. ACE Limited currently manages an
investment portfolio of over $900 million.
ACE Limited was incorporated in England and Wales on 25 June
2007 as a limited liability company with registered number 6291467.
The registered office of ACE Limited is Pellipar House, 1st Floor,
9 Cloak Lane, London EC4R 2RU.
The Directors of ACE Limited are Kenneth Gordon Watters, Michael
Arougheti, Robert Kipp deVeer and
Michael Weiner.
ACE Limited is a wholly owned subsidiary of ACE L.P. through its
intermediate holding company ACE
Holdco UK. ACE Holdco Cayman is also wholly owned subsidiary of
ACE L.P. and is the holder of the ACE Warrants. ACE Limited has a
sub-advisory agreement with Ares Management Limited, an FSA
registered firm. Ares Management Limited also provides investment
management services to Ares Lux.
Ares Lux is a private limited liability company, registered
under the laws of Luxembourg under section B number 135825, with
its registered office at L-1331 Luxembourg, 65, Boulevard
Grande-Duchesse
Charlotte. Its sole activity is the provision of senior and
mezzanine debt financing to European middlemarket companies. As
referred to in paragraph 3.3 of this Part I and detailed in
paragraph 5.8 of Part VI of the Circular available on the Company's
website www.healthcarelocums.com, Ares Lux is the mezzanine lender
to the Company under the Mezzanine Facility Agreement.
The directors of Ares Lux are Kenneth Gordon Watters, Gerard
Birchen, Jean-Christophe Dauphin and
Hugo Froment.
By virtue of various funding agreements with ACE Limited and ACE
L.P, Ares Lux and its holding companies, ACE (BVI) Limited (British
Virgin Islands) and ACE (BVI) Trust (British Virgin Islands) are
also deemed to be acting in concert.
Therefore, the "ACE Concert Party" comprises ACE L.P., ACE
Holdco UK, ACE Holdco Cayman, ACE
Limited, ACE Limited's wholly owned subsidiary, Ares Capital
European Investments Limited, Ares
Management Limited, Ares Lux, ACE (BVI) Limited (British Virgin
Islands) and ACE (BVI) Trust (British Virgin Islands).
ACE Limited will finance its participation in the Placing from
its own resources. None of its funds are
dependent on the Company or its business.
10. Dispensation from Rule 9
The issue of Placing Shares to the Toscafund Concert Party would
normally give rise to an obligation to make a general offer to all
Shareholders pursuant to Rule 9 as it will result in the Toscafund
Concert Party controlling the voting rights of 30 per cent. or more
of the issued share capital of the Company. The
Toscafund Concert Party, following the Refinancing, will manage
and/or own Ordinary Shares which carry more than 30 per cent. but
will not hold more than 50 per cent. of the Company's voting share
capital and, in such circumstances, any further increase in the
number of Ordinary
Shares by the Toscafund Concert Party will be subject to the
provisions of Rule 9.
In addition, the Debt for Equity Conversion and issue of Placing
Shares to the ACE Concert Party would normally give rise to an
obligation to make a general offer to all Shareholders pursuant to
Rule 9 as it may result in the ACE Concert Party controlling the
voting rights of 30 per cent. or more of the issued share capital
of the Company. The ACE Concert Party, following the Refinancing,
could manage and/or own Ordinary Shares which carry more than 30
per cent. but will not hold more than 50 per cent. of the Company's
voting share capital and, in such circumstances, any further
increase in the number of Ordinary Shares by the ACE Concert Party
will be subject to the provisions of Rule 9.
Following an application by the Directors, the Panel has agreed,
subject to the approval of the Waiver Resolution on a poll by
Independent Shareholders at the General Meeting, to grant the
Waiver. The effect of the Waiver, if the Waiver Resolution is
approved by Independent Shareholders, will be that neither the
Toscafund Concert Party nor the ACE Concert Party will be
subject to a requirement to make a general offer under Rule 9 that
would otherwise arise due to the increase in the aggregate holding
of Ordinary
Shares by the Toscafund Concert Party and the ACE Concert Party
resulting from the issue of New Ordinary Shares to Toscafund and
ACE Limited under the Placing and Ares Lux under the Debt for
Equity Conversion.
The Waiver Resolution is subject to the approval of the
Independent Shareholders on a poll and each
Independent Shareholder will be entitled to one vote for each
Ordinary Share held.
The Independent Shareholders comprise Shareholders other than
the Toscafund Concert Party. The ACE
Concert Party is not a Shareholder.
11. Intentions of the Toscafund Concert Party and the ACE
Concert Party
The Board welcomes the Toscafund Concert Party and the ACE
Concert Party's support of the Placing.
The Board believes that this support, together with the
Refinancing, will provide the Group with a strengthened financial
platform from which to implement the operational improvements
identified by the investigations.
Toscafund has been a shareholder of the Group for approximately
16 months and intends to support the Board's current strategic
plans for the business. Toscafund has informed the Board that it
currently intends to continue to support it in running the Company
in line with the Board's proposed strategy, as detailed further in
paragraph 4 of this Part I.
Toscafund does not have any current intentions regarding HCL's
business that would affect:
-- the strategic plans of the Company;
-- the employment of HCL's personnel, including the continued
employment of, or the conditions of employment of, any of the
Group's management; or
-- the locations of HCL's business or operating
subsidiaries.
Toscafund does not have any immediate intention to dispose of or
otherwise change the use of any of the fixed assets within the
Group.
ACE Limited and Ares Lux intend to support the Board's current
strategic plans for the business. ACE
Limited and Ares Lux have informed the Board that they currently
intend to continue to support it in running the Company in line
with the Board's proposed strategy, as detailed further in
paragraph 4 of this Part I.
ACE Limited and Ares Lux do not have any current intentions
regarding HCL's business that would affect:
-- The strategic plans of the Company
-- The employment of HCL's personnel including the continued
employment of, or the conditions of
employment of any of the Group's management;
-- The locations of HCL's business or operating
subsidiaries.
ACE Limited and Ares Lux do not have any immediate intention to
dispose of or otherwise change the use of any of the fixed assets
within the Group.
12. Details of the Open Offer
Qualifying Shareholders, on and subject to the terms and
conditions of the Open Offer, will be given the opportunity under
the Open Offer to apply for any number of Open Offer Shares at the
Issue Price pro rata to their holdings on the following basis:
3 Open Offer Shares for every 8 Existing Ordinary Shares
Fractions of Open Offer Shares will not be allotted to
Qualifying Shareholders in the Open Offer and entitlements under
the Open Offer will be rounded down to the nearest whole number of
Open Offer Shares. The Issue Price represents a 91.11 per cent.
discount to the price of 112.5 pence per Ordinary
Share at which the Ordinary Shares traded on AIM immediately
prior to their suspension from trading on
25 January 2011. The size of the discount is to allow Qualifying
Shareholders to participate at the same level of discount as the
placees under the Placing. The discount also reflects the fact
that, in the absence of the Refinancing, the Existing Ordinary
Shares would in the Board's view have no value for the reasons
explained above.
There will be 42,505,790 New Ordinary Shares available to
Qualifying Shareholders under the Open Offer.Qualifying
Shareholders are also being offered the opportunity to apply for
additional Open Offer Shares in excess of their Open Offer
Entitlement to the extent that other Qualifying Shareholders do not
take up their Open Offer Entitlement in full. A Qualifying
Shareholder may only apply for additional Open Offer Shares if they
have themselves agreed to take up their Open Offer Entitlement in
full.In the event that applications are received for in excess of
42,505,790 Open Offer Shares, excess applications will be scaled
back pro rata to Qualifying Shareholders' existing shareholdings.
The Open Offer Shares have not been placed under the Placing
subject to clawback under the Open Offer nor have they been
underwritten. Consequently, there may be no or fewer than
42,505,790 New Ordinary Shares issued pursuant to the Open
Offer.
Application has been made for the Open Offer Entitlements and
Excess CREST Open Offer Entitlements to be admitted to CREST. It is
expected that the Open Offer Entitlements and
Excess CREST Open Offer Entitlements will be admitted to CREST
on 22 August 2011. The Open
Offer Entitlements and Excess CREST Open Offer Entitlements will
also be enabled for settlement in CREST on 22 August 2011.
Applications through the CREST system may only be made by the
Qualifying Shareholder originally entitled or by a person entitled
by virtue of a bona fide market claim.
The latest time and date for acceptance and payment in full
under the Open Offer will be 11.00 a.m. on
6 September 2011, unless otherwise announced by the Company via
a Regulatory Information Service.
Qualifying CREST Shareholders should note that, although the
Open Offer Entitlements and Excess
CREST Open Offer Entitlements will be admitted to CREST and be
enabled for settlement, applications in respect of entitlements
under the Open Offer may only be made by the Qualifying Shareholder
originally entitled or by a person entitled by virtue of a bona
fide market claim raised by Euroclear's Claims Processing Unit.
Qualifying Non-CREST Shareholders should note that their
Application Form is not a negotiable document and cannot be
traded.
Further information on the Open Offer and the terms and
conditions on which it is made, including the procedure for
application and payment, are set out in Part III: "Terms and
Conditions of the Open Offer" and in Part IV "Questions and Answers
about the Open Offer" of of the Circular available on the Company's
website www.healthcarelocums.com and, where relevant, on the
applicable Application Form.
The Open Offer will be conditional, amongst other things, on the
approval of the Refinancing Resolutions by the Shareholders at the
General Meeting and upon the Placing and Open Offer Agreement
becoming unconditional in all respects (other than as to Admission)
and Admission of the Open Offer Shares becoming effective by not
later than 8.00 a.m. on 13 September 2011 (or such later time
and/or date as the Company and Fairfax may determine, not being
later than 8.00 a.m. on 17 October 2011).
If Admission does not take place on or before 8.00 a.m. on 13
September 2011 (or such later time and/or date as the Company and
Fairfax may determine, not being later than 8.00 a.m. on 17 October
2011), the
Open Offer will lapse, any Open Offer Entitlements and Excess
CREST Open Offer Entitlements admitted to CREST will thereafter be
disabled and application monies under the Open Offer will be
refunded to the
24 applicants, by cheque (at the applicant's risk) in the case
of Qualifying Non-CREST Shareholders and by way of a CREST payment
in the case of Qualifying CREST Shareholders, without interest as
soon as practicable thereafter.
Settlement and dealings
Application will be made to the London Stock Exchange for the
Open Offer Shares to be admitted to trading on AIM. It is expected
that Admission will become effective and that dealings will
commence at
8.00 a.m. on 13 September 2011.
13. Effect of the Refinancing
725,000,000 New Ordinary Shares will be issued pursuant to the
Placing and the Debt for Equity
Conversion and up to 42,505,790 New Ordinary Shares will be
issued pursuant to the Open Offer. All the
Open Offer Shares, Placing Shares and Debt for Equity Shares,
when issued and fully paid, will rank
pari passu with the Existing Ordinary Shares, including the
right to receive all dividends and other distributions declared,
made or paid after the date of Admission. No temporary documents of
title will be issued.
The Refinancing Resolutions set out in the Notice of General
Meeting must be passed at the General Meeting in order for the
Placing, the Open Offer and the Debt for Equity Conversion to
proceed.
Upon completion of the Refinancing (and assuming full take up of
the Open Offer), the Placing Shares, the Open Offer Shares and the
Debt for Equity Shares will in aggregate represent approximately
87.13 per cent of the Enlarged Issued Share Capital and the
Existing Ordinary Shares will represent approximately 12.87 per
cent of the Enlarged Issued Share Capital. Assuming nil take up of
the Open Offer, the Placing Shares and the Debt for Equity Shares
will in aggregate represent approximately 86.48 per cent. of the
Enlarged Issued Share Capital and the Existing Ordinary Shares will
represent approximately 13.52 per cent. of the Enlarged Issued
Share Capital.
Depending on the level of take up of the Open Offer it may be
possible for a Qualifying Shareholder, who so wishes, to subscribe
for as many New Ordinary Shares under the Open Offer as will ensure
that he does not suffer any dilution of his economic interest due
to the Refinancing. However, if the Open Offer is heavily
subscribed or over-subscribed, even if a Qualifying Shareholder
subscribes for his Open Offer Entitlement, his proportionate
economic interest will be diluted by the issue of New Ordinary
Shares pursuant to the Refinancing.
By way of illustration, if a Qualifying Shareholder who holds
1,000 Existing Ordinary Shares takes up his
Open Offer Entitlement (being 375 Open Offer Shares) and applies
in addition for up to 6,397 further Open Offer Shares by way of
excess application, if that excess application can be satisfied in
full he will suffer no economic dilution. However, if the same
Qualifying Shareholder who holds 1,000 Existing Ordinary Shares
takes up his Open Offer Entitlement, but does not apply for any
excess Open Offer Shares, or is not allocated any excess Open Offer
Shares for which he does apply, he will suffer a dilution of 82.31
per cent of his interest in the Company, in the situation where all
Qualifying Shareholders take up their Open Offer Entitlements. If
the same Qualifying Shareholder does not take up any of his Open
Offer Entitlement, he will suffer a dilution of 87.13 per cent. of
his interest in the Company, assuming the Open Offer is fully taken
up.
The Open Offer is being made only to Qualifying Shareholders.
Qualifying Shareholders are, subject to certain further exceptions,
Shareholders who are not participating in the Placing. However, the
basis upon which the Open Offer is being made to Qualifying
Shareholders (being 3 Open Offer Shares for every 8
Existing Ordinary Shares) was determined taking in to account
Existing Ordinary Shares held by Placees as it was impracticable to
exclude the holdings of Placees from the calculation. Since Placees
are not entitled to participate in the Open Offer, the practical
effect of this should be to increase the number of
Open Offer Shares available under the Excess Application
Facility.
The Board considered whether it would be practicable to
structure the Open Offer as a rights issue or other fully pre
emptive offer, but this was not considered feasible in view of the
timing constraints and cost implications.
Shareholders should note that the Open Offer is not a rights
issue. Qualifying Shareholders should be aware that in the Open
Offer, unlike in a rights issue, any Open Offer Shares not applied
for will not be sold in the market on behalf of or placed for the
benefit of Qualifying Shareholders who do not apply under the Open
Offer.
14. Directors' Remuneration Proposals
Assuming the Refinancing Resolutions are passed and the
Refinancing proceeds, the Board proposes to introduce as soon as
practicable management incentive arrangements to support the
implementation of its strategy over the next period, in which some
or all of the Directors will participate. These arrangements will
be designed to align the interests of the Directors with the
interests of Shareholders. Where relevant, this will involve a
review of existing incentivisation provisions in the Directors'
existing service contracts.
15. Other matters
It is the Board's intention in due course to propose a
consolidation and, if considered appropriate at the time, a
re-denomination of the Ordinary Shares. However, the Board does not
consider it appropriate to do so at this stage. Further details of
this proposal will be announced in due course.
As a result of the Group's constrained financial position,
contractual restrictions and the Company's distributable reserves
being in deficit at 31 December 2010, the Board will not be
recommending payment of a dividend.
The Board will continue to keep its dividend policy under review
with the aim of reinstating dividends at the appropriate time,
subject as permitted under the terms of the Amended and Restated
Senior Facilities Agreement.
16. General Meeting
For the purposes of effecting the Refinancing, the Refinancing
Resolutions will be proposed at the General Meeting. For the
purposes of considering the business which was deferred at the AGM
and certain other matters, the Non-Refinancing Resolutions will
also be proposed at the General Meeting. At page 91 of the
Circular, you will find the Notice convening the General Meeting to
be held at One Fleet Place, London EC4M 7WS at 11.00 a.m. on 12
September 2011. The full texts of the Resolutions are set out in
that Notice, but set out below is a summary of the Resolutions
which will be proposed at the General Meeting:
Refinancing Resolutions:
-- Resolution 1 (ordinary): to approve the waiver to be granted
by the Panel in respect of the Toscafund
Concert Party and the ACE Concert Party and the obligations
which would arise under Rule 9 to make a general offer as a result
of the issue of Placing Shares to the Toscafund Concert Party and
Placing Shares and Debt for Equity Shares to the ACE Concert Party.
The resolution relating to the approval of the Waiver will be
proposed as an ordinary resolution and will be taken on a poll.
Only the Independent Shareholders will be entitled to vote on this
Resolution;
-- Resolution 2 (ordinary): to authorise the Directors under
section 551 of the Act to allot shares up to an aggregate nominal
amount of GBP76,750,579 for the purposes of the Refinancing. If
passed, this authority will expire at the conclusion of the next
Annual General Meeting of the Company after the date on which this
Resolution is passed;
-- Resolution 3 (special): to disapply the pre-emption rights
provisions of sections 570 and 573 of the
Act in respect of the allotment of equity securities pursuant to
the Refinancing. If given, this authority will expire at the same
time as the authority conferred by Resolution 2 expires;
Non-Refinancing Resolutions:
-- Resolution 4 (ordinary): to receive and adopt the Financial
Statements, together with the Directors' and Independent Auditors'
reports, for the year ended 31 December 2010;
-- Resolution 5 (ordinary): to approve the Remuneration Report
for the year ended 31 December 2010;
-- Resolution 6 (ordinary): to authorise the Directors under
section 551 of the Act to allot shares otherwise than for the
purposes of the Refinancing. This Resolution, which is in addition
to the authority sought under Resolution 2, will authorise the
Directors to allot shares up to a maximum aggregate nominal amount
of GBP29,361,000 (if the Refinancing Resolutions are passed and the
Refinancing proceeds) or GBP3,778,000 (if the Refinancing
Resolutions are not passed and the Refinancing does not proceed),
which in either case will represent approximately 33 per cent. of
the ordinary share capital of the Company in issue (in the former
case following completion of the Refinancing and assuming full take
up of the Open Offer). This authority replaces the resolution
passed on 26 May 2010 (which expired at the AGM) and will expire at
the conclusion of the next Annual General Meeting or 15 months
after the passing of this Resolution, whichever is the earlier;
-- Resolution 7 (special): to disapply the pre-emption rights
provisions of sections 570 and 573 of the Act otherwise than for
the purposes of the Refinancing. This Resolution, which is in
addition to the disapplication of pre-emption rights under
Resolution 3, will authorise the Directors to allot equity
securities without limit in connection with a rights issue or
open offer of shares which is made not strictly in accordance with
section 561 of the Act, and otherwise up to a maximum aggregate
nominal amount of GBP8,808,000 (if the Refinancing Resolutions are
passed and the Refinancing proceeds) or GBP1,133,000 (if the
Refinancing Resolutions are not passed and the Refinancing does not
proceed), which in either case will represent approximately 10 per
cent. of the ordinary share capital of the Company in issue (in the
former case following completion of the Refinancing and assuming
full take up of the Open Offer). This authority replaces the
resolution passed on 26 May 2010 (which expired at the AGM) and
will expire at the conclusion of the next Annual General Meeting or
15 months after the passing of this Resolution, whichever is the
earlier. This Resolution will enable the Directors, at their
discretion, to allot a limited number of extra securities for cash
and also provide the Directors with greater flexibility to take
advantage of business opportunities as they arise; and
-- Resolution 8 (special): to authorise the Company to buy back
its own ordinary shares in the market as permitted by the Act. This
authority will limit the number of shares that can be purchased to
a maximum of 88,080,000 (if the Refinancing Resolutions are passed
and the Refinancing proceeds) or 11,330,000 (if the Refinancing
Resolutions are not passed and the Refinancing does not proceed),
which in either case will represent approximately 10 per cent. of
the issued ordinary share capital of the Company, in the former
case following completion of the Refinancing (and assuming full
take up of the Open Offer) and in the latter case as at 18 August
2011 (the latest practicable date prior to publication of the
Circular), and sets minimum and maximum prices. This authority will
expire at the conclusion of the next Annual General Meeting or 15
months after the passing of this Resolution, whichever is the
earlier. The Directors have no present intention of exercising the
authority to purchase the Company's ordinary shares but will keep
the matter under review, taking into account the financial
resources of the Company, the Company's share price and future
funding opportunities. The authority will be exercised only if the
Directors believe that to do so would result in an increase in
earnings per share and would be in the interests of shareholders
generally. Any purchase of ordinary shares would be by means of
market purchases through the London Stock Exchange. Listed and
AIM traded companies purchasing their own shares are allowed to
hold them in treasury as an alternative to cancelling them. No
dividends are paid on shares whilst held in treasury and no voting
rights attach to treasury shares. If this Resolution is passed at
the General Meeting, it is the Company's current intention to
cancel or hold in treasury any shares purchased pursuant to the
authority granted to it. In order to respond properly to the
Company's capital requirements and prevailing market conditions,
the Directors will need to assess at the time of any and each
actual purchase whether to hold the shares in treasury or cancel
them, provided it is permitted to do so. The Company is only
permitted to hold a maximum of up to 10 per cent. of its issued
share capital in treasury.
Serious loss of capital
On the basis of the Company's audited Financial Statements for
the year ended 31 December 2010, the value of the Company's net
assets is now less than half of its called-up share capital. In
such circumstances, the Directors are required under section 656 of
the Act to convene a general meeting of the Company for the purpose
of considering whether any, and if so what, steps should be taken
to deal with the situation.
However, the Board has taken action that it believes is
appropriate to address the current circumstances of the Group which
has resulted in the proposals contained in the Circular, the
Refinancing Resolutions and the convening of the General Meeting.
As such, the Board does not see a need for further steps to be
proposed at the General Meeting.
Shareholders should note that the Directors will not be able to
proceed with the Proposals unless and until all the proposed
Refinancing Resolutions are approved at the General Meeting.
Furthermore, Shareholders should note that the Board believes
that, in the event that the
Refinancing Resolutions are not passed at the General Meeting
and the Refinancing is not implemented, then the Group will be
unable to satisfy its existing financial covenants and/or service
its existing borrowings or meet its ongoing funding requirements
without further support from the Lenders. In such event, the Group
would be in default under the Existing Facilities. Such a default
under the Existing Facilities, in addition to any default which may
subsist due to misrepresentations made under the terms of the
Existing Facilities at the time they were entered into, would
entitle the Lenders to demand repayment of the Existing Facilities.
Further, if the Refinancing does not proceed, the Banks have
informed the Company that they will only continue to support the
business on the basis that a sale of all or part of the Group is
pursued. This would be likely to involve formal insolvency
proceedings for all or part of the Group. This would, in the
Board's opinion, result in Shareholders receiving no value for
their current shareholdings.
17. Overseas Shareholders
The attention of Overseas Shareholders is drawn to the
information which appears in paragraph 6 of
Part III: "Terms and Conditions of the Open Offer" of the
Circular.
18. Irrevocable undertaking
The Company has received an irrevocable undertaking from
Toscafund to vote in favour of the Refinancing Resolutions (other
than the Waiver Resolution on which Toscafund is not entitled to
vote) in respect of Existing Ordinary Shares representing, in
aggregate, approximately 15.05 per cent. of the Existing Ordinary
Shares.
Further details of this irrevocable undertaking are set out in
paragraph 12 of Part VI of the Circular available on the Company's
website www.healthcarelocums.com.
19. Action to be taken by Shareholders
General Meeting
Shareholders will find enclosed with the Circular a Form of
Proxy for use at the General Meeting.
Whether or not you propose to attend the General Meeting in
person, it is important that you complete and sign the enclosed
Form of Proxy in accordance with the instructions printed thereon
and return it so as to arrive at the Company's registrar Capita
Registrars, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU not
later than 11.00 a.m. on 8 September 2011. The completion and
depositing of a Form of Proxy will not preclude you from attending
and voting in person at the General Meeting should you wish to do
so.
If you hold shares in CREST, you may appoint a proxy by
completing and transmitting a CREST Proxy
Instruction to Capita (CREST participant RA10) so that it is
received by no later than 11.00 a.m. on
8 September 2011.
Open Offer
Qualifying Non-CREST Shareholders (i.e. holders of Ordinary
Shares who hold their Ordinary
Shares in certificated form)
If you are a Qualifying Non-CREST Shareholder, you will receive
an Application Form which gives details of your entitlement under
the Open Offer. Subject to availability, the Excess Application
Facility will enable Qualifying Shareholders to apply for further
Open Offer Shares. Further details in relation to the Excess
Application Facility are set out in Part IV of the Circular
available on the Company's website www.healthcarelocums.com
"Questions and Answers about the Open Offer" and, for Qualifying
Non-CREST Shareholders, the Application Form.
If you wish to apply for Open Offer Shares under the Open Offer,
you should complete the Application Form in accordance with the
procedure for application set out in paragraph 4.1 of Part III:
"Terms and Conditions of the Open Offer" of the Circular available
on the Company's website www.healthcarelocums.com and on the
Application Form itself. Completed Application Forms, accompanied
by full payment in accordance with the instructions in paragraph
4.1 of Part III "Terms and Conditions of the Open Offer" of the
Circular available on the Company's website
www.healthcarelocums.com, should be posted in the accompanying
pre-paid envelope or returned by post or by hand (during normal
business hours only) to the Receiving Agent, Capita Registrars,
Corporate Actions, The Registry, 34 Beckenham Road, Beckenham,
Kent, BR3 4TU so as to arrive as soon as possible and in any event
so as to be received by no later than 11.00 a.m. on
6 September 2011. If you do not wish to apply for any Open Offer
Shares, you should not complete or return the Application Form.
Qualifying CREST Shareholders
If you are a Qualifying CREST Shareholder, no Application Form
will be sent to you. Qualifying CREST
Shareholders will have Open Offer Entitlements and Excess CREST
Open Offer Entitlements credited to their stock accounts in CREST.
You should refer to the procedure for application set out in
paragraph 4.2 of Part III: "Terms and Conditions of the Open Offer"
of the Circular. The relevant CREST instructions must have settled
in accordance with the instructions in paragraph 4.2 of Part III:
"Terms and Conditions of the Open Offer" of the Circular by no
later than 11.00 a.m. on 6 September 2011.
Qualifying CREST Shareholders who are CREST sponsored members
should refer to their
CREST sponsors regarding the action to be taken in connection
with the Circular and the
Open Offer.
If you are in any doubt as to the action you should take, you
should immediately seek your own personal financial advice from an
independent professional adviser authorised under FSMA if you are
in the United
Kingdom or, if not, another appropriately authorised independent
financial adviser.
20. Additional information
Your attention is drawn to Part VI: "Additional Information" of
the Circular which contains certain additional information in
respect of Healthcare Locums, the Toscafund Concert Party and the
ACE Concert Party. Shareholders are advised to read the whole of
the Circular and not rely solely on the summary information set out
in this letter. In addition, you should consider the risk factors
set out in Part II: "Risk Factors" of the Circular available on the
Company's website www.healthcarelocums.com.
21. The importance of the Shareholder vote on the Refinancing
Resolutions
The Placing, the Open Offer, the Debt for Equity Conversion and
the Debt Repayment and Restructuring are all conditional upon all
of the Refinancing Resolutions being passed.
The Board of Healthcare Locums is of the opinion that, taking
into account the net proceeds of the Placing following the Debt
Repayment and Restructuring, the working capital available to the
Group would be sufficient for the Group's present requirements,
that is, for at least the next 12 months from the date of
Admission.
In the event that the Refinancing Resolutions are not passed at
the General Meeting and the
Refinancing is not implemented, then the Group will be unable to
satisfy its existing financial covenants and/or service its
existing borrowings or meet its ongoing funding requirements
without further support from the Lenders. In such event, the Group
would be in default under the Existing Facilities. Such a default
under the Existing Facilities, in addition to any default which may
subsist due to misrepresentations made under the terms of the
Existing Facilities at the time they were entered into, would
entitle the Lenders to demand repayment of the Existing Facilities.
Further, if the Refinancing does not proceed, the Banks have
informed the Company that they will only continue to support the
business on the basis that a sale of all or part of the Group is
pursued. This would be likely to involve formal insolvency
proceedings for all or part of the Group. This would, in the
Board's opinion, result in Shareholders receiving no value for
their current shareholdings.
22. Recommendation
For the purposes of the AIM Rules, the Directors consider,
having consulted with the Company's nominated adviser, Fairfax,
that the terms of the Toscafund Concert Party's participation in
the Placing are fair and reasonable insofar as the Shareholders are
concerned. In giving advice to the Directors, Fairfax has taken
into account the Directors' commercial assessments of the Toscafund
Concert Party's participation in the Placing.
The Directors, who have been so advised by Fairfax and
Hawkpoint, consider the Refinancing and the Waiver and the passing
of the Refinancing Resolutions to be fair and reasonable and in the
best interests of the Independent Shareholders and the Company as a
whole. In providing advice to the Directors, Fairfax and Hawkpoint
have each taken into account the commercial assessment of the
Directors.
The Directors also consider the Non-Refinancing Resolutions to
be fair and reasonable and in the best interests of all the
Shareholders and the Company as a whole. Accordingly, the Directors
unanimously recommend that Shareholders vote in favour of all the
Resolutions.
Yours faithfully
Peter Sullivan
Non-executive Chairman
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Event Time and/or Date
------------------------------------------ -------------------------------
Record Date for entitlement under 17 August 2011
the Open Offer
------------------------------------------ -------------------------------
Announcement and publication of 19 August 2011
Circular and Application Form
------------------------------------------ -------------------------------
Ex-entitlement date of the Open 19 August 2011
Offer
------------------------------------------ -------------------------------
Open Offer Entitlements and Excess As soon as possible after 8.00
CREST Open Offer Entitlements a.m.
credited to stock accounts of 22 August 2011
Qualifying CREST Shareholders
in CREST
------------------------------------------ -------------------------------
Recommended latest time for requesting 4.30 p.m.
withdrawal of Open Offer Entitlements 31 August 2011
from CREST
------------------------------------------ -------------------------------
Latest time and date for depositing 3.00 p.m.
Open Offer Entitlements into CREST 1 September 2011
------------------------------------------ -------------------------------
Latest time and date for splitting 3.00 p.m.
Application Forms (to satisfy 2 September 2011
bona fide market claims only)
------------------------------------------ -------------------------------
Latest time and date for receipt 11.00 a.m.
of completed Application Forms 6 September 2011
and payment in full under the
Open Offer and settlement of relevant
CREST instructions (as appropriate)
------------------------------------------ -------------------------------
Latest time and date for receipt 11.00 a.m.
of General Meeting Forms of Proxy 8 September 2011
------------------------------------------ -------------------------------
General Meeting 11.00 a.m.
12 September 2011
------------------------------------------ -------------------------------
Resumption of trading on AIM of 8.00 a.m.
Existing Ordinary Shares 13 September 2011
------------------------------------------ -------------------------------
Admission and commencement of 8.00 a.m.
dealings in New Ordinary Shares 13 September 2011
------------------------------------------ -------------------------------
New Ordinary Shares in uncertificated As soon as possible after 8.00
form expected to be credited to a.m.
accounts in CREST By 13 September 2011
------------------------------------------ -------------------------------
Dispatch of definitive share certificates By 27 September 2011
for New Ordinary Shares in certificated
form
------------------------------------------ -------------------------------
1 Reference to times in this announcement are to London time
unless otherwise stated.
2 The times and dates set out in the Expected Timetable of
Principal Events above and mentioned throughout the Circular may be
adjusted by Healthcare Locums plc in which event details of the new
times and dates will be notified to the London Stock Exchange and,
where appropriate, Qualifying Shareholders.
REFINANCING STATISTICS
Number of Existing Ordinary Shares* 113,348,771
------------------------------------------ -----------------------------
Issue Price for each Placing Share
and Open Offer Share 10 pence
------------------------------------------ -----------------------------
3 Open Offer Share for every
Basis of Open Offer 8 Existing Ordinary Shares
------------------------------------------ -----------------------------
Number of Placing Shares 600,000,000
------------------------------------------ -----------------------------
Maximum number of Open Offer Shares 42,505,790
------------------------------------------ -----------------------------
Number of Debt for Equity Shares 125,000,000
------------------------------------------ -----------------------------
Placing Shares as percentage of
the Enlarged Issued Share Capital** 68.12 per cent.
------------------------------------------ -----------------------------
Open Offer Shares as percentage
of the Enlarged Issued Share Capital** 4.83 per cent.
------------------------------------------ -----------------------------
Debt for Equity Shares as percentage
of the Enlarged Issued Share Capital** 14.19 per cent.
------------------------------------------ -----------------------------
Estimated maximum proceeds receivable
by the Company under the Placing
and the Open Offer (before expenses)**+ GBP64.25 million
------------------------------------------ -----------------------------
Maximum Enlarged Share Capital** 880,854,561
------------------------------------------ -----------------------------
Note:
* This includes 10,000 shares which were issued in error. The
Company is currently discussing with Capita Registrars how to
rectify or otherwise address this.
** Assuming full take up under the Open Offer and after the
issue of the Placing Shares and the Debt for Equity Shares.
+ Of the proceeds of the Placing (before expenses), at least
approximately GBP50.9 million will comprise cash; up to
approximately GBP5.0 million of principal amount of, and interest
and commitment fees accrued on, the Interim Working Capital
Facility and GBP4.1 million of other debts owed by the Company will
be equitised.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise:
"2010 Annual Report" the annual report of the Company for
the year ended 31 December 2010 which
includes the 2010 Financial
Statements and has been posted to
Shareholders with the Circular
"2010 Financial Statements" the audited financial statements
of the Group for the year ended
31 December 2010
"A$" Australian dollars
"Act" the Companies Act 2006
"ACE Concert Party" has the meaning given to it in
paragraph 9 of Part I of the
Circular
"ACE Directors" the directors of ACE Limited and
Ares Lux as at the date of the
Circular whose names appear on
page 22 of the Circular
"ACE Holdco Cayman " ACE Equity Holdco (Cayman) Ltd
"ACE Holdco UK" ACE UK Holdco Limited
"ACE Limited" Ares Capital Europe Limited
"ACE Lock-up Agreement" the lock up agreement dated 19
August 2011 between the Company
(1), Fairfax (2), ACE Limited
(3) and Ares Lux (4), details
of which are set out in paragraph
5 of Part VI of of the Circular
available on the Company's website
www.healthcarelocums.com
"ACE L.P." Ares Capital Europe L.P. (Cayman)
"ACE Warrants" the 2,493,453 warrants to subscribe
for Ordinary Shares held by ACE
Holdco Cayman and issued by the
Company pursuant to the Warrant
Instrument
"Admission" the admission of the Placing Shares,
the Open Offer Shares and the
Debt for Equity Shares (as the
case may be) to trading on AIM
becoming effective in accordance
with the AIM Rules
"AGM" the annual general meeting of
the Company held on 29 June 2011
"AIM" the AIM market operated by the
London Stock Exchange
"AIM Rules" the AIM rules for companies published
by the London Stock Exchange (as
updated from time to time) governing
the admission to and the operation
of AIM
"Amended and Restated Senior the senior facilities agreement
Facilities Agreement" on the terms described in the
Circular between the parties to
the Senior Facilities Agreement
which is to replace the Senior
Facilities Agreement upon the
Refinancing taking effect
"Amended Intercreditor Agreement" the security trust and intercreditor
deed between the parties to the
Intercreditor Agreement which
is to replace the Intercreditor
Agreement upon the Refinancing
taking effect
"Application Form" the personalised application form
on which Qualifying Non-CREST
Shareholders may apply for Open
Offer Shares under the Open Offer
"Ares Lux" Ares Capital Europe (Luxembourg)
S.a.r.l.
"Banks" CBA and NAB
"Business Day" any day (excluding Saturdays and
Sundays) on which banks are open in
London for normal banking business
"Capita Regstrars" a trading name of Capita Registrars
Limited
"CBA" Commonwealth Bank of Australia
"CCSS" the CREST Courier and Sorting
Service established by Euroclear
to facilitate, amongst other things,
the deposit and withdrawal of
securities
"Company" or "Healthcare Locums" Healthcare Locums plc
or "HCL"
"Craig Tibbles Variation Agreement" the deed of release and variation
dated 19 August 2011 between the
Company (1) and Craig Tibbles
(2), details of which are set
out in paragraph 5 of Part VI
of the Circular
"CREST" the relevant system (as defined in
the CREST Regulations) for the
paperless settlement of share
transfers and the holding of shares
in uncertificated form in respect of
which Euroclear is the operator (as
defined in the CREST Regulations)
"CREST Manual" the rules governing the operation of
CREST consisting of the CREST
Reference Manual, the CREST
International Manual, the CREST
Central Counterpart Service Manual,
the CREST Rules, the CCSS Operations
Manual, the Daily Timetable, the
CREST Application Procedures and the
CREST Glossary of Terms (as updated
in November 2001)
"CREST member" a person who has been admitted
to CREST as a system-member (as
defined in the CREST Manual)
"CREST member account ID" the identification code or number
attached to a member account in
CREST
"CREST participant" a person who is, in relation to
CREST, a system-participant (as
defined in the CREST Regulations)
"CREST participant ID" shall have the meaning given in
the CREST Manual issued by Euroclear
"CREST payment" shall have the meaning given in
the CREST Manual issued by Euroclear
"CREST Regulations" or "Regulations" the Uncertificated Securities
Regulations 2001 (S.I. 2001/3755),
as amended from time to time
"CREST sponsor" a CREST participant admitted to
CREST as a CREST sponsor
"CREST sponsored member" a CREST member admitted to CREST
as a sponsored member
"Debt for Equity Conversion" the conversion of GBP22.4 million of
debt (including accrued interest)
currently owed to Ares Lux by the
Company into 125 million New Ordinary
Shares at approximately 18 pence per
New Ordinary Share, which comprises
part of the Refinancing
"Debt for Equity Shares" the 125 million New Ordinary Shares
to be issued to Ares Lux pursuant
to the Debt for Equity Conversion
"Debt Repayment and Restructuring" the (i) repayment of approximately
GBP35 million (or its equivalent in
other currencies) of Senior
Facilities currently owed to the
Banks by the Group, (ii) writing off
of approximately GBP6.5 million of
Senior Facilities owed to the Banks
by the Group, (iii) amendment and
restatement of the Senior Facilities
Agreement and the Intercreditor
Agreement, (iv) conversion of
GBP10.21 million of debt currently
owed to Ares Lux by the Company into
Zero Coupon Notes in an initial
principal amount of GBP10.21 million,
(v) partial closing of existing
hedging agreements in respect of the
sterling facilities under the Senior
Facilities Agreement which will incur
break costs of up to a value of
GBP2.71 million which will be written
off by the Banks, and (vi) part of
the agreement with Craig Tibbles
which comprises payment by the
Company to him in October 2011 of
GBP1 million and in October 2012 of
GBP0.9 million (or GBP0.8 million in
June 2012 if he so elects) and the
release of GBP90,000 plus interest
from an escrow account, each as
described in the Circular
"Directors" or the "Board" the Directors of the Company as at
the date of the Circular, whose names
are set out on page 5 of the Circular
available on the Company's website
www.healthcarelocums.com
"Disclosure and Transparency Rules" the disclosure and transparency
rules of the FSA
"Eastern States" the eastern states of Australia
namely, Queensland, New South
Wales and Victoria
"Enlarged Issued Share Capital" the Existing Ordinary Shares and
the 767,505,790 New Ordinary Shares
which will be in issue following
the issue and allotment of the
Placing Shares, the Open Offer
Shares and the Debt for Equity
Shares (assuming full take-up
of the Open Offer)
"Euroclear" Euroclear UK & Ireland Limited,
the operator of CREST
"Excess Application Facility" the arrangement pursuant to which
Qualifying Shareholders may apply
for any number of Open Offer Shares
in excess of their Open Offer
Entitlement provided they have
agreed to take up their Open Offer
Entitlement in full
"Excess CREST Open Offer Entitlement" in respect of each Qualifying
CREST Shareholder, the entitlement
(in addition to his Open Offer
Entitlement) to apply for Open
Offer Shares pursuant to the Excess
Application Facility, which is
conditional on him taking up his
Open Offer Entitlement in full
"Existing Facilities" the existing facilities made
available to the Company by the Banks
under the Senior Facilities Agreement
and by Ares under the Mezzanine
Facility Agreement, and the Company's
indebtedness thereunder
"Existing Ordinary Shares" the 113,348,771 ordinary shares
of 10p each in the capital of
the Company in issue as at the
date of the Circular
"Fairfax" Fairfax I.S. PLC, nominated adviser
and broker to the Company
"Form of Proxy" the form of proxy accompanying
the Circular for use in connection
with the General Meeting
"Framework Agreements" or "FAs" contracts with the National Health
Service governed by the national
framework agreements or the regional
framework agreements
"FSA" the Financial Services Authority
"FSMA" Financial Services and Markets
Act 2000 (as amended)
"General Meeting" or "GM" the general meeting of the Company
convened for 11.00 a.m. on 12
September 2011, notice of which
is set out in the Circular, and
any adjournment thereof
"Grant Thornton" Grant Thornton UK LLP
"Group" the Company and its subsidiaries
from time to time
"Hawkpoint" Hawkpoint Partners Limited
"HCA" or "Healthcare Australia" Healthcare Australia Holdings
Pty Limited
"Healthcare Locums Share Schemes" The Healthcare Locums Limited
Enterprise Management Incentive Share
Option Scheme and the Healthcare
Locums plc HM Revenue & Customs
Approved Company Share Option Plan
"HMRC" Her Majesty's Revenue and Customs
and, where relevant, any predecessor
body which carried out part of
its functions and references to
any approval by HMRC shall, where
appropriate, include approval
by an officer of Her Majesty's
Revenue and Customs
"Independent Shareholders" the Shareholders other than the
Toscafund Concert Party
"Intercreditor Agreement" the security trust and intercreditor
deed originally dated 17 December
2010 between, amongst others,
the Banks, Ares Lux and certain
members of the Group under which
the claims of the Banks and other
persons against the Group were
regulated (as amended or varied
from time to time)
"Interim Working Capital Facility" the interim working capital facility
of up to GBP5,000,000 provided to the
Company by ACE Limited pursuant to an
agreement dated19 August 2011,
amending the Mezzanine Facility
Agreement, details of which are set
out in paragraph 5 of Part VI of the
Circular available on the Company's
website www.healthcarelocums.com
"Issue Price" 10 pence per New Ordinary Share
"Lenders" the Banks and Ares Lux
"London Stock Exchange" London Stock Exchange plc
"Mezzanine Facility Agreement" the mezzanine facility agreement
originally dated 17 December 2010
between, among others, the Company,
ACE Limited as agent and Ares
Lux as mezzanine lender (as amended,
varied and restated from time
to time)
"Money Laundering Regulations" The Money Laundering Regulations
2007, as amended from time to
time "NAB" National Australia
Bank Limited
"NAB" National Australia Bank Limited
"New Ordinary Shares" the new ordinary shares of 10
pence each to be issued by the
Company in accordance with the
Placing, Open Offer and Debt for
Equity Conversion and "New Ordinary
Share" means one of them
"NHS" the UK National Health Service
"Non-Refinancing Resolutions" Resolutions 4 to 8 to be proposed
at the General Meeting, which
are set out in the Notice of General
Meeting
"Notice of GM" or "Notice of General the notice convening the General
Meeting" Meeting set out on page 91 of
the Circular
"Official List" the official list maintained by
the UK Listing Authority pursuant
to Part IV of FSMA, as amended
from time to time
"Open Offer" the conditional offer made by the
Company to Qualifying Shareholders
inviting them to apply to subscribe
for the Open Offer Shares on the
terms and subject to the conditions
set out in the Circular and, in the
case of Non-CREST Shareholders, in
the Application Form
"Open Offer Entitlements" an entitlement of a Qualifying
Shareholder, pursuant to the Open
Offer, to apply for 3 Open Offer
Shares for every 8 Existing Ordinary
Shares held by the Qualifying
Shareholder at the Record Date
"Open Offer Shares" up to 42,505,790 New Ordinary
Shares which are the subject of
the Open Offer
"Options" options granted pursuant to the
Healthcare Locums Share Schemes
"Ordinary Shares" ordinary shares of 10p each in
the capital of the Company
"Orion and MJV Acquisition" the acquisition by the Company
from Craig Tibbles of Orion Locums
Limited and MJV Locums Limited
as described in paragraph 5.12(d)
of Part VI of the Circular
"Overseas Shareholders" Shareholders who are resident
in or a citizen or national of
any country outside the United
Kingdom
"Panel" the Panel on Takeovers and Mergers
"Penta Advisory Agreement" the advisory services agreement
dated 12 August 2011 between Penta
Capital LLP and the Company referred
to in paragraph 5.11 of Part VI
of the Circular
"Placees" investors in the Placing
"Placing" the conditional placing of the
Placing Shares, details of which
are set out in paragraph 3.1 of
Part I of the Circular
"Placing and Open Offer Agreement" the conditional placing and open
offer agreement dated 19 August 2011
between the Company and Fairfax,
relating to the Placing, details of
which are set out in paragraph 5 of
Part VI of the Circular
"Placing Shares" the aggregate 600,000,000 New
Ordinary Shares which are the
subject of the Placing
"Previous Directors" or "Previous the Directors of the Company at
Board" the time of the announcement on
25 January 2011 of the suspension
of the Company's shares from trading
on AIM
"Prospectus Rules" the rules made for the purposes
of Part VI of FSMA in relation
to offers of securities to the
public and admission of securities
to trading on a regulated market
"Qualifying CREST Shareholders" Qualifying Shareholders whose
Existing Ordinary Shares are held
in uncertificated form
"Qualifying Non-CREST Shareholders" Qualifying Shareholders whose
Existing Ordinary Shares are in
certificated form
"Qualifying Shareholders" Shareholders whose Ordinary Shares
are on the register of members of the
Company at the close of business on
the Record Date with the exclusion of
any such Shareholder who is a Placee
and (subject to exceptions) of
persons with a registered address or
located or resident in the Restricted
Jurisdictions
"Receiving Agent" Capita Registrars Limited
"Record Date" close of business on 17 August
2011
"Refinancing" the Placing, Open Offer, Debt
for Equity Conversion and Debt
Repayment and Restructuring
"Refinancing Resolutions" Resolutions 1 to 3 to be proposed
at the General Meeting, which
are set out in the Notice of General
Meeting
"Registrar" Capita Registrars Limited
"Regulatory Information Service" a regulatory information service
that is approved by the FSA and
that is on the list of regulatory
information service providers
maintained by the FSA
"Resolutions" the Refinancing Resolutions and
the Non-Refinancing Resolutions
"Restricted Jurisdiction" each and any of Australia, Canada,
Japan, the Republic of South Africa
and the United States
"Restructuring Agreement" the agreement entered into on 19
August 2011 between, amongst others,
(1) the Company (2) the Banks and (3)
Ares Lux which provides for, inter
alia, the conditions precedent to the
Debt for Equity Conversion and Debt
Repayment and Restructuring (other
than the part thereof which comprises
part of the Craig Tibbles Variation
Agreement) and related matters
"Rule 9" Rule 9 of the Takeover Code
"Securities Act" the US Securities Act of 1933,
as amended
"Senior Facilities" the facilities made available by the
Banks to the Company and certain
other members of the Group under the
Senior Facilities Agreement
"Senior Facilities Agreement" the senior facilities agreement
originally dated 17 December 2010
between, among others, the Company,
NAB as agent and the Banks (as
amended, varied and restated from
time to time)
"Shareholders" holders of Ordinary Shares
"Subordination Deed" the subordination deed to be dated on
or before the date of the Refinancing
taking effect between the Company,
NAB as security trustee (under and as
defined in the Amended Intercreditor
Agreement) and Ares Lux as holder of
the Zero Coupon Notes
"Takeover Code" the City Code on Takeovers and
Mergers
"Toscafund" Toscafund Asset Management LLP
"Toscafund Concert Party" has the meaning given to it in
paragraph 7 of Part I of the Circular
available on the Company's website
www.healthcarelocums.com
"Toscafund Placing the placing between the Company (1) and Toscafund
commission agreement dated 19 (2), details of which are set out in
August 2011 Commission Agreement" paragraph 5 of Part VI of the
Circular available on the Company's
website www.healthcarelocums.com
"Toscafund Relationship Agreement" the relationship agreement dated 19
August 2011 between the Company (1)
and Toscafund (2), details of which
are set out in paragraph 5 of Part VI
of the Circular available on the
Company's website
www.healthcarelocums.com
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland
"UKLA" or "UK Listing Authority" The UK Listing Authority, being the
FSA acting as competent authority for
the purposes of Part VI of the FSMA
"US", "USA" or "United States" the United States of America,
each state thereof (including
the district of Columbia), its
territories, possessions and all
areas subject to its jurisdiction
"USE" Unmatched Stock Event
"Waiver" the waiver which has been granted by
the Panel, conditional upon the
approval by the Independent
Shareholders of Resolution 1 on a
poll, of the obligations to make a
mandatory offer for the entire issued
and to be issued share capital of the
Company not already held by the
Toscafund Concert Party and the ACE
Concert Party respectively which
might otherwise be imposed on the
Toscafund Concert Party and the ACE
Concert Party respectively under Rule
9 of the Takeover Code, as a result
of the issue of New Ordinary Shares
to Toscafund and ACE Limited under
the Placing and to Ares Lux under the
Debt for Equity Conversion
"Waiver Resolution" Resolution 1 set out in the Notice
of General Meeting, which relates
to the Waiver
"Warrant Instrument" the warrant instrument described
in paragraph 5.8 of Part VI of
the Circular
"ZCN Instrument" the instrument to be executed by the
Company on or before the Refinancing
taking effect constituting the Zero
Coupon Notes
"Zero Coupon Notes" the unsecured zero coupon notes to be
issued by the Company to Ares Lux
under the ZCN Instrument in an
initial amount of approximately
GBP10.21 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEEASPNFDFFEEF
Healthcare Locums (LSE:HLO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Healthcare Locums (LSE:HLO)
Historical Stock Chart
From Jul 2023 to Jul 2024
